Sbi's Financial Statement

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Nature and Scope of Banking

32.1 Introduction
You have studied in lessons 7 and 10 that banking is an important aid t idsr ad tae ad ta i as poie a vrey o srie o nuty n rd, n ht t lo rvds ait f evcs to the public in general. Indeed banking may be regarded as an indispensable part of the economy of every country. The significance of banking has increased all over the world with the rise in income levels and growth in the volume of financial transactions.
In this lesson, we shall study about the nature and socpe of banking ad is atvte. n t ciiis

32.2 Objectives
After studying this lesson, you will be able to — l describe the terms bank and banking;


distinguish between banks and money lenders;

l …show more content…

A non–professional money lender, on the other hand, is either a merchant, or a trader, or a member of the business community, whose main activity is not money lending. Such money lenders engage in money lending as a side activity.
A money lender normally meets the cash requirements of the public.
He gives loans for consumption purposes such as marriages and other social functions. The rate of interest charged by him is generally very high. He may give loans against the security of jewellery, household ies poet ad ast a wl a aant proa scrt. Patcs tm, rpry n ses s el s gis esnl euiy rcie adopted by money lenders are known to be manipulative in nature. For

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instance, they do not furnish receipt of payments made, manipulate books of accounts, and realise more money than the original loan. The money lending practices of money lenders are considered to be exploitative and socially undesirable.
Distinction between bank and money lender
S.No. Basis


Money lender

1 Ett
. niy

Banks are organised isiuin ntttos

Money lenders are gnrly idvdas eeal niiul.

2 Nature

Banks are professional organisations Money lenders may or may not be professionals.

3 Atvt
. ciiy

Banking activities include acceptance o dpst fr lnig f eois o edn.

Activities of money lenders may not include acceptance of deposits.

4 Cins
. let

Banks meet the needs of people in

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