Meaning and Definitions of Bank

What is bank? Or Define bank.

Meaning and Definitions of Bank

_{The term ‘bank’ has originated from the Italian word ‘Banco’. In French it is called ‘Banke’ which in English become Bank. German believes that the term ‘bank’ was coined from ‘Bnck’. The word bank is emerged from the Italian word ‘Banco’, ‘Bancou’ or ‘Bancus’. All these terms are concluded as ‘Bench’ as there was the tradition in Italy that most of the moneylenders used to sit on the bench to do their money transactions. On the basis of which the word ‘bank’ has been used for the institutions practising money transactions. According to other scholars, the term bank was originated from the German term, ‘Banck’ which refers to the joint treasure. According to Macleod it is the symbol of joint-money collection of various people.}

Definitions of bank can be classified into following categories.

Definitions as per above category are as under :

(a) Functional Definitions –

Following are the functional definitions of banks :

(i) According to Gilbert, “Bank deals in capital, or in suitable words in money.”

(ii) According to Walter Leaf, “A banker is an institution or individual who is always ready to receive money or deposits to be returned against the cheques of their depositors.”

(iii) According to D. L. Hart, “A banker is one who, in the ordinary course of business, receives money which he repays by honouring cheques of persons from whom or on whose accounts he receives it.”

Bank means any bank which transacts the business of banking. But the function of bank are not limited to only borrowing and lending of money.

(b) Institutional Definitions –

These are as under :

(i) According to Horace White, “Bank is a manufacturer of credit and a machine for facilitating exchanges.”

(ii) According to Sayers, “Ordinary banking business consists of changing cash for bank deposits and bank deposits for cash; transferring bank deposits from one person or corporation (one depositor) to another, giving bank deposits in exchange for bills of exchange, government bonds, the secured or unsecured promises of businessmen to repay, etc.”

(c) Legal Definitions –

Following are legal definitions of bank:

(i) According to the Banking (Regulation) Act, 1949, “The accepting, for purpose of lending or investment, of deposits of money from the public repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise, these are banking functions and a company which does all this is a banking company.”

(ii) According to Negotiable Instruments Act, “Banker includes any person acting as a banker.”

(d) Appropriate Definition –

The definition given in the Webster’s Dictionary is the best one.

According to Webster’s Dictionary, “Bank is an institution which trades in money, an establishment for the deposits, custody and issue of money, as also for making loans and discounts and facilitating the transmission of remittances from one place to another.”

On the analysis of above definitions it can be concluded that bank deals mainly with money and credit. Bank is an establishment which accepts deposits and lends money on credit.

Related Link