The Banking System
A bank is in institution with a twofold function. First, it keeps people's money safe and readily available. In this way it functions as saving a bank. Secondly, it lends money to people who need. It is also, therefore, a moneylender.
Anyone can go to any bank and deposit money, that is, ask the bank to look after it. He becomes a customer of the bank. When he deposit money, we say he opens a bank account. There are two types of bank account. The first is a current account. When a customer deposits money on a current account, he can make withdraw the money only at maturity date. Interest is paid for this type account.
A bank receives deposits from customers, as well as lends money to its customers. A person who wants to borrow money has to give the bank something as collateral for instance, a certificate showing ownership of property. Whwn customer has bank loan, the bank charges him interest on the money he has borrowed. The bank does not always give the borrower actual money. it may credit his account with the amount borrowed, exactly as if he had deposited the amount of the bank.
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Anyone can go to any bank and deposit money, that is, ask the bank to look after it. He becomes a customer of the bank. When he deposit money, we say he opens a bank account. There are two types of bank account. The first is a current account. When a customer deposits money on a current account, he can make withdraw the money only at maturity date. Interest is paid for this type account.
A bank receives deposits from customers, as well as lends money to its customers. A person who wants to borrow money has to give the bank something as collateral for instance, a certificate showing ownership of property. Whwn customer has bank loan, the bank charges him interest on the money he has borrowed. The bank does not always give the borrower actual money. it may credit his account with the amount borrowed, exactly as if he had deposited the amount of the bank.
