Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM.
Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current accounts, by making installment loans, and by investing in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account.
Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings too.
There is many types of Bank,one of them is Central Bank.
Central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system within its country's borders. A central bank is distinguished from a normal commercial bank because it has a monopoly on creating the currency of that nation, which is usually that nation's legal tender.
The primary function of a central bank is to provide the nation's money supply, but more active duties include controlling interest rates, and acting as a lender of last resort to the banking sector during times of financial crisis. It may also have supervisory powers, to ensure that banks and other financial institutions do not behave recklessly or fraudulently.
Most developed nations today have an "independent" central bank, that is one which operates under rules designed to prevent political interference.
In our country Bank Indonesia is the central bank of Indonesia. Bank Indonesia is currently being governed by Darmin Nasution, former interim governor. The last governor before the interim phase, Boediono, resigned due to his vice presidential candidacy in the Indonesian presidential election. Darmin Nasutionwas sworn in by President Susilo Bambang Yudhoyono on September, 1 2010.
Finance minister Sri Mulyani Indrawati was proposed as a candidate to take over the Bank Indonesia governorship earlier in 2009, however is now likely to remain in Yudhoyono's new cabinet and moved to the world bank group on May, 5 2010.
he bank is led by the board of governors, comprising the governor, a senior deputy governor and at between four and seven deputy governors.
The governor and deputy governors serve a five year term ,and are eligible for re-election for a maximum of two terms.
The governor and senior deputy governor are nominated and appointed by the president, with approval from the People's Representative Council. Deputy governors are nominated by the governor and appointed by the president, with approval of the People's Representative Council.
The president has no power to dismiss a member of the board, except when a board member voluntarily resigns, is permanently handicapped, or is proven guilty of criminal offence.
The Board of Governors Meeting is the bank’s highest decision-making forum. It is held at least once a month to decide on general policy on monetary affairs, and at least once a week to evaluate policy implementation or to decide on other strategic and principle policy.
Bank Indonesia was founded on 1 July 1953 from the nationalization of De Javasche Bank, a Dutch bank dating from colonial times.[2]
For the next 15 years, the Bank of Indonesia carried on commercial activities as well as acting as the nation’s bank.
This came to an end with the Law No.13/1968 on the Central Bank, which was subsequently replaced by Law No.23/1999, freeing the bank from government interference.
Thereafter, the bank reported to the People's Representative Council instead of the president, and the bank’s governor was no longer a member of the cabinet.
Until now there're more than 5 governors that've been on duty: Here the list of Governors
| No. | Name | Reign |
| 1. | Radius Prawiro | 1966-1973 |
| 2. | Rachmat Saleh | 1973-1983 |
| 3. | Arifin Siregar | 1983-1988 |
| 4. | Adrianus Mooy | 1988-1993 |
| 5. | J. Soedradjad Djiwandono | 1993-1998 |
| 6. | Syahril Sabirin | 1998-2003 |
| 7. | Burhanuddin Abdullah | 2003-2008 |
| 8. | Boediono | 2008-2009 |
| 9. | Darmin Nasution | 2009-present |
