Banks are government certified financial institutions that land or receive money deposit. The bank of Hindustan was the first bank to be established at Calcutta while the State Bank of India established in 1906, is the oldest functioning Bank. Banks provide long and short-term loans to individuals and company firms. Banks are an elemental part of society. Banks are located in several parts of the country and deal directly with the overall public. They provide multiple services on customer-based requirements and supply lockers, ATM Services, money transfers, loans for houses and businesses, and many other monetary services.
A bank may be a licensed monetary institution to form loans and receive or deposit money. It provides financial services like safe deposit boxes, wealth management, and currency exchange.
Loans got to those in need and were then known to be the name ‘rnalekhya or rnapatra.’ As time evolved, Big merchants and business people started bidding interests on loans to farmers and small traders, and the unpayable assets were confiscated.
Classifications of a Bank
1. Commercial Bank: Theses may be government-owned or a private bank. There are 20 major commercial banks
2. Industrial or Investment Banks: These banks provide long-term loans or other features to any industrial concerns.
3. Exchange Banks: These banks deal with the foreign exchange of currencies.
4. Co-operative Banks: These are set-up regarding small-scale industries and farmer’s concerns. Co-operative banks are subcategorized as Central Co-operative Banks and State Co-operative Banks.
5. Land Mortage Banks: These banks provide loan-term debentures to agriculturalists and farmers.
6. Central banks: This Bank occupies the central position in the country and is the financial market’s statutory body.
7. Saving Banks: these banks promote savings schemes among middle-class families.
8. Indigenous banks: These lend money and finance the country’s internal trade.
9. Regional Rural Banks: These banks are set-up by the central government for the economic development of rural regions. The commercial banks sponsor these banks.
Functions of a Bank
The essential function of a bank is to receive deposits. These deposits are received as fixed deposits- which have a limited time-frame, current deposits- require no interests and are framed mainly for business people and savings bank deposits to encourage savings with a 5 percent interest rate.
Another primary function of a bank is to lend money through cash credits or loans, overdrafts, or discounting bills. The banks usually charge a better rate of interest while giving money.
The banks also perform various agency functions that provide services like remitting funds, sell and buy shares and bonds, collect and paycheck bills, subscriptions, rents, etc.
Importance of a Bank
A bank provides safe custody of valuables like deeds, ornaments, documents, jewels, etc. It also sells and purchases stocks, shares, etc. A bank is essential as it provides Credit information and a Letter of Credit and acts as representatives and makes correspondence.
Top 10 Indian Banks
1. HDFC Bank
2. Axis Bank
3. IDFC Bank
4. SBI
5. Bank of Baroda
6. Punjab National Bank
7. ICICI Bank
8. Canara Bank
9. IDBI Bank
10. Bank of India
Thus, a bank forms an integral part of society and maybe a critical factor that reinforces economic development within the country.
A bank offers various functions like transfer of funds, issuance of drafts, locker facility, portfolio management, etc. The first established Indian Bank is that the Bank of Hindustan, located at Calcutta in 1770.
There are different types of functioning banks, like Retail banks, national banks, investment banks, savings banks, co-operative banks, commercial banks, land mortgage banks, exchange banks, industrial banks, and consumer banks.
A bank plays an important role within the economic development of a rustic because it removes the deficiency of capital and encourages investment and savings.
- Banks are government certified financial institutions that lend or receive money deposits.
2. The Bank of Hindustan was the first Bank to be established in 1770 at Calcutta, while the State Bank of India, established in 1906, is the oldest functioning Bank.
3. Banks provide long and short term loans to individuals and corporate firms.
4. The Reserve Bank of India is a central monetary that controls and regulates the entire banking system- circulation of currency and credit.
5. India comprises 34 functioning banks, out of which 12 are public sector banks, and the remaining 22 are private sector banks.
6. There are multiple divisions in banks. However, the 2 primary classifications of a bank are Investment Banks and Commercial/Retail Banks.
7. The primary purpose of a bank is to provide consumers with ease of financial issues.
8. A bank plays a significant role in the economic development of a country.
9. A bank also performs other services such as remitting funds, sell and purchase shares and bonds, collect and paycheck bills, subscriptions, rents, etc.
10. The Bank acts as the lifeline of any economy and is significant for the development of a country.
-TANISHA SETHI
