In simple words, bank refers to an institution that deals in money. The institution accepts deposits from the people and gives loans to those who are in need. Besides dealing in money, banks these days perform various other functions, such as credit creation, agency job and general service.
Bank, therefore, is such an institution which accepts deposits from the people, gives loans, creates credit and undertakes agency work.
On the basis of ownership, banks are of the following types:
(i) Public Sector Banks:
Public Sector Banks are those banks which are owned by the Government. The Government runs these banks. In India 20 banks (14+6) were nationalised in 1969 and 1980 respectively. All these banks now belong to the public sector category. Social welfare is their principal objective.
(ii) Private Sector Banks:
These are those banks which are owned and run by the private sector. Various banks in the country such as Vijaya Bank belong to this category. An individual has control over these banks in proportion to the shares of the banks held by him.
(iii) Co-operative Banks:
Co-operative Banks are those banks which are jointly run by a group of individuals. Each individual has an equal share in these banks. The affairs of the bank are managed by its shareholders. Profits are equally distributed among the shareholders. Mutual help of the members of co-operative banks is the principal objective of these banks.