What is a bank license?

A banking license is a permit from a regulatory body that allows a person or group to open a financial institution in a particular jurisdiction. The banking industry in most countries is highly regulated. Banking is the main part of the country's economy and the license requirements are usually strict to avert the bank's failure and the collapse of public confidence. Only individuals who have been thoroughly explored can provide banking services to the public. In general, the bank is a financial institution that receives deposits from the public and then lends money under control to other individuals and entities at the agreed interest rate. The Bank keeps a record of customer deposits and is obliged to provide the customer with access to his funds on request. Since there is a high degree of confidence in the process, the banking license is only granted in cases where the regulators are convinced that there is no risk that people who operate the bank will fail on their obligations to the public.

Banks are primarily regulated by jurisdiction that grants a banking license, usually in a wider context of national laws regulating financial institutions. In the US, for example, the bank can be licensed by state or federal authorities. The license granted by the state limits the bank's operation to the state borders. As the primary regulatory body of the bank, the state would be responsible for ensuring that the bank had sufficient cash and reserve resources, the directors are trustworthy, the banking procedure corresponds to state and federal laws and that the public money is completely safe when stored.

A person looking for a state banking license in the United States would usually hover that he has received enough money to satisfy the operational needs and requirements for capital reserves, submitted a credible business plan and underwent personal and professional investigations of all directors, including investors, officers and directors. Type of checks that are involved in obtaining BANovovní licenses are usually much more involved than any other type of business license. Maintaining citizenship confidence in the bank is essential for every jurisdiction. If the bank fails on its duties or if its directors are taking place before the law, the public may lose its ability to withdraw funds if necessary. Public panic caused by failed banks can disrupt the country's economy and cause political shocks.