IDEAL PUBLIC SCHOOL
Ideal public school
Om Nagar , Kharwasa Main Road , Dindoli Surat .
Chapter- 4 Banking and Monetary Policy
Evolution and Meaning of Bank:
• The word bank means ‘heap’ or ‘mass’.
• In Sanskrit, the word related to bank is ‘bhanda’ which means collection of fund.
• The word ‘bandol’ is derived from ‘bhanda’.
• The word bank originated from the Italian word ‘banca’ or from the French word
‘banque’. Both meant a ‘Bench’ for money exchange.
• European money lenders used to display coins of different countries on benches for
the purpose of exchanging various coins. Thus, the word ‘bank’ came into use and is
related to collection of fund or money.
• In Spain, the ‘Bank of Barcelona’ is known to be the first real bank established in the
world in 1401.
Meaning of a Bank:
• A bank is an institution authorised to collect peoples’ deposits with the purpose of
lending those under the condition of returning the same when the depositor
demands.
• A bank is a commercial organization functioning for profit.
• A bank accepts peoples’ deposits and pays interest in return.
• A bank ensures the safety of these deposits and lends money from these deposits by
charging interest and invests the surplus deposits in various sectors of economy for
the development of the country.
• Banks are instrumental in mobilizing money. Where value of stock of money tends to
‘fall at a future date and value of circulating money tends to increase.
Classification (Types) of Banks: Banks are basically classified into two categories:
1. Commercial Bank and
2. Central Bank.
1. Commercial Bank:
• Commercial bank is one which transacts the business of banking that is accepting
deposits from the people for the purpose of lending or investment, repayable on
demand or otherwise and withdrawal by cheque, draft, pay-order or otherwise.
• Banks undertake the activity of mobilizing peoples’ money in order to make profit and
therefore they are commercial institutes.
Functions of Commercial Banks:
• Accepting deposits,
• Providing credit facilities,
• Payments and withdrawal facilities
• Credit creation
• Inter-banking transactions,
ALOK SIR
Ideal public school
Om Nagar , Kharwasa Main Road , Dindoli Surat .
Chapter- 4 Banking and Monetary Policy
Evolution and Meaning of Bank:
• The word bank means ‘heap’ or ‘mass’.
• In Sanskrit, the word related to bank is ‘bhanda’ which means collection of fund.
• The word ‘bandol’ is derived from ‘bhanda’.
• The word bank originated from the Italian word ‘banca’ or from the French word
‘banque’. Both meant a ‘Bench’ for money exchange.
• European money lenders used to display coins of different countries on benches for
the purpose of exchanging various coins. Thus, the word ‘bank’ came into use and is
related to collection of fund or money.
• In Spain, the ‘Bank of Barcelona’ is known to be the first real bank established in the
world in 1401.
Meaning of a Bank:
• A bank is an institution authorised to collect peoples’ deposits with the purpose of
lending those under the condition of returning the same when the depositor
demands.
• A bank is a commercial organization functioning for profit.
• A bank accepts peoples’ deposits and pays interest in return.
• A bank ensures the safety of these deposits and lends money from these deposits by
charging interest and invests the surplus deposits in various sectors of economy for
the development of the country.
• Banks are instrumental in mobilizing money. Where value of stock of money tends to
‘fall at a future date and value of circulating money tends to increase.
Classification (Types) of Banks: Banks are basically classified into two categories:
1. Commercial Bank and
2. Central Bank.
1. Commercial Bank:
• Commercial bank is one which transacts the business of banking that is accepting
deposits from the people for the purpose of lending or investment, repayable on
demand or otherwise and withdrawal by cheque, draft, pay-order or otherwise.
• Banks undertake the activity of mobilizing peoples’ money in order to make profit and
therefore they are commercial institutes.
Functions of Commercial Banks:
• Accepting deposits,
• Providing credit facilities,
• Payments and withdrawal facilities
• Credit creation
• Inter-banking transactions,
ALOK SIR
