Meaning and Nature of Bank

A Bank is an institution, which deals with money and credit accepts deposits from the public and mobilizes the fund to productive sectors. It also provides remittance facility to transfer money from one place to another. Generally, bank accepts deposits from business.institutions and individuals, which is mobilized into productive sectors mainly business and consumer lending. Bank is, therefore, known as a dealer of money. At present context, bank is not only confined accepting deposits and disbursing loan. In addition to this, a bank may be engaged in different types of functions such as remittance, exchange currency, joint venture, underwriting, bank guarantee, discounting bills etc. In short, the term "modern bank" refers to an institutions having following features:

1. It deals with money; it accepts deposits and advances loans.

2. It deals with credit; it has the ability to create credit expanding its liabilities.

3. It is commercial institutions; it aims at earning profit. 

Banks are the principal source of credit for millions of individuals families and for many units of government. They are among the most important financial institutions in the economy. Moreover, for small, local business ranging from grocery stores to automobile dealer;s banks are often the major source of credit. Banks grant more installment loans consumer than any other financial institutions.

In most years, they are among the leading buyers of bonds and notes issued by government to finance public facilities, ranging from hospital and football stadiums ti airport and highways. Moreover, bank reserves are the principal channel for economic policy of government to stabilize the economy.

Banks are among the most important sources of short-term working capital for business.They have become increasingly active in recent years in making long-term business loans for new plant and equipments. When business and consumers must make payments for purchase of goods and services, more often they use bank provide exchequers, credit or debit cards or electronic accounts connected to a computer network . It is the banker to whom they turn most frequently for advice and counsel, when they need financial information and financial planning.