Wednesday, July 31, 2013

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
  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)

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