A Bank is not an easy task as it may appear to a layman, for whom a bank is the one wihch accepts deposits from the public and lends money. It may seem strange, but it is impossible to lay down any general defination of the term banking or bank. The reason for this is that the concept of banking has varied from age to age and continues to vary from country to country at least in the legal sense.
- Origin: We are begning the study of commercial banking by looking to it’s origin. It’s origin, in the most simple form, can be traced to the origin of authentic history. Soon after society recognised the benefits of using money as a medium of exchange, it recognised the need for a ” safe place” to store it. This safe place ultimately evolved into financial institutions that accept deposits and make loans’ i.e. the modern commercial banks.
- Origin in India: In India as early as the vedica era, banking existed in its crude form. The works of manu, contain references to deposits, pledges, policy of loan and rates of interest etc. The original banking operations were in the hands of indigenous bankers, who dominated the finance to the extent that they provided credit to the government of the also day.
- Origin in Europe. There is evidence to show that the pratices of safe keeping and savings banking flourished in the temples of babylon as early as 2000 B.C.. Centuries before the evolution of modern banking, the priests of Greek temples carried on a thriving business of safe keeping and lending. From the ruins of babyloniua, caly tablets have been found. This indicates that credit instruments in the form of promises and orders to pay gold and silver were used in the ninth century. The art of banking fell with the roman empire. However, in the 15th and 16th centuries, Europe saw the re-emergence of commerce and trade. In this revival of commerce and trade at least three principal business activities institutions to which commercial banking can be traid were also revived.
These three instutions are:
- the merchant-trader.
- the goldsmith.
- the money-lender.
- Orgin of the word ‘BANK’: On the other hand, even the origin of the word”bank” is shrouded in mystery. Accourding to one viewpoint, the italian business houses carrying on crude form of banking were called”banchi bancherii”. According to another viewpoint, the word “Bank” is derived from the German word ‘banck’ which means heap or a moud.