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Difference between Banking and Money Lending:
A banking business is, however, distinct from a pure money-lending business. A money-lender usually advances his own funds.
A bank accepts deposits from the public, which are withdraw-able by cheques, and the funds so accumulated are lent to its needy customers against goods or securities or by discounting bills.
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Further, the bank pays interest to its depositors, and the deposits are withdraw-able by cheques.
Money-lenders generally .do not receive deposits from public, and even if they receive such deposits, it is not obligatory on their part to pay a uniform interest rate on such deposits; and these deposits are not chequable.
Further, very often, when there is credit stringency, bankers may borrow from other banks or central bank to lend to their customers. Money-lenders obviously do not do so.