What is a Bank?
A Banking Company is one which transacts the business of banking which means accepting for the purpose of lending or investment of deposits money from the public repayable on demand or otherwise and withdrawable by cheque, draft, order, or otherwise.
Definition of Bank
A bank is a firm which collects money from those who have it spare. It lends to those who require it.Professor G. Crowther
A bank is a firm that takes deposits from households and firms and makes loans to other household and firms.Professor Parking
Characteristics of Bank
From the above definitions, the following characteristics of bank:
- Deals in Money
- Individual Company
- Acceptance of Deposits
- Giving Advances
- Facilitates Payment and Withdrawal
- Agency and Utility Services
- Profit and Service Organization
- Banking Business
- Name Identity
Deals in Money
Bank is an institution that deals in other people’s money. It accepts deposits from people and institutions and lends them to the needy ones.
Bank may be a firm or a company. A banking company is a company that deals in the business of banking.
Acceptance of Deposits
The bank accepts deposits from the public in the form of deposits which are usually repayable on demand or after the expiry of a fixed period. It gives safety to the deposits of its customers.
The Bank lends to the needy ones in the form of term loans at a cost most commonly known as the rate of interest.
Facilitates Payment and Withdrawal
The Bank provides easy deposit and withdrawal facilities to its customers in the form of cheques and drafts.
Agency and Utility Services
The Banks provide various facilities to customers apart from accepting and lending money like the provision of lockers, accepting standing instructions of receipt and payment, etc.
Profit and Service Organization
The Bank is a profit-making organization having service-oriented approach. A service-oriented approach is an approach that focuses on the delivery of services to its customers.
As discussed above, it is the businesses of banking for which banks are known for. These institutions should not be subsidiaries of any other business.
A Bank should always add the word ‘BANK’ to its name in order to enable it to know that it is a bank.
FAQs About the Characteristics of Bank
What are the characteristics of bank?
The following are the characteristics of bank:
1. Deals in Money
2. Individual Company
3. Acceptance of Deposits
4. Giving Advances
5. Facilitates Payment and Withdrawal
6. Agency and Utility Services
7. Profit and Service Organization
8. Banking Business
9. Name Identity.