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Definition of Bank

 

The definition of a bank varies from country to country. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:

• conducting current accounts for his customers;
• paying cheques drawn on him, and
• collecting cheques for his customers.

Banco de Venezuela in Coro.In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is organised or regulated.

 
 


The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one.

Banking business means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within a period.

2. paying or collecting cheques drawn by or paid in by customers.

3. other financial instruments such as bankers cheques, letter of credit, etc.
 

 

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