Banks can be divided into several types depending up on the functions they perform. They include: commercial banks, small business banks, investment banks, private banks, and non- profit banks.
Individuals and other entities including partnership firms and companies can open an account with a bank by filing an application form, an account acceptance form and such other legal forms. Bank accounts of customers show all transactions made with the bank during a particular period. In entities like partnership firms and companies, designated persons will be authorized to operate the bank account. They will be authorized using an authorization form.
Banks offer many forms of services to account owners and outsiders. The primary service of a bank is acceptance of money from account owners as deposits and lending of money in the form of loans. Banks offer other services including discounting commercial paper and buying and selling bills of exchange.
For transferring money in one's account, an account holder can make a written order on that account in the form of a check. Banks also exchange loans for promissory notes. Apart from these negotiable instruments, banks may issue a letter of credit granting authorization on drafts and offer guarantee of payment of drafts on a specified amount of money. A person can legally assign all or part of the proceeds from a letter of credit to a third party. For this, the beneficiary has to file an application or an assignment letter with the bank.
A payroll account is a type of bank account in which fund transfers of an employer's wages, salary, and other compensations are made online on a recurring basis. For online salary transfer, payroll forms must be filed with the bank.
Many banks are offering special products and programs to attract small businesses. Generally, banks are reluctant to lend money on credit to small businesses but there are government agencies, like the Small Business Administration, that work with banks to lend money to small business owners.
Banks have to maintain various business forms or bank statements according to various accounting standards. Such statements or forms include balance sheets, various journals, expense documents, and credit forms. Banking forms like balance sheets and accounting statements have to be periodically filed with the appropriate authorities. Apart from these accounting forms, banks also have to file various reports like Consolidated Report of Condition and Income, generally referred to as the call report.
In order to protect account holders from bank failures, the Congress has created the Federal Deposit Insurance Corporation (FDIC) in 1933. If a banking institution is insured by the FDIC, the depositor is assured of protection even if s/he is a non- U.S. citizen.