What is a Bank ?
Introduction : Finance is the life blood of trade,
commerce and industry. Now-a-days,
bank money acts as the backbone of
modern business. Development of any
country mainly depends upon the
banking system. The term bank is derived from the
French word Banco which means
a Benchor Money exchange table . In olden days, European money lenders
or money changers used to display
(show) coins of different countries in
big heaps (quantity) on benches or
tables for the purpose of lending or
exchanging. A bank is a financial institution which
deals with deposits and advances and
other related services. It receives
money from those who want to save in
the form of deposits and it lends money
to those who need it.
- Definition of a Bank
Oxford Dictionary defines a bank as "an
establishment for custody of money,
which it pays out on customer's order."
- Characteristics / Features of a Bank:
1. Dealing in Money: Bank is a financial institution which
deals with other people's money i.e.
money given by depositors.
2. Individual / Firm / Company : A bank may be a person, firm or a
company. A banking company means a
company which is in the business of
banking.
3. Acceptance of Deposit: A bank accepts money from the people
in the form of deposits which are
usually repayable on demand or after
the expiry of a fixed period. It gives
safety to the deposits of its customers.
It also acts as a custodian of funds of its customers.
4. Giving Advances : A bank lends out money in the form of
loans to those who require it for
different purposes.
5. Payment and Withdrawal: A bank provides easy payment and
withdrawal facility to its customers in
the form of cheques and drafts, It also
brings bank money in circulation. This
money is in the form of cheques, drafts,
etc.
6. Agency and Utility Services : A bank provides various banking
facilities to its customers. They include
general utility services and agency
services.
7. Profit and Service Orientation: A bank is a profit seeking institution
having service oriented approach.
8. Ever increasing Functions Banking is an evolutionary concept.
There is continuous expansion and
diversification as regards the functions,
services and activities of a bank.
9. Connecting Link: A bank acts as a connecting link
between borrowers and lenders of
money. Banks collect money from
those who have surplus money and give the same to those who are in need
of money.
10. Banking Business: A bank's main activity should be to do
business of banking which should not
be subsidiary to any other business.
Introduction : Finance is the life blood of trade,
commerce and industry. Now-a-days,
bank money acts as the backbone of
modern business. Development of any
country mainly depends upon the
banking system. The term bank is derived from the
French word Banco which means
a Benchor Money exchange table . In olden days, European money lenders
or money changers used to display
(show) coins of different countries in
big heaps (quantity) on benches or
tables for the purpose of lending or
exchanging. A bank is a financial institution which
deals with deposits and advances and
other related services. It receives
money from those who want to save in
the form of deposits and it lends money
to those who need it.
- Definition of a Bank
Oxford Dictionary defines a bank as "an
establishment for custody of money,
which it pays out on customer's order."
- Characteristics / Features of a Bank:
1. Dealing in Money: Bank is a financial institution which
deals with other people's money i.e.
money given by depositors.
2. Individual / Firm / Company : A bank may be a person, firm or a
company. A banking company means a
company which is in the business of
banking.
3. Acceptance of Deposit: A bank accepts money from the people
in the form of deposits which are
usually repayable on demand or after
the expiry of a fixed period. It gives
safety to the deposits of its customers.
It also acts as a custodian of funds of its customers.
4. Giving Advances : A bank lends out money in the form of
loans to those who require it for
different purposes.
5. Payment and Withdrawal: A bank provides easy payment and
withdrawal facility to its customers in
the form of cheques and drafts, It also
brings bank money in circulation. This
money is in the form of cheques, drafts,
etc.
6. Agency and Utility Services : A bank provides various banking
facilities to its customers. They include
general utility services and agency
services.
7. Profit and Service Orientation: A bank is a profit seeking institution
having service oriented approach.
8. Ever increasing Functions Banking is an evolutionary concept.
There is continuous expansion and
diversification as regards the functions,
services and activities of a bank.
9. Connecting Link: A bank acts as a connecting link
between borrowers and lenders of
money. Banks collect money from
those who have surplus money and give the same to those who are in need
of money.
10. Banking Business: A bank's main activity should be to do
business of banking which should not
be subsidiary to any other business.
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