Definition of Bank

Definition of Bank

At present, the word “Bank” is considered as an economic term in all country. A bank is one kind of financial institution which deals with money and other monetary instruments and conducts business. Bank receives deposits from one group of people and lends it to other groups of people. By this process, the bank earns a profit. Nowadays the activities of the bank are so diversified that it cannot be defined in short. Expectedly the scholars hold different. Views on the subject, it is observed that there are at least three scholars of thought about its origin, these are as follows:

  • Some of the economists believe that the word ‘Bank’ originates from the German word ‘Banc’ meaning a joint-stock firm.
  • The second category of economists believes that the word ‘bank’ has been derived from the Italian word ‘Banco’ which means heap or mound.
  • There is again another group of people who trace the origin of the word ‘Bank’ to the Greek word ‘Braque’ meaning a bench.

Some important definitions of Bank are given below:

  • Crowther: “A bank is a firm or institution doing a bonafide banking business.”
  • S.Sayers: “Banks are the institutions whose debts are commonly accepted in settlement of other people’s debts.”
  • John Harry: “A bank is an economic institution whose main aim is to earn profit through exchange of money and credit Instruments.”
  • C. Wood: “Bank is the trader of money and loan.”
  • Chambers: “A Bank is an office or institution for the keeping, lending and exchanging of money.”

If we analyze above given definitions we can say, Bank is a-

  • Financial intermediary;
  • Ensures the safeties of collected deposits;
  • Gives loans and create credit instruments:
  • Discounting of bill and transfers of money etc.

Finally, it can be said that, a bank is an economic financial institution that collects the idle savings from the public and lend it to others, invest it, discount bonds and bills etc. pay the deposit on demand and do many other economic activities.