Anchoring Matter for Fresher Party

Topics: Central bank, Federal Reserve System, Monetary policy Pages: 5 (2149 words) Published: November 25, 2012
Meaning of Bank
It is generally said that the word “BANK” has been originated in Italy. In the middle of 12th century there was a great financial crisis in Italy due to war. To meet the war expenses, the government of that period imposed a forced subscribed loan on citizens of the country at the interest of 5% per annum. Such loans were known as Compara, Mintuo etc. The most common name was Monte. In Germany the word Monte was named as Bank or Banke. According to some writers, the word Bank has been derived from the word Banke. It is also said that the word Bank has been derived from the word Banco which means a banch. The Jews money lenders in Italy used to transact their business sitting on banches at different market places. When any of them used to feel to meet his obligations, his banco or banch would be broken by the angry creditors. The word Bankrupt seems to be originated from broken banco. Since, the banking system has been originated from money lending business, it is rightly argued that the word Bank has been originated from the world banco. Today the word bank is used as a comprehensive term for a number institutions carrying on certain kinds of financial business. In practice, the work Bank means which borrows money from one class of people and again lends money to another class of people for interest or profit. Definition of a Bank

Oxford Dictionary defines a bank as "an establishment for custody of money, which it pays out on customer's order." Definition of banking
In general terms, the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn a profit.

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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. 11. Name Identity
A bank should always add the word "bank" to its name to enable people to know that it is a bank and that it is dealing in money. Type 1. Saving Banks
Saving banks are established to create saving habit among the people. These banks are helpful for salaried people and low income groups. The deposits collected from customers are invested in bonds, securities, etc. At present most of the commercial banks carry the functions of savings banks. Postal department also performs the functions of saving bank. Type 2. Commercial...
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