What is the difference between Banking and Money Lending?


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.


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.

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