"BANKS

WHAT IS A BANK?
A bank is an organization, usually a corporation, that accepts deposits, makes (grants) loans, issues credit and debit cards, pays, cheques, and performs some other services.
HOW DOES A BANK ACT?
A bank acts as an intermediary between suppliers of funds (depositors) and users of funds (borrowers).
WHY DID BANK COME INTO EXISTENCE?
Banks take over the major risks related to monetary transactions and provide the main element of security for both depositors and borrowers.
WHAT MAIN TYPES OF BANKS EXIST?
Saving Banks – sometimes called thrift institutions are usually financial institutions that accept consumer
deposits and make primary consumer loans and residential mortgages.
Commercial Banks – gather funds from depositors and inter-bank markets and invest them principally in
both personal and commercial loans.
Investment Banks – manage dealing and investment securities for customers and for their own trading
account.
HOW DO BANKS EARN MONEY?
The principal component of bank earnings is interest. To determine the banks profitability we need to know the differential between the interest paid and interest earned. Fees are another source of bank income.
BANK STRUCTURE
The structure of the bank depends on its size. There is always a head office, sometimes called headquarters. Each bank usually has a branch network. Branches are organized in a special way because they serve as selling points (these are the places which serve customers and make the principal profit of the banks).
The most important part of any branch is a front office with a lot of counters where customers open or close their accounts, deposit or withdraw money, etc. Then there is a back office where transactions are processed.
BANK ACCOUNTS
Current account – pays very low interest but on the other hand the bank usually does not charge any fees for
running it.
Deposit account – money deposited by a customer can earn much higher interest, but he cannot withdraw his
money at any time without losing interest. He has to give notice which depends on the period
of a time deposit account.
Giro account – a type of current accounts. The interest is not very high but is usually slightly higher than in
typical current accounts. In our country it is an account to which salaries are typically paid
(they are directly transferred from the companies for which the customers work). This is a
simple system allowing payments of rent, gas, water and electricity bills, TV and radio charges.
A BANK LOAN
…is an agreed sum of money lent by a bank to a customer to be repaid at a later date, usually with interest (a contract between a buyer (a borrower) and a seller (a lender)).
Telephone banking
As the banking hours do not always match customers working hours, the banks have introduced new services in order to help their customers to gain access to their accounts whenever it suits them – day or night.
There are business lines for companies and private entrepreneurs and private lines for individuals. These lines give customers access to their accounts 24 hours a day, 7 days a week, enabling them to:
- - check their balances, both business and personal
- - transfer money between accounts
- - check particular payments
- - pay bills or invoices from suppliers
- - obtain a list of the scheduled and confirmed transactions
- - order cheque books, pay-in books and statements"