What do you understand by bank? What functions do banks perform in the modern era?

Bank is an important institution of our modern economic life. Bank is commonly known as Rupee depositing and lending institution. But in modern times the functions of the bank have become very wide. Hence the definitions of bank have broadened. Bank can be defined as follows-

A bank is a person or institution that does business in soil and credit, where deposits are protected and issued. And the facilities of credit and deduction are provided and arrangements are made to send from one place to another.

Bank Work-

A modern bank performs the following functions-

1- Receiving Rupee on Deposit-

Also Read: What do you understand by crop rotation?

The main function of a commercial bank is to collect the savings of the public and make it available to those who want to make proper use of it. There are usually five types of accounts opened for depositing money in the bank-
1-Current Account,
2- Fixed Deposit Account,
3-Savings Account
4-Planet Savings Account
5-Recurring Deposit Account

2-Lending-

Another important function of a commercial bank is to provide loans to meet the needs of its customers. In front of the bank, five types of loans are provided.
1-Loans and advances,
2-cash credit,
3-override,
4-Pay bills,
Investment of money in government securities.

Also Read: What do you understand by underemployment?

3-Power medium of exchange-

Banks provide cheap and convenient medium of exchange to the society. The prime examples of this are checks and notes.

4-Transfer of currency-

Also Read: What is Transistor? Types and Functions of Transistors

Banks through their various branches provide facilities to transfer currency from one part of the country to another. Banks who perform work by draft or account transfer.

5-Agent work-

1- To make payment of letters of credit like cheques, bills of exchange, etc. sent by customers.
2-Paying customers’ insurance premiums, checks and accepting customers’ bills.
3- To pay dividend, interest, rent, loan installment etc. on behalf of its customers.
4- To act as a manager, trustee or administrator of the property of his clients.

Also Read: What do you understand by social justice?

6-Buying and selling of foreign exchange-

For the development of international trade, some commercial banks buy and sell foreign exchange, this task is entrusted to them by the central bank.

7-Credit building work-

Also Read: Write the main functions of blood?

In order to earn more profit, modern banks give more loans than the total amount of their capital and deposits. These types of banks create credit.