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DEFINITION OF BANKS.


As per Section 5(c) of the Banking Regulation Act, 1949 a "Banking Company" means
any company which transacts the business of banking in India.


Explanation: Any company which is engaged in the manufacture of goods or carries on
any trade and which accepts the deposits of money from public merely for the purpose of
financing its business as such manufacturer or trader shall not be deemed to transact the
business of banking within the meaning of this clause."

As per Section 5(b) of 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




DEFINATIONS OF BANKING COMPANIES
A Banking company means any company which transacts the Business of banking
in India. The major carrying on business of banking in India Include:
1. Nationalised Banks
2. State Bank of India and its subsidiaries
3. Private Banking Companies
4. Foreign banks having branches in India
5. Co- operative banks





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OBJECTIVES


Every Bank is required to maintain proper books of accounts and have its accounts
audited.

Because of the nature of its business, a bank has to ensure that its books and
accounts are- (a) Accurate , and (b) up to date. In trading concerns, only day books are
kept up to date, while the ledgers are posted afterwards. A bank cannot postpone the
posting of the Ledgers to a later date and must make entries into Ledgers as soon as a
transaction takes place. Otherwise it would not know the upto the minute balance of its
customers. This may lead to the bank wrongly returning a cheque or allowing excess
withdrawal of cash by mistake. A bank can afford to do neither. So, in banks accounts,
the Ledgers are more important than Journals. The system of book keeping in banks,
therefore, emphasis the maintenance of up-to date ledgers and the daily tallying of the
trial balance.

The definition of a bank varies from country to country. See the relevant country page (below)
for more information.

Under English common law, a banker is defined as a person who carries on the business of
banking, which is specified as:
conducting current accounts for his customers,

paying cheques drawn on him/her, and

collecting cheques for his/her customers.


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In most common law jurisdictions there is a Bills of Exchange Act that codifies the
law in relation to negotiable instruments, including cheques, and this Act contains a statutory
definition of the term banker: banker includes a body of persons, whether incorporated or not,
who carry on the business of banking' (Section 2, Interpretation). Although this definition seems
circular, it is actually functional, because it ensures that the legal basis for bank transactions such
as cheques does not depend on how the bank is structured or regulated.

The business of banking is in many English common law countries not defined by
statute but by common law, the definition above. In other English common law jurisdictions
there are statutory definitions of the business of banking or banking business. When looking at
these definitions it is important to keep in mind that they are defining the business of banking for
the purposes of the legislation, and not necessarily in general. In particular, most of the
definitions are from legislation that has the purpose of regulating and supervising banks rather
than regulating the actual business of banking. However, in many cases the statutory definition
closely mirrors the common law one. Examples of statutory definitions:

"banking business" means the business of receiving money on current or deposit account,
paying and collecting cheques drawn by or paid in by customers, the making of advances
to customers, and includes such other business as the Authority may prescribe for the
purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).

"banking business" means the business of either or both of the following:
1. receiving from the general public money on current, deposit, savings or other similar
account repayable on demand or within less than [3 months] ... or with a period of call or
notice of less than that period;
2. paying or collecting checks drawn by or paid in by customers.