BANKING PRACTICES

ORIGIN OF BANKING

The term bank is either derived from old Italian

word ‘banca’ or from a French word ‘banque’
both mean a Bench or money exchange table. In
olden days, European money lenders or money
changers used to display
(show) coins of different
countries in big heaps
(quantity) on benches or
tables for the purpose of
lending or exchanging.
 MEANING

A bank is a financial institution which deals with

deposits and advances and other related services.
It receives money from those who want to save in
the form of deposits and it lends money to those
who need it.
 DEFINITION

Banking Regulation Act of 1949 defines banking as:

“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, order or otherwise”.
CHARACTERISTICS OF BANKING
1. Dealing in Money
2. Individual / Firm / Company
3. Acceptance of Deposit
4. Giving Advances
5. Payment and Withdrawal
6. Agency and Utility Services
7. Profit and Service Orientation
8. Ever increasing Functions
9. Connecting Link
10. Banking Business
11. Name Identity
 IMPORTANCE OF BANKING

1. Banks mobilise small, scattered and idle savings of the

people, and make them available for productive purposes
2. By offering attractive interests, Banks promote the habit of
thrift and savings
3. By accepting savings, Banks provide safety and security to
the surplus money
4. Banks provide convenient and economical means of
payments
5. Banks provide convenient and economical means of
transfer of funds
6. Banks facilitate the movement of funds from unused
regions to useful regions
7. Banking help trade, commerce, industry and agriculture
by meeting their financial requirements
8. Banking connect saving people and investing people.
9. Through their control over the supply of money, Banks
influence the economic activities, employment, income level
and price level in the economy.
 Savings Bank Account

A savings bank account is a basic type of bank account

that allows individual's/public to deposit money, keep it
safe, and withdraw funds, all while earning interest.
 FEATURES OF SAVINGS BANK A/C

 Promote savings.
 There is no restriction on the number and amount of deposits.
 Withdrawals are allowed subject to certain restrictions.
 The money can be withdrawn either by cheque or withdrawal
slip of the respective bank.
 The rate of interest payable is very nominal on saving accounts.
 Saving account is of continuing nature.
 A minimum amount has to be kept.
 No loan facility is provided against saving account.
 Electronic clearing System (ECS) or E-Banking.
 Payment of equated monthly installments (EMI) for loans
through SB A/c.
PROCEDURE FOR OPENING BANK ACCOUNTS

Choose a Bank

Approach any bank of choice

Fill up Bank Account Opening Form

Give References
Submit Bank Account Opening Form and
Documents
Officer will verify the Bank Account
Opening Form

Deposit initial amount