Question

Define 'bank'. Explain different types of banks.

Answer 1

A banking company in India is one that transacts the business of banking by accepting deposits from the public repayable on demand or otherwise for the purpose of lending and investment. It earns its income by lending the money. It mobilizes the savings of the people and makes funds available to businesses.

Types of banks:

1. Commercial banks: These are governed by the Indian Banking Regulation Act 1949. They accepts deposits from the public and lend money.

2. Cooperative banks: These are governed by the State Cooperative Societies Act. They provide cheap credit to its members.

3. Specialised banks: These cater to the specific needs of the business. Foreign exchange banks, development banks, export-import banks are specialised banks.

4. Central bank: It supervises, controls and regulates the activities of all the commercial banks. It controls and coordinates the currency and credit policy. RBI is the central bank of India.