Monday, December 27, 2010

How Was Banking System Started

The word "Bank" is derived from the Italian Word "Banco". which means a 'Bench'. in the mid century the Italian People used to make there business transactions sitting on the benches itself. The Word 'Benco' underwent many changes and became "Bank". now all the Countries in the world have their own banking systems
But, do you know how did the banking systems started.

In the beginning giving money on credit and banking system was started by the 'Jews'. but later on it went into the hands of Jewelers. The businessmen used to keep their spare money in safe custody of the jewelers. these jewelers used issue a receipt like a bank note to the depositor. so much so that these jewelers used to lend money on interest to other people. so with that the jeweler had an extra income. A part of this interest was shared with the depositor.this was the beginning of the saving bank or the early banking system.
The traders/businessmen used to write letter to the jewelers to give money to other traders. these letters were used as the modern cheques.
The modern Banking System started in the beginning of year 1587 in the city of Venice, Italy and in the same year 'Banco de Rialto' was established.The people used to deposit money in this bank and could withdraw at the time when required. In year 1619 the management of the bank was taken over by 'Banco de Genero'. Apart from Money, people could also deposit gold and silver, with the bank, for which banks used to issue receipts also. These receipts were used as the currency notes.
The first American bank was established in 1782 in the city of Philadelphia. the first bank started in 1825 in England. The first Indian bank in India started in 1804. The name of the first Bank of India was "the Presidency bank of Bombay". But the first indigenous Indian Bank was "Punjab National Bank" established in 1894. The Government of India established Reserve Bank Of India in 1935. The Reserve Bank of India used to issue currency notes and coins. Today, a number of banks are established in the world.
In the early times the banks only did two jobs- one to deposit money and second to lend money on interest, but nowadays banks do other jobs also- like issue of credit cards, the give foreign currency to foreigners, Deal in share, Mutual funds, etc. Banks also gives facilities of Lockers to its customers, in which we could keep our valuables safely.
ANIL DUTTA (Member, Managing Committee-GMS Delhi) (Senior Vice-President- Mohyal Sabha, Amritsar)
91-8146558833, 9878391830 Email:

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