The term Bank derives from the Italian word banco, which means "desk/bench", used to make transactions above a desk covered by a green tablecloth. Banks are among the most important financial institution in the economy. Bank is the intermediary financial institution it takes deposit from the surplus unit and provide loan to the deficit unit. The various definition of bank have been given by many writers; among those some definitions are as follows, * A bank is a financial organization that deals in money and credit. * A bank is an office or institution for the lending, keeping, exchanging etc of money. * Bank is a financial intermediary accepting deposits and granting loans; offers the widest range of services of any financial institution and in return receives payments from them. * Banks are different to other businesses as Banks do not sell goods to the customer but sell financial services. * A Bank is a business organization that receipts & payment funds to their customers.
In final we can say that a bank is an institution the principle function of which is to collect the unutilized money of the people and to lend it to others.
According to Oxford English Dictionary “Banking is the business of a banker, the keeping or management of a bank” According to Indian banking law section-5(1) “Banking means the accepting for the purpose of lending or investment of deposit or money from the public, repayable on demand or otherwise, and withdrawn able by cheque, draft, and order or otherwise Banks view point: All of the activities of bank are called banking. Clients view point: All of the activities of clients that are related with bank are called banking.
According to British Stampt Act, 1881“any person carrying on the business of banking is a banker” According to G.Crowther, “A bank is a dealer in debt –his own and other peoples.” A banker is a person who deals with the money of others; but he often lends his own money, and when thus acting he is one of the two original parties.
Types of Bank:
Bank is mainly classified by two types
* Central Bank
* Commercial Bank
Central Bank is a bank to which it has been entrusted the duty of regulating the volume of currency and credit in the country. According to Dee kock, “The Central Bank is a Banking system in which a single bank has either a complete or residuary monopoly of note issue.” Functions of Central Bank
General Function of Central Bank
* Issue of Notes and coins
* Credit Control
* Controlling Foreign Exchange and Maintain Value of home Currency * Maintain Favorable Foreign Exchange Reserve
* Developing Money Market
Function related to Bankers Bank
* Banker of The Schedule Banks
* Lender to the last Resort
* Acting as a clearing house
* Maintaining Reserve ratio
* Controlling Commercial Bank
Performing Duties as Govt. Banker
* Govt. Banker and Economic Advisor
* Granting Credit to the government
* To carry on financial Transaction of the govt.
* Maintain Relation with other banks and financial Institutions.
Commercial Bank is an institution which deals with money and credit. It accepts deposits from the public, makes the fund available to those who need them and helps in the remittance of money from one place to another. Their aim is to earn profit. According to the Professor Roger, “the bank which deals with money and money’s worth is known as commercial bank.” Functions of a Commercial Bank
* Receiving Deposits and Payment of Interest
* Granting loans and Charging interest
* Creating Medium of Exchange
* Creating Loans
* Discounting of bills
* Financing of foreign trade
* Keeping Accounts
Objectives of a Commercial Bank
* To earn Profit
* To ensure security of Customers money
* To create saving inspiration
* To collect saving and from capital