Bank is a lawful organisation, which accepts deposits that can be withdrawn on demand. It also lends money to individuals and business houses that need it.

Banks accept deposits from the general public as well as from the business community. Any onewho saves money for future can deposit his savings in a bank. Businessmen have income from sales out of which they have to make payment for expenses. They can keep their earnings from sales safely deposited in banks to meet their expenses from time to time. Banks give two assurances to the depositors –

a. Safety of deposit, and
b. Withdrawal of deposit, whenever needed

The activities carried on by banks are called banking activity.


                                                                                  Role of Banking

Banks provide funds for business as well as personal needs of individuals. They play a significant role in the economy of a nation. Let us know about the role of banking.

• It encourages savings habit amongst people and thereby makes funds available for productive use.

• It acts as an intermediary between people having surplus money and those requiring money for various business activities.

• It facilitates business transactions through receipts and payments by cheques instead of currency

• It provides loans and advances to businessmen for short term and long-term purposes.

• It also facilitates import export transactions.

• It helps in national development by providing credit to farmers, small-scale industries and self-employed people as well as to large business houses which lead to balanced economic development in the country.


                                                                                 Types of Banks

There are various types of banks which operate in our country to meet the financial requirements of different categories of people engaged in agriculture, business, profession, etc. On the basis of functions, the banking institutions in India may be divided into the following types:



                                                                Different Type of Banking In India

Individual Banking—Banks typically offer a variety of services to assist individuals in managing their finances, including:

  • Checking accounts
  • Savings accounts
  • Debit & credit cards
  • Insurance*
  • Wealth management

Business Banking—Most banks offer financial services for business owners who need to differentiate professional and personal finances. Different types of business banking services include:

  • Business loans
  • Checking accounts
  • Savings accounts
  • Debit and credit cards
  • Merchant services (credit card processing, reconciliation and reporting, check collection)
  • Cash management (payroll services, deposit services, etc.)

Digital Banking—The ability to manage your finances online from your computer, tablet, or smartphone is becoming more and more important to consumers. Banks will typically offer digital banking services that include:

  • Online, mobile, and tablet banking
  • Mobile check deposit
  • Text alerts
  • eStatements
  • Online bill pay

Loans—Loans are a common banking service offered, and they come in all shapes and sizes.  Some common types of loans that banks provide include:

  • Personal loans
  • Home equity loans
  • Home equity lines of credit
  • Home loans
  • Business loans


Group Banking- A plan offered by banks designed to be used by groups rather than individuals. A common example is a company plan offered to employees.

Usually the bank will offer incentives such as discounts, lower fees and interest rates, as well as other benefits not available to individual customers.

Group banking members may have access to lower interest rates, lower fees, discounts and other perks not available to regular account holders.

Group banking can also provide a more personalized banking relationship for the members if the bank designates one representative, who is generally more knowledgeable about the group’s needs, as the point of contact for all the members of the group.


Chain Banking —Conceptually, chain banking refers to a form of bank governance that occurs when a small group of people control at least three banks that are independently chartered.

Usually, the controlling parties are majority shareholders or the heads of interlocking directorates. Chain banking as an entity has declined with the surge in interstate banking.

Chain banking is a situation in which three or more banks that are independently chartered are controlled by a small group of people.

The concept of chain banking is different from group banking, in that the entities involved in the chain bank arrangement remain autonomous and are not owned by a single holding company.

Chain banking is also different from branch banking, a situation where all local branches of a bank are owned by a single banking institution.

A bank holding company is a company that controls one or more banks, but does not necessarily engage in banking itself.



Mixed Banking– Mixed banking is a system of banking where a bank combines both deposit banking as well as investment banking. In other words, the bank will provide short-term loans for commerce and trade and long-term finance for industrial units.




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