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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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