What is a bank?

To answer the question of what is a bank in simple words – a bank (or bank) is a type of institution that collects money as deposits from the public or various institutions, creating their own capital. Then the capital provides loans to those who need money for various purposes. Profits are made by charging service charges and interest for lending. That earns profit. A portion of that profit is paid to the saver or depositor to encourage the saver to save in his bank).

A bank as an institution is a business institution. Like all other business organizations, the main objective of banks is to earn profit. It should be noted that banks do not manufacture and sell products like manufacturing companies. But the bank is definitely a service selling organization. Considered as a product of the Bank’s services. So many people say that if the quality of banking products is not ensured, it becomes unthinkable to make more profit by selling more.

Likewise, if the quality of the bank’s service is better and more efficient, there is no doubt that more people will be interested in benefiting from the bank’s services. As a result, the bank can achieve success by incurring higher net profit by executing fund expenses including service delivery costs. Bank customers can generally be of two types. One type of customer provides funds as a deposit and there is another type of customer who collects funds from the bank for temporary use on the promise of repayment as a loan.

What does bank mean?

A bank is a financial institution that collects the surplus money of the society and lends it to individuals who want to invest in order to make a profit. That is, a bank is a secondary institution that provides a link between owners of surplus savings and capital deficit investors. In this process, the bank earns a profit to prove the correctness of its activities by receiving a relatively high profit as interest from the investors willing to borrow capital and paying a relatively low rate of interest to the depositors.

With the speed of time, banks have been using various types of loan documents, showing respect to the demands of the era. In this the use of money and the risk of loss of weight of the metal currency are largely dealt with.

Below are some definitions of banks widely accepted in conscious society:

(a) According to Dictionary of Banking and Finance:

“Bank is an institution registered by the Provincial or Central Government and which mainly performs the following functions:

(i) Accepting current deposits and providing withdrawal facilities to customers through cheques.

(ii) Acceptance of fixed deposits and payment of interest thereon.

(iii) Debenture of notes, issue of loans and investment in Government and other Debentures.

(iv) Collection of check drafts and notes etc.

(v) Issuance of drafts and cashier’s cheques.

(vi) Endorsement of depositor’s cheques.

(vii) to act as a trustee of any property subject to the approval of the Government”;

(b) According to New Encyclopaedia Britannica:

“A commercial bank is a dealer in alternative currencies such as coins, checks and bills of exchange”.

(c) According to American Institute of Bankers :

“A bank essentially performs distributive services and acts as an intermediary between borrowers and lenders. Banks in a broad sense can also be called the heart of a complex financial structure.” –

We already know that a bank is what a bank does. And this activity of the bank is changing according to the demands of the era. It is logical to change the functions of the bank with the change, expansion and sophistication of the culture of the country, age and people. So it is really difficult to give a timeless definition of bank for all ages and all conditions. But the old definition needs to be supplemented, modified in view of the situation.

However, according to the author, a bank means a business institution that accepts as deposits the surplus currency of individuals, business or non-business institutions, public or private institutions, and in exchange for profit or interest, individuals, business or non-business institutions, public or private institutions, who are short of funds. Provides money to such demander with security or other assurance of recovery and in the process creates various credit instruments and provides facilities for withdrawal of collateral when required.”