Banking Regulation Act of India, 1949 defines Banking as
"accepting, for the purpose of lending or investment of deposits of money from the
public, repayable on demand or otherwise and withdrawable by cheques, draft, order or
Most of the activities a Bank performs are derived from the above definition. In addition,
Banks are allowed to perform certain activities which are ancillary to this business of
accepting deposits and lending. A bank's relationship with the public, therefore, revolves
around accepting deposits and lending money. Another activity which is assuming increasing
importance is transfer of money - both domestic and foreign - from one place to another.
This activity is generally known as "remittance business" in banking parlance.
The so called forex (foreign exchange) business is largely a part of remittance albeit it
involves buying and selling of foreign currencies.
The law governing Banking Activities in India is called "Negotiable Instruments Act
1881". The banking activities can be classified as :
Accepting Deposits from public/others (Deposits)
Lending money to public (Loans)
Transferring money from one place to another
Acting as trustees
Acting as intermediaries
Keeping valuables in safe custody
A Bank Account is the record of financial relationship a customer has with the Bank. It
contains details of all the moneys deposited with the Bank and withdrawn from it. There
are many Bank accounts, but basically there are two types: