Banking, conventionally, is defined as the acceptance of deposits of money from the public for the purpose of lending or investment. These deposits are repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise. Deposits are accepted from individuals as well as from firms. In sum, the nature of banking business can be summarised in two words, i.e., ‘financial inter mediation’, which needs to be carried out efficiently (both operational and allocations) for stimulating the real sectors of the economy. Another essential characteristic of Banks is that they are highly leveraged and, hence, special and need to be regulated for protecting the interest of depositors. As banks are institutions with legal backing and as there is a banking regulator to oversee their financial solvency and soundness, it enables the banks to earn the trust and confidence of the public.
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