Introduction: -Bank is an
institution which deals in money
and credit. It accepts deposits from the public and grants loans and advances
to those who are in need of funds for various purposes. Banks encourage saving
habits among individuals and thereby make funds available for their use as and
when require. Banks also help in the nation's 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 of the country.
Definition: -"Bank is an establishment for custody of
money, which it pays out on customer's order." (Oxford Dictionary)
1. Central Bank: -The
main function of the central bank (RBI) is to regulate money supply and to
maintain economic stability of the country. The central bank can print currency notes. The central bank does
not accept deposits from public. The Central bank provides loan to banks and
financial institutions. It is owned and controlled by the government if India.
The Central bank frames the monetary policy and credit policy for the country.
2.
Commercial
Bank: -These banks accept the deposits from the general
public and provide short term loans to traders, manufacturers and businessmen
by way of cash credits, overdrafts, and etc. commercial banks provide various
services like collecting cheques, bills of exchange, remitting money from one
place to another place, etc. Commercial
banks are of three types' i.e. public sector banks, private sector banks, and
foreign banks.
3. Development Banks:
-business often requires medium and long term capital for purchase of machinery
and equipment, for using latest technology or for expansion and modernization.
Such financial assistance is provided by development banks. Examples of
development banks are Industrial Development Corporation of India (IFCI) And
State Financial Corporation (SFCs)
4. Co-operative Banks:
-Co-operative banks are financial institutions registered under the
co-operative societies Act. The main objective of such a bank is to give credit
to economically backward people. In India co-operative banks are the main
source of rural credit. These banks encourage saving habit among the villagers
and give loans at a low rate of interest.
5. Specialized Banks:
-There are some banks which cater to the requirements and provide overall
support for setting up business in specific areas. EXIM Bank, SIDBI and NABARD are examples of such banks.
6. Regional Rural Banks:
-These banks were established in 1975 to enhance the banking facilities in the
rural areas. In these banks, the features of commercial and co-operative banks
are found. These banks are sponsored by some commercial bank. 50% of their capital
is provided by the central Government. 35% by the Commercial bank concerned and
15% by the state government concerned.
7. Exchange Banks:
-Exchange banks are mainly concerned with financing foreign trade. Main
functions of exchange bank are remitting money from one country to another
country, discounting of foreign bills, helping import and export trade, etc.
Bank of Tokyo, Bank of America is examples of exchange banks working in India.
8. Indigenous Banks:
-In India, Indigenous or native/domestic bankers have been carrying on banking
functions for generations before properly organized commercial and other banks
started functioning. They mainly deal in "hundis" and promissory
notes. They charge a very high
rate of interest on loan. Hundis are regarded as native Bills of Exchange.
9. Saving Banks:
- This bank accepts small savings from public who have fixed income. It creates
the saving habit among people. In India, post
office saving bank is one of the saving banks.
