Banking

Commercial banks are an important institution of the economy, providing institutional credit to their customers.

What banking means

• In India, a banking company is one that transacts the business of banking — that is, accepting deposits of money from the public for the purpose of lending and investment, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise.
• In simple terms, a bank accepts money on deposit repayable on demand and earns a margin of profit by lending money.

What a bank does for the economy

• It stimulates economic activity by dealing in money.
• It mobilises people's savings and makes funds available to businesses to finance their capital and revenue expenditure.
• It also deals in financial instruments and provides financial services for a price — interest, discount, commission, and so on.

Ownership types (introduced here, detailed next)

• Public sector banks — the government holds a major stake; they emphasise social objectives over profitability. …