1.0                   Introduction

                        A bank is a financial institution, which deals with deposit and advance and other related service. It receives money from those who want to save in the form of deposit and lends to those who need it. [1]Banks have some characteristics, which is very important for a bank to be a bank. Bank have to deal with money i.e. money gives by the depositors. A bank lends out money in the form of loans to those who require it for different purposes. A bank provides easy payment and withdrawal facility to its customers in the form of cheques and drafts, [2]It also brings bank money in circulation. This money is in the form of cheques, drafts, etc. A bank provides various banking facilities to its customers. They include general utility services and agency services. A bank is a profit seeking institution having service-oriented approach Banking is an evolutionary concept. There is continuous expansion and diversification as regards the functions, services, and activities of a bank. A bank acts as a connecting link between borrowers and lenders of money. Banks collect money from those who have surplus money and give the same to those who are in need of money. A bank’s main activity should be to do business of banking which should not be subsidiary to any other business. A bank should always add the word “bank” to its name to enable people to know that it is a bank and it is dealing in money. 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. 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.

2.0                   DEFINITION

                          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.

3.0                   What is Bank?

                          [6]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 business like a video store, a restaurant, or a skating rink. The business needs to make enough money to pay the people who work there and the cost of things like electricity, paper, and even paper clips.

In order for a bank to stay open, it needs to get many people to put their money in it. Each bank tries to make THEIR bank look better than all of the others by offering services that some other banks might not have. Another way to get more people to put their money in the bank is to pay them interest. Interest is extra money the bank gives you to keep your money there. This means that you earn money on every taka you put into the bank.

In Bangladesh “banking company” means any company transacting the business of banking in Bangladesh, and includes all new banks and special banks; Explanation. – Any company which is mainly 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.

1. a.      “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;
2. b.      “temporary liability” means any liability other than demand liability;
3. c.       “gold” means gold in the form of coin, whether legal tender or not, or in the form of bullion or ingot, whether refined or not;
4. d.      “register” shall have the same meaning as in the Companies Act.[5]

4.0                   Business of Banking Companies[7]

                          In addition to the business of banking, a banking company may engage in all or any of the following forms of business, namely:-

1. a.      The borrowing, raising or taking up of money;
2. b.      The lending or advancing of money either upon or without security;
3. c.       [8]The drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hoondees, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, participation term certificates, term finance certificates, musharika certificates, modareka certificates, such other instruments as may be approved by the Bangladesh Bank, and such other instruments and securities whether transferable or negotiable or not;
4. d.      The granting and issuing of letters of credit, traveler’s checks, and circular notes;
5. e.      The buying, selling and dealing in gold and silver coins and coins of other metals;
6. f.        The buying and selling of foreign exchange including foreign bank notes;
7. g.      The acquiring, holding, issuing on commission, underwriting and dealing in stocks, funds, shares, debenture stock, obligations, participation term certificates, term finance certificates, musharika certificates, modareka certificates and such other instruments and investments of any kind as may be approved by the Bangladesh Bank;
8. h.      The purchasing and selling of bonds, scrips or other forms of securities, participation term certificates, term finance certificates, musharika certificates, modareka certificates and, on behalf of the constituents of the Bangladesh Bank or others, such other instruments as may be approved by the Bangladesh Bank;
9. i.        The negotiating of loans and advances;
10. j.        The receiving of all kinds of bonds or other valuables on deposit or for safe custody or otherwise;[9]
11. k.      Providing vaults for the safety of the deposits;
12. l.        The collecting and transmitting of money against securities;
13. m.    Acting as agents for the Government, local authorities or any other person;
14. n.       The carrying on of agency business of any description including the clearing and forwarding of goods and acting as a law agent on behalf of customers, but excluding the business of a managing agent or treasurer of a company;
15. o.       Contracting for public and private loans and negotiating and issuing the same;
16. p.      The effecting, insuring and underwriting of shares, stocks, debentures, debenture stock of any company, corporation or association and the lending of money for the purpose of any such issue;
17. q.      The carrying on and transacting of every kind of guarantee and indemnity business;
18. r.       The buying and acquiring of any kind of property including merchandise, patents, designs, trademarks and copyrights, in addition to, at the normal business period of a bank, such or similar transactions as-

r)i     Repurchase by the seller, or

r)ii   Selling in the way called purchase on rent, or

r)iii Repayment of outstanding rates, or

r)iv Leases, or

r)v   Sharing out of revenues, or

r)vi Financing in any other way;

r)vii                       Bringing into possession any property which may satisfy or partly satisfy any of the claims of the banking company and the managing and borrowing of such property;

r)viii                      Acquiring, holding and managing of any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may be connected with any such security;

r)ix Undertaking and executing trusts;

r)x   Undertaking the administration of movable and immovable property as executor, trustee or otherwise;

5.0                   Bank Act[10]

                          This version of section 983 is in force from 2003-01-01 to 2008-05-18.

Use of name

v      983. Except to the extent permitted by the regulations, every person who uses the name of a bank or of a bank holding company in a prospectus, offering memorandum, takeover bid circular, and advertisement for a transaction related to securities or in any other document in connection with a transaction related to securities is guilty of an offence.

v                  Marginal note: Unauthorized use of title “bank”, etc.[11]

Subject to the regulations and subsections (4) to (6.1) and (10) to (12), every entity that acquires, adopts or retains a name that, in any language, includes the word “bank”, “banker” or “banking”, either alone or in combination with other words, or any word or words of import equivalent thereto, and every person who, in any language, uses the word “bank”, “banker” or “banking”, either alone or in combination with other words, or any word or words of import equivalent thereto, to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.

v                  Marginal note: Unauthorized use of the name of a bank holding company[12]

Subject to the regulations and subsections (7) to (9.1), every entity that acquires, adopts or retains, in any language, the name of a bank holding company and every person who, in any language, uses the name of a bank holding company to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.

v                  Marginal note: Permitted use

No person commits an offence that uses the word “bank”, “banker” or “banking”

• (a) in relation to a business that is not engaged in financial activities, unless the business is carried out by a prescribed entity;
• (b) in a description of the corporate relationship of an entity controlled by a bank to that bank;[13]
• (b.1) with the approval of the Minister and subject to terms and conditions that the Minister may impose, in a description of the corporate relationship of an entity in which a bank has a substantial investment to that bank;
• (b.2) in a description of the corporate relationship of an entity controlled by a bank holding company to that bank holding company;
• (b.3) with the approval of the Minister and subject to terms and conditions that the Minister may impose, in a description of the corporate relationship of an entity in which a bank holding company has a substantial investment to that bank holding company;
• (c) in an advertisement in Canada by or on behalf of a foreign bank in respect of its facilities outside Canada;
• (d) in the identification of representative offices of a foreign bank in Canada;
• (e) in relation to the business in Canada of an authorized foreign bank;
• (f) in a description made in accordance with the regulations of the corporate relationship of a bank or a bank holding company with a foreign bank or an entity associated with a foreign bank within the meaning of section 507 that controls the bank or bank holding company;
• (g) in a description made in accordance with the regulations of the corporate relationship of a prescribed Canadian entity with a foreign bank or an entity associated with a foreign bank within the meaning of section 507;
• (h) in a description made in accordance with the regulations of the corporate relationship of a prescribed entity associated with a foreign bank within the meaning of section 507 with the foreign bank or with another prescribed entity;
• (i) in the identification of a body corporate that was a non-bank affiliate of a foreign bank within the meaning of subsection 303(1) of the Bank Act, being chapter B-1 of the Revised Statutes of Canada, 1985, at any time before June 1, 1981;[14]
• (j) in the identification of a Canadian financial institution that
  • (i) was controlled by a bank that was a subsidiary of a foreign bank before June 15, 1997 but that has ceased to be so controlled,
  • (ii) is controlled by a foreign bank that, before June 15, 1997, controlled the subsidiary, and
  • (iii) used, before June 15, 1997, the word “bank”, “banker” or “banking” to identify itself; or
  • (k) In the identification of a bank holding company.

v                  Marginal note: Permitted use

No subsidiary of a bank commits an offence by reason only that it uses the name of the bank of which it is a subsidiary in its corporate name or a name under which it carries on business or by reason only that it uses any identifying mark, logogram or insignia of that bank in carrying on its business.

6.0                   OHIO LAWS AND RULES[15]

                          1101.15 Using bank, banker, banking, trust or state in designation or name[16]–

(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:

1. 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;
2. 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.[17]

7.0                   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.[18]

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.

8.0                   Use of the Word “Bank” in Bangladesh[19]

                          Every company carrying on the business of banking in Bangladesh shall use 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.

It clearly define that only banking company can use “bank” word, other company don’t have any rights to use this word.

9.0                   Use of the Word “Bank” in other countries and comparison

                           Bellow I have discussed the use of bank under some other countries perspectives.

9.1                        THE BANKING REGULATION ACT, 1949-INDIA[20]

“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”.

Use of words “bank”, “banker”, “banking” or “banking company”[8]

1.         i.            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’, ‘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.
2.       ii.            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”.
3.     iii.            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).

9.2                        LAW IN THE PERSPECTIVE OF USA[21]

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.”

9.3                        Use of the word ‘bank’ in Australia[22]

There are a number of instances where consent under s. 66 has been granted. Banks authorized deposit-taking institutions (ADIs) listed on the APRA web site as banks have been given an unrestricted consent to use the words ‘bank’, ‘banker’ or ‘banking’. This allows the ADI to use the word bank:

1.                                             i.            In its company name or trading names; or
2.                                           ii.            To describe or to advertise its business.

Consents are granted together with the authorities granted to ADIs representative offices of foreign banks. A foreign bank, which has a current consent to maintain a representative office in Australia, may use the word ‘bank’ or its equivalent as part of the bank’s corporate name in the descriptive title of its representative office in Australia. Consents are granted together with consent to maintain a representative office. Foreign banks raising funds in Australia. Overseas banks may, subject to certain conditions, use the words ‘bank’, ‘banker’ or ‘banking’ in relation to the business of raising funds in the Australian wholesale capital market by way of issuing securities. This exemption is made under Banking (Exemption) Order No. 82 dated 23 September 1996.

9.4                        Use of the word “Bank” in New Zealand Act 1989[23]

The Reserve Bank of New Zealand Act 1989 limits the use of the words “bank”, “banker” and “banking” (referred to as the “restricted words”). Section 64 provides that:  No person may-

Be formed, incorporated, or registered  using a name or title that includes a restricted word; or

1.         i.            Change a person’s name or title to a name or title that includes a restricted word; or
2.       ii.            Carry on any activity directly or indirectly in New Zealand (whether through an agent or otherwise) using a name or title that includes a restricted word.

The legislation also exempts certain persons from this restriction, i.e.:

• Registered banks;

• Any person who is exempted by section 66; and

• Any person who is authorized by the Reserve Bank, under section 65, to use a name or title that includes a restricted word.

Section 66 of the Act states that the restrictions in section 64 do not apply to a person using a name or title that includes a restricted word if:

1. a.      The restricted word signifies a geographic place name or the name of a natural person; and
2. b.      The name or title is not used in respect of a financial institution, or could not reasonably be mistaken for the name or title of a financial institution.

Section 65, which gives the Reserve Bank the power to authorize the use of restricted words, states:

The Bank may authorize any of the following persons to use a name or title that includes a restricted word:

1. a.      A person licensed or registered as  a bank in a country other than New Zealand:
2. b.      A class of persons licensed or registered as banks in a country other than New Zealand:
3. c.       a person that is formed, incorporated, or registered to represent the interests of-
   1.                                                                                                      i.            Any registered bank; or
   2.                                                                                                    ii.            Any person connected with a registered bank;
   3. d.      An associated person of a registered bank;
   4. e.      A registered bank or an associated person of a registered bank that intends to use a name or title that includes a restricted word in respect of a unit trust of which the registered bank or the associated person is a trustee or manager within the meaning of the Unit Trusts Act 1960;
   5. f.        A person that is not a financial institution.

9.5                        BRITISH VIRGIN ISLANDS BANKS AND TRUST COMPANIES ACT[24]

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

9.0                   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.                                             

References

v    Constitution/Laws/ Cases

1. Banking Regulation Act, 1949 India
2. Banking Regulation Act (AACS) – CAB
3. BANKING REGULATION ACT, 1949 BRITISH VIRGIN ISLANDS BANKS AND TRUST COMPANIES ACT
4. Company act 1949
5. General Laws: CHAPTER 167, Section 37
6. Inserted by Act I of 1984, w.e.f. 15-2-1984.
7. Inserted by Act I of 1984, w.e.f. 15-2-1984.
8. Substituted by Act 55 of 1963, w.e.f. 1-2-1964.
9. The Banking Company Act (Amendment), 1993
10. The Bank Company Act, 1991 Bangladesh
11. THE BANKING REGULATION ACT, 1949-INDIA

v    Books and Articles

1. A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.
2. de Albuquerque, Martim (1855). Notes and Queries. London: George Bell. pp. 431.
3. de Albuquerque, Martim (1855). Notes and Queries. London: George Bell. pp. 431.
4. Lawriter – ORC – 1101.15 Using bank, banker, banking, trust or state
5. NRS: CHAPTER 659 – ORGANIZATION AND LICENSING OF BANKS
6. Oxford Dictionary
7. Ohio Revised Code, Title [11] XI FINANCIAL INSTITUTIONS, Chapter 1101: BANKS – GENERAL PROVISIONS
8. 1981-2005 by Gerald N. Hill and Kathleen T. Hill.

v    Others

1. College of Agricultural Banking, RBI, PUNE
2. Joachimson v Swiss Bank Corporation 1921
3.  Wikipedia, the free encyclopedia