We all know that a bank is perhaps the safest place for us to keep our valuables. But have you ever wondered how they work? Let’s find out.
For any favour that you seek from a bank, you need to open an account in the beginning. You deposit money in this account, which later goes into a larger pool of money that is formed by similar deposits.
To give you more details about your account, the bank officials will issue a pass book, and a cheque book. The latter helps you withdraw money from the account.
Besides keeping your money safe, banks also give loans, which are to be repaid with an additional amount, within a fixed time. This extra amount is the ‘interest’ you pay for the loan. Different kinds of loans are given to a person depending on his need – personal loan, housing loan, vehicle loan etc.
There is always a central bank that monitors all other banks. In India, it is the Reserve Bank that acts as the central bank, and takes necessary steps to help them function effectively.
