Question

Discuss important functions of commercial banks.

Answer 1

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Answer 2

Functions of commercial banks :-

1) Collection of Deposits - They accept deposits from their clients . The common types of deposits accepted by bank are

• Saving account deposits

• Current account deposits

• Recurring deposits

• Fixed term deposits

2) Lending of Funds - It provide loans and advances out of the money received through deposits . These advances can be made in the form of overdraft cash credit .

3) Cheque Facility - The banks collect the cheques for their customers drawn on other banks . To collect cheques banks have clearing houses .

4) Agency Functions - Bank pay insurance premium on behalf of their clients , Bank also collect divided premium , interest , pension , etc .

5) Allied Services - In addition to above functions bank also provide allied services such as bill payments , locker facilities , etc .