Objectives

Here, you will be able to understand

the meaning of banking the various types of banks in operation in India various functions of banks

Banking Definition

Section 5 (b) of the Banking Regulation Act 1949 defines Banking as:

Accepting for the purpose of lending and investment, Deposits of money from the public, repayable on demand or otherwise and withdraw able on by cheque, draft, order or otherwise

Basic Functions of Banks

Banks primary function is taking deposits for lending and investment. Accepting deposits from public in the form of Savings, Current or Term Deposits. Facilitating remittances of funds. Collection of Utility Bills. Accepting tax payments on behalf of Government Lending money for business, agriculture, purchase of house, purchase of vehicles etc. Facilitates transactions in foreign exchange. Providing Safe deposit vault facilities for safe keeping of customers valuables. Providing alternate channels such as ATM, Internet Banking, Mobile Banking etc. Offers credit/debit and charge card facilities which helps customers make payments as also borrow money.

Structure of Indian Banking System

Functions of Banks

Obtaining Deposits Lending for various activities Managing Overdue Loans or NPA Remittance of Funds Ancillary Services Electronic of Channel Banking Mutual Funds and Life Insurance Products

Summary

In this session, you learned:

Banking is defined as accepting for the purpose of lending and investments, deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or otherwise Banks are risk managers. Banks offer a variety of services.