Opinion

Money and Banking

As important as banks are, to the economy, as a whole and to the communities specifically, they are called benches where money and money worth are exchanged. However, there is still much confusion about what exactly a bank is. A bank can be defined in the terms of: The economic functions it performs, the services it offers its customers and the legal basis of its existence.

Certainly, banks can be identified by the functions they perform in the economy. They are involved in transferring funds from savers to borrowers paying for goods and services.

Historically, banks have been recognized for the great range of financial services they offer; from Chequing and debit accounts, to consumers, to government, plans to loans for businesses, and government corporations. However, banks services menus are expanding rapidly today, to include investment banking (security underwriting), insurance protections, financial planning, and advice for merger companies, the sale of risk management services to businesses and customers and numerous other innovative financial products. Unfortunately, in our quest in South Sudan to identify what a bank is, has failed us and our economy. We will soon discover that not only are the functions and services of banks changing, yet we do not seem to realize the changes within the global financial system. The main problem in banking system menus is that we intend to generalize these financial institutions and do not specify what function each of these banks operates.

The statement of the problem is that while there are many banks that could have control the economy, our economy is going from bad to worst. Why? Because these banks do not know what category they belong and what functions of the economy they are supposed to support. There are 30 Banks within five years while Sudan had 31 Banks in 2005 after so many years. Banks are supposed to be defined by the nature of operations. Hence, this will help to control the economy as to which part of the economy is doing badly and why, so that those banks responsible could be called to question or account for the failure. The typical international classification of banks, their functions and operations is hereby listed below:

Type of Banks in Controlling the Economy

S/N0 Bank Type Functions and Category of the Economy
  Name Products offered by the bank
1 Commercial Banks Sell deposits; make loans to businesses, individual and institutions.
2 Money Centers Banks Largest Commercial Banks based in leading financial centers
3 Community Banks Smaller, locally focused commercial saving Banks
4 Saving Banks Saving deposits and makes loans to individuals and families
5 Cooperative Banks Help farmers, ranchers and customers acquire goods and services
6 Mortgage Banks Provide mortgage loans on new homes but do not sell deposits
7 Investment Banks Underwrite issues of new securities on behalf of their corporate customers
8 Merchant Banks Supply both debts and equity capital to businesses
9 Industrial Banks State chartered loan companies owned by other corporations that provide credit and receive deposits
10 Retail Banks Smaller banks serving primarily households and small business
11 Wholesale Banks Larger commercial Banks serving corporate and governments
12 Limited Purpose Banks Offer a narrow menu of services, such as credit cards companies and subprime lenders
13 Minority Banks Focus primarily on customers belonging to minority groups (MFI)
14 National banks Function under a Federal charter through the controller of currency
15 State Banks Function under charter issued by banking commissions in various states
16 Insurance Banks Maintain deposit backed by federal deposits insurance plans
17 Member Banks Belong to the Federal Reserve or Central Bank system
18 Universal Banks Offer virtually all services available in today marketplaces
19 Virtual Banks Offer their service only over internet
20 Fringe Banks Offer payday and title loans, cash cheques or operated as pawnshops and rent to own firms
21 Affiliated Banks Wholly or partially owned by a holding company.
22 International Banks Commercial Banks present more than one Nations
23 Bankers Banks Supply services, of clearing and securities trading to Banks

 

Therefore, looking at the above list, there is no doubt that any part of our economy has not been covered. In any case we may need to look at the functions and definition of each Bank in South Sudan so that accountability may be set to bear.

 

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