What is a Bank?
A bank is a licensed financial institution that provides services such as savings, withdrawal of savings, loan disbursement and others. The bank provides loan to individuals and institutions who want to borrow money while taking deposits from the savers who want to save. Banks are also called financial intermediaries. Keeping money in the bank means making your earnings transparent and secure. You can obtain the full details of interest, withdrawn amount or deposit amount from the bank.
Banks and financial institutions are needed to enhance public confidence in the overall banking and financial system, to protect and promote the rights of depositors, to strengthen the national economy and maintain financial stability by providing quality and reliable banking and financial services through healthy competition between the BFIs.
Benefits Of Taking Banking Services
The major benefits of doing transactions with the bank include:
(A) The amount saved in the bank is secured.
(B) Saving in a bank earns interest according to the amount saved.
(C) In case of need, you can withdraw money from the bank when required.
(D) If you have a bank account, you can receive or send money from home or abroad.
(E) You can take the loans from banks when required.
(F) You can make payment for various goods, services or utilities through the bank.
(G) Social security allowances, pensions, salaries or amounts provided by the government can be obtained from the bank account.
(H) People availing the services of banks and financial institutions do not have to carry large sums of money from one place to another. The required amount can be withdrawn from the branches or ATM machines of various banks. In this way the risk of losing money can be reduced.
You May Also Like:
Types Of Bank Account
There are different types of bank accounts. Of these, current accounts, savings accounts and term accounts are more common. A current account is an account where you can deposit and withdraw any amount of money you want at any time of the day. There is no interest on the amount saved in the current account. This account is more useful for offices/businesses carrying day to day transactions.
The amount can be deposited in the savings account as many times but the amount can be withdrawn only within a certain limit. The bank pays certain interest on the savings account deposits.
The term deposit (fixed deposit) is deposit of the sum of money for a fixed period of time- 3 months, 6 months, 1 year, 2 years, 5 years or more. Generally, it is not possible to withdraw money from the term deposit account until the payment period has expired. You can earn higher interest income in term deposit account. Similarly, in case of great need of money, one can take a loan of up to ninety percent of the amount in the term deposit account.
What is Know Your Customer (KYC) ?
KYC or Know Your Customer is a form where the bank maintains complete details of its customers. When opening a bank account, it is mandatory to fill up a KYC form. The form should fully disclose your photo, identity card, address and family details.
To open a savings account, you need a account opening form, photo and proof of residence (such as a water, telephone or electricity receipt). At the same time, you should fill the KYC form and submit in the bank. In this way, the bank gets to know a lot about its customer and becomes confident in the relationship and business with the customer. The bank has well-kept details related to customer identification and can easily contact the customer when needed.