Question

State four functions of bank

Answer 1

Answer:

functions of commercial banks:- primary functions include accepting deposit, granting loans, advance, cash,credit,overdarft and discounting of bill

Answer 2

Answer:

1. Accepting Deposits

The bank collects deposits from the public. These deposits can be of different types, such as :-

• Saving Deposits.
• Fixed Deposits.
• Current Deposits.

• Recurring Deposits.

2. Granting of Loans and Advances

The bank advances loans to the business community and other members of the public. The rate charged is higher than what it pays on deposits. The difference in the interest rates (lending rate and the deposit rate) is its profit.

The types of bank loans and advances are :

• Overdraft.
• Cash Credits.
• Loans.
• Discounting of Bill of Exchange.

3. Agency Functions

The bank acts as an agent of its customers. The bank performs a number of agency functions which includes :-

• Transfer of Funds.
• Collection of Cheques.
• Periodic Payments.
• Portfolio Management.
• Periodic Collections.

4. General Utility Functions

The bank also performs general utility functions, such as :-

• Issue of Drafts, Letter of Credits, etc.
• Locker Facility.
• Underwriting of Shares.
• Dealing in Foreign Exchange.
• Project Reports.
• Social Welfare Programmes.
• Other Utility Functions.