WhaL ls 8anklng

8aslc ueflnlLlon A sysLem of Lradlng money whlch

provldes a safe place Lo save excess cash known as deposlLs
supplles llquldlLy Lo Lhe economy by loanlng Lhls money ouL Lo help buslnesses grow and Lo allow
consumers Lo purchase consumer producLs homes cars eLc

A bank ls a flnanclal lnsLlLuLlon whose prlmary acLlvlLy ls Lo acL as a paymenL agenL for cusLomers and Lo
borrow and lend money
8anks are lmporLanL players ln flnanclal markeLs and offer flnanclal servlces such as lnvesLmenL funds
ln some counLrles such as CL8MAn? banks are Lhe prlmary owners of lndusLrlal corporaLlons
Whlle ln oLher counLrles such as Lhe unl1Lu S1A1LS banks are prohlblLed from ownlng nonflnanclal
companles
A bank ls a flnanclal lnLermedlary LhaL accepLs deposlLs and channels Lhose deposlLs
lnLo lendlng acLlvlLles elLher dlrecLly or Lhrough caplLal markeLs A bank connecLs cusLomers wlLh caplLal
deflclLs Lo cusLomers wlLh caplLal surpluses
8anklng ls generally a hlghly regulaLed lndusLry and governmenL resLrlcLlons on flnanclal
acLlvlLles by banks have varled over Llme and locaLlon 1he currenL seL of global bank caplLal sLandards
are called 8asel ll ln some counLrles such as Cermany banks have hlsLorlcally owned ma[or sLakes ln
lndusLrlal corporaLlons whlle ln oLher counLrles such as Lhe unlLed SLaLes banks are prohlblLed from
ownlng nonflnanclal companles ln !apan banks are usually Lhe nexus of a crossshare holdlng enLlLy
known as Lhe kelreLsu ln lceland banks had very llghL regulaLlon prlor Lo Lhe 2008 collapse
1he oldesL bank sLlll ln exlsLence ls MonLe del aschl dl Slena headquarLered ln Slena lLaly
whlch has been operaLlng conLlnuously slnce 1472



WhaL are banks
lnsLlLuLlons whlch deals ln money and credlL
An lnLermedlary whlch handles oLher people's money boLh for Lhelr advanLage and Lo lLs own proflLs
A flnanclal lnsLlLuLlon LhaL llnks Lhe flow of funds from savers Lo Lhe users
lays an lmporLanL role ln Lhe economy of any counLry as Lhey hold Lhe savlng of Lhe publlc

ub||c Sector 8anks State 8ank Group 8eglonal rural banks

r|vate Sector 8anks lorelgn 8anks Scheduled and non Scheduled 8anks

Commerclal role of banklng
lssue of banknoLes (promlssory noLes lssued by a banker and payable Lo bearer on demand)
rocesslng of paymenLs by way of Lelegraphlc Lransfer Ll1CS lnLerneL banklng or oLher means
lssulng bank drafLs and bank cheques
AccepLlng money on Lerm deposlL
Lendlng money by way of overdrafL lnsLallmenL loan or oLherwlse
rovldlng documenLary and sLandby leLLers of credlL (Lrade flnance) guaranLees performance bonds
securlLles underwrlLlng commlLmenLs and oLher forms of offbalance sheeL exposures
Safekeeplng of documenLs and oLher lLems ln safe deposlL boxes

Currency exchange
AcLlng as a flnanclal supermarkeL for Lhe sale dlsLrlbuLlon or brokerage wlLh or wlLhouL advlce of
lnsurance unlL LrusLs and slmllar flnanclal producLs

Lconomlc role of banklng
lssue of money ln Lhe form of banknoLes and currenL accounLs sub[ecL Lo cheque or paymenL aL Lhe
cusLomers order
neLLlng and seLLlemenL of paymenLs
CredlL lnLermedlaLlon
CredlL quallLy lmprovemenL
MaLurlLy LransformaLlon

8anklng ln lndla
8ank|ng |n Ind|a orlglnaLed ln Lhe lasL decades of Lhe 18Lh cenLury
1he flrsL banks were 1PL CLnL8AL 8Ank Cl lnulA whlch sLarLed ln 1786 and 8Ank Cl PlnuuS1An
boLh of whlch are now defuncL
1he oldesL bank ln exlsLence ln lndla ls Lhe S1A1L 8Ank Cl lnulA whlch orlglnaLed ln Lhe 8Ank Cl
CALCu11A ln !une 1806
1he flrsL fully lndlan owned bank was Lhe ALLAPA8Au 8Ank esLabllshed ln 1863