Uses of Fund
The banks cannot simply keep the resources with them without investing them profitably outside. Before a bank can plan intelligently for the employment of funds to advantage, he must be completely familiar with the nature 0 the funds with which he has to work.
The total working funds may vary from bank to bank depending upon the capital, reserves, deposits and borrowings of each bank; but the bank's own funds, viz, paid- up share capital, reserves and unallocated profits as stated earlier, accounts for only a small percentage of working funds. The contributions coming from various deposits in Current, Savings, Fixed and other Accounts constitute the major part of bank's funds. As these deposits from the public are payable on demand, or at a very short notice, banker cannot make advance whole of them. A part of the deposit is kept in cash to meet withdrawals of the depositors and a portion in the form of other liquid assets to maintain statutory cash reserve with the Central Bank, i.e., Bangladesh Bank.
The Premier Bank Limited do not lockup their funds for long periods. They usually grant short term advances which are utilized to meet the working capital requirements of the borrowers repayable at short notice. Only a small portion of a bank's demand and time liabilities is advanced on a long term basis where the banker usually insists on a regular repayment by the borrower. Thus The PBL has to employ his funds wisely so that he is able to meet the obligations and at the same time make maximum profit.
The banks cannot simply keep the resources with them without investing them profitably outside. Before a bank can plan intelligently for the employment of funds to advantage, he must be completely familiar with the nature 0 the funds with which he has to work.
The total working funds may vary from bank to bank depending upon the capital, reserves, deposits and borrowings of each bank; but the bank's own funds, viz, paid- up share capital, reserves and unallocated profits as stated earlier, accounts for only a small percentage of working funds. The contributions coming from various deposits in Current, Savings, Fixed and other Accounts constitute the major part of bank's funds. As these deposits from the public are payable on demand, or at a very short notice, banker cannot make advance whole of them. A part of the deposit is kept in cash to meet withdrawals of the depositors and a portion in the form of other liquid assets to maintain statutory cash reserve with the Central Bank, i.e., Bangladesh Bank.
The Premier Bank Limited do not lockup their funds for long periods. They usually grant short term advances which are utilized to meet the working capital requirements of the borrowers repayable at short notice. Only a small portion of a bank's demand and time liabilities is advanced on a long term basis where the banker usually insists on a regular repayment by the borrower. Thus The PBL has to employ his funds wisely so that he is able to meet the obligations and at the same time make maximum profit.
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