Definitions [1]
Definitions: Commercial Banks
- “A bank collects money from those who have it to spare or who are saving it out of their incomes and it lends this money to those who require it.” — Crowther
- “Bank means accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft or otherwise.” — According to Indian Companies Act, 1949
- Banking Regulation Act of 1949: “Banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, demand draft, order or otherwise.”
- Prof. Cairncross: “A bank is a financial intermediary, a dealer in loans and debts.”
Key Points
Key Points: Banking > Functions of Commercial Bank
- Acceptance of Deposits: Banks accept current, savings, and fixed deposits from the public to mobilise savings.
- Advancing Loans and Credit: Banks give loans through cash credit, overdrafts, term loans, and discounting of bills.
- Facilitating Payments: Payments are made easily through cheques, drafts, and electronic transfers.
- Transfer of Funds: Banks help in quick and safe remittance of money from one place to another.
- Agency & Utility Services: Banks collect payments, pay taxes and insurance, deal in shares, provide lockers, cards, and advisory services.
- Credit Creation: Banks create credit by lending more than their actual cash deposits.
