Introduction to Banking
Types of Banks
Introduction to Banking :
Banking is the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn profit. The banking also includes issuance of debit and credit cards, providing safe custody of valuable items, lockers, ATM services and online transfer of funds across the country or world. It is well said that banking plays a silent, yet crucial part in the economy. The banking activity encourages the flow of money to productive use and investments. This in turn allows the economy to grow.
A bank is a financial institution which receives deposits from the public and lends them for investment purpose. Depositing money and grant of loans are the main functions of banks, but in the era of globalization, banks indulge in many activities like Insurance, Mutual Funds and Investment in Stock Exchanges. These activities of banks are considered as Para Banking Activities.
Functions of a Bank:
Banks act as payment agents by opening accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' accounts. Banks also enable customer payments via other payment methods such as Electronic Fund Transfers (EFT), Real Time Gross Settlements (RTGS), and Automated Teller Machine (ATM).
The main functions of banks are accepting deposits from the public and granting them loans. However, besides these functions, there are many other functions which the banks perform. All these functions are:
Types of Banks :
According to a Bank's activities, Banks can be divided into: