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Meaning, Feature and Origin

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7 views

Meaning, Feature and Origin

Uploaded by

amithm255
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTRODUCTION TO BANKING

Meaning and Definition of Bank

 A bank is a financial institution which deals with money and credit


 It accepts deposits and lends money to those who are in need of it.
 According to banking regulation Act 1949, a banking is one, which transact the business
of banking which means accepting for the purpose of lending or investments of deposits
of money, repayable on demand or otherwise, withdrawable by cheque, draft, order or
otherwise

Features of Bank

 Dealing in money: Banks primarily operate by accepting deposits and providing loans,
thus dealing directly in money and financial transactions.
 Individual or firm or company: Banks serve as financial intermediaries for
individuals, firms, and companies, facilitating various financial services.
 Acceptance of deposits: Banks accept deposits from the public, providing a safe place
for individuals and entities to store their money.
 Giving advances: Banks provide loans or advances to individuals, businesses, and
other entities, helping in economic activities by offering credit.
 Payment and withdrawal: Banks facilitate payments and allow customers to withdraw
money, enabling smooth financial transactions.
 Agency and general utility services: Banks offer additional services such as fund
transfers, bill payments, and acting as agents for customers in various financial matters.
 Profit and service orientation: Banks aim to generate profit while providing essential
financial services to customers, balancing commercial objectives with service
provision.
 Ever increasing function: The role of banks is continuously expanding to include new
services and adapt to the evolving financial landscape.
 Connecting link: Banks act as intermediaries between depositors and borrowers,
connecting savers with those in need of funds, thus facilitating economic growth.

Origin And Development (Evolution) of Banking

 The term bank is derived from the Italian word banca or from a French word banque.
 The evolution of banking can be tracked to the era of early times of human history.
 The necessity of saving money was felt by people even in olden days.
 In olden times, people deposited their money and valuables at temples.
 In earlier times, banks provided funds only to businesses. But today modern banking,
deals with all category of customers.

Modern banking has 3 ancestors

1. Merchant bankers: they are traders in goods. Along with trade, they started to finance
trade including foreign trade.

2. Goldsmith: they were considered as men of honesty, integrity and reliability. They
provide safe place for keeping valuables and money of people.

3. Money lender: gradually, goldsmith began to lend a part of the deposits after keeping
contingency reserves. Thus, gold smith became a banker by performing two important
function such as accepting deposits and lending money.

 Bank of Venice started in Italy is considered as oldest banking institution in the


world.
 In the beginning of 18th century, East India Company launched a few commercial
banks.
 The first Indian Bank, Bank of Hindustan was started at Calcutta in 1770.
 Then East India Company started 3 presidency banks, Bank of Bombay, Calcutta
and Madras.
 Later, these 3 banks were amalgamated and Imperial bank was formed.
 The Reserve Bank of India was established in 1935
 The RBI was nationalized in 1949 and Banking Regulation Act was passed in the
same year.
 The imperial bank was nationalized in 1955 and renamed as State Bank of India.
 Fourteen banks were nationalized in 1969 and 6 banks were nationalized in 1980.
 Regional Rural Banks in 1975, NABARAD in 1982, EXIM Bank in 1984, and NHB
in 1988.
 At present, 12 Public sector Banks and 22 Private sector banks.

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