Banking is a institution that deals with money. The term “Bank” is derived from the German word “Banck” which means a joint fund or a common fund (that is) “heap of money” raised from a large number of members of the public. It is very difficult to define the term banking precisely on account of the numerous activities performed by the modern bank. The bank performs certain important functions of “Accepting deposits” and “Lending deposits”. A person who is doing the banking business is called a banker, who performs following essential functions such as receiving deposits of various kinds, opening new accounts, lending money or creating credit, issuing cheques, honoring cheques and collecting cheques. A bank with huge resources enjoys high credit standing only with the confidence of the public or the existing customers of the bank. The banker undertakes to make payment on behalf of his customers by paying bills of exchange, promissory notes, debits the customer’s account with payments. He also pays Insurance premium, subscription to clubs, and subscription to newspaper, rents to landlords, etc. |