Banks manage the customers' current and savings accounts, pay out checks that have been drawn on the bank by account holders, and also perform the collection of checks deposited in their customers' accounts.
Banks implement a number of other procedures for payments to customers, such as: ATM's (Automated Teller Machines), telegraphic transfer, and EFTPOS (Electronic Funds Transfer at the Point of Sale), or Debit Cards.
The borrowing process of banks is carried out by receiving funds in savings accounts and current accounts and receiving term deposits, as well as through issuance of debt securities, such as bonds and banknotes. Banks also provide loans to customers that are repayable in installmentsas well as lending through investments in tradeable debt securities and other types of lending.
Banks offer a comprehensive variety of payment facilities, and a bank account is regarded as indispensable by the majority of governments, business enterprises, and individuals.
Banks perform the following commercial functions:
- They process payments with the help of online banking, telegraphic transfer, EFTPOS or Debit Card, and other methods
- They issue banknotes, such as promissory notes
- Acceptance of funds on term deposits
- Issuance of bank checks and bank drafts
- Offering performance bonds, guarantees, letters of credit, and other types of documents related to underwriting commitments for securities
- Safe custody of important documents and other valuable items in safe deposit vaults or safe deposit boxes
- Providing loans through installment loans, overdrafts, and others
- Selling and brokerage services related to unit trust and insurance products
- Foreign exchange services
Banks can be categorized into the following types:
Retail Banks
- Postal savings banks
- Commercial banks
- Community banks
- Private banks
- Savings banks
- Community development banks
- Offshore banks
- Building societies
Investment Banks
- Merchant Banks
- Investment Banks
The different types of banking channels offered to customers for accessibility of banking services include the following:
- ATM's (Automated Tellering Machines)
- Bank Branches at different locations
- Telephone banking
- Mail
- Online banking
In order to operate as a bank, a financial services provider has to obtain a banking license. The banking license is issued by the banking regulation authorities.
For further details, please refer to the following links: