Banking in India : Origin & Evolution
ORIGIN AND EVOLUTION OF INDIAN BANKING
Opinions differ as to the origin of the work "Banking". The word "Bank" is said to be of Germanic origin, cognate with the French word "Banque" and the Italian word "Banca", both meaning "bench". It is surmised that the word would have drawn its meaning from the practice of the Jewish money-changers of Lombardy, a district in North Italy, who in the middle ages used to do their business sitting on a bench in the market place. Again, the etymological origin of the word gains further relevance from the derivation of the word "Bankrupt" from the French word "Banque route" and the Italian word "Banca-rotta" meaning "Broken bench" due probably to the then prevalent practice of breaking the bench of the money-changer, when he failed.
Banking is different from money-lending but two terms have in practice been taken to convey the same meaning. Banking has two important functions to perform, one of accepting deposits and other of lending monies and/or investment of funds. It follows from the above that the rates of interest allowed on deposits and charged on advances must be known and reasonable. The money-lender advances money out of his own private wealth hardly accepts deposits and usually charges high rates of interest. More often, the rates of interest relate to the needs of the borrower. Money-lending was practised in all countries including India, much earlier than the recent type of Banking came on scene.
DEFINITION AS PER BANKING REGULATION ACT 1949
A Bank borrow by accepting deposits of money from the public, the deposits are to be repaid on demand or after fixed period. They can be withdrawn by the depositors by means of cheque, draft, order or any other way. A Bank accepts deposits (i.e. borrows) for the purposes of lending mainly to traders, industrialists and manufacturers and the like as also, for the
Opinions differ as to the origin of the work "Banking". The word "Bank" is said to be of Germanic origin, cognate with the French word "Banque" and the Italian word "Banca", both meaning "bench". It is surmised that the word would have drawn its meaning from the practice of the Jewish money-changers of Lombardy, a district in North Italy, who in the middle ages used to do their business sitting on a bench in the market place. Again, the etymological origin of the word gains further relevance from the derivation of the word "Bankrupt" from the French word "Banque route" and the Italian word "Banca-rotta" meaning "Broken bench" due probably to the then prevalent practice of breaking the bench of the money-changer, when he failed.
Banking is different from money-lending but two terms have in practice been taken to convey the same meaning. Banking has two important functions to perform, one of accepting deposits and other of lending monies and/or investment of funds. It follows from the above that the rates of interest allowed on deposits and charged on advances must be known and reasonable. The money-lender advances money out of his own private wealth hardly accepts deposits and usually charges high rates of interest. More often, the rates of interest relate to the needs of the borrower. Money-lending was practised in all countries including India, much earlier than the recent type of Banking came on scene.
DEFINITION AS PER BANKING REGULATION ACT 1949
A Bank borrow by accepting deposits of money from the public, the deposits are to be repaid on demand or after fixed period. They can be withdrawn by the depositors by means of cheque, draft, order or any other way. A Bank accepts deposits (i.e. borrows) for the purposes of lending mainly to traders, industrialists and manufacturers and the like as also, for the