INTRODUCTION
Finance is the life blood of trade, commerce and industry. Now-a-days, bank money acts as the backbone of modern business. Development of any country mainly depends upon the banking system.
The word bank was borrowed in Middle English from Middle French banque, from Old Italian banca, from Old High German banc, bank “bench, counter”. Benches were used as desks or exchange counters during the Renaissance by Florentine bankers, who used to make their transactions atop desks covered by green tablecloths.[1] In olden days, European money lenders or money changers used to display (show) coins of different countries in big heaps (quantity) on benches or tables for the purpose of lending or exchanging. Forms of business in which banking companies may engage borrowing, raising, or taking up of money acting as agents for any Government or local authority or any other person or persons carrying on of agency business of any description including the clearing.[2]
DEFINATION
An organization, usually a corporation chartered by a state or federal government, which does most or all of the following, receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests insecurities, collects checks, drafts, and notes, certifies depositor’s checks and issues drafts and cashier’s checks.
An establishment for custody of money, which it pays out on customer’s order.[3]
A place for the deposit of money, an institution, generally incorporated, authorized to receive deposits of money, to lend money, and to issue promissory notes, usually known by the name of bank notes.[4]
[5]“The bank undertakes to receive money and to collect bills for its customer’s account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch. Bankers never do make a payment to a customer in respect of a current account except upon demand.”
In short, A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses. A bank is a financial institution which deals with deposits and advances and other related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it.
USE OF THE WORD “BANK”
BRITISH VIRGIN ISLANDS BANKS AND TRUST COMPANIES ACT
use or continue to use the words “bank”, either in English or in any other language, in the name, description or title under which that person is carrying on business from within the Virgin Islands, whether or not the business is carried on within or outside the Virgin Islands.[6]
THE BANKING REGULATION ACT, 1949-INDIA
“Banking” means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or otherwise.
“Banking company” means any company which transacts the business of banking 11[in India];
Explanation: Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money from the 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; 11 Substituted by Act No. 20 of 1950 for the words “in any State”.[7]
Use of words “bank”, “banker”, “banking” or “banking company”[8]
(1)No company other than a banking company shall use as part of its name [9][or, in connection with its business] any of the words ‘bank’, ‘or” ‘banking’ and no company shall carry on the business of banking in India unless it as part of its at least one of such words.[10]
(2)No firm, individual or group of individual shall, for the purpose of carrying on any business, use as part of its or his name any of the words “bank”, “banking” or “banking company”.[11]
(3)Nothing in this section shall apply to-
(a)A subsidiary of a banking company formed for one or more of the purposes mentioned’ in subsection (1) of section 19, whose name indicates that it is a subsidiary of that banking company;
(b)Any association of banks formed for the protection of their mutual interests and registered under section 25 of the Companies Act, 1956 (1 of 1956).]
LAW IN THE PERSPECTIVE OF BANGLADESH
Use of the Word “Bank” or any of its derivatives.- Every company carrying on the business of banking in Bangladesh shall use the word “bank” or any of its derivatives as part of its name and no company other than a banking company shall use in its name any word calculated to indicate that it is a banking company:
Provided that nothing in this section shall apply to –
a) any subsidiary company of a banking company formed for one or more of the purposes mentioned in subsection (1) of section 26;
b) any association of banks formed for the protection of their mutual interest and registered under section 26 of the Company Act.
Provided further that the Government may, by notification in the official Gazette, and subject to the conditions determined therein, grant the right to use the word “bank” or any of its derivatives as part of its name to any company completely or partly owned or controlled by the Bangladesh Bank, including non-banking companies.[12]
LAW IN THE PERSPECTIVE OF USA
An officially chartered institution empowered to receive deposits, make loans, and provide checking and savings account services, all at a profit. In the United States banks must be organized under strict requirements by either the Federal or a state government. Banks receive funds for loans from the Federal Reserve System provided they meet safe standards of operation and have sufficient financial reserves. Bank accounts are insured up to $100,000 per account by the Federal Deposit Insurance Corporation. Most banks are so-called “commercial” banks with broad powers. In the east and Midwest there are some “savings” banks which are basically mutual banks owned by the depositors, concentrate on savings accounts, and place their funds in such safe investments as government bonds. Savings and Loan Associations have been allowed to perform some banking services under so-called deregulation in 1981, but are not full-service commercial banks and lack strict regulation. Mortgage loan brokers, and thrift institutions (often industrial loan companies) are not banks and do not have insurance and governmental control. Severe losses to customers of these institutions have occurred in times of economic contraction or due to insider profiteering or outright fraud. Credit Unions are not banks, but are fairly safe since they are operated by the members of the industry, union or profession of the depositors and borrowers. A group of judges sitting together as an appeals court, referred to as “in bank” or “en banc.”[13]
OHIO LAWS AND RULES
(A)(1) Except as provided in division (A)(2) of this section, no person other than a bank doing business under authority granted by the superintendent of financial institutions, the bank chartering authority of another state, the office of the comptroller of the currency, or the bank chartering authority of a foreign country shall do either of the following:
(a) Use “bank,” “banker,” or “banking,” or a word or words of similar meaning in any other language, in a designation or name, or as any part of a designation or name, under which business is or may be conducted in this state;
(b) Represent itself as a bank.
(2)(a) A corporation doing business under Chapter 1151. of the Revised Code may use the word “bank,” “banker,” or “banking,” or a word or words of similar meaning in any other language, in or as part of a designation or name under which business is or may be conducted in this state, as provided in section 1151.07 of the Revised Code.
(b) A corporation doing business under Chapter 1161. of the Revised Code may use the word “bank,” “banker,” or “banking,” or a word or words of similar meaning in any other language, in or as part of a designation or name under which business is or may be conducted in this state, as provided in section 1161.09 of the Revised Code.
(c) A corporation doing business under authority granted by the office of thrift supervision may use the word “bank,” “banker,” or “banking,” or a word or words of similar meaning in any other language, in or as part of a designation or name under which business is or may be conducted in this state.
(d) A person, whether operating for profit or not, may use the word “bank,” “banker,” or “banking,” or a word or words of similar meaning in any other language, in or as part of a designation or name under which business is or may be conducted if the superintendent determines the name, on its face, is not likely to mislead the public and authorizes the use of the name.
BANKING REGULATION ACT (AACS) – CAB
Section 7 – Use of words “bank”, “banker”,”banking”, or “banking company “.
No company other than a banking company shall use as part of its name or in connection with its business any of the words “bank”, “banker” or “banking” and no company shall carry on the business of banking in India unless it uses as part of its name at least one of such words. Only cooperative banks are legally authorized to use the word bank, banker and banking.[15]
The Act allows the usage of these names by primary credit society, or a co-operative society formed for the protection of the mutual interest of cooperative banks or cooperative land mortgage banks, or any co-operative society, which is not being a primary credit society but is formed by the employees of commercial banks or a cooperative bank or a primary credit society cooperative land mortgage bank.
CONCLUTION
One may think that a bank is like a moneylender who provides funds to borrowers and charges interest on the loan. But it is not so. A bank is quite different from a moneylender. A bank performs two main functions. Firstly, it accepts deposits, and on that basis it lends money. The moneylenders, on the other hand, advance money out of their own private wealth and usually do not accept deposits from others. Banks are organized institutions. Moneylenders are individuals. Banking activities includes acceptance of deposits as well as lending of money but activities of moneylenders may not include acceptance of deposits. Banks meet the needs of people in general and the business community in particular but Moneylenders meet the needs of agriculturists and poor people. Banks accept tangible and personal security against loans on the other hand Moneylenders generally accept gold, jewelers, or land as security for giving loan. The process of recovery of loan in bank is flexible but it is rigid and strict in the case of Moneylender Company. Interest charged by banks on loan is governed by state banks on the other hand the rate is decided by the Moneylender Company itself. For these reasons the rule is imposed that no other company other than a bank can use the word bank for running their business.
BIBLIOGRAPHY
Wikipedia, the free encyclopedia
General Laws: CHAPTER 167, Section 37
The Banking Company Act (Amendment), 1993
Lawriter – ORC – 1101.15 Using bank, banker, banking, trust or state
de Albuquerque, Martim (1855). Notes and Queries. London: George Bell. pp. 431.
College of Agricultural Banking, RBI, PUNE
Oxford Dictionary
A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.
Joachimson v Swiss Bank Corporation 1921
BANKING REGULATION ACT, 1949 BRITISH VIRGIN ISLANDS BANKS AND TRUST COMPANIES ACT
Banking Regulation Act, 1949 India
Substituted by Act 55 of 1963, w.e.f. 1-2-1964.
Inserted by Act I of 1984, w.e.f. 15-2-1984.
Company act 1949
The Bank Company Act, 1991 Bangladesh
1981-2005 by Gerald N. Hill and Kathleen T. Hill.
Ohio Revised Code, Title [11] XI FINANCIAL INSTITUTIONS, Chapter 1101: BANKS – GENERAL PROVISIONS
Banking Regulation Act (AACS) – CAB
THE BANKING REGULATION ACT, 1949-INDIA
NRS: CHAPTER 659 – ORGANIZATION AND LICENSING OF BANKS
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[1] de Albuquerque, Martim (1855). Notes and Queries. London: George Bell. pp. 431.
[2] College of Agricultural Banking, RBI, PUNE
[3] Oxford Dictionary
[4] A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.
[5] Joachimson v Swiss Bank Corporation 1921
[6] BANKING REGULATION ACT, 1949 BRITISH VIRGIN ISLANDS BANKS AND TRUST COMPANIES ACT
[7] Banking Regulation Act, 1949 India
[8] Substituted by Act 55 of 1963, w.e.f. 1-2-1964.
[9] Inserted by Act I of 1984, w.e.f. 15-2-1984.
[10] Company act 1949
[11] Company act 1949
[12] The Bank Company Act, 1991 Bangladesh
[13]1981-2005 by Gerald N. Hill and Kathleen T. Hill.
[14] Ohio Revised Code, Title [11] XI FINANCIAL INSTITUTIONS, Chapter 1101: BANKS – GENERAL PROVISIONS
[15] Banking Regulation Act (AACS) – CAB