What are the major types and functions of commercial banking?

What are the major types and functions of commercial banking?

Commercial banks perform a variety of functions which can be divided as: (1) accepting deposits; (2) advancing loans; (3) Credit creation; (4) financing foreign trade; (5) agency services; and (6) miscellaneous services to customers.

What are primary functions of commercial bank?

Commercial banks offer loans, deposits, savings accounts, etc. to their customers….

  • Credit creation.
  • Investment of funds.
  • Discounting bills of exchange.
  • Offering overdraft facilities.
  • Agency functions.
  • Offering the locker facility.
  • Dealing in foreign exchange.
  • Exchanging securities.

What is primary function of commercial bank?

Functions of Commercial Banks: – Primary functions include accepting deposits, granting loans, advances, cash, credit, overdraft and discounting of bills. – Secondary functions include issuing letter of credit, undertaking safe custody of valuables, providing consumer finance, educational loans, etc.

Which is not function of commercial bank?

Hence, Issuing of Notes is not the function of a Commercial Bank.

What are the modern functions of commercial banks?

The most important functions of commercial banks are discussed below:

  • Accepting deposits: The most significant and traditional function of commercial bank is accepting deposits from the public.
  • Providing loans:
  • Credit Creation:
  • Transfer of funds:
  • Agency functions:
  • Other functions:

What is the most important function of bank?

Granting Loans and Advances: The bank lends people money on a time-interest basis. Each loan amount is passed by the bank after due consideration and securing the bank’s profit. The bank also gives advances to its customers. These are also the primary functions of the banks.

What are the key functions of a bank?

The function of a Bank is to collect deposits from the public and lend those deposits for the development of Agriculture, Industry, Trade and Commerce. Bank pays interest at lower rates to the depositors and receives interests on loans and advances from them at higher rates.

What is the primary function of commercial bank?

Providing Loans – One of the main functions of commercial banks is providing credit to organisations and individuals, and profit from the earned interest. Usually, banks retain a small reserve for their expenses while offering the remaining amount to customers as various types of short and long-term credits.

What are the main features and functions of commercial banks?

Accepting Deposits: Banks attract the idle savings of people in the form of deposits.

  • also known as current accounts: These are repayable on demand without any notice.
  • Fixed Deposits or Time Deposits: These deposits can be withdrawn only after the expiry of the period for which these deposits have been made.
  • What are the main aims of commercial banks?


  • The Importance of Commercial Banks.
  • Advantages of Commercial Banks.
  • What are main objectives of commercial bank?

    The main objective of commercial banks is to maintain higher profitability by maintaining circular and efficient flow of amount of money deposited by the customers and the lenders. Commercial banks contribute to the economic cycle by keeping the money circulation among households, government and corporate businesses.

    What is Commercial Bank and its functions?

    Commercial banks are financial institutions that provide finance and investing services for businesses. The primary role of commercial banks in the developed world is to offer business bank accounts with standard options, such as deposits, withdrawals and loans. A secondary role of commercial banks is supporting the development of the local economy.

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