What is a bank?

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What is a bank

The whole world knows about it and you must know about it. What is a bank To fulfill every need, we need money. That is why it is necessary to have an account for its security. That financial institution is called bank which takes money from the public. and gives loans to the public. The bank gives interest on the deposit amount. If you do not have an account, then you can imagine how much problem there is. You do electricity bill, gas bill, shopping, transaction, mobile recharge, DTH recharge sitting at home.

Banking is the acceptance of money or deposits from the public for the purpose of lending or investment, which can be given on demand or withdrawn by cheque, draft, order or other means. Banks in most countries are under strict regulation. is kept. In India, the Reserve Bank of India is the apex banking institution that controls the monetary policy in the country. Among the existing banks, State Bank of India is the oldest in the country.

definition of bank

According to the Oxford Dictionary  , a bank is “ an establishment of providing money that pays its consumers when they apply for it.  ,

If we talk about finance, then it is the basis of any trade, commerce and industry. Talking about the present times, the banking sector is the backbone of any modern business  .

Types of Banks in English| types of banks

Commercial Banks Commercial Banks

Public Sector Banks Public Sector Banks

Private Sector Banks Private Banks

Foreign Banks Foriegn Banks

Payment Banks Payment Banks

write the functions of bank

  1. Bank Accounts: This is the most common service in the banking sector. Any person can open a bank account, which can be a savings account, current account or deposit account. The bank offers various types of account facilities.
  2. Loan Accounts: Bank also undertakes loan to the public. The main earning of the bank is to give loan. It gives various types of loans. These loans can be taken for home loan, car loan, personal loan, loan against share and educational loan etc.
  3. Money Transfer: Bank can send money to any place in the world. It can send money through online banking, draft, check.
  4. Credit and Debit Cards: All banks give credit cards to their customers. So that it is easy for them. With the help of these cards, you can pay anywhere. Ever since the introduction of this card, individuals have started keeping very little cash with them.
  5. Lockers facility: Most of the banks have lockers facility in which the customer can keep his important documents or valuables in them. in which it is safe. At present, this lockers facility is being used.

Functions of Reserve Bank of India

To give directions to the bank.
Licensing of banks.
Banker to Reserve Bank of India Banks. works like this.
Opening of banks at the villagers’ place to
control the credit.
Controlling currency transactions.
Issues and exchanges currency if it is not fit for circulation, destroys notes and coins.

State five functions of a bank ”  Define Bank “

Any person can deposit his money by opening an account in the bank under the prescribed rules and arrangements. Deposits by commercial banks are used for the economic development of the nation. Through this work, the work of capital formation is done by collecting small savings and on the basis of these deposits, banks do the work of credit creation. Banks accept deposits in many types of accounts, the main accounts of which are as follows:-

fixed deposit account

Fixed deposit refers to such deposit in the account, which can be withdrawn only after the expiry of a specified period. The deposit tenure is selected by the customer keeping in mind his convenience and requirement. This account is the best from the point of view of security and interest. It can be used only by those people who have the ability and willingness to keep their money in lump sum with the bank for a fixed period. The rate of interest on a permanent deposit account can be more or less depending on the tenure of the deposit. The bank gives a receipt to the depositor. If money is required before the date of maturity, loan can be taken from the bank against the security of deposit receipt.

Savings Bank Account

The main objective of the savings bank account is to encourage the saving spirit among the public. This account is very important for low and middle income group. Through this, any person can deposit his small savings in the bank and withdraw it when needed. Interest is also available on the amount deposited in this account. Check book facility is also available on this account.

current account

Current account is an account in which transactions can be done multiple times in any working day. Deposits in the current account are payable on demand, so the bank does not pay any interest on it. This account is suitable for traders, joint stock companies, institutions etc. The bank also provides overdraft facility to the customers on the current account.

Recurring or Cumulative Deposit Account

Recurring deposit account is mainly for those depositors who want to deposit a fixed amount for a certain purpose through their small savings. The person opening this account has to deposit a fixed amount, which is in multiples of Rs 5 or 10, in his account every month for a certain period. The rate of interest paid on this account is slightly higher than on the savings account.

Other Deposit Accounts/Schemes

Commercial banks also offer the facility of opening a home savings account with a view to mobilize and encourage the savings of very low income individuals. Commercial banks have also started various types of deposit schemes according to different objectives of savings, in which daily savings deposit scheme, monthly interest income deposit scheme, minor savings scheme, farmer deposit scheme, home deposit scheme etc.

lend or lend

The second main function of a bank is to lend or lend. The bank charges interest on its loans at a higher rate than the interest it pays on deposits. The bank can give loan facility to the applicant in four ways:-

cash credit

Under the cash credit method, the bank sets a limit for the borrower to take a loan. The trader can withdraw the amount whenever he wants to the extent he wants. Interest is charged only on the amount withdrawn. Cash credit is always granted only on the basis of adequate security.

overdraft

Bank can provide loan facility in the form of overdraft only to its account holders. Sometimes the customer may require more than the amount deposited in the account temporarily. In such a situation, the customer requests his bank to allow him to withdraw more than the amount deposited in the account. The bank, considering the creditworthiness of its customer, allows him to overdraft up to a certain amount. The customer can withdraw the amount at any time up to that limit.

normal debt

This is the simplest form of lending by banks. When a person requests for a loan, the bank, after considering the creditworthiness of the applicant and other things, sanctions the loan to him and deposits that amount in his separate loan account. At the time of sanctioning the loan, the rate of interest and the terms of payment are decided between the bank and the applicant.

The important banking function of the institution is to disburse loans. Various loan schemes are being operated by the institution so that the members can easily get financial means. From the point of view of security, some rules have been made in the bye-laws of the institution for obtaining loans. Only after the fulfillment of which the member can get the loan.

  1. The rules for getting loan from the institution are as follows: –
    Only the member is eligible to get loan from the bank.
  2. It is necessary to purchase additional shares at the rate of five percent on unsecured loans and 2.5 percent on secured loans.
  3. The loan applicant is required to give information in the prescribed format and give proof of his assets and income.
  4. According to the bye-laws of the bank and the rules laid down by the Board of Directors, there will be a plan to get loan on security and by taking mortgage on movable and immovable property.
  5. To grant, not to give or to give less than the amount applied for and whether the given collateral or mortgage property is eligible or not, it is in the right of the Board of Directors or the loan limited authorized by it.
  6. The Board of Directors has the right to recover the loan given with interest immediately if the given information is not correct.
  7. If the furnished surety or mortgaged property is not worthy or sufficient for any reason, it is necessary to give the loanee member its eligible surety or mortgaged property within the time prescribed by the Board of Directors, otherwise the Board of Directors has the right to recover the loan given with interest immediately. .
  8. If it is necessary to recover the loan on the sale of mortgaged property and full payment could not be made from that sale amount, then the responsibility of repayment of the remaining amount lies with the indebted member. For this, it is necessary to give a qualified mortgage or a qualified surety to the member.
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