Banks play a most important part in the business life of every country, and it is almost impossible to imagine how commerce could be carried on without their help. They are the heart of business life.
The first purpose of a bank is to provide a place of security for money. It would not be safe, and it would not be easy, for men to carry about thousands or hundreds of dollars in their pockets; but if there are banks in which money can be put and well guarded, any part of which can be had whenever it is wanted, a sensible person will be only too pleased to save himself the trouble and anxiety by making use of them. One thing a trader is not advised to do is to keep money in a coffer at home or bury it in the compound. Treasuring money home does generate interest.
If a person wants to have a banking account, he takes his money to the bank, sis the manager, and, after the latter has agreed to allow an account to be opened, entrusts his money to the bank. He opens a current or drawing account.
But how does the banker make his money? It is all very simple. Most business people keep a balance at their banker’s, and the banker is aware that all his customers cannot want all their money back again at same time. He, therefore, lends a portion of his customer’s money on good security. The interest on the loans is the banker’s profit. The banker also lends money upon bills of exchange and makes a small profit on every amount advanced. For those traders going abroad a possibility is given to receive money in using traveler’s cheques. The traveler may show a bill of parcels to draw the banker’s confidence. At last trader must know his balance sheet to know what he has spent and remains in the bank.
QUESTIONS BASED ON THE TEXT
Match the worlds in column (I) with their meanings in column (II) to make a good association in (III).
- A quantity of money
- The reason for doing something
- The fact of causing fear or worry
- A person who buys from a shop
- Anything lent ; money especially
- The organ which pumps blood