I.Com (Intermediate in Commerce) Banking Syllabus

Banking syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Banking in I.Com (Intermediate in Commerce), not a summary of it.

1. 1

   Introduction to Banking

   3 topics

   • Meaning and Evolution of Banking
   • Functions of a Bank
   • Importance of Banking in Economy
2. 2

   Types of Banks

   3 topics

   • Commercial Banks
   • Central Bank
   • Specialized and Islamic Banks
3. 3

   Commercial Banking

   3 topics

   • Functions of Commercial Banks
   • Credit Creation
   • Bank Deposits and Accounts
4. 4

   State Bank of Pakistan

   3 topics

   • Functions of the Central Bank
   • Monetary Policy
   • Credit Control Methods
5. 5

   Negotiable Instruments

   3 topics

   • Cheques
   • Bills of Exchange
   • Promissory Notes
6. 6

   Banking Services and Operations

   3 topics

   • Letter of Credit
   • Online and Electronic Banking
   • ATM and Plastic Money
7. 7

   Islamic Banking

   2 topics

   • Principles of Islamic Banking
   • Modes of Islamic Finance
8. 8

   International Banking and Foreign Exchange

   2 topics

   • Foreign Exchange
   • Financing of Foreign Trade

Banking flashcards for I.Com (Intermediate in Commerce)

25 of 53 cards from the Banking deck — real questions with worked answers.

1. What is the literal origin of the word "bank"?

   It derives from the Italian word "banco" (also linked to French "banque" and German "banck"), meaning a bench or table on which early money-changers conducted their dealings.

2. Define a bank.

   A bank is a financial institution that accepts deposits of money from the public, repayable on demand or otherwise, and lends or invests that money to earn a profit, while providing related financial services.

3. Name the three classes of people whose activities contributed to the evolution of modern banking.

   The merchants (traders), the goldsmiths, and the moneylenders.

4. How did goldsmiths contribute to the evolution of banking?

   People deposited gold and valuables with goldsmiths for safekeeping; the goldsmiths issued receipts that began circulating as money, and they started lending out surplus deposits at interest, giving rise to modern banking practices.

5. What is considered the oldest/earliest established bank still cited in banking history?

   The Bank of Venice (established 1157) is generally regarded as the first/oldest public bank; the Bank of Barcelona (1401) and Bank of England (1694) were other early milestones.

6. State two primary functions of a bank.

   (1) Accepting deposits from the public, and (2) Advancing loans/credit to borrowers.

7. What are the two broad categories of a bank's functions?

   Primary functions (accepting deposits and advancing loans) and secondary functions (agency services and general utility services).

8. List three agency functions performed by a bank.

   Collecting and paying cheques/bills, transferring funds, acting as an agent for buying and selling securities, paying insurance premiums and bills, and acting as trustee or executor.

9. List three general utility (utility) functions of a bank.

   Providing locker/safe-deposit facilities, issuing letters of credit and travellers' cheques, dealing in foreign exchange, and underwriting securities.

10. Why is banking important to the economy? Give two reasons.

    It mobilises savings and channels them into productive investment, promotes capital formation, encourages trade and industry, facilitates payments, and helps implement monetary policy and economic development.

11. How do banks promote capital formation in an economy?

    By collecting scattered small savings from the public as deposits and making them available as loans for investment in industry, agriculture and commerce, thereby increasing productive capital.

12. Define a commercial bank.

    A commercial bank is a profit-seeking financial institution that accepts demand and time deposits from the public and provides short- and medium-term loans and advances to trade, industry and commerce.

13. Give two examples of commercial banks operating in Pakistan.

    Habib Bank Limited (HBL), United Bank Limited (UBL), National Bank of Pakistan (NBP), Muslim Commercial Bank (MCB), and Allied Bank Limited (ABL).

14. Define a central bank.

    A central bank is the apex monetary authority of a country that regulates the money supply and credit, issues currency, acts as banker to the government and to commercial banks, and controls the entire banking system.

15. What is the name of Pakistan's central bank and when was it established?

    The State Bank of Pakistan (SBP), established on 1st July 1948.

16. What is a specialized bank? Give two Pakistani examples.

    A specialized bank is set up to provide finance and services to a particular sector of the economy. Examples in Pakistan: Zarai Taraqiati Bank Limited (ZTBL, agriculture), House Building Finance Corporation (HBFC, housing), and SME Bank (small and medium enterprises).

17. Define an Islamic bank.

    An Islamic bank is a financial institution that conducts banking business in accordance with Shariah (Islamic law), operating on the basis of profit-and-loss sharing and avoiding interest (Riba).

18. What is the basic principle that distinguishes Islamic banking from conventional banking?

    Islamic banking prohibits Riba (interest) and operates instead on profit-and-loss sharing and asset-backed/trade-based modes of financing.

19. Define the Islamic banking mode "Mudarabah."

    Mudarabah is a partnership in which one party provides the capital (Rab-ul-Maal) and the other provides the skill/management (Mudarib); profit is shared at an agreed ratio while any financial loss is borne by the capital provider.

20. Define the Islamic banking mode "Musharakah."

    Musharakah is a joint-venture partnership in which all partners contribute capital and share profits at an agreed ratio, while losses are shared in proportion to each partner's capital contribution.

21. What is "Murabaha" in Islamic banking?

    Murabaha is a cost-plus sale in which the bank buys an asset and sells it to the customer at the original cost plus an agreed, disclosed profit margin, usually on a deferred-payment basis.

22. What is "Ijarah" in Islamic banking?

    Ijarah is an Islamic leasing arrangement in which the bank purchases an asset and leases it to the customer for an agreed rental over a fixed period, with ownership remaining with the bank.

23. List the two primary functions of commercial banks.

    Accepting deposits from the public and advancing loans and credit (lending).

24. Name three forms in which commercial banks advance loans.

    Cash credit, overdraft, discounting of bills of exchange, and term/demand loans.

25. What is an "overdraft" facility provided by a commercial bank?

    An overdraft allows a current-account holder to withdraw more money than the balance in the account up to an agreed limit, with interest charged only on the amount actually overdrawn.

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