set up their stalls in the middle of enclosed courtyards called macellaon a long bench called abancu, from which the words bancoand bankare derived.Traditional banking activities9
Banks act as payment agents by conducting checking or current accountsfor customers,paying chequesdrawn by customers on the bank, and collecting cheques deposited to customers'current accounts. Banks also enable customer payments via other payment methods such astelegraphic transfer, EFTPOS, and ATM.Banks borrow money by accepting funds deposited on current accounts, by accepting termdeposits, and by issuing debt securities such as banknotesand bonds. Banks lend money bymaking advances to customers on current accounts, by making installment loans, and byinvesting in marketable debt securities and other forms of money lending.Banks provide almost all payment services, and a bank account is considered indispensableby most businesses, individuals and governments. Non-banks that provide payment services suchas remittance companies are not normally considered an adequate substitute for having a bankaccount.Banks borrow most funds from households and non-financial businesses, and lend mostfunds to households and non-financial businesses, but non-bank lenders provide a significant andin many cases adequate substitute for bank loans, and money market funds, cash managementtrusts and other non-bank financial institutions in many cases provide an adequate substitute tobanks for lending savings to.Entry regulationCurrently in most jurisdictions commercial banks are regulated by government entities andrequire a special bank licence to operate.Usually the definition of the business of banking for the purposes of regulation is extendedto include acceptance of deposits, even if they are not repayable to the customer's order—although money lending, by itself, is generally not included in the definition.Unlike most other regulated industries, the regulator is typically also a participant in themarket, i.e. a government-owned (central) bank. Central banks also typically have a monopolyon the business of issuing banknotes. However, in some countries this is not the case. In the UK,for example, the Financial Services Authoritylicences banks, and some commercial banks (suchas the Bank of Scotland) issue their own banknotesin addition to those issued by the Bank ofEngland, the UK government's central bank.10
DefinitionThe definition of a bank varies from country to country.Under English common law, a banker is defined as a person who carries on the business ofbanking, which is specified as: conducting current accounts for his customerspaying cheques drawn on him, andcollectingcheques for his customers.
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- Summer '17
- ICICI Bank, Reserve Bank of India