WHAT IS A BANK

PART1

I- INTRODUCTION

Now-a-days, the banking sector acts as the backbone

of modern business.

Development of any country depends mainly upon the

banking system.

II-DEFINITION

A bank is a financial institution which deals with deposits.

It receives money from those who want to save in the form of deposits and it

lends it to those who need it.

III-FEATURES OF A BANK

1. DEALING IN MONEY

The Bank is a financial institution

which deals with people's money.

2. ACCEPTANCE OF DEPOSITS

A bank accepts money in the form of deposits repayable on

demand.

3. GIVING ADVANCES

A bank lends out money in

the form of loans to those who need it for different

purposes.

4. PAYMENT AND WITHDRAWAL

A bank provides easy

payment and withdrawal facility to its customers in

the form of cheques.

5. PROFIT AND SERVICE ORIENTATION

A bank

is a profit seeking

institution which is

service oriented.

6. AN INTERMEDIARY ROLE

A bank acts as a intermediary between

borrowers and lenders. It collects money from those who have a money- surplus

and gives it to those who are in need

of money.

PART 2

TYPES OF BANKS

There are many kinds of banks.

The most important are:

TYPE 1. SAVING BANKS

Saving banks are established to create saving habit among salaried people

and low income groups. The deposits collected from customers

are invested in various business projects.

TYPE 2. COMMERCIAL BANKS

Commercial banks have the objective to help businessmen.

They collect money from general public and give short-term loans to

businessmen.

TYPE 3. INDUSTRIAL BANKSDEVELOPMENT BANKS

The main objective of these banks is to provide long-term loans

for expansion

and modernisation

of industries.

TYPE 4. LAND MORTGAGE / LAND DEVELOPMENT BANKS

These also known as Agricultural Banks

because they are formed to

finance the agricultural sector. They also help in land development.

TYPE 5. CENTRAL OR NATIONAL BANK

Every country of the world has a central bank.

In U.S.A, Federal Reserve and

in U.K, Bank of England.

These central banks are the bankers of the other banks.

They provide specialised functions i.e. issue of paper currency, bankers of

government, supervising and

controlling foreign exchange.

A central bank is a non-profit making institution.

It does not deal with the public but it deals with other banks.

The principal responsibility of a Central Bank is the thorough control of the

national currency.

TYPE 6. CO-OPERATIVE BANKS

Co-operative banks give credit facilities to small farmers,

salaried employees, small-scale industries, etc.

TYPE 7. EXCHANGE BANKS

These banks are concerned with

financing foreign trade.

Their functions are: Remitting money from one country

to another country. Buying and Selling Gold and Silver.

Helping Import and Export Trade.

TYPE 8. CONSUMERS BANKS

Consumers banks are usually found only in advanced countries like U.S.A.

and Germany. The main objective of this bank is to give

loans to consumers for the purchase of the durables like Motor car,

Television set, washing machine, furniture, etc.

The consumers have to repay the loans in easy

installments.

PART 3

E-BANKING

DEFINITION

E-banking is an electronic banking sytem.

It is also called "Virtual Banking"

or "Online Banking".

It involves information technology based banking.

Under this I.T system, the banking services are delivered by way of a Computer-

Controlled System.

This system does not involve direct interface with the

customers. The customers do not have

to visit the bank's premises.

The services covered under E-Banking include

Automated Teller Machines Credit Cards, Debit Cards, Electronic Funds Transfer (EFT) System, Mobile Banking, Internet Banking, Telephone Banking, etc.

ADVANTAGES OF E-BANKING

The main advantages of E-banking are: A lower operating cost. Customers’ conveniency. Very low incidence of errors. Acquisition of funds at any time. The credit cards and debit cards

enables the Customers to obtain discounts from retail outlets.

The customer can easily transfer the funds from one place to another place electronically.

KEY WORDS TRADE:The business of buying and selling

commodities; commerce.

INDUSTRY:Commercial production and sale of goods.

CURRENCY:The official currency, coins, and negotiable paper notes issued by a

government.

A COIN:A small piece of metal, usually flat and circular, authorized by a government for use as money.