Even though, the largest part of population obtain services from banks, however, not each person knows how banking enterprise functions or about their role. From the viewpoint of customers, for individual account holders to corporate companies or establishments bank play a significant role of an intermediary in the financial system. Matt Rush says that among many services provided by banking sector the major are as follows.
A Brief Idea of the Variety of Services Provided by Banks From Matt Rush
- Banks are, basically, financial establishments where people can deposit what they save out of their income safety or in a much-protected way. Typically, banks are of three types and that are federally owned, private and foreign banks. Importantly, even the private sector as well as foreign banks need license from the government prior to initiating their services in a country or city. In order to ensure absolute security on their deposited money in these private banks and foreign banks, the Central or Reserve bank of every country has full control over these banks. Moreover, when it comes to foreign banks, before opening their branch office in overseas countries, they are supposed to take official permission from the government of that particular country.
- Thus, banks are the most protected places for people to keep their money deposited while banks pay them interest on certain percentage, which is like bonus for the depositors. Now you can realize well that if there were no banking service, the public would have no other option but to store their money with themselves, which is risky and non-productive.
- Banks provide loans to public as well as companies, small enterprises out of the deposited money of people in a very scientific and systematic way. Equally, borrowing companies and people of loans require paying interest on them, which is typically kept on the higher side than what banks pays against deposit. Apart from paying interest, borrowers are supposed to pay their loans back to banks in scheduled installments. As security against loan, banks typically need keeping mortgage of workshops, office building, residential place or other collateral.
- Banks play a major role in payment systems. With the appearance of internet based payment systems, for companies and people, it has become easy to transfer money, making direct debits against services obtained. To facilitate people to withdraw money or deposit money through ATM services, banks also provide debit cards to their customers. Banks also offer customers credit cards, shopping cards, or trouble chards, which are widely known as master cards in the industry.
- Banks also provide other services, like assisting companies in mergers or at the time of acquisitions, conversion of foreign currencies, providing business capitals. All banks have different cells to offer all these various kinds of complex services that involve many procedures before final transaction.
- Almost all banks maintain strict policies and rules for effective functioning, monitoring, and managing different risk factors. It plays a crucial role relating to both fiscal and no-fiscal risk. Banks also undertake varieties of projects relating to CSR for the wellbeing of society and environment.
Finally, banks that are fully controlled under public administration, according to Matt Rush, must carry out numerous functions towards nation’s economic issues, government functions. It is also acting as a major supportive unit for public treasury related activities.