Bank
A bank is a financial institution that accepts deposits from the public and provides loans and other financial services, acting as a safe place to keep money and an engine that keeps money moving in the economy. Banks connect people who have extra money (savers) with people and businesses who need money (borrowers), helping growth, investment, and daily transactions.
Basic meaning of a bank
In simple terms, a bank is a licensed organization that collects money as deposits, keeps it safe, and then lends most of it out to others while keeping a small part in reserve. It also provides services like accounts, payments, cards, and transfers so that people and companies can handle money easily.
Main functions of banks
The primary functions of banks are accepting deposits and giving loans or advances. Common types of deposits include savings accounts, current accounts, and fixed or term deposits, each with different rules and interest rates.
Types of banks
There are several major categories of banks, each serving different roles. Key types include.
Commercial or retail banks: Banks that serve individuals and businesses with everyday banking services like accounts, loans, and cards.
Central bank: The main bank of a country (for example, RBI in India) that issues currency, manages monetary policy, and supervises other banks.
Cooperative banks: Member-owned institutions that provide banking, often to specific communities, farmers, or small businesses.
Regional rural banks and small finance banks: Banks created to provide credit and services in rural or underserved areas and to small borrowers.
Investment banks and development banks: Institutions that help large companies and governments raise capital, manage big investments, and support long-term projects.
Role in the economy
Banks play a crucial role in economic development by turning savings into productive investments. When banks collect deposits and then lend to businesses, farmers, and industries, they help create capital, jobs, and new products or services.
Services for people and businesses
For individuals, banks provide tools to manage daily life: salary accounts, savings accounts, ATMs, online banking, UPI or other digital payments, loans, and savings or investment products. This makes it easier to receive income, pay bills, save for goals, and build credit history that helps with future borrowing.
Banking in India (brief view)
In India, the banking system is structured around the Reserve Bank of India (RBI) as the central bank, with public sector banks, private banks, foreign banks, regional rural banks, cooperative banks, and newer small finance and payment banks under it. This mix ensures that banking reaches cities, towns, and villages, from large corporates to small farmers and self-employed workers.