BANK ESSAY 3 (600 WORDS)

BANK ESSAY 3 (600 WORDS)

Introduction

Banks are financial institutions that lend money and accept deposits from general public. Banks maintain the flow of money in the country and are important for its economic growth. There are different types of banks that offer different kinds of services to individuals as well as businesses.

Types of Banks

Here are the various types of banks and their functions:

1. National Banks

Also known by the name, Central or Federal bank, these banks manage the financial system of the government. These non-profit making institutes serve as bankers to the other banks. There is one Central bank in every country. Some of the functions of National banks include supervising foreign exchange, controlling the country’s currency and issuance of paper currency. They do not deal with the general public.

2. Retail Banks

These are the most common types of banks. These are mainly set up to focus on the requirements of the general public. They open your savings account, provide credit cards, give loans and provide locker facility among other services.

3. Saving Banks

These are especially established to inculcate the habit of saving money among the people. The deposits from the customers are turned into securities and bonds in these banks. These were set up way back in the 18thcentury in European countries. Besides, accepting deposits from individuals these banks offer various other services too.

4. Commercial Banks

The main aim of these banks is to aid the business class. They provide loans to the businessmen and also provide other services that are useful for the business men. Some of these services include bill of exchange, overdraft and cheque collection.

5. Investment Banks

These banks are also set up to aid the businesses. These banks help the businessmen establish a foothold in the financial markets. Investment banks facilitate those businessmen who require selling debt to the investors or want to go public with their business.

6. Land Mortgage Banks

Also known as agricultural banks or Land Development banks, these are mainly set up to aid the agricultural sector by financing it. These banks also play an important part in land development. The reason why this special category of banks has come into being is that there is a lot of risk in financing the agricultural sector and the commercial banks that support other businesses are not ready to take such risk.

7. Co-operative Banks

Co-operative banks provide loans to small-scale farmers, small-scale businesses and salaried people. They provide both commercial and retail services to people. These banks are registered under Co-operative Societies Act, 1912.

8. Consumer Banks

These banks have exclusively been set up to provide loan for purchasing durable consumer goods such as car, washing machine, refrigerator, furniture, etc. These banks give their consumers the leverage to repay loans in easy instalments. These are mostly found in first world countries.

9. Industrial Banks

Also known by the name Development Banks, these banks are established to aid the industrial sector. These banks accept cash by issuing shares and debentures. They provide long-term loan to the industries to help them expand and develop. Many such banks have been established in the country post independence.

10. Exchange Banks

These banks are particularly engaged in financing foreign trade. Some of the main functions of these banks include discounting foreign bills, purchasing and selling silver and gold and providing assistance in carrying out export and import trade.

Conclusion

Banks are established to ease the financial issues of the general public as well as the country as a whole. Different types of banks serve different purposes and have been set up to cater to the needs of various classes.