Banking is defined as the accepting of deposits for the purpose of lending or investment of deposited money by the public, repayable on demand or otherwise and withdrawal by cheque, draft order or otherwise.
 Main features of commercial banks are as follows:
 (i) It deals with money, it accepts deposits and advances loans.
 (ii) It also deals with credit, it has the power to create credit.
 (iii) It is a commercial institution, whose aim is to earn profit.
 (iv) It is a unique financial institution that creates demand.
 (v) It deals with the general public.

Historical origin of money:

(a) Animal money: First of all, human beings used animals as a medium of exchange. For example, the Vedic literature tells us that cows or horses were used as money in India.
(b) Commodity money: Before the invention of money several commodities were used as money. Even today in small villages food-grains like, wheat, horse gram, rice etc. are used as commodity money.
(c) Metallic money: Man used metal, like copper, silver, gold, etc. as a medium of exchange. Coins were minted by goldsmith and used as money until paper money was invented.
(d) Paper money: China was the first country that started using representative paper currency standard. Certain quantity of gold is kept as reserve in proportion to currency notes issued at the particular point of time.
 Coins are also used besides paper currency in our country.
(e) Credit money: Credit money is also known as bank money. It refers to bank deposits kept by people with banks which are payable on demand and can be transferred from one party to another through cheque/demand drafts/pay orders etc.

(A) Formal credit sources
(i) Commercial Banks (ii) Central Bank (iii) Government Agency (iv) LIC
(v) Registered Chit Fund Companies (vi) UTI (vii) Mutual Fund Institution
Above mentioned all formal financial institutions accept savings and sanction loans to the people, companies and other agencies.
 
 (B) Informal credit sources
 (i) Local moneylenders: village mahajan and sarafs or gold smiths in the rural areas or in the cities.
 (ii) Land lords: this class include the big, middle and small category land-lords. They accept as collateral, title  documents of agricultural land, dwelling unit, factories and issue loans to needy persons and companies.
(iii) Self help groups: thrift and credit societies, union of government servants, cooperative societies and farmers, labourers, domestic helpers and housewives organizations. They also accept savings from
 different people and help their needy members.
(iv) Chit fund companies and private finance companies are very powerful informal
 financial institutions. Some of them are working very effectively in villages and cities and all pay more interest to depositors than the formal agencies and institutions.