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SAI INTERNATIONAL SCHOOL
CLASS-XI

SUB: BUSINESS STUDIES
Chapter 4: BUSINESS SERVICES
Lesson Notes 17 BANKING SERVICES

Banking services:

Commercial banks are an important institution of the economy for providing institutional credit
to its customers. A banking company in India is the one which transacts the business of banking
which means accepting, for the purpose of lending and investment of deposits of money from the
public, repayable on demand or otherwise and withdrawable by cheques, draft, and order or
otherwise. In simple terms, a bank accepts money on deposits, repayable on demand and also
earns a margin of profit by lending money. A bank stimulates economic activity in the market by
dealing in money. It mobilises the savings of people and makes funds available to business
financing their capital and revenue expenditure. It also deals in financial instruments and
provides financial services for a price i.e., interest, discount, commission, etc.

Banking and Social Objectives

In the recent past there has been a concerted effort by the policy makers in reorienting
banking towards achieving social objectives. There has been a major shift in the banking
policy of the country:

From To
(i) Urban orientation Rural orientation
(ii) Class banking Mass banking
(iii) Traditional Innovative practices
(iv) Short term objectives Development objectives

Type of Banks:

The focus of banking is varied, the needs diverse and methods different. Thus, we need
distinctive kinds of banks to cater to the above-mentioned complexities. Banks can be classified
into the following:
1. Commercial banks
2. Cooperative banks
3. Specialised banks
4. Central bank