What Is A Bank And How Many Types Of Bank Are There

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What Is A Bank

I understood in simple language, the bank is called that financial institution where the public deposits their savings amount and withdraws that amount when needed, apart from this, when money is needed for their personal or business purpose, they take a loan from the bank. An institution, which is licensed by the government to deposit money, and to give loans to people, is called a bank.

How Many Types Of Banks Are There?

The nature and functions of different types of banks can be briefly mentioned in the following form -

1. Commercial Banks

 Commercial banks, in the course of their normal business operations, provide credit facilities for a short period by collecting deposits payable on short-term demand through various accounts from the general public. These institutions have special importance in the business sector because they also provide many types of services. There are two types of commercial banks in India 

a. Private sector banks with mixed capital,

B. Public Sector Banks - like Punjab National Bank, Bank of Baroda, Central Bank of India, etc.

 At present, there are 19 nationalized banks operating in India.

2. Industrial Bank

 The working capital requirement of industries is met by commercial banks, but a long-term capital requirement is met by industrial banks. These banks accept long-term deposits and give only long-term loans. There are two modes of long term lending by these banks -

(a) Help in selling shares and debentures of industries and underwriting of shares.

(b) Provides financial facility by providing long-term loans against permanent securities like buildings, machinery, etc.

3. Central Bank

In the present era, there is a central bank in every country which issues paper currency as per the requirement of the country, controls the credit and banking business, and takes care of the work of the financial representative of credit. At present almost all the banks have been nationalized.

4. Co-operative Banks

 Co-operative banks are working in India to provide short-term loans to the farmers. These banks work on the principle of cooperation. He was born in Germany. They were established for the first time in India in 1904 under the 'Co-operative Credit Society' Act. From time to time changes have been made in their organization as per the convenience. Under this, the farmers together form a primary credit committee, which collects capital by selling shares to the members. District of central co-operative banks have been established at the district level and state co-operative banks at the state level.

 5. Foreign Exchange Bank

 Banks dealing in foreign currency are called foreign exchange banks. At present, in general, only commercial banks in all countries do the work of foreign exchange banks. The main objective of establishing these banks is to facilitate international payments and to convert the currency of one country into the currency of another country. These banks keep the currencies of many countries with them and these banks have branches in many countries.

 6. Land Development Bank

 These are co-operative, semi-co-operative, or non-cooperative institutions, which mortgage the land and provide loans to make permanent improvements to the land. They were first established in France. At present, they are working as banks in all the countries in general. Most of their capital comes from shares and debentures.

 7. Savings Bank

 Savings banks are established to accept small savings of the public in the form of deposits. These banks act as subsidiary banks of commercial banks. In India, this work is being done by 'Post Office Savings Bank'.

8. Import-Export Banks

For the purpose of promoting export-import, many countries establish export-import banks in their country. These banks provide long-term credit facilities for imports. They are playing an important role in the foreign trade of America and Japan. In view of their importance, Export-Import Bank has been established in India on January 1, 1982.

 9. National Bank 

for Agriculture and Rural Development:- On July 12, 1982, for the purpose of providing loans for agriculture and rural development, 'Agriculture Credit Department' and 'Agriculture Refinance and Development Corporation' of the Reserve Bank. By merging this bank has been established. This bank is responsible for maintaining and coordinating the short-term and long-term credit provided for agricultural and non-farm activities such as handloom, handicrafts etc.

10 International Banks

The banks which have been established to facilitate currency and credit transactions between different countries at the international level are called international banks. The following types of banks are important -

(i) World Bank and its Subsidiaries 

 In the International Monetary Conference of 44 nations held in Braillewoods in the year 1914, with the objective of providing assistance for economic development in war-torn nations and backward nations, an 'International It was decided to set up 'Reconstruction and Development Bank'. This bank is also called the 'World Bank'. This bank has the mandate to provide long-term loans in foreign currencies for the reconstruction and development of the member states, 

to guarantee the timely repayment of loans given by other financial institutions or banks to the member states, and to provide facilities for technical assistance and training. Important work is done.

The World Bank has two subsidiaries 

1. International Development Council.

2. International Finance Corporation.

(i)The International Development 

Council has been established in 1960 with the objective of providing long-term credit for the economic development of less developed countries and the International Finance Corporation has been established in 1946 to provide loans or share capital to firms operating in less developed countries. .

(ii) Bank for International Settlement 

This bank was established in 1930 in Switzerland to solve the problem of First World War debts. At present, this bank is working to establish cooperation in the central bank of different countries and to settle the payments between them.

(iii) European Investment Bank

 This bank was established by the European Economic Community in 1957 in Luxembourg. Initially, the financial assistance provided by this bank was limited to 6 members of the European Economic Community like a regional development bank, but at present, it is also providing economic assistance to Greek, Turkey, and community partner countries.

(iv) Asian Development Bank

This bank was established in the Philippines for the purpose of providing technical assistance, capital, and development loans to non-communist Asian countries.

(v) Inter-American Development Bank

 In 1959, this bank was established in Washington for the purpose of providing loans for social and economic development in Latin American countries. This bank is working as a regional development bank, and 40 percent of its total capital has been received from America.

FAQ on Banking

Q. When was the first bank established in India?

Ans. The first bank in India was established in Calcutta in 1770 AD, whose name was Bank of Hindustani.

Q. Which three banks were established by the East India Company?

Ans. The East India Company established the Bank of Bombay, Bank of Bengal, and Bank of Madras.

Conclusion

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