Banking institutions conduct financial transactions like loans, investments, and deposits. Part of the original purpose of banks was to offer customers safekeeping for their money. With banks, consumers no longer need to keep large amounts of currency on hand; transactions can be handled with checks, debit cards or credit cards, instead.
Banking institutions are “corporations that provide services as intermediaries of financial markets”, these are categorized into three major types namely depository institutions, contractual institutions, investment institutions. These banking institutions are distinguished into two Commercial banks and Cooperative banks.
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Commercial banks provide loans to individuals and businesses to buy goods or expand business operations, which in turn leads to more deposited funds that make their way to banks. Banking institutions work as payment agents within a nation and between countries too. Banks underwrite financial transactions by lending their reputation and credibility to the transaction for example- a check is basically just a promissory note between two people, but without a bank’s name and information on that note, no merchant would accept it. Baking institutions make commercial transactions convenient as you no longer have to carry large amounts of currency instead the same can be done through cheques, debit cards, credit cards that the banks provide.
Investment banks have different operational abilities than commercial banks that gather deposits. These banks indulge in variety of services for businesses and the govt which includes underwriting debt and equity offerings, acting as an intermediary between an issuer of securities and the investing public, making markets, facilitating mergers and other corporate reorganizations, and acting as a broker for institutional clients, provide research and financial advisory services to companies.
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Banking institutions also include retail banking, private banking, specialized financing and the central banks which are public sector undertakings. These banking institutions collectively work towards the growth of the economy and are generally the gauge for progress in a nation. There are many banking institutions in India like Allahabad Bank, American Express Bank Ltd., BNP Paribas, Bank Of India, Canara Bank, Citibank NA, Deutsche Bank, JP Morgan Chase Bank and many others.