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State Bank of Pakistan

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State Bank of Pakistan
‫بینک دولت پاکستان‬

State Bank of Pakistan

Headquarters Karachi, Pakistan
Established 1947
Governor Syed Salim Raza
Central Bank of Pakistan
Currency Pakistani rupee
ISO 4217 Code PKR
Website www.sbp.org.pk

The State Bank of Pakistan (SBP) (Urdu: ‫ )بینسسک دولسست پاکسسستان‬is the central bank of
Pakistan. While its constitution, as originally laid down in the State Bank of Pakistan
Order 1948, remained basically unchanged until January 1, 1974, when the bank was
nationalized, the scope of its functions was considerably enlarged. The State Bank of
Pakistan Act 1956, with subsequent amendments, forms the basis of its operations today.
The headquarters are located in the financial capital of Pakistan, Karachi with its second
headquarters in the capital, Islamabad

Before independence on 14 August 1947, the Reserve Bank of India (Central Bank of
India) was the central bank for what is now Pakistan. On 30 December 1948 the British
Government's commission distributed the Bank of India's reserves between Pakistan and
India - 30 percent (750 M gold) for Pakistan and 70 percent for India.

The losses incurred in the transition to independence were taken from Pakistan's share (a
total of 230 million). In May, 1948 Muhammad Ali Jinnah (Founder of Pakistan) took
steps to establish the State Bank of Pakistan immediately. These were implemented in
June 1948, and the State Bank of Pakistan commenced operation on July 1, 1948.


Under the State Bank of Pakistan Order 1948, the state bank of Pakistan was charged
with the duty to "regulate the issue of bank notes and keeping of reserves with a view to
securing monetary stability in Pakistan and generally to operate the currency and credit
system of the country to its advantage".

A large section of the state bank's duties were widened when the State Bank of Pakistan
Act 1956 was introduced. It required the state bank to "regulate the monetary and credit
system of Pakistan and to foster its growth in the best national interest with a view to
securing monetary stability and fuller utilisation of the country’s productive resources".
In February 1994, the State Bank was given full autonomy, during the financial sector

On January 21, 1997, this autonomy was further strengthened when the government
issued three Amendment Ordinances (which were approved by the Parliament in May
1997). Those included were the State Bank of Pakistan Act, 1956, Banking Companies
Ordinance, 1962 and Banks Nationalisation Act, 1974. These changes gave full and
exclusive authority to the State Bank to regulate the banking sector, to conduct an
independent monetary policy and to set limit on government borrowings from the State
Bank of Pakistan. The amendments to the Banks Nationalisation Act brought the end of
the Pakistan Banking Council (an institution established to look after the affairs of NCBs)
and allowed the jobs of the council to be appointed to the Chief Executives, Boards of the
Nationalised Commercial Banks (NCBs) and Development Finance Institutions (DFIs).
The State Bank having a role in their appointment and removal. The amendments also
increased the autonomy and accountability of the chief executives, the Boards of
Directors of banks and DFIs.

The State Bank of Pakistan also performs both the traditional and developmental
functions to achieve macroeconomic goals. The traditional functions, may be classified
into two groups:

1. The primary functions including issue of notes, regulation and supervision of the
financial system, bankers’ bank, lender of the last resort, banker to Government, and
conduct of monetary policy.
2. The secondary functions including the agency functions like management of public
debt, management of foreign exchange, etc., and other functions like advising the
government on policy matters and maintaining close relationships with international
financial institutions.

The non-traditional or promotional functions, performed by the State Bank include

development of financial framework, institutionalisation of savings and investment,
provision of training facilities to bankers, and provision of credit to priority sectors. The
State Bank also has been playing an active part in the process of islamisation of the
banking system.

Regulation of liquidity

The State Bank of Pakistan has also been entrusted with the responsibility to carry out
monetary and credit policy in accordance with Government targets for growth and
inflation with the recommendations of the Monetary and Fiscal Policies Co-ordination
Board without trying to effect the macroeconomic policy objectives.

The state bank also regulates the volume and the direction of flow of credit to different
uses and sectors, the state bank makes use of both direct and indirect instruments of
monetary management. During the 1980s, Pakistan embarked upon a program of
financial sector reforms, which lead to a number of fundamental changes. Due to these
changed the conduct of monetary management which brought about changes to the
administrative controls and quantitative restrictions to market based monetary
management. A reserve money management programme has been developed, for
intermediate target of M2, that would be achieved by observing the desired path of
reserve money - the operating target.

State Bank of Pakistan has changed the format and designs of many bank notes which are
currently in circulation in Pakistan. These steps were taken to overcome the problems of
fraudulent activities.


The State Bank of Pakistan looks into a lot of different ranges of banking to deal with the
changes in economic climate and different purchasing and buying powers. Here are some
of the banking areas that the state bank looks into;

• State Bank’s Shariah Board Approves Essentials and Model Agreements for
Islamic Modes of Financing
• Procudure For Submitting Claims With SBP In Respect of Unclaimed Deposits
Surrendered By Banks/DFIs.
• Banking Sector Supervision in Pakistan
• Micro Finance
• Small Medium Enterprises (SMEs)
• Minimum Capital Requirements for Banks
• Remittance Facilities in Pakistan
• Opening of Foreign Currency Accounts with Banks in Pakistan under new
• Handbok of Corporate Governance
• Guidelines on Risk Management
• Guidelines on Commercial Paper
• Guidelines on Securitization
• SBP.Scheme for Agricultural Financing


1. Zahid Hussain, 10-06-1948 TO 19-07-1953

2. Abdul Qadir, 20-07-1953 TO 19-07-1960
3. Shujaat Ali Hasnie, 20-07-1960 TO 19-07-1967
4. Mahbubur Raschid, 20-07-1967 TO 01-07-1971
5. S.U. Durrani, 01-07-1971 TO 22-12-1971
6. Ghulam Ishaq Khan, 22-12-1971 TO 30-11-1975
7. S. Osman Ali, 01-12-1975 TO 01-07-1978
8. A G N Kazi, 15-07-1978 TO 09-07-1986
9. V.A. Jaffrey, 10-07-1986 TO 16-08-1988
10. I.A. Hanfi, 17-08-1988 TO 02-09-1989 (first term), 01-09-1990 TO 30-06-1993
(second term)
11. Kassim Parekh, 05-09-1989 TO 30-08-1990
12. Mohammad Yaqub, 25-07-1993 TO 25-11-1999
13. Ishrat Husain, 02-12-1999 TO 01-12-2005
14. Shamshad Akhtar, 02-01-2006 TO 01-01-2009
15. Syed Salim Raza, 01-01-2009 TO PRESENT

Pakistani rupee
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Jump to: navigation, search

‫( روپی ہ‬Urdu)

1000-rupee note Coins of various denominations

The rupee PKR is the currency of Pakistan. The issuance of the currency is controlled by
the State Bank of Pakistan, the central bank of the country. The most commonly used
symbol for the rupee is Rs, used on receipts when purchasing goods and services. In
Pakistan, the rupee is referred to as the "rupees", "rupaya" or "rupaye". As standard in
Pakistani English, large values of rupees are counted in terms of thousands, lakh (100
thousand, in digits 1,00,000) and crore (10 million, in digits 1,00,00,000).
Main article: History of the rupee

The origin of the word "rupee" is found in the Sanskrit word rūp or rūpā, which means
"silver" in many Indo-Aryan languages. The Sanskrit word rūpyakam (रपयक) means coin
of silver. The derivative word Rūpaya was used to denote the coin introduced by Sher
Shah Suri during his reign from 1540 to 1545 CE.

The Pakistani rupee was put into circulation after the country became independent from
the British Rule in 1947. For the first few months of independence, Pakistan used Indian
coins and notes with "Pakistan" stamped on them. New coins and banknotes were issued
in 1948. Like the Indian rupee, it was originally divided into 16 annas (‫)آن‬, each of 4 pice
(‫ )پيس‬or 12 pie (‫)پاى‬. The currency was decimalised on 1 January 1961, with the rupee
subdivided into 100 pice, renamed (in English) paise (singular paisa) later the same year.
However, coins denominated in paise have not been issued since 1994.


In 1948, coins were introduced in denominations of 1 pice, ½, 1 and 2 annas, ¼, ½ and 1

rupee. 1 pie coins were added in 1951. In 1961, coins for 1, 5 and 10 pice were issued,
followed later the same year by 1 paisa, 5 and 10 paise coins. In 1963, 10 and 25 paise
coins were introduced, followed by 2 paise the next year. 1 rupee coins were reintroduced
in 1979, followed by 2 rupees in 1998 and 5 rupees in 2002. 2 paise coins were last
minted in 1976, with 1 paisa coins ceasing production in 1979. The 5, 10, 25 and 50 paise
all ceased production in 1994. There are two variations of 2 rupee coins; most have
clouds above the Badshahi Masjid but many don't have. This is noted by very few people.
The one and two rupee coins were changed to aluminium in 2007 [1]

Currently Circulating Coins

Depiction Depiction Year in Front

Value Composition Back Illustration
(Front) (Back) Use Illustration

Hazrat Lal Shahbaz

1998 - Bronze and Qalandar
Re. 1 Muhammad Ali
Present Aluminium Mausoleum, Sehwan

1998 - Brass and Badshahi Masjid,

Rs. 2 Crescent and Star
Present Aluminium Lahore
2002 -
Rs. 5 Cupro-nickel Crescent and Star

For table standards, see the coin specification table.


In 1947, provisional issues of banknotes were made, consisting of Government of India

and Reserve Bank of India notes for 1, 2, 5, 10 and 100 rupees overprinted with the text
"Government of Pakistan" in English and Urdu. Regular government issues commenced
in 1948 in denominations of 1, 5, 10 and 100 rupees. The government continued to issue
1 rupee notes until the 1980s but other note issuing was taken over by the State Bank in
1953, when 2, 5, 10 and 100 rupees notes were issued. Only a few 2 rupees notes were
issued. 50 rupees notes were added in 1957, with 2 rupees notes reintroduced in 1985. In
1986, 500 rupees notes were introduced, followed by 1000 rupees the next year. 2 and 5
rupees notes were replaced by coins in 1998 and 2002. 20 rupee notes were added in
2005, followed by 5000 rupees in 2006.

All banknotes other than the 1 and 2 rupees feature a portrait of Muhammad Ali Jinnah
on the obverse along with writing in Urdu. The reverses of the banknotes vary in design
and have English text. The only Urdu text found on the reverse is the Urdu translation of
the Prophetic Hadith, "Seeking honest livelihood is worship of God."

The banknotes vary in size and colour, with larger denominations being longer than
smaller ones. All contain multiple colours. However, each denomination does have one
colour which predominates. All banknotes feature a watermark for security purposes. On
the larger denomination notes, the watermark is a picture of Jinnah, while on smaller
notes, it is a crescent and star. Different types of security threads are also present in each
Origin of the word

Silver drachm coin from Trapezus, 4th century BC

The name bank derives from the Italian word banco "desk/bench", used during the
Renaissance by Jewish Florentine bankers, who used to make their transactions above a
desk covered by a green tablecloth.[2] However, there are traces of banking activity even
in ancient times.

In fact, the word traces its origins back to the Ancient Roman Empire, where
moneylenders would set up their stalls in the middle of enclosed courtyards called
macella on a long bench called a bancu, from which the words banco and bank are
derived. As a moneychanger, the merchant at the bancu did not so much invest money as
merely convert the foreign currency into the only legal tender in Rome—that of the
Imperial Mint.[3]

The earliest evidence of money-changing activity is depicted on a silver drachm coin

from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325
BC, presented in the British Museum in London. The coin shows a banker's table
(trapeza) laden with coins, a pun on the name of the city.

Traditional banking activities

Large door to an old bank vault.

Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as telegraphic transfer, EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current accounts, by accepting

term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend
money by making advances to customers on current accounts, by making installment
loans, and by investing in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that provide
payment services such as remittance companies are not normally considered an adequate
substitute for having a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most
funds to households and non-financial businesses, but non-bank lenders provide a
significant and in many cases adequate substitute for bank loans, and money market
funds, cash management trusts and other non-bank financial institutions in many cases
provide an adequate substitute to banks


The definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on the business
of banking, which is specified as:[4]

• conducting current accounts for his customers

• paying cheques drawn on him, and
• collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies
the law in relation to negotiable instruments, including cheques, and this Act contains a
statutory definition of the term banker: banker includes a body of persons, whether
incorporated or not, who carry on the business of banking' (Section 2, Interpretation).
Although this definition seems circular, it is actually functional, because it ensures that
the legal basis for bank transactions such as cheques do not depend on how the bank is
organised or regulated.

The business of banking is in many English common law countries not defined by statute
but by common law, the definition above. In other English common law jurisdictions
there are statutory definitions of the business of banking or banking business. When
looking at these definitions it is important to keep in mind that they are defining the
business of banking for the purposes of the legislation, and not necessarily in general. In
particular, most of the definitions are from legislation that has the purposes of entry
regulating and supervising banks rather than regulating the actual business of banking.
However, in many cases the statutory definition closely mirrors the common law one.
Examples of statutory definitions:

• "banking business" means the business of receiving money on current or deposit

account, paying and collecting cheques drawn by or paid in by customers, the
making of advances to customers, and includes such other business as the
Authority may prescribe for the purposes of this Act; (Banking Act (Singapore),
Section 2, Interpretation).
• "banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other
similar account repayable on demand or within less than [3 months] ... or with a
period of call or notice of less than that period;
2. paying or collecting cheques drawn by or paid in by customers

Accounting for bank accounts

Bank statements are accounting records produced by banks under the various accounting
standards of the world. Under GAAP and IFRS there are two kinds of accounts: debit and
credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets
and Expenses. This means you credit a credit account to increase its balance, and you
debit a debit account to decrease its balance.[7]

This also means you debit your savings account every time you deposit money into it
(and the account is normally in deficit), while you credit your credit card account every
time you spend money from it (and the account is normally in credit).

However, if you read your bank statement, it will say the opposite—that you credit your
account when you deposit money, and you debit it when you withdraw funds. If you have
cash in your account, you have a positive (or credit) balance; if you are overdrawn, you
have a negative (or deficit) balance.

The reason for this is that the bank, and not you, has produced the bank statement. Your
savings might be your assets, but the bank's liability, so they are credit accounts (which
should have a positive balance). Conversely, your loans are your liabilities but the bank's
assets, so they are debit accounts (which should also have a positive balance).

Where bank transactions, balances, credits and debits are discussed below, they are done
so from the viewpoint of the account holder—which is traditionally what most people are
used to seeing.

Wider commercial role

The commercial role of banks is not limited to banking, and includes:

• issue of banknotes (promissory notes issued by a banker and payable to bearer on

• processing of payments by way of telegraphic transfer, EFTPOS, internet banking
or other means
• issuing bank drafts and bank cheques
• accepting money on term deposit
• lending money by way of overdraft, installment loan or otherwise
• providing documentary and standby letters of credit (trade finance), guarantees,
performance bonds, securities underwriting commitments and other forms of off-
balance sheet exposures
• safekeeping of documents and other items in safe deposit boxes
• currency exchange
• acting as a 'financial supermarket' for the sale, distribution or brokerage, with or
without advice, of insurance, unit trusts and similar financial products

Economic functions

The economic functions of banks include:

1. issue of money, in the form of banknotes and current accounts subject to cheque
or payment at the customer's order. These claims on banks can act as money
because they are negotiable and/or repayable on demand, and hence valued at par.
They are effectively transferable by mere delivery, in the case of banknotes, or by
drawing a cheque that the payee may bank or cash.
2. netting and settlement of payments – banks act as both collection and paying
agents for customers, participating in interbank clearing and settlement systems to
collect, present, be presented with, and pay payment instruments. This enables
banks to economise on reserves held for settlement of payments, since inward and
outward payments offset each other. It also enables the offsetting of payment
flows between geographical areas, reducing the cost of settlement between them.
3. credit intermediation – banks borrow and lend back-to-back on their own account
as middle men.
4. credit quality improvement – banks lend money to ordinary commercial and
personal borrowers (ordinary credit quality), but are high quality borrowers. The
improvement comes from diversification of the bank's assets and capital which
provides a buffer to absorb losses without defaulting on its obligations. However,
banknotes and deposits are generally unsecured; if the bank gets into difficulty
and pledges assets as security, to raise the funding it needs to continue to operate,
this puts the note holders and depositors in an economically subordinated
5. maturity transformation – banks borrow more on demand debt and short term
debt, but provide more long term loans. In other words, they borrow short and
lend long. With a stronger credit quality than most other borrowers, banks can do
this by aggregating issues (e.g. accepting deposits and issuing banknotes) and
redemptions (e.g. withdrawals and redemptions of banknotes), maintaining
reserves of cash, investing in marketable securities that can be readily converted
to cash if needed, and raising replacement funding as needed from various sources
(e.g. wholesale cash markets and securities markets).
Law of banking

Banking law is based on a contractual analysis of the relationship between the bank
(defined above) and the customer—defined as any entity for which the bank agrees to
conduct an account.

The law implies rights and obligations into this relationship as follows:

1. The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the
customer; when the account is overdrawn, the customer owes the balance to the
2. The bank agrees to pay the customer's cheques up to the amount standing to the
credit of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from the
customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's
account as the customer's agent, and to credit the proceeds to the customer's
5. The bank has a right to combine the customer's accounts, since each account is
just an aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the extent
that the customer is indebted to the bank.
7. The bank must not disclose details of transactions through the customer's account
—unless the customer consents, there is a public duty to disclose, the bank's
interests require it, or the law demands it.
8. The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.

These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular
jurisdiction may also modify the above terms and/or create new rights, obligations or
limitations relevant to the bank-customer relationship.

Entry regulation
Main article: Banking regulation

Currently in most jurisdictions commercial banks are regulated by government entities

and require a special bank licence to operate.

Usually the definition of the business of banking for the purposes of regulation is
extended to include acceptance of deposits, even if they are not repayable to the
customer's order—although money lending, by itself, is generally not included in the
Unlike most other regulated industries, the regulator is typically also a participant in the
market, i.e. a government-owned (central) bank. Central banks also typically have a
monopoly on the business of issuing banknotes. However, in some countries this is not
the case. In the UK, for example, the Financial Services Authority licences banks, and
some commercial banks (such as the Bank of Scotland) issue their own banknotes in
addition to those issued by the Bank of England, the UK government's central bank.

Some types of financial institution, such as building societies and credit unions, may be
partly or wholly exempt from bank licence requirements, and therefore regulated under
separate rules.

The requirements for the issue of a bank licence vary between jurisdictions but typically

1. Minimum capital
2. Minimum capital ratio
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or
senior officers
4. Approval of the bank's business plan as being sufficiently prudent and plausible.

[edit] Banking channels

Banks offer many different channels to access their banking and other services:

• A branch, banking centre or financial centre is a retail location where a bank or

financial institution offers a wide array of face-to-face service to its customers.
• ATM is a computerised telecommunications device that provides a financial
institution's customers a method of financial transactions in a public space without
the need for a human clerk or bank teller. Most banks now have more ATMs than
branches, and ATMs are providing a wider range of services to a wider range of
users. For example in Hong Kong, most ATMs enable anyone to deposit cash to
any customer of the bank's account by feeding in the notes and entering the
account number to be credited. Also, most ATMs enable card holders from other
banks to get their account balance and withdraw cash, even if the card is issued by
a foreign bank.
• Mail is part of the postal system which itself is a system wherein written
documents typically enclosed in envelopes, and also small packages containing
other matter, are delivered to destinations around the world. This can be used to
deposit cheques and to send orders to the bank to pay money to third parties.
Banks also normally use mail to deliver periodic account statements to customers.
• Telephone banking is a service provided by a financial institution which allows its
customers to perform transactions over the telephone. This normally includes bill
payments for bills from major billers (e.g. for electricity).
• Online banking is a term used for performing transactions, payments etc. over the
Internet through a bank, credit union or building society's secure website.
• Mobile banking is a method of using one's mobile phone to conduct simple
banking transactions by remotely linking into a banking network.
• Video banking is a term used for performing banking transactions or professional
banking consultations via a remote video and audio connection. Video banking
can be performed via purpose built banking transaction machines (similar to an
Automated teller machine), or via a videoconference enabled bank branch.

[edit] Types of banks

Banks' activities can be divided into retail banking, dealing directly with individuals and
small businesses; business banking, providing services to mid-market business; corporate
banking, directed at large business entities; private banking, providing wealth
management services to high net worth individuals and families; and investment banking,
relating to activities on the financial markets. Most banks are profit-making, private
enterprises. However, some are owned by government, or are non-profit organizations.

Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cash interest
rate. They generally provide liquidity to the banking system and act as the lender of last
resort in event of a crisis.

Types of retail banks


National Copper Bank, Salt Lake City 1911

• Commercial bank: the term used for a normal bank to distinguish it from an
investment bank. After the Great Depression, the U.S. Congress required that
banks only engage in banking activities, whereas investment banks were limited
to capital market activities. Since the two no longer have to be under separate
ownership, some use the term "commercial bank" to refer to a bank or a division
of a bank that mostly deals with deposits and loans from corporations or large
• Community Banks: locally operated financial institutions that empower
employees to make local decisions to serve their customers and the partners.
• Community development banks: regulated banks that provide financial services
and credit to under-served markets or populations.
• Postal savings banks: savings banks associated with national postal systems.
• Private banks: banks that manage the assets of high net worth individuals.
• Offshore banks: banks located in jurisdictions with low taxation and regulation.
Many offshore banks are essentially private banks.
• Savings bank: in Europe, savings banks take their roots in the 19th or sometimes
even 18th century. Their original objective was to provide easily accessible
savings products to all strata of the population. In some countries, savings banks
were created on public initiative; in others, socially committed individuals created
foundations to put in place the necessary infrastructure. Nowadays, European
savings banks have kept their focus on retail banking: payments, savings
products, credits and insurances for individuals or small and medium-sized
enterprises. Apart from this retail focus, they also differ from commercial banks
by their broadly decentralised distribution network, providing local and regional
outreach—and by their socially responsible approach to business and society.
• Building societies and Landesbanks: institutions that conduct retail banking.
• Ethical banks: banks that prioritize the transparency of all operations and make
only what they consider to be socially-responsible investments.
• Islamic banks: Banks that transact according to Islamic principles.

Types of investment banks

• Investment banks "underwrite" (guarantee the sale of) stock and bond issues,
trade for their own accounts, make markets, and advise corporations on capital
market activities such as mergers and acquisitions.
• Merchant banks were traditionally banks which engaged in trade finance. The
modern definition, however, refers to banks which provide capital to firms in the
form of shares rather than loans. Unlike venture capital firms, they tend not to
invest in new companies.

Both combined

• Universal banks, more commonly known as financial services companies, engage

in several of these activities. These big banks are very diversified groups that,
among other services, also distribute insurance— hence the term bancassurance, a
portmanteau word combining "banque or bank" and "assurance", signifying that
both banking and insurance are provided by the same corporate entity.

Other types of banks

• Islamic banks adhere to the concepts of Islamic law. This form of banking
revolves around several well-established principles based on Islamic canons. All
banking activities must avoid interest, a concept that is forbidden in Islam.
Instead, the bank earns profit (markup) and fees on the financing facilities that it
extends to customers.

Banks in the economy

Size of global banking industry

Worldwide assets of the largest 1,000 banks grew 16.3% in 2006/2007 to reach a record
$74.2 trillion. This follows a 5.4% increase in the previous year. EU banks held the
largest share, 53%, up from 43% a decade earlier. The growth in Europe’s share was
mostly at the expense of Japanese banks, whose share more than halved during this
period from 21% to 10%. The share of US banks remained relatively stable at around
14%. Most of the remainder was from other Asian and European countries.[8]

The United States has the most banks in the world in terms of institutions (7,540 at the
end of 2005) and possibly branches (75,000).[citation needed] This is an indicator of the
geography and regulatory structure of the USA, resulting in a large number of small to
medium-sized institutions in its banking system. As of Nov 2009, China's top 4 banks
have in excess of 67,000 branches (ICBC:18000+,
BOC:12000+,CCB:13000+,ABC:24000+) with an additional 140 smaller banks with an
undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004,
Germany, France, and Italy each had more than 30,000 branches—more than double the
15,000 branches in the UK.[8]

Bank crisis

Banks are susceptible to many forms of risk which have triggered occasional systemic
crises. These include liquidity risk (where many depositors may request withdrawals
beyond available funds), credit risk (the chance that those who owe money to the bank
will not repay it), and interest rate risk (the possibility that the bank will become
unprofitable, if rising interest rates force it to pay relatively more on its deposits than it
receives on its loans).

Banking crises have developed many times throughout history, when one or more risks
have materialized for a banking sector as a whole. Prominent examples include the bank
run that occurred during the Great Depression, the U.S. Savings and Loan crisis in the
1980s and early 1990s, the Japanese banking crisis during the 1990s, and the subprime
mortgage crisis in the 2000s. Usually, the governments bail out the bank through rescue
plan or individual public intervention.[9]