Earlier money transaction was done on the bench by the traders. Nowadays, the bank becomes an institute that deals with money transactions. Banking is a service organization that holds a position in the modern era. All the modern and trading activities whichever it is done on a daily basis will not be imagined without a banking system. The foundation of modern banking laid in the 17th century.
Types of banks
There are several types of banks. They are:
- Commercial Bank- This bank provides short term loans to a business and provides proper economic management facilities for it. Rather than providing loans to business, credits, or overdraft, it performs various functions towards their customers. There are several commercial banks in India such as the State Bank of India, Vijaya Bank, Bank of Baroda, Dena Bank, Canara Bank, Punjab National Bank, Bank of Maharashtra, etc.
- Industrial Bank- This bank provides long-term loans to industries and provide them economic assistance. The Industrial Development Bank of India (IDBI) is the industrial Bank of India.
- Agricultural Bank- This bank helps farmers by providing them short-term loans. There is a cooperative credit society at villages that provides the loans. State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, Oriental Bank of Commerce are best of agricultural loan.
- Foreign Exchange Bank– This bank’s work is to purchase and sale of foreign exchange. Their main function is to manage funds for foreign trade. They convert foreign currency into local and for this they get commissions. Some foreign exchange banks in India are Bank of Baroda, Andhra Bank, Central Bank of India, HDFC Bank, ICICI Bank, Oriental Bank of Commerce, etc.
- Central Bank– This bank maintains the economic stability of a country and frames national policies. They work in especially underdeveloped countries. Every country has one central bank. Its head office is in Mumbai.
A Banking system helps poor or needy as they collect funds from the rich people and provide to the unemployed, traders or industrialist so they can make money on their own. All men, businessmen, and society receive several different advantages from a banking system. They protect their assets, helps in saving money and facilitates in the opening of various accounts.