The bank is an essential part of our daily life. It is essential to know the basic details about banks like, What is a bank, Who regulates Bank, and What are the services offered by Banks to the customers. Also will cover the topics like How bank makes revenue and How banks are rated. In addition, this blog will share pieces of information like What is a basic banking account and what are the different types of bank accounts.
What is a Bank?
A bank is a financial institution that accepts deposits and Lends money to the public. These activities can be performed either directly or indirectly through capital markets. Bank offers a wide range of personal banking services including locker, loans, credit and debit cards, savings, money transfer. Money exchange etc.
Who regulates Bank?
All banks are highly regulated by the country’s reserve banking organization due to their importance in the financial stability of a country. The concept of banking has begun from the barter system period in ancient Babylonia and Assyria. It starts with in merchants who can offer loans against the grain as collateral.
What are the services offered by the Bank?
- Banks act as borrower and payment agents for customers.
- Bank accepts money from the customer and safeguard it in customers current account and provide them money as and when they required.
- Bank provides loans to the customers for personal and business needs against the collateral.
- Banks have many payment methods such as Automated Clearing House (ACH), Online transfer, Wire transfers or telegraphic transfer, and automated teller machines (ATM).
How the bank makes revenue?
Banks generate revenue by charging interest on the capital it lends out to customers, transaction fees, charging for locker facilities, and financial advice providing to the customers. Banks also provide different payment processing products to make it easier for consumers to conveniently make transactions like debit cards, prepaid cards, and credit cards and they charge for these services.
How banks are rated?
Banks face a number of risks in order to conduct their business, the efficiency of a bank is based on how well these risks are managed. The rating is given to banks by the credit rating agencies after analyzing their business and finance risk.
What are the two main types of banking?
Banking and financial institutions are categorized into commercial banks and Central banks. Commercial banks are consumer-facing banks, who provided loans and receive funds directly from the public. Central banks are the government entities to regulate the monetary policy in the country.
What is a basic banking account?
Basic bank accounts are products designed for poor citizens who can’t afford the AMC and charges needed to maintain the normal account. This account helps the citizens to store the money and get primary banking services like fund transfer, bill payments… at a very nominal charge. Proof of address and identity are the documents needed to open a basic bank account or joint basic bank account. AMC will be nil for the basic bank account, if the holding crossed the threshold, it will convert to the normal bank account.
What is the different type of bank accounts?
The main two types of bank accounts are Savings bank Account and Current bank Account. In addition, we can subclassify the bank account below.
Understanding Bank is an essential part of our daily life. Before opening an account, it is essential to understand different types of accounts which will help to choose the right type of account. As there are many nationalized banks around us, we need to choose the right bank on the basis of our requirements and the service which they provide to us, and the charges applicable.
Thanks & Regards