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Abstract: Banks play a major role in all the economic and financial activities in modern society. They are playing key role in activities financing the industries. All trade and commerce would slow down badly if banks were not there to handle their financial transactions. The economic development of a modern society depends on industrial growth and modernization of agriculture. Banks promote both these activities; they mobilize small deposits from the public and provide financial resource to big industries. Thus the banks perform the major task of capital formation. They motivate and lure the common people to save money and earn interest. This money otherwise would be wasted in marriages or hoarded and lie unused in iron safes. Banks mop up the funds lying idle in every home.
Keywords: bank, history of banking, banking system, bank functions, types of bank, law of banking, banking channels.
1. INTRODUCTION
There are many definitions for the word bank. Cunderlík (1991) says that Bank is universal naming for business (institution) specialized in money trading, money and capital intermediation. Bernard and Colli (2002) say that Bank is a business, which professional externalization is receiving funds from public in forms of deposits or other ways on own account and using them on discount operations, loans and other financial operations. Wikipedia also provides information about what a bank is. It says, that A bank is a financial institution that accepts deposits and channels those deposits into lending activities. Banks primarily provide financial services to customers while enriching investors. Banks are important players in financial markets and offer services such as investment funds and loans.
2. ORIGIN OF THE WORD
The name bank derives from the Italian word banco, which means "desk" or "bench". This word was used during the Renaissance by Jewish Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times, which indicates that the word 'bank' might not necessarily come from the word 'banco'.
In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the...