DEFINITION OF BANK

 Definition of Bank

The term bank is derived from the French / Italian word Banco which means a 'bench / desk' or 'money exchange table'

A bank is a financial institution which deals with deposits and advances and other related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it. 

Oxford dictionary defines a bank as 'an establishment for custody of money, which it pays out on customer's order'. 

History of Banking: There are traces of banking activity even in ancient times. In fact, the word traces its origins back to the ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancuit. It is from here that the words banco and bank are derived. As a moneychanger, the merchant at the banco did not invest much money but merely converted the foreign currency into the only legal tender in Rome that was the Imperial Mint. 

 In simple terms, a bank is an institution that accepts various types of deposits and then advances money in form of loans to people requiring it. Money and credit provide the pivot (axle) around which all the economic activities revolve. 

Banks are institutions, which accept deposits and use these funds to grant loans. Banks collect the surplus funds of millions of individual savers who are widely scattered. The money so collected is channelized to the investors i.e. people asking for loans for further investment purposes. 

Banks help in money growth and capital formation. They are reservoirs of resources for economic growth and development of the nation. They help in building the infrastructure; boosting the agriculture, setting up industries and aid to global trade. Thus, a bank by discharging its functions effectively enhances productive and industrial capacity of the nation and boosts its pace of growth.