Most modern banking systems are based on Fractional reserves.
Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank.
1. In a fractional reserve banking system banks can create money through the lending process.
2. A fractional reserve banking system is susceptible to bank panics.
3. Bank panics are a risk of fractional reserve banking, but are unlikely when banks are highly regulated and lend prudently.
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Ujjivan Small Finance Bank Ltd, a wholly-owned subsidiary of Ujjivan Financial Services Ltd, has been given scheduled bank status by RBI.
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The journal entry to record a credit sale is Accounts Receivable. Credit sale is nothing butthe customers pay at the time of buying.
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Among the first banks were the Bank of Hindustan, which was established in 1770 and liquidated in 1829-32.
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