Banking System

Roles of Banks
 A bank is usually thought of as a reliable agency with which money is deposited. The idea is wanting in precision. Banks do receive valuables for safe custody and undertake to return them, but that is only a subsidiary function. Usually it is jewellery, deeds, securities and similar articles, which are given to the bank as safe custody deposits, but the services rendered by a bank either as depository or as trustee are only a few of the many services some of them of a more important nature, a modern commercial bank renders. In very general terms, the roles of a commercial bank can be classified under the following main heads:
 Receiving of money on deposit:
This is, perhaps, the most important role of almost all modern banks, as it is largely by means of deposits that bank prepares the basis for several other activities. The money power of a bank, by which it helps largely the business community, depends considerably upon the amounts it can borrow by way of deposits, which may be in the form of fixed, savings or current deposits. All these go towards augmenting its resources. The money received on fixed deposits can be used without any risk of withdrawal before the due date, and, in the case of savings deposits, a bank can use a very large part of them, as generally the demands of customers having such deposits are comparatively small, on account of restrictions placed as to the amount to be withdrawn and the number of withdrawals to be made within a week. By the opening of current accounts, a bank not only obtains funds, but also provides its clients with deposit currency, which is both more convenient and more economical than other forms of currency. Buy taking money on deposit, a bank strong room. It is replaced by a debt due from a banker, who ordinarily pays interest so long as the money is retained by him as a deposit. The principal together with interest is returned on its being claimed in accordance with the terms of the contract.
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