UNIT-II: FINANCIAL INSTITUTIONS
Introduction to Banking Banking refers to the business activity of accepting deposits from the public and lending those funds to individuals, businesses, and governments. Banks act as financial intermediaries, facilitating the flow of funds from savers to borrowers in the economy. In simple terms, a bank is an institution that: Accepts money from people who have surplus funds (depositors), And lends that money to those who need funds (borrowers), While also providing various financial services like payments, fund transfers, and investments. The definition as per Banking Regulation Act, 1949 : “Banking means accepting, for the purpose of lending or investment, deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order, or otherwise.” Functions of Banks Accepting Deposits – Savings, Current, Fixed Deposits. Granting Loans and Advances – Personal loans, business loans, overdrafts. Credit Creation – By ...