Project report of accounting in banks and balance sheet
2. DEFINITION AND FUNCTIONS OF A BANK
Banking has been defined by section 5 of the Banking Regulation Act andmeans:(a)accepting deposits of money from public
for the purpose of lending or investment and deposits are repayableon demand or otherwise by cheque, draft, and order or otherwise. Itshould be noted that company which is engaged in manufacturinggoods and for the purpose of financing business accepts depositsfrom the public should not be deemed to transact business of banking.In addition to banking business, a bank is permitted under Section 6 of theBanking Regulation Act to engage in certain class of business which isincidental to the business of banking. Section 8 of the Banking RegulationAct prohibits a bank from buying and selling or dealing in goods except inconnection with realization of a security held by it or in connection withthe business of collections or negotiating bills of exchange.Some of the main functions of modern commercial banks are:
Accepting deposits and providing facilities to depositors of payment by cheques.
Granting loans and advances (cash credits, overdraft, term loans,etc.).
Dealing in securities on its own account or on behalf of itscustomers.(d)Opening letters of credits.(e)Issuing guarantees.(f) Dealing in foreign exchange.
Transferring money from one place to another through demanddraft, telegraphic transfers, traveler’s cheques, bills, etc.
Merchant banking, i.e. acting as managers to public issues, etc.