Q.Define banking and explain the functions of banking.

Banking is the business of accepting public deposits (repayable on demand or otherwise, withdrawable by cheque or order) for the purpose of lending or investment. Bank functions are of two kinds — primary functions (accepting deposits and advancing loans) and secondary functions (agency services and general utility services). ## Definition of Banking As per the Banking Regulation Act, 1949, banking means "the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise." In simple terms a bank is an institution that collects the idle savings of the public as deposits and lends that money to those who need it, earning its profit from the difference in interest. This is a standard TS Inter 2nd-year Commerce topic, aligned with the NCERT/CBSE commerce treatment of banking. ## Functions of Banking ### A. Primary Functions 1. Accepting deposits. The bank collects surplus money from the public through various accounts: - Current account — for businessmen; no interest; unlimited withdrawals. - Savings account — for households; limited withdrawals; modest interest. - Fixed (term) deposit — money kept for a fixed period at a higher rate of interest. - Recurring deposit — a fixed sum deposited every month for a period, repaid with interest on maturity. 2. Advancing loans. The bank lends the deposited money to earn interest, through: - Loans — a lump sum advanced against security. - Cash credit — credit allowed against the security of stock/goods up to a limit. - Overdraft — a current-account holder is allowed to overdraw up to a sanctioned limit. - Discounting of bills of exchange — paying the holder the present value of a bill before its due date. ### B. Secondary Functions 1. Agency functions (performed on behalf of customers): collection and payment of cheques, bills and promissor …