Former Divisional Manager, Canara Bank, India
Online published on 14 July, 2015.
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”. This definition establishes the fact that if the purpose of accepting of deposits is not to lend or invest, then it is not banking business. The Section 5(b) is applicable to all scheduled banks operating in India. In general, commercial banks are scheduled banks which are operating throughout this great nation. Money deposited with a bank is always repayable with interest accrued due. Similarly money received from a bank by way of a loan is also repayable with interest accrued due. Both these functions go together and they are the two dimensions of banking namely deposits and advances. Legally money deposited by a customer with a bank is money lent by a customer to a banker. Bank uses this money according to its discretion in compliance to the directions of Reserve bank of India and to the directives of the Government of India.
