Bank : Origin & Definition

Origin of the term ‘Bank’

The term ‘Bank’ seems to have originated and/or derived from different sources like the Germanic word ‘banck’, the French word ‘banque’ and the Italian word ‘banco’. The Germanic word ‘banck’ which means a joint stock fund or heap. The Italian word ‘banco’ refers to a bench at which the money changers used to change one kind of money into another and transact their banking business. Thus, in olden days, banking was associated with the business of money changing/lending.

Definition of a Bank

Chamber’s Twentieth century Dictionary defines a bank as an, “institution for the keeping, lending and exchanging etc. of money”.

According to Banking Regulation Act, “Banking means the accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise”.

Oxford Dictionary defines a bank as "an establishment for custody of money, which it pays out on customer's order."

Prof. Kent defines a bank as, “an organization whose principal operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to others for expenditure”.

It is evident from the above definitions that a bank is an institution which accepts deposits from the public and in turn advances loans by creating credit.

Categories: Banking Basics, Tutorials