Bank: A bank is an entity or corporation that has the power to legally accept local or foreign funds from persons or other entities to be kept in trust and used by the bank to engage in other endeavors for its own benefit. The funds are kept by the bank indefinitely until such time the depositors or clients partially or completely withdraw its funds.

The funds kept in trust known as deposits, are used by the bank to engage in other financial endeavors and the bank regularly pays the trustees known as depositors, a fee otherwise known as interest for the use of the funds. The interest is often equivalent to a computed percentage of the funds kept by the bank.

The bank earns its income in by charging fees for the initial deposits of funds and charges for partial withdrawals as well as other services. Majority of a bank’s income comes from loaning its funds to debtors or borrowers for various purposes. The banks earn by receiving an additional percentage of the borrowed amount called interest from its borrowers. For its own security, the bank secures the debtor’s assets of value known as collateral before issuing loans. The collateral is kept and later liquidated by the bank should the borrower fail to repay the loan.