Explain the functions of commercial bank?

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Posted by Kamal Jeet 4 years, 1 month ago

Yogita Ingle 4 years, 1 month ago

Accepts deposit – The bank takes deposits in the form of saving, current, and fixed deposits. The surplus balances collected from the firm and individuals are lent to the temporary required of commercial transactions.
Provides Loan and Advances – Another critical function of this bank is to offer loans and advances to the entrepreneurs and businesspeople and collect interest. For every bank, it is the primary source of making profits. In this process, a bank retains a small number of deposits as a reserve and offers (lends) the remaining amount to the borrowers in demand loans, overdraft, cash credit, and short-run loans etc.
Credit Cash- When a customer is provided with credit or loan, they are not provided with liquid cash. First, a bank account is opened for the customer and then the money is transferred to the account. This process allows a bank to create money.

Discounting bills of exchange – It is a written agreement acknowledging the amount of money to be paid against the goods purchased at a given point of time in future. The amount can also be cleared before the quoted time through a discounting method of a commercial bank.
Overdraft Facility – It is an advance given to a customer by keeping the current account to overdraw up to the given limit.
Purchasing and Selling of the Securities – The bank offers you with the facility of selling and buying the securities.
Locker Facilities – Bank provides lockers facility to the customers to keep their valuable belonging or documents safely. Banks charge a minimum of an annual fee for this service.
Paying and Gather the Credit – It uses different instruments like a promissory note, cheques, and bill of exchange.

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