Topics
Secretary
- Concepts of Secretary
- Types of Secretaries
- Functions of Secretary
- Qualities of Secretary
- Distinction of a Secretary
Joint Stock Company
- Evolution of Business Organization
- Joint Stock Company
- Distinction Between Private Company and Public Company
Formation of a Company
- Formation of a Company
- Stages in the Formation of a Company
- Promotion
- Incorporation of a Company
- Commencement of Business
Documents Related to Formation of a Company
- Documents Related to Formation of a Company
- Memorandum of Association(MOA)
- Articles of Association(AOA)
- Prospectus
Members of a Company
- Members of a Company
- Eligibility of Membership
- Acquisition of Membership
- Cessation/Termination of Membership
- Rights, Duties and Liabilities of a Member
Directors and Key Managerial Personnel of a Company
- Directors
- Key Managerial Personnel (KMP)
- Distinction Between Director and Managing Director
Company Meetings - 1
- Company Meetings
- Essentials of a Valid Meeting
- Properly Convened
- Properly Constituted
- Properly Conducted
- Distinction
Company Meetings - 2
- Company Meetings
- Types of Meeting - Shareholders Meetings
- Types of Meeting - Directors Meetings
- Types of Meeting - Creditors Meeting
- Functions of Secretary Related with Annual General Meeting
Business Communication Skills of Secretary
- Business Communication
- Types of Business Communication
- Methods of Communication
- Merits of Written Communication
- Modes of Electronic Communication
- Essential Skills for Effective Communication
- Roles of Secretary in Business Communication
Correspondence with Directors
- Precautions to Be Taken by the Secretary While Corresponding with Directors
- Circumstances Under Which a Secretary Has to Enter into Correspondence with Directors
Correspondence with Banks
- Concept of Bank
- Banking > Functions of Commercial Bank
- Precautions to Be Taken by a Secretary
- Circumstances Under Which a Secretary Has to Enter into Correspondence with Banks
Correspondence with Statutory Authorities
- Ministry of Corporate Affairs (MCA)
- Registrar of Companies (ROC)
- National Company Law Tribunal (NCLT)
- National Company Law Appellate Tribunal (NCLAT)
- Securities and Exchange Board of India (SEBI)
- Precaution to Be Taken While Corresponding with Statutory Authorities
- Definition: Concept of Bank
- Background: Money in the Modern Economy
- Three Essential Functions of a Bank
- Bank vs. Non-Banking Financial Institutions
- The Unique Characteristic: Credit / Money Creation
- History of Banking
- Key Points: Concept of Bank
Definition: Concept of Bank
- “A bank Collects money from those who have it to spare or who are saving it out of their incomes, and it lends this money to those who require it.” — Crowther
- According to the Indian Companies (Amendment) Act, 2000, banking means:
“Accepting for the purpose of lending or depositing money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft or otherwise.”
Background: Money in the Modern Economy
Modern money consists of two components:
- Currency — Notes and coins issued by the Central Bank (in India, the Reserve Bank of India)
- Deposit Money — Created by commercial banks through their lending activities
Currency forms only a small fraction of a country's total money supply. The greater proportion consists of money created by commercial banks.
Three Essential Functions of a Bank
All three functions are equally essential. No institution qualifies as a bank unless it performs all three.
Bank vs. Non-Banking Financial Institutions
The following comparison — drawn directly from the source — clarifies why only commercial banks qualify as banks:
Why Post Office Savings Bank is NOT a bank:
Although it accepts deposits from the public, it does not lend and therefore does not create money. Hence, it is not regarded as a bank.
Why LIC and UTI are NOT banks:
They accept deposits from the public and lend to others, but they do not have the power to create money, which is the unique and exclusive characteristic of commercial banks.
The Unique Characteristic: Credit / Money Creation
"Creation of money is the unique characteristic of commercial banks. Their debts circulate as money in the economy. Banks have the power to 'create' and 'destroy' money through their lending activities. Money created by commercial banks is known as deposit money or bank money."
How Banks Create Money — The Process
Banks operate on the principle of Fractional Reserve Banking — they are legally required to keep only a fraction of total deposits as cash reserves (called the Legal Reserve Ratio / CRR) and are free to lend out the rest.
History of Banking
The origin of banking can be traced back to three key figures who operated early forms of banking:
Merchants → Money-lenders → Goldsmiths →Modern Commercial Banks
Among the three, goldsmiths took the leading role. They accepted gold/valuables for safekeeping and issued paper receipts. Over time, these receipts began circulating as money, and goldsmiths discovered they could lend out the deposited gold because no depositor ever came to withdraw simultaneously. This formed the foundation of modern fractional reserve banking.
Modern banking gradually evolved through a series of modifications to meet society's growing needs.
Key Points: Concept of Bank
- Modern money = Currency (by RBI) + Deposit Money (by Commercial Banks)
- A bank must perform all three functions: accept deposits + lend + create money
- Credit/money creation is the unique characteristic that separates commercial banks from all other financial institutions
- Banks use fractional reserve banking — keeping a small % as reserves (CRR) and lending the rest
- Money Multiplier = 1/CRR — an initial deposit multiplies through the banking system
- Post Office Savings Bank, LIC, and UTI are non-banking financial institutions — they cannot create money
- Modern banking evolved from goldsmiths, who first issued paper receipts for gold deposits.
