Origin
and Definition of Bank or Banker:
The English term ‘Bank’
is derived from
- · The Italian word 'Banco'
- · The Latin word 'Bancus'
- · The French word 'Banque'
Which means a 'BENCH' used as a counter for banking activities.
In England, Money
lenders used to exhibit coins of different denominations of different countries
on benches installed in market places. They transacted money lending and money
changing activities.
The German word 'Banck' means
a common fund or joint stock fund raised from the public.
German view seems more
correct as the term bank is generally associated with an institution dealing in
heaps of money or bundles of money raised from the public.
Definition of Bank, Banker or Banking Company:
As per Section 3 of
the Indian Negotiable
Instrument Act. 1881,
the term 'Bank' may be defined
as "any individual.
Partnership firm, corporation or company which transacts the Business of
Banking in India".
'Business of banking' is
the composite of two terms. 'Business' and 'Banking',
Business means the state
of being busy in one type of activity or the other.
Section 85 of
the Indian Banking
Regulation Act, 1949 defines
the term 'Banking' as accepting for the purpose of lending or investment, of
deposits of money from the public. 'Repayable on demand or otherwise and
withdrawals by cheque, draft, order or otherwise'.
In the light of the
above definition, the following activities of banking can be summed up.
1) Accepting of deposits of money for the purpose
of lending or investment.
2) The deposits accepted are repayable on demand or
after expiry of the period of deposit.
3) The demand is to be made in the form of cheque,
draft, withdrawal slips, etc.
John Paget's Definition:
According to Sir John Paget, ''No one and nobody, Corporate or otherwise
can be a banker who does not:
1) Take deposit accounts
2) Take current accounts
3) Issue and pay cheques drawn on himself &
4) Collect cheque for his customers''.
Banks and other Financial Institutions:
It is important to
remember that banks do accept deposits, but all those who accept deposits are
not bankers.
Banks do lend and invest
money, but all those who lend and invest money are not bankers.
Eminent authority on
banking Mr.H.P.Sheldon clarifies that 'the function of accepting
deposits from customers and repaying them on demand by honouring the customers’
cheques is the chief function which distinguishes a bank from other financial
institutions (like S.F.C., I.F.C., I.D.B.I., etc., )
Characteristics of a Banker:
1) Receipt of different types of deposits.
2) Payment of customers’ cheques.
3) Lending and investing the money.
4) Collection of cheques from the paying banker.
5) The word 'bank' must be used as a part of the
name of the bank e.g., S.B.I, S B.H., Canara Bank,
Corporation Bank, Krishna Grameena Bank, State Co-operative Apex Bank Ltd
6) Banking should be the main business, not
subsidiary one.
As per Section 8 of
the Indian Banking Regulation
Act, 1949 Banks may also
sell the goods or shares or any property given by the borrower as cover for
loan.
Such selling
activity is done only in the event of borrower's default to pay the debt due to
the bank.
Points Covered:
- · Origin
of banker
- · Meaning
of banker
- · Definition
of banker
- · Banks
and other financial institutions
- · Characteristics
of a banker
Your Friend,
SmDSohail
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