The Banking Regulation Act 1949 defines banking as accepting the purpose of lending or investment, of deposits of money from the public, repayable on demandor otherwise and withdrawal by cheque, draft, and order otherwise. The essentialfunction of a bank is to provide services related to the storing of value and theextending credit. The evolution of banking dates back to the earliest writing, andcontinues in the present where a bank is a financial institution that provides bankingand other financial services. Currently the term bank is generally understood aninstitution that holds a banking license. Banking licenses are granted by financialsupervision authorities and provide rights to conduct the most fundamental bankingservices such as accepting deposits and making loans. There are also financialinstitutions that provide certain banking services without meeting the legal definitionof a bank, a so called non-bank. Banks are a subset of the financial servicesindustry.The word bank is derived from the Italian
which is derived from German andmeans bench
The terms bankrupt and "broke" are similarly derived from bancarotta, which refers to an out of business bank, having its bench physically broken.Money lenders in Northern Italy originally did business in open areas, or big openrooms, with each lender working from his own bench or table.Typically, a bank generates profits from transaction fees on financial services or theinterest spread on resources it holds in trust for clients while paying them interest onthe asset.
TYPES OF BANKS:
There are several different types of banks including:
Central banks usually control monetary policy and may be the lender of lastresort in the event of a crisis. They are often charged with controlling themoney supply, including printing paper money. Examples of central banks arethe European Central Bank and the US Federal Reserve Bank.