Introduction to Banking

Contents
• Meaning
• Nature
• Functions
 MEANING
• Bank refers to an institution that deals in
Money. This Institution accepts deposits from
the public and advances loans to those who
are in need.
• These days banks perform various other
functions such as credit creation, agency work
and general services besides dealing in money.
 Definition
• According to Oxford Dictionary, “Bank is an
establishment for the custody of money, which
it pays out on customer’s order.
• According to Banking Companies (Regulation)
Act of India, 1949, “Banking means the
accepting for the purpose of lending or
investment, of deposits of money from the
public, repayable on demand or otherwise, and
withdraw able by cheque, draft or otherwise.”
 Nature
Commercial establishment

Accepts deposits

Repayment of accepted deposits

Withdrawable by cheques, drafts or otherwise

Advancing loans to public

Earning profit
 functions
Secondary
functions
Primary
Functions
functions of Commercial Banks

Modern functions
Primary functions

ACCEPTING DEPOSITS

ADVANCING LOANS

CREATION OF CREDIT

CHEQUE SYSTEM OF
PAYMENT FUNDS
 Secondary Functions

(A) AGENCY FUNCTIONS

OLLECT SALES & REMITT REPRESEN BULLIO

TRUSTE
ON AND PURCHA TATION
ESHIP & ANCE N
AYMEN SE OF AND
T OF
EXECUT OF CORRESP TRADI
SECURIT
CREDIT IES OR MONEY ONDENCE NG
 Developmental functions
Mobilization of savings

Extension of financial services to rural areas

Making loans to weaker sections of society

Modern Functions
ATM

Credit Cards

Tele-Banking

Internet Banking

Round the clock Banking

Cross-border banking

Factoring

Leasing

Insurance
 Closing quiz
• Acronyms:
(a) RBI
(b) SBI
(c) IDBI
(d) RRB
(e) ROA
(f) ROC
(g) NPA
• Categorize the functions of bank:
(a) Providing Debit card
(b) Accepting Deposits
(c) Providing loans to weaker sections of the society
(d) Insurance
(e) Merchant banking
(f) Mobilization of savings
(g) Fund Remittance
(h) Cross-border banking
(i) Creation of credit
 THANK YOU

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