Concept of Banking, Various System and Norms for Attracting the Customers, Explain and Illustrate in the World Wide Aspect


This report is under the direction of Barrister M.A. Billah, course instructor of law 200. This report is focused on concept of banking, various system and norms for attracting the customers. This report gives the picture about different concept on different banking policy. Also it gives the view that who are the target customer of that concept. In this report I give examples of different banks which are following that particular concept of banking. Also, this report says about the new banking systems and norms which are made to attract the customer and also to maintain a chain for all banks. This report also stated the evolution, recommendation as to give more clear idea.

Table of Content

Introduction……………………………………………………………………………. 05

Concept of Banking, Various System and Norms for Attracting the Customers……… 06

Evolution………………………………………………………………………………. 12

Recommendation………………………………………………………………………. 12

Conclusion……………………………………………………………………………… 13

1.0 Introduction

A bank is a financial institution. It works as a financial intermediary. In short the main work of bank can said as it accepts deposits and then it makes the channels to lend those deposits in different activities.According to InvestorWord (2009) Banking is defined as a business of keeping money for checking and saving accounts or for exchange or for issuing loans and credit, etc. Again from finance perspective, it is the management of credit, money, banking and investments.[1]Now, as different types of model has emerged in the banking service like securities, insurance facility but still banks are continuing to perform their primary role and that is accepting deposits and lending money.

A bank is a type of industry which is very highly regulated under the restriction of the government on financial activity.  Now, in different arena of the world there are different types of banking procedures. These makes new concepts are like in current set of global bank capital standards are called Basel II. In USA banks are restricted from owning non-financial companies, again in Germany, banks has owned by the major stakes. Now, all the banks are following various norms and systems to attract different types of customers.

2.0 Concept of Banking, Various System and Norms for Attracting the Customers

2.1 Concepts of Banking:

The concept of the banking based on two different concepts and these are deposit banking and the loan banking. Here deposit banking refers to an individual for safekeeping. It may issue the depositor with an open book account. Now, the other one of the concept is loan banking. In this concept of banking the bankers are lending money to its customers. The requirements varies from bank to bank, again this difference depends based on different areas.[2]

Now based on basic concepts there are different types of concept of banking has introduced in world to attract as much as customers. These can be divided into different types.

2.1.1. Saving Banks:

Saving bank, are deposits collecting banking system.Collected money from deposits has used by invested in securities, bonds etc. This also knows as the cooperative banking. Saving banking is kind of normal activities of different banks, but still this it has different value. In different arena this recognizes differently. Like in some it works as credit union. Credit union is something which thrifts, provides credit at reasonable rates, and providing other financial services to its members.[3] In Africa this saving bank or credit bank works under “savings and credit cooperative organizations”, Spanish speaking countries say this as “cooperativas de ahorro y crédito”[4] In Islamic countries this banking policy has integrated with Islamic bank banking practice. Like in Afghanistanit runs under the banking corporation known as “Islamic investment and finance cooperatives”[5]

Saving Bank in Bangladesh and Microcredit Banking:

In Bangladesh, different banks have saving bank as an integrated part. Again, based on saving bank concept the Nobel Prize owner Muhammad Yunus introduced microcredit banking.

Targeted Customers:

This type of banking has come to in front specifically to attract the customers like salaried people and low income groups.

2.1.2 Commercial Banks:

Commercial bank has been established with a purpose of investment. Most of the banks are following this process of banking. This concept of banking is just a broader concept of saving banks. The basic concept of the is banking is to take deposits from individual and institutional customers, and then they give this money to individual people, especially to different organization in high interest rate. Currently this loan has been giving in the form of ATM, repair loan, mortgage loan, SME loan etc. This commercial banking policy has been presented by the Roman.Now, in all over the world this banking concept is using as the core banking system. As in India after the independent, their government has reform their whole structure of the banking for the commercial banking.[6] British banks like Standard Chartered, HSBC and others have different portion of commercial banking service. As for high demand, another concept of banking has from this, which known as investing banking. Deregulation and competition has meant that commercial banks have diversi?ed in recent years from their core business of deposit and lending, into new areas such as installmentand trade ?nance, mortgage lending, insurance, leasing, trust agencies, and investment banking.
For example, typical examples of commercial banks include Barclays and NatWest in the UK, Deutsche or Dresdner Bank in Germany, Cr´editAgricole in France, ING and ABN Amro in the Netherlands, UBS in Switzerland, Chase, Citicorp, and Bank of America in the USA.

Targeted Customers:

Commercial banks have been introduced for the development of private sector. Specially, the business people are the main target of this concept of business. SME comes for the entrepreneurship.

2.1.3. Central Bank:

Each and every country has a central bank. The work routine of this bank is totally different than other types of the bank. It has totally different structure than others. While the main duty of other banks to take deposit and give loan while central is focusing on regulating other banks. It controls the foreign exchange policy; it works as bankers of government.
For example, some central banks are, Bangladesh Bank (Bangladesh), Reserve Bank of India (India), Federal Reserve System(USA),State Bank of Pakistan (Pakistan), Bank of Japan (Japan).

Targeted Customer:

 As this type of bank does no work for the people straight, but it regulates that all the banks are following rule of serving people perfectly or not.

2.1.4. Islamic Banks:

Islamic banks are the banks which are running under the Sharia laws. The principle of Islamic law has been developed by the Islamic economics. The main principle of Islamic banks is to restriction on the interest. The Islamic banks are following the profit sharing process instead of taking interest from the person who takes money from the bank.In this process bank might buy the product from the sellers, and re-sell it to the buyer at a profit. It allows the buyer to give the money in installment. However, the bank’s profit cannot be made unequivocal and therefore there are no additional drawbacks for late payment. In order to protect itself against avoidance, the bank asks for strict insurance. The goods or land is registered to the name of the buyer from the start of the deal.
The concept of Islamic bank is on growing rate currently it is 10-15%.[7]  In USA Michigan based Universal bank, Bangladesh based Islamic Bank, Iranian Bank, Saudi Arabian Banks; many of the Pakistani banks are the prime example of Islamic Banking. In 2009 Iranian banks accounted for almost 40 percent of total assets in the list of world’s top 100 Islamic banks.

Targeted customers: this banking policy is mainly operated in the Islamic countries. So, it says those Muslim regions are the main target customer of this concept of banking. These banks are giving different offers to the customers based Islamic law to attract customers.
Now, there is also some other types of Banks like Industrial banks which are giving long term loan to the customer. ICICI and IDBI bank of India is a prime example of that. Again Indigenous is another type of Bank which gives loan to the needy people from their funds as well as from the fund of deposits. It is popular in Marwari’s and Multan communities of India.
Now, there are some banks which are totally focusing on financing on financial trade. Its functions are:Helps in the Export and Import Trade, it buys and sells silver and gold, remits money from different countries and it discounts the bills of foreign.
For example, Bank of Tokyo, Bank of America, and Hong Kong Bank can be said.
Other type of concept of Banking has found in USA, Germany which gives loan to the customer for different household items.[8]

2.2 Norms of Banking:

Different banks of different countries are following different norms to attract customers.This whole thing has said as the KYC policy of Bank. It gives the idea to its customers that how the services will be given in that particular bank. Some banks give specifics time table that how much time they will take to give to service. Now, these norms are varied from country to country but there is a standard norm which is known as Basel Accords which refers by banking supervision accords. Currently the world wide banks are following the Basel II. It based on three pillars concepts and these areminimum capital requirements, supervisory review, and market discipline. It introduced in 2004 and it updates in 2005 for 1st time.[9]

2.3 Various Systems of Banking:

As to run with the time, different Banks has been introduced new systems of Banking. Like online banking where all the banking procedure can be finished by internet. Credit card is another integrated part of new system of banking. All of these systems have been introduced to attract customers.

 4.0 Evolution:

From this discussion I have found mostly eleven types of concept of banking. All of these types of banking are using in different parts of the world to attract the customer in different point of view.The entire concepts have been introduced based on research on different types of people. Now, to keep the world’s bank in same line Basel II came. Also, new system of banking like online banking came for give better service to customer and to attract them easily.


5.0 Recommendation:

Though all the banks are running based on different many concepts which are made on research, but here I am giving some recommendation to improve the situation more.

  1. 1.      Spreading different concepts among all the people, because all the customers are not aware about the systems.
  2. 2.      Integrating concepts of different banks to come up with better one
  3. 3.      Do the research to go to the depth to know what customer wants.

 6.0 Conclusion:

Introduction of various concepts of banking is the reason to attract different types of customers in different areas of the world. New systems are arriving to run with the speed of modern time. The entireconcepts are using to grab the customers in different level of society. Like micro-credit banking is for lower level people and also commercial banking for business people and for different individual. In this report I tried to give the clear picture about all the concept, norms and systems which are using to attract different customers.


1.        Akrani, G., (2011, September 2), Different Types of Banks – What are Various Kinds of Banks? Retrieved from

  1. Cihak, M. &Hesse, H. (n.d.)  Islamic Banks and Financial Stability: An Empirical Analysis. Retrieved from

  1. CUNA, Products and Services, “Spanish Stuffer: Las Cooperativas de Ahorro y Crédito“. Retrieved


  1. E.g., 12 U.S.C.  1752(1), available at; CUNA Model

Credit Union Act 0.20 (2007); see also 12 U.S.C.  1757, available at; CUNA Model Credit Union Act 3.10 (2007).

  1. FRB Press Release: Banking Agencies Announce Revised Plan for Implementation of Basel II Framework

  1. Roy, A. (n.d.) A commercial banking in India: a beginners module. Retrieved from

  1. Seun, O., (n.d.) The Concept Of Banking And Bad Deb. retrieved from
    1. WOCCU, “What is a Credit Union?”. Retrieved 2011-10-09.

  1. (n.d.), A short course in economics, retrieved from

align=”left” size=”1″ />

[1]Seun, O., (n.d.) The Concept Of Banking And Bad Deb. retrieved from

[2](n.d.), A short course in economics, retrieved from


[3]E.g., 12 U.S.C. 1752(1), available at; CUNA Model

Credit Union Act  0.20 (2007); see also 12 U.S.C.  1757, available at; CUNA Model Credit Union Act 3.10 (2007).


[4]CUNA, Products and Services, “Spanish Stuffer: Las Cooperativas de Ahorro y Crédito“. Retrieved


[5]WOCCU, “What is a Credit Union?”. Retrieved 2011-10-09.

[6]Roy, A. (n.d.) A commercial banking in India: a beginners module. Retrieved from

[7]Cihak,M. &Hesse,H. (n.d.)  Islamic Banks and Financial Stability: An Empirical Analysis. Retrieved from

[8]Akrani, G., (2011, September 2), Different Types of Banks – What are Various Kinds of Banks ?retrieved from

[9] FRB Press Release:Banking Agencies Announce Revised Plan for Implementation of Basel II Framework