Banking Fundamentals: An Introductory Guide
by Yuvi K - December 16, 2023
What is Banking?
Banking is a financial service that allows people to deposit, withdraw, and borrow money. Banks are companies that use various financial products and services to help make money. Banks may also provide access to certain financial products such as stocks, bonds, mutual funds, etc. (बैंकिंग एक वित्तीय सेवा है जिसके द्वारा लोग धन जमा, निकासी और ऋण ले सकते हैं। बैंक विभिन्न वित्तीय उत्पादों और सेवाओं का उपयोग करके धन कमाने के लिए कंपनियां हैं। बैंक भी प्रत्येक वित्तीय उत्पादों के उपयोग की प्रतिबंधित पहुँच प्रदान कर सकते हैं, जैसे शेयर, धनराशियां, म्यूचुअल फ़ंड आदि।)
Fundamental Principles of Banking
Banking has evolved from its traditional form to its modern form by following certain fundamental principles. These principles are used by banks to measure and understand risks, evaluate the effectiveness of their operations, and ultimately reach financial goals. Some of these principles include risk management, financial literacy, trustworthiness, and customer needs.
Risk management (जोखिम प्रबंधन):
Risk management is the process of assessing and managing the risks associated with banking activities. Banks use risk management to identify potential risks in operations and investments, mitigate those risks, and ensure compliance with applicable rules and regulations.
Financial Literacy (वित्तीय सिद्धांत):
Financial literacy is the ability to understand and use financial products and services responsibly. A bank’s financial literacy program educates customers about different financial products and services, so they can make informed decisions about how to use them.
Trustworthiness (विश्वास):
Trustworthiness is a key banking principle that ensures customers trust their bank with their financial matters. Banks must ensure that their customers can trust their services, conduct, and commitments.
Customer Needs (ग्राहकों की आवश्यकताएं):
Customer needs should be the primary concern of any bank. Banks must strive to understand and meet the needs of their customers. This includes providing relevant and helpful products and services that meet the customers’ financial needs.
Types of Banking
Banks offer a variety of services, which can be divided into different types of banking. Some of the most common banking services are:
Retail Banking (रिटेल बैंकिंग):
Retail banking is a type of banking that caters to the needs of ordinary people. Retail banking provides services like checking and savings accounts, loans, and debit cards.
Commercial Banking (वाणिज्यिक बैंकिंग):
Commercial banking is a type of banking that provides services to companies and other businesses. Commercial banks offer specialized services such as business loans and trade finance.
Investment Banking (निवेश बैंकिंग):
Investment banking is a type of banking that helps companies and governments raise capital and manage financial investments. Investment banking also provides advice and services related to mergers and acquisitions, as well as capital structure and strategic planning.
Private Banking (निजी बैंकिंग):
Private banking is a type of banking that caters to the financial needs of wealthy individuals and families. Private banks offer services like portfolio management and wealth planning.
Conclusion
Banking is an important part of our financial system. Banks provide convenient and secure access to financial products and services to individuals and businesses. Banking has evolved to become more customer-focused and efficient, using fundamental principles such as risk management, financial literacy, trustworthiness, and customer needs. Banks offer different services like retail banking, commercial banking, investment banking, and private banking, and these services help people manage and grow their finances.
