THE ROLE OF FINANCIAL INSTITUTIONS IN PROMOTING

Transcript:THE ROLE OF FINANCIAL INSTITUTIONS IN PROMOTING:
THE ROLE OF FINANCIAL INSTITUTIONS IN PROMOTING ENTREPRENEURSHIP ZICA CONFERENCE – AUGUST 2018 Presented By: Simangolwa Shakalima Managing Director Investrust Bank Plc Institutions/organizations that provide financial services for their clients, members and society. Most important financial service provided is acting as financial intermediaries – collect funds from the public and place them in financial assets such as deposits, loans and bonds (rather than tangible property) Plays an indispensable role in overall development of a country Conduit for transfer of resources from net savers to net borrowers (i.e. from those who spend less than their earnings to those who spend more than their earnings Mostly regulated by government Financial institutions – what are they? 2 FI’s: include Banks, microfinance entities, credit unions, asset management firms, building societies and stock brokerages Responsible for distributing financial resources in a planned way to potential users Performed in following ways: Accepting deposits Providing Agricultural loans Providing Commercial loans Providing Real estate Loans Providing Mortgage loans Collaterised financing Issuing Share Certificates Functions of Financial Institutions 3 4 FI LANDSCAPE IN ZAMBIA Transformative function of Financial Institutions 5 COMMERCIAL BANKS Banking institutions that accept deposits (repayable on demand) and grant short-term loans and advances to customers In addition to giving short-term loans, commercial banks also give medium-term and long term loans to business enterprises Increasingly, they are also providing housing loans on a long-term basis to individuals. Providers of depository and transaction services. These activities are major sources of creating money. Major source of providing loans and other credit facilities to clients TYPES OF COMMERCIAL BANKS Public Sector Banks: where majority stake is held by government e.g. ZICB (IDC) Investrust (ZCCM-IH), ZANACO, IZB: Private Sector Banks: majority of share capital of the Bank is held by private individuals. Registered as companies with limited liability Commercial Bank’s Role as a Financial Institution 6 Primary functions Accepting deposits Granting loans and advances Secondary functions Issuing letters of credit, bank drafts, bank guarantees, travelers cheques etc Undertaking safe custody of valuables, important document and securities by providing safe deposit vaults or lockers Providing customers with facilities of foreign exchange dealings Transferring money from one account to another; and from one branch to another branch of the bank through cheque, pay order, demand draft (transfers and payments) Banking products/functions of Commercial Banks 7 Background Factors Economic Factors Rewards Motivational Factors Entrepreneurship Education, training & experience Family background Support System Financial conditions