Banking and Credit — Chapter Summary

A bank is an institution

A bank is an institution which accepts money from public as deposits and gives loans to them. It also helps people withdraw money, make payments, and

Banking refers to accepting money from

Banking refers to accepting money from the public for lending or investment, with money withdrawable by cheque, draft, order, or otherwise.

The main functions are accepting deposits

The main functions are accepting deposits from the public and giving loans. Banks also issue cheque books and provide locker facilities for valuables.

Credit is the claim to receive

Credit is the claim to receive payments. It is also a contractual agreement in which a borrower receives something of value now and agrees to repay la

When a bank gives a loan

When a bank gives a loan, it creates a new deposit in the borrower’s name. This process continues in rounds and increases total deposits in the bank s