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    Mbi Assign 1

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    Martha Oka
    Bank regulation refers to rules set by governments and central banks to oversee banking institutions and ensure consumer protection and transparency. Regulations promote safety, monetary stability, efficient allocation of resources, and equal access to banking services. Nonbank banks offer limited financial services like loans but cannot accept deposits like traditional banks. ATMs allow customers to access basic banking functions without a human teller by using debit or credit cards to withdraw cash, check balances, and make deposits at electronic machines.

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    Mbi Assign 1

    Uploaded by

    Martha Oka
    13 views3 pages
    Bank regulation refers to rules set by governments and central banks to oversee banking institutions and ensure consumer protection and transparency. Regulations promote safety, monetary stability, efficient allocation of resources, and equal access to banking services. Nonbank banks offer limited financial services like loans but cannot accept deposits like traditional banks. ATMs allow customers to access basic banking functions without a human teller by using debit or credit cards to withdraw cash, check balances, and make deposits at electronic machines.

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    MBI ASSIGN 1

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    Bank regulation refers to rules set by governments and central banks to oversee banking institutions and ensure consumer protection and transparency. Regulations promote safety, monetary stability, efficient allocation of resources, and equal access to banking services. Nonbank banks offer limited financial services like loans but cannot accept deposits like traditional banks. ATMs allow customers to access basic banking functions without a human teller by using debit or credit cards to withdraw cash, check balances, and make deposits at electronic machines.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views3 pages

    Mbi Assign 1

    Uploaded by

    Martha Oka
    Bank regulation refers to rules set by governments and central banks to oversee banking institutions and ensure consumer protection and transparency. Regulations promote safety, monetary stability, efficient allocation of resources, and equal access to banking services. Nonbank banks offer limited financial services like loans but cannot accept deposits like traditional banks. ATMs allow customers to access basic banking functions without a human teller by using debit or credit cards to withdraw cash, check balances, and make deposits at electronic machines.

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    1.

    a) Definition of key terms

    Bank Regulation

    Bank regulation refers to the formulation and implementation of rules and restrictions by the
    government or central bank to regulate banking institutions. The requirements, restrictions,
    and guidelines ensure consumer protection and operational transparency.

    Banking:

    Banking is an industry that handles cash, credit, and other financial transactions. Banks provide
    a safe place to store extra cash and credit. They offer savings accounts, Certificates of deposit,
    and checking accounts.

    Banking Sector

    Banking Sector therefore refers to a network or a group of financial institutions that provide
    banking services to corporate and individual customers.

    Reasons why they regulate the banking sector.

    1. Safety and Soundness

    Banks accept huge deposits from the general public. If they invest such public deposits in risky
    projects or concentrate their loan and advances in a few sectors or borrowers or do not
    diversify their investment portfolio, they are taking too much risk.

    2. Monetary Stability

    Monetary instability adversely affects the economic growth, interest rate, price level, and
    standard of living of the people. So, central banks control the money supply in their respective
    nations through monetary policy.

    3. Efficient and Competitive Financial System

    Only an efficient and competitive financial system can allocate the resources efficiently for
    economic development.
    4. Protection of Customer

    Regulatory authorities regulate the banks to protect the customers from any discrimination by
    banks. Borrowers should have equal opportunities to obtain loans from the banks. Depositors
    also should have equal opportunities to deposit their money in banks.

    5. Integrity of National Payment System

    The national payment system is an important component of a country’s financial system. It is a


    configuration of institutions supported by an infrastructure of technology-driven processes and
    practices to facilitate commercial and financial transfers between buyers and sellers.

    b) Definition of a non-bank bank

    A nonbank bank refers to a company that offers limited financial services similar to a traditional
    bank but typically does not take deposits like a traditional bank would. Nonbank banks can offer
    financial products and services to consumers, such as giving loans or accepting deposits, but
    they cannot offer both.

    How nonbank banks work

    In general, when you want to open a checking or savings account, you know a traditional bank
    would be the first place to go. However, at some point, you may have utilized the services of a
    nonbank bank without even realizing it.

    Traditional full-service banks can offer customers services like accepting demand deposits into
    checking accounts as well as making commercial loans to businesses. However, nonbank banks
    are considered limited-purpose financial institutions because they have chosen to forego one of
    those services. In other words, they can do one or the other, but not both.

    Automated Teller Machine(ATM)

    An Automated Teller Machine refers to an electronic machine that’s used for financial
    transactions.

    How does an ATM work?


    An ATM allows customers with credit or debit cards to carry out basic banking transactions
    without the aid of a human bank teller. Customers can use them to withdraw cash, check their
    bank balance or get a printed balance statement. Some ATMs also allow customers to make
    cash deposits and move funds between accounts.

    References:

    1. Bank regulations-wallstreetmojo team


    2. Reasons for bank regulations-Gyanko Vandar
    3. Nonbank banks by Deshena Woodard
    4. Cite GoCardless ATM-Sep 2021

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