Banking
Domain:
A bank is a business; banks sell financial services such as Vehicle loans, home mortgage loans, business loans, checking accounts, credit card services, certificates of deposit, and individual retirement accounts etc...
Some people go to banks in search of a safe place to keep their money. Others are seeking to borrow money to buy a house or a car, start a business, expand a farm, pay for college, or do other things that require borrowing money.
Where do banks get the money to lend?
They get it from people who open accounts. Banks act as go-between for people who save and people who want to borrow. If savers didn’t put their money in banks, the banks would have little or no money to lend.
Types
of Banks:
a) Saving Banks
Saving banks are established to create saving habit among the people. These banks are helpful for salaried people and low income groups. The deposits collected from customers are invested in bonds, securities, etc. At present most of the commercial banks carry the functions of savings banks. Postal department also performs the functions of saving bank.
b) Commercial Banks
Commercial banks are established with an objective to help businessmen. These banks collect money from general public and give short-term loans to businessmen by way of cash credits, overdrafts, etc. Commercial banks provide various services like collecting cheques, bill of exchange, remittance money from one place to another place.
c) Industrial Banks
Industrial or Development banks collect cash by issuing shares & debentures and providing long-term loans to industries. The main objective of these banks is to provide long-term loans for expansion and modernization of industries.
d) Land Mortgage Banks
Land Mortgage or Land Development banks are also known as Agricultural Banks because these are formed to finance agricultural sector. They also help in land development.
e) Central / Federal / National Bank
Every country of the world has a central bank. In India, Reserve Bank of India, in U.S.A, Federal Reserve and in U.K, Bank of England. These central banks are the bankers of the other banks. They provide specialized functions i.e. issue of paper currency, working as bankers of government, supervising and controlling foreign exchange. A central bank is a non-profit making institution. It does not deal with the public but it deals with other banks. The principal responsibility of Central Bank is thorough control on currency of a country.
f) Co-operative Banks
Co-operative banks generally give credit facilities to small farmers, salaried employees, small-scale industries, etc. Co-operative Banks are available in rural as well as in urban areas. The functions of these banks are just similar to commercial banks.
g) Exchange Banks
These banks are mainly concerned with financing foreign trade.
Following are the various functions of Exchange Banks:-
1. Remitting money from one country to another country,
2. Discounting of foreign bills,
3. Buying and Selling Gold and Silver, and
4. Helping Import and Export Trade.
h) Consumers Banks
Consumers bank is a new addition to the existing type of banks. Such banks are usually found only in advanced countries like U.S.A. and Germany. The main objective of this bank is to give loans to consumers for purchase of the durable like Motor car, television set, washing machine, furniture, etc. The consumers have to repay the loans in easy installments.
