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Concept of Bank– A bank is a financial institution that collects money (deposits) from the public and provides loans to individuals, business organizations, or government bodies. It performs various financial services such as accepting deposits, providing loans, transferring funds, making payments, and contributing to the economic development of the country.
Theoretically, a bank is understood as a financial intermediary institution that collects small amounts of savings from the surplus sector of the economy and mobilizes them in the deficit sector with the permission of the central bank of the country.
According to Prof. Crowther:
“Bank is an institution which collects money from those who have it to spare and lends it to those who require it.”
That means — A bank is an institution that collects money from people who have surplus funds and lends it to those who need it.
Main Functions of Bank
1. Accepting Deposits:
Banks collect money from the public and keep it in saving, current, and fixed deposit accounts.
2. Providing Loans:
The collected funds are invested in the form of loans — such as personal, business, or mortgage loans.
3. Payment and Transfer:
Banks facilitate payments and fund transfers through cheques, debit cards, mobile banking, and other means.
4. Agency and Utility Services:
Banks offer services such as bill payments, money transfers, ATM facilities, remittance, and credit cards.
5. Role in Economic Development:
Banks help in capital formation, job creation, and industrial as well as business expansion.
Importance of Bank
- Provides a safe place for public savings.
- Supports productive sectors by providing loans.
- Facilitates foreign trade and investment.
- Creates employment opportunities.
- Maintains monetary balance in the economy.
Conclusion :
In short, a bank is the heart of a nation’s economy. It not only safeguards people’s money but also invests it in productive sectors, thereby playing a vital role in the country’s economic development.