What is Bank? A bank is a financial institution that is licensed to receive deposits, offer loans, and provide various financial services to individuals, businesses, and governments. Banks act as intermediaries between savers and borrowers, helping manage and circulate money within an economy. They are vital to economic stability, growth, and development, playing a key role in both individual and corporate financial management.
Meaning of Bank
The term bank is either derived from old Italian word banca or from a French word banque both mean a Bench or money exchange table. In olden days, European money lenders or money changers used to display (show) coins of different countries in big heaps (quantity) on benches or tables for the purpose of lending or exchanging.
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❏ Types of Bank
Definition of Bank
A bank is a financial institution which deals with deposits and advances and other related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it.
» Oxford Dictionary defines “A financial establishment that uses money deposited by customers for investment, pays it out when required, makes loans at interest, and exchanges currency.”
» Professors Cairn Cross says-
“Bank is a financial intermediary institution which deals in loans and advances”.
» Professors R.P. Kent says-
“Bank is an institution which collects idle money temporarily from the public and lends to other people as per need.”
» Professors P.A. Samuelson says-
“Bank provides service to its clients and in turn receives perquisites in different forms.”
» Professors W. Hock says-
“Bank is such an institution which creates money by money only.”
» Sir John Pagette says-
“Bank is such a financial institution which collects money in current, savings or fixed deposit account; collects cheques as deposits and pays money from the depositors account through cheques.”
» Indian Companies Act 1936 defines banks as-
“A banking company which receives deposits through current account or any other forms and allows withdrawal through cheques or promissory notes.”
» Professor Chambers says-
“A Bank is in office or institution for the keeping, lending and exchanging etc. of money.”
» Professor RS Sayers says-
“Banks are institutions whose debts are commonly accepted in final settlement of other peoples debts.”
» G Growther says-
“A Bank is a dealer in date of his own and other peoples.”
Banks play a crucial role in facilitating the flow of money in the economy by accepting deposits, providing credit, enabling payments, and offering a range of financial services. They act as intermediaries between savers and borrowers and help manage risks, liquidity, and financial stability. A well-functioning banking system is essential for economic growth, financial inclusion, and the overall health of the economy.
