Banking is the business activity of accepting and safeguarding money owned by individuals and entities and then lending or investing it to earn a profit. Banking is one of the essential components of the financial system of any country. There are several features of banking that make it a crucial component of the economy.

Safety and Security
Banks provide a safe and secure place for individuals and businesses to deposit their money. Banks have security systems in place to protect the money deposited by their customers.

Lending and Borrowing
Banks lend money to individuals and businesses for various purposes such as purchasing a home, starting a business, or buying a car. Banks make money by charging interest on the amount they lend.

Payment Services
Banks offer various payment services such as credit cards, debit cards, and online banking. These services make it easier for individuals and businesses to make transactions.

Investment Services
Banks also provide investment services such as mutual funds, stocks, and bonds. These services allow individuals and businesses to invest their money and earn a return on their investment.

Foreign Exchange
Banks provide foreign exchange services to individuals and businesses. These services allow customers to exchange currency when traveling or doing business internationally.

Conclusion
In conclusion, banking is an essential component of the financial system. Banks provide a safe and secure place for individuals and businesses to deposit their money, offer lending and borrowing services, payment services, investment services, and foreign exchange services. These services make it easier for individuals and businesses to manage their finances and conduct transactions.

Banking refers to the services that a bank provides which includes accepting deposits, lending funds, credit creation, etc. in order to earn profit.

A commercial bank refers to a financial institution that accepts deposits from the general public and extends loans for various purposes such as consumption and investment. it is engaged in a two way transaction. On one hand, it accepts deposits from the public and in return, it offers them a rate of interest on their deposits (borrowing rate for bank). On the other hand, it extends loans to the investors in return of which it charges a rate of interest on the amount lend (i.e. lending rate).

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