Bank Characteristics and Features : As you stroll along the streets of towns and cities, you’ve likely noticed signboards on buildings bearing names like State Bank of India, Punjab National Bank, ICICI Bank, IDBI, City Union Bank, and more. Have you ever wondered about these names? Have you ventured inside these buildings? Upon entering, you’ll find an office layout with numerous desks or counters, each labeled with functions like “May I Help You,” “Teller,” “Deposits,” “Loans,” and others. You’ll also notice: Characteristics Features Bank : How to Get the Most Out of Your Bank Account
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Features of a Bank
A dedicated room for the manager. b) Various types of challans available in the office. c) Employees at each counter assisting customers with their financial service needs. Some customers may be depositing money, others withdrawing, and some may be discussing their financial plans with the branch manager.
This establishment is known as a ‘Bank.’ In this unit, we will delve into the meaning, definition, history, functions of the banking system, the structure of the Indian banking system, the relationship between bankers and customers, the use of cheques, and a bank’s balance sheet.
Characteristics of a Bank
The characteristics of a bank can be summarized as follows:
- Dealing in Money: A bank is a financial institution that deals with other people’s money, primarily funds deposited by customers.
- Individual/Firm/Company: A bank can be an individual, firm, or company. In the case of a banking company, it refers to a firm involved in banking.
- Acceptance of Deposits: Banks accept money from individuals in the form of deposits, which are typically repayable on demand or after a predetermined period. Banks safeguard these deposits and serve as custodians for their customers’ funds.
- Giving Advances: Banks provide loans to those in need for various purposes.
- Payment and Withdrawal: Banks facilitate easy payment and withdrawal for customers through instruments like cheques and drafts, effectively circulating bank money.
- Agency and Utility Services: Banks offer a wide range of banking services, including general utility and agency services.
- Profit and Service Orientation: Banks aim for profitability while maintaining a service-oriented approach.
- Ever-Increasing Functions: Banking continually evolves, expanding and diversifying its functions, services, and activities.
- Connecting Link: Banks serve as intermediaries between those with surplus funds and those in need of loans, connecting borrowers and lenders.
- Banking Business: A bank’s primary focus should be banking as its main business activity, not subsidiary to any other business.
- Name Identity: Banks must include the word “bank” in their name to signify their role as financial institutions dealing with money.
FAQ – Bank Characteristics and Features
The primary role of a bank in the financial system is to serve as an intermediary, accepting deposits from individuals and entities and providing loans to those in need of funds.
Yes, a bank can exist in various legal forms, including individuals, firms, or companies. However, when referring to a banking company, it typically indicates a business engaged in banking activities.
Banks act as custodians of the funds deposited by their customers and take measures to safeguard these deposits, providing a level of security and assurance.
Banks offer a wide range of services, including accepting deposits, extending loans, facilitating payment and withdrawal through instruments like cheques, and providing general utility and agency services.
Banks are profit-seeking institutions that also maintain a service-oriented approach, aiming to provide essential financial services while generating profits.