What is banking?

Banking Companies Act 1949 defines, “Banking means the accepting for the purpose of lending or investments of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheques, draft, order or otherwise”.
Clearly the two essential features of a bank are (i) Acceptance of chequable deposits from the public, and (ii) lending. One function like borrowing (in the form of deposits) or lending alone does not make a financial institution a bank. For example, since Post Office Saving Banks do not perform the essential function of lending, although they accept deposits, they are not banks in the real sense of the term. Similarly, financial institutions like UTI, LIC, etc. are not banks, because they do not accept chequable deposits although they lend to others.