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The word 'bank' is derived from the Italian word 'Banco' which refers to a bench.
In the ancient time, there were some money-lenders, who used to sit on a bench for
keeping, lending and exchanging of money. In the present context, bank is confined
not only to accepting deposits and disbursing loan. In addition to this, a bank may be
engaged in different types of functions such as remittance of money from one place
to another, exchange of currency, underwriting shares of newly established company,
providing bank guarantee, discounting bills, etc.
An organization, usually a corporation, chartered by a state or federal government,
which does most or all functions like receiving demand deposits and time deposits,
honoring instruments drawn on them, and paying interest on them; discounting
notes, making loans, and investing in securities; collecting checks, drafts, and notes;
certifying depositor's checks; and issuing drafts and cashier's checks is known as
bank.

Definition of Bank

In the words of Crowther, "The banker's business is to take debts of other
people to offer his own in exchange and thereby create money."

According to Horace White, "Bank is a manufacture of credit and money so
facilitating exchanges."

Types of Banks

A. Central Bank

In the monetary system of all countries, the central bank occupies an important
place. The central bank is an apex institution of the monetary system which seeks
to regulate the functioning of the commercial banks of the country. The central bank
enjoys a special status in the banking structure of the country. The principle on which
central bank is run differs from the ordinary banking principles. An ordinary bank is
run for profits. A central bank, on the other hand, is primarily meant to promote the
financial and economic stability of the country. It plays an active role in implementing
government’s economic policy in the country.
World’s first central bank established in 1668 AD is Riksbank of Sweede but the Bank
of England established in 1694 AD was the first to function as a true central bank in
1844 AD.
Nepal Rastra Bank is the central bank of Nepal. It was established in 2013 Baishakh
14 with an authorized capital of one crore, fully subscribed by the government under
Nepal Rastra Bank Act 2012 B.S.

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