Evolution and History of Banking: A Comprehensive Overview
Definition of Banking
The term bank refers to an institution that
deals in
money
, accepts
deposit
s, makes
loans
, and derives a profit from the
difference in the
interest rates(not
applicable)
paid and charged respectively.
Some banks also have the power to
create
money.
A bank must always have
cash balances
on
hand in order to pay its depositors upon
demand or when the amounts credited to
them become due.
It must also keep a
proportion of its assets
in forms that can readily be converted into
cash. Because it the only way confidence in
the banking system can be maintained.
Banking is of ancient origin, though little is
known about it prior to the 13 century.
Many of the early ―banks‖ dealt primarily
in
coin
,and the supplying of
foreign
and
domestic
coin of the correct weight and
fineness
Another important early group of banking
institutions was the
merchant bankers
, who
dealt both in goods and in bills of exchange,
providing for the remittance of money and
payment of accounts at a distance.
Another form of early banking activity was
the
acceptance of deposits
. These might
derive from the deposit of money or
valuables for safekeeping or for purposes of
transfer to another party
the idea of banks began as long ago as 1,800
BC in
Babylon
. In those days money lenders
made loans to people. In Greece and Rome
banks made loans and accepted deposits.
However with the collapse of the
Roman
Empire
trade slumped and banks temporarily
vanished. However banking began to revive
again in the 12th and 13th centuries in the
Italian towns of Florence and Genoa.
In the
16
th century a German family called
the Fuggers from Augsburg became very
important bankers
English bankers in particular had, by the
17 th century, begun to develop a deposit
banking business, and the techniques they
evolved were to prove influential
elsewhere. The London
goldsmiths
kept
money and valuables in safe custody for their
customers.
The first bank notes issued in Europe were by
the
Bank of Stockholm in 1661
.) Some
commercial banks are still permitted to
issue their own notes, but in most
countries, this has become a prerogative of
the central bank.
The following list details the institutions that
have provided banking services in Somalia
since 1920.
1920
: The first bank opened in Southern
Somalia was the Banca d’Italia (Central Bank
of Italy) which established its branch in
Mogadishu.
1925
The bank opened also another branch
in Kisimayo .
1930:
The British Government opened in
Northern Somalia the Government Savings
Bank with the objectives to encourage the
people to save parts of their income
1932:
In Mogadishu a branch of Cassa di
Risparmio di Torino, an Italian commercial
Bank, opens its office.
1936:
A branch of Banco di Roma, an Italian
commercial bank, was established in
Mogadishu. In the same year Banca d’Italia
opened its third branch in the city of Merca.
1938
: Banco di Napoli took over the branch
of Cassa di Risparmio di Torino branch in
Mogadishu.
1941:
All Italian banks were closed by the
British Administration.
1943:
The Barclays Bank , a British
Commercial Bank, was opened in
Mogadishu,This coincides when the British
Government Army took control the southern
regions of Somalia.
1950:
Italian commercial banks, such as
Banco di Roma and Banco di Napoli
re‐ope‐ned their branches in Mogadishu.
1950
: The Italian Trusteeship Administration
(A.F.I.S.) established on 8Th April, 1950 a new
c
urrency institution regulator “ Cassa per la
circolazione monetaria della Somalia” with
its head quarter in Rome.
1952
: In Hargeysa for the first time was
opened a branch of National Bank of India, a
commercial bank owned by the British
Government.
1954 : T
he National Bank of India opens
another branch in Berbera.
1954
: In Mogadishu was established the first
Government owned bank the “ Credito
Somalo” founded by Decree No.2 of 22
February
1954
issued by A.F.I.S.
1960
: Was established the Central Bank of
Somalia named “Somali National Bank” by
Decree No.3 of 30 June, 1960 and converted
into Law No.2 of 13 January, 1961.
The Somali National Bank has been authorized to
extend to its activities to all the regions of the
Republic of Somalia and opened the following
branches:
Hargeysa 20 August 1961
Berbera 27 January 1962
Kismayo 5 November 1962
Bosaso 26 March 1963
Qardho 26 March 1963
Burao 29 March 1963
Galkaio 5 November 1963
Baidoa 4 January 1965
Beled Weyne 6 January 1965
1961:
Banque de Port Said, an Egyptian
commercial bank, opened a branch in
Mogadishu, and operated until 7 thof May,
1970.
1968
: The Somali Development Bank was
established by Decree No.2 of 28 February
1968.
1968:
in Mogadishu the National and
Grindlays Bank established a new branch and
also the bank were operating in Hargeysa
and Berbera.
1968
: the Credito Somalo was closed due of
liquidity crises and all its assets and liabilities
were transferred to the Somali National
Bank.
1971
The establishment of two public
commercial banks.
On the 1 st January, 1971 two commercial
banks were established:
1. Somali Savings and Credit Bank
2. Somali Commercial Ban
1975
: In 1975 there was a change to the
structure of banking system in Somalia. The
two commercial banks were amalgamated
into the Commercial and Savings Bank of
Somalia, at the same time, the Somali
National Bank was
renamed
the Central Bank
of Somalia.
1990
: In 1990 following an agreement with
the I.M.F. on 1 St July, 1990 implementing the
free private oriented economy, a
new
commercial bank
was established “Somali
Commercial Bank” by Presidential Decree
No. 4 of 16 December, 1989, with a capital of
So.Shs. 2 billion divided into two thousand
shares of one million So.Shs. Each
One billion was paid jointly by the
Government and the Central Bank of Somalia
and one billion left to the private investors of
which only 22 shares were subscribed.
In conclusion, the under listed banks were
operating in Somalia at 30 December, 1990:
1. Central Bank of Somalia
2. Commercial and Savings Bank of Somalia
3. Somali Development Bank
4. Somali Commercial Bank
Banking has ancient origins, dating back to Babylon in 1800 BC. Over time, banks evolved from dealing in coins to accepting deposits and making loans. The collapse of the Roman Empire saw a decline in banking, only to be revived in Italian towns like Florence and Genoa. English bankers in the 17th century pioneered deposit banking techniques that shaped the modern banking system we know today.
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Presentation Transcript
Definition of Banking The term bank refers to an institution that deals in money, accepts deposits, makes loans, and derives a profit from the difference in the interest rates(not applicable) paid and charged respectively. Some banks also have the power to createmoney.
A bank must always have cash balances on hand in order to pay its depositors upon demand or when the amounts credited to them become due. It must also keep a proportion of its assets in forms that can readily be converted into cash. Because it the only way confidence in the banking system can be maintained.
Banking is of ancient origin, though little is known about it prior to the 13 century. Many of the early banks dealt primarily in coin ,and the supplying of foreign and domestic coin of the correct weight and fineness
Another important early group of banking institutions was the merchant bankers, who dealt both in goods and in bills of exchange, providing for the remittance of money and payment of accounts at a distance.
Another form of early banking activity was the acceptance of deposits. These might derive from the deposit of money or valuables for safekeeping or for purposes of transfer to another party
the idea of banks began as long ago as 1,800 BC in Babylon. In those days money lenders made loans to people. In Greece and Rome banks made loans and accepted deposits.
However with the collapse of the Roman Empiretrade slumped and banks temporarily vanished. However banking began to revive again in the 12th and 13th centuries in the Italian towns of Florence and Genoa. In the 16th century a German family called the Fuggersfrom Augsburg became very important bankers
English bankers in particular had, by the 17 thcentury, begun to develop a deposit banking business, and the techniques they evolved were to prove influential elsewhere. The London goldsmiths kept money and valuables in safe custody for their customers.
The first bank notes issued in Europe were by the Bank of Stockholm in 1661.) Some commercial banks are still permitted to issue their own notes, but in most countries, this has become a prerogative of the central bank.
The following list details the institutions that have provided banking services in Somalia since 1920. 1920: The first bank opened in Southern Somalia was the Bancad Italia(Central Bank of Italy) which established its branch in Mogadishu. 1925 The bank opened also another branch in Kisimayo.
1930: The British Government opened in Northern Somalia the Government Savings Bank with the objectives to encourage the people to save parts of their income 1932: In Mogadishu a branch of Cassa di RisparmiodiTorino, an Italian commercial Bank, opens its office.
1936: A branch of BancodiRoma, an Italian commercial bank, was established in Mogadishu. In the same year Bancad Italia opened its third branch in the city of Merca. 1938: BancodiNapoli took over the branch of Cassa di RisparmiodiTorino branch in Mogadishu. 1941: All Italian banks were closed by the British Administration.
1943: The Barclays Bank , a British Commercial Bank, was opened in Mogadishu,Thiscoincides when the British Government Army took control the southern regions of Somalia. 1950: Italian commercial banks, such as BancodiRoma and BancodiNapoli re ope nedtheir branches in Mogadishu.
1950: The Italian Trusteeship Administration (A.F.I.S.) established on 8Th April, 1950 a new currency institution regulator Cassa per la circolazione monetaria della Somalia with its head quarter in Rome. 1952: In Hargeysafor the first time was opened a branch of National Bank of India, a commercial bank owned by the British Government.
1954 : The National Bank of India opens another branch in Berbera. 1954: In Mogadishu was established the first Government owned bank the Credito Somalo founded by Decree No.2 of 22 February 1954issued by A.F.I.S.
1960 : Was established the Central Bank of Somalia named Somali National Bank by Decree No.3 of 30 June, 1960 and converted into Law No.2 of 13 January, 1961.
The Somali National Bank has been authorized to extend to its activities to all the regions of the Republic of Somalia and opened the following branches: Hargeysa 20 August 1961 Berbera 27 January 1962 Kismayo 5 November 1962 Bosaso 26 March 1963 Qardho 26 March 1963 Burao 29 March 1963 Galkaio 5 November 1963 Baidoa 4 January 1965 BeledWeyne 6 January 1965
1961: Banquede Port Said, an Egyptian commercial bank, opened a branch in Mogadishu, and operated until 7 thofMay, 1970. 1968: The Somali Development Bank was established by Decree No.2 of 28 February 1968.
1968: in Mogadishu the National and GrindlaysBank established a new branch and also the bank were operating in Hargeysa and Berbera. 1968: the CreditoSomalowas closed due of liquidity crises and all its assets and liabilities were transferred to the Somali National Bank.
1971 The establishment of two public commercial banks. On the 1 stJanuary, 1971 two commercial banks were established: 1. Somali Savings and Credit Bank 2. Somali Commercial Ban
1975: In 1975 there was a change to the structure of banking system in Somalia. The two commercial banks were amalgamated into the Commercial and Savings Bank of Somalia, at the same time, the Somali National Bank was renamedthe Central Bank of Somalia.
1990: In 1990 following an agreement with the I.M.F. on 1 St July, 1990 implementing the free private oriented economy, a new commercial bankwas established Somali Commercial Bank by Presidential Decree No. 4 of 16 December, 1989, with a capital of So.Shs. 2 billion divided into two thousand shares of one million So.Shs. Each
One billion was paid jointly by the Government and the Central Bank of Somalia and one billion left to the private investors of which only 22 shares were subscribed.
In conclusion, the under listed banks were operating in Somalia at 30 December, 1990: 1. Central Bank of Somalia 2. Commercial and Savings Bank of Somalia 3. Somali Development Bank 4. Somali Commercial Bank
