MBA In Banking Management

Introduction MBA In Banking Management:  

Concept of Banking

“Banking can be explained as the business process of accepting and safeguarding money owned by other individuals this money to earn again.”

Functions of Banks:

1.  Primary Functions
2.  Secondary Functions

Primary functions are of two types: 

1.  Accepting Deposits
2.  Granting loans and advances

1. Accepting deposits are of four types:

• Saving Deposit
• Fixed Deposit
• Current Deposit
• Recurring Deposit

2.Granting Loans and Advances are of four types:

• Cash Credit
• Bank Overdraft
• Loans
• Discounting Bills

Secondary Functions:

1.  Agency Functions
2.  Utility Functions

1. Agency Functions are of 5 types:

• Funds Transfer
• Cheque collection
• Periodic payment/collection
• Portfolio Management
• Other functions

2. Utility Functions: 

• Issue of Drafts, Letter of Credit
• Locker facility
• Underwriting of sharing
• Dealing with Foreign Exchange
• Project reports
• Social welfare program

Types of Accounts:

1.  Savings Bank Account

• The main goal is to promote savings.
• No limitations on the number and amount of deposits.
• Withdrawals are subject to certain limitations.
• No loan advantage is provided against saving accounts.
• Neither frills accounts.

2.Current Account

• Most liquid and no restrictions on the number of transactions.
• Punishment is charged if minimum balance is not maintained.
• Commonly banks do not pay any interest in current accounts.
• Bank charging a payment for a current account current is most suitable for a businessman. 

3.Fixed Deposit Account:

• The amount can be paid only once.
• Premature withdrawal is permitted in some banks without penalty other banks charge a minimum rate of interest as a penalty. 
• Consumers can avail loans against Fixed deposits up to 80 to 90 percent of the value of deposits. 

4.Recurring Deposit Account:

• Earn interest on the amount already paid at the same rate as FDs.
• Either fixed installments.
• Neither withdrawals are permitted. However, the bank may permit closure of the account before the maturity period. 

Meaning of Banking Management In MBA: In general, bank management is defined as the activity of managing the Bank's statutory activity. Bank management is distinguished by the particular object of management - financial connections connected with banking occupation and other relations, also connected with the implementation of management functions in banking. 

Definition of Banking Management in MBA: bank management means the activity of governing the bank’s statutory activities. Bank management can be known by the particular object of management – financial activities connected with banking concerns. Bank management also discusses the application of management functions in the banking sector.

Significance of Banking Management in MBA: 

1. Changing Regulation of Banks: at the finish of the 3rd decade of the 20th century, thousands of banks across the world failed due to the economic recession known as the Great depression. Due to bank failure, millions of depositors hurt from a great problem as they did not get back their deposited money.

2. Increasing competition due to transforming technological development: Number of served customers and quality dimensions of services is the support of the competition. The bank, which provides good service with high quality, is capable of being successful in competition.

Two banks combinedly create new services that provide the customers with a sustainable competitive advantage.

Why the new advantage or service that the bank offers is unique and different from that of the other organizations requires the commercial banks to participate in the multidimensional competitive environment.

The bank, which can attract more clients, can create customers repeatedly. These technological surroundings absorbed more investment and new training.

So, the management of the bank creates a new master plan of banking services adjusted in the competitive banking business.

3.Changing International Relationship

In international banking work, the large amounts of legislation in the event of a new problem. International relations, global or bilateral, create more contestants in the banking business.

Other factors, such as modifying in international trade and commerce, laws of fund transfer, change in social and cultural factors establish a new 

operational management system which dares the banking business.

In this era of modern science, solution of competitive surroundings and development of international relationships among banks, the management of banks follows a masterplan to merge banks in international banking business.

All these factors stated make bank management more complex and daring.