What is a Bank

Definition: A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as: conducting current accounts for his customers, paying  cheques drawn on him, and collecting cheques for his customers.

Basics: Banks are highly regulated in most countries. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the funds deposited and lend out the rest for profit. They are generally subject to minimum capital requirements which are based on an international set of capital standards, known as the Basel Accord.

History: Banking in the modern sense of the word can be traced to medieval and early Renaissance Italy, to the rich cities in the north like Florence, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe. One of the most famous Italian banks was the Medici Bank, set up by Giovanni di Bicci de' Medici in 1397. The earliest known state deposit bank, Banco di San Giorgio (Bank of St. George), was founded in 1407 at Genoa, Italy.

Banking Products:

—  Retail banking

—  Checking account

—  Savings account

—  Money market account

—  Certificate of deposit (CD)

—  Individual retirement account (IRA)

—  Credit card

—  Debit card

—  Mortgage

—  Home loan

—  Mutual fund

—  Personal loan

—  Time deposits

—  ATM card

—  Business (or commercial/investment) banking

—  Business loan

—  Capital raising

—  Project finance

—  Risk management

—  Term loan

—  Cash Management Services (Lock box, Remote Deposit Capture, Merchant Processing)

ADVANCES AND GUARANTEES

Advances

Sanctioning advances to its customers in different forms is one of the basic functions of a bank

Forms of advances can be broadly categorized into the following:

   a) Loans, overdraft and cash credit;

   b) Bills purchased and discounted.

Loans

Loans are advances that are allowed for a specific purpose and generally the period for payment is fixed. A loan is granted in a lump sum which is payable either by installments or in lump sum with or without interest or any charges. Generally loans are sanctioned to those borrowers who have a fixed source of income or who is capable of repaying the whole debit amount.

Overdraft

Overdraft is a kind of advance that is allowed against a current account. This current account must be operated by a cheque. There are limitations as to the amount of money and the drawing time in case of an overdraft. The borrower is allowed to draw money as many times as his convenience satisfies but he cannot exceed the agreed limit. 

Cash credit

This type pf advance is generally made to industrialists and agricultural people etc. The agreement in this case is such that the limit of credit will go up with the increased production and will go down with the decrease in production. This privilege is provided by the bank on taking the possession of the goods or products in the storage. However, the ownership remains with the borrower. 

Bills purchased and discounted

By this type of grant the bank allows the advance payment under a bill of exchange before the time of its maturity. In this case, when the person draws money under the bill, the bank becomes the holder of the bill for value and gets absolute title to it.

Guarantees

A guarantee contract is made in order to safeguard the payment of an advance or loan made by the bank to a borrower. In case the borrower fails to repay the lent amount and his personal security is not sufficient, an additional security in the form of guarantee is sought by the bank from a third person. The guarantor gives personal undertaking to the bank for the payment of debt.

Statutory definition:

   A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default. (Sec: 126, Contract Act, 1872)

Kinds of Guarantee:

   a) Specific Guarantee;

   b) Continuing Guarantee.

Specific Guarantee:

   A guarantee is given in respect of a single transaction undertaken by the principal debt.

Continuing Guarantee:

   A guarantee is given in respect of a series of transactions. However, the amount up to which the guarantor will be liable.

What is Defamation

The law of defamation protects people against untrue

statements that could damage their reputation, and is

probably the single most important area of law for any

journalist to know about. One of the reasons for this is that defamation can affect journalists in any field of work. If you work, for example, for a trade magazine or in the women’s press, it’s quite possible that you will never need to think

about court reporting or official secrets after you’ve passed

your law exams. But almost every kind of journalist, on

almost every kind of publication, has the potential to

defame someone, and some of the most high-profile

defamation cases have involved quite small publications.

The second reason why defamation is such an important part of the law for journalists is that being successfully sued for it can be very expensive. Damages in defamation cases are usually decided by juries; as a result, they are very unpredictable, and can be extremely high. One

careless piece of research or unchecked statement could end up costing a publisher tens of thousands of pounds in damages – sometimes even hundreds of thousands – and as much again, sometimes more, in legal fees. Big national papers can absorb such losses (though decreasing circulations mean even they find it difficult), but for smaller magazines, losing a libel case can be disastrous. The magazine Living Marxism was actually forced into liquidation after being order to pay damages of £375,000 in a libel case in 2000. Because of this, most publishers are very nervous of libel actions. One result of this is that, faced with a threat of libel, even where the

journalist believes that the story is legally sound,

many publishers will choose not to run it, or to water it down. In this way the threat of a libel action can be used to prevent publication of stories that really ought to be

brought to the public’s attention. Similarly, many

publishers, faced with a complaint about a story that has

already been published, will back down, print an apology and if necessary, agree to pay some compensation, rather than allow the case to go to court and risk huge legal costs

and possibly damages. In fact most libel claims are settled out of court, and court hearings are rare. None of this means that journalists should be so scared of being sued that we never write anything that upsets anyone, but it does mean that every journalist needs to understand

thoroughly the basic rules of this area of the law – not just

so that you know what not to write or say, but because defamation law does give some protection to press

freedom, and by knowing the rules, you can often safely

say more than you might imagine. Many newspapers

and magazines publish potentially defamatory material every day but by making sure that what they print is covered by one of several defenses to defamation, they can do so safely.