In the purest form, A Bank is an institution that, on one side, accepts the money and, on the other hand, lend them money.
Apart from the above primary activity of a Bank, these days Bank’s have a lot more to offer such as:
Savings Accounts, Current Accounts, Fixed Deposits, Recurring Deposits, NRI Banking and Accounts, Debit and Credit Cards, ATM Services, Online Banking, and Fund Transfers, Payment Services, Remittances, Import and Export Services, Foreign Exchange Services, Forex or Multicurrency Cards, Bank Guarantees, Demand Draft and Manager’s Cheque Issuance, Loans related to Personal requirement and Business requirement, Point of Sale Services, Payment Gateways, Cash Management Services, Locker Facilities, Investment, and Advisory Services and so on…
We can say that Bank or Banking is an integral part of our day-to-day lives. Banks are financial intermediaries in all economic activities where the movement of funds takes place from one person or business to others, except for Cash transactions.
Importance of Banking
Banks are the financial institutions for safekeeping our money, transferring it, and further investing / lending / distributing it further.
The Bank plays a significant role as an intermediary to these funds, making a connection between investors and depositors and those who need the funds for personal and business needs.
We can identify a few of the importance of Banking as:
- To keep our money in the form of Saving, Current, or Deposit account.
- Keep our money safe
- Have a record of our financial transactions
- Easy to make a payment or receive payment
- Pay interest on our deposits
- Expedite Financial Transactions online or through internet payment and transfers
- Facilitate Financial Transactions through Debit or Credit Cards
- Offer Loans and Overdrafts
- Make Investments on our behalf
- Offer Banking and Other Services
- Banks are Financial Institutions taking money and lending money
- They provide Safety to cash as it can’t be lost, stolen or destroyed if kept in Bank
- Also, provide Convenience as we need not carry cash with us
- Banks are Secure as Central Bank and other Regulatory Authorities govern them
- Help in Building Financial Future as their Financial Professionals provide knowledgeable and expert advice on matters related to Finance, Investing, and Loans.
We can conclude that the Banks play an essential role in the economy as they help in the free flow of funds in the marketplace and plays a vital role as an intermediary between the investors and borrowers.
They also help in the movement of funds. Banks also help in collection and payment from one person to another and posses many benefits and importance to us.