The following questions in about 100-150 words.(a) state the functions of commercial banks.
Answers
Answered by
3
Hey mate..
========
The following are the functions of Commericial Banks :----)
1) The commercial banks mobilises savings:--
Savings are of three types :-
▪Current savings --->
These savings can be withdrawn by the saver or depositer at any time.
▪ Fixed Savings--->
Fixed savings cannot be withdrawn like current savings. The depositor has to give prior intimation to the bank before he/she withdraws the savings.
▪ Savings Deposit--->
In case of savings Deposit , a part can be withdrawn as and when neccessary but the other part can only be withdrawn with the banks permission.
In India according to census 2011, only 36% of the people has bank accounts. But by 2014 onwards, 210.5 million people had bank accounts.
(2) Distribution of Loans:---
The commercial banks offers loans. Farmers, artisans , thelwallas and industrialists recieve loans.
The proper utilisation of bank loans improves the economic condition of the people.
But, These banks doesn't offer long term loans. Long term loans means that the bank has to part with the savings for a longer period of time. This may create various problems in the banks. The bank will not be in a position to release the savings to the depositor when he or she comes to withdraw money. People may lose confidence in the bank and the bank might go bankrupt.
(3) Creation of Credit:---
The commercial banks on a whole can create credit money. On the basis of primary or passive deposits , the banks can create derivative or active deposits. The savings deposited with the bank by the saver is the primary or passive deposit. On the contrary, active deposits are created by commercial banks. A part of the primary deposits os retained by the bank while the bank offers the other part as loans to different sections of people in the society.
The process of credit creation starts as soon as the bank begins to offer loans.
#racks.
========
The following are the functions of Commericial Banks :----)
1) The commercial banks mobilises savings:--
Savings are of three types :-
▪Current savings --->
These savings can be withdrawn by the saver or depositer at any time.
▪ Fixed Savings--->
Fixed savings cannot be withdrawn like current savings. The depositor has to give prior intimation to the bank before he/she withdraws the savings.
▪ Savings Deposit--->
In case of savings Deposit , a part can be withdrawn as and when neccessary but the other part can only be withdrawn with the banks permission.
In India according to census 2011, only 36% of the people has bank accounts. But by 2014 onwards, 210.5 million people had bank accounts.
(2) Distribution of Loans:---
The commercial banks offers loans. Farmers, artisans , thelwallas and industrialists recieve loans.
The proper utilisation of bank loans improves the economic condition of the people.
But, These banks doesn't offer long term loans. Long term loans means that the bank has to part with the savings for a longer period of time. This may create various problems in the banks. The bank will not be in a position to release the savings to the depositor when he or she comes to withdraw money. People may lose confidence in the bank and the bank might go bankrupt.
(3) Creation of Credit:---
The commercial banks on a whole can create credit money. On the basis of primary or passive deposits , the banks can create derivative or active deposits. The savings deposited with the bank by the saver is the primary or passive deposit. On the contrary, active deposits are created by commercial banks. A part of the primary deposits os retained by the bank while the bank offers the other part as loans to different sections of people in the society.
The process of credit creation starts as soon as the bank begins to offer loans.
#racks.
AkashMandal:
Great Answer!
Thanks
Answered by
2
hello Frnd
What is a commercial Bank ?
A commercial bank refers to an institution which accepts deposits and provides loan to the public or Companies with a profit motive.
What a commercial bank do and what are it's functions ?
A commercial banks performs many functions I m just mentioning few of them.
1. Accepts Deposits
A commercial bank accepts deposits of public and keep it safe in their lockers and in return of that, it provides Interest to the person. Normally Interest provided by banks are 4 -6% Per annum.
Rate of Interest is decided by the bank itself by following the directions by RESERVE BANK OF INDIA.
A person can deposit his money in the bank only if he has opened an account with the bank, and bank credits the interest in that account.
There are mainly two types of account
a. Savings account - Which is opened by general Public to keep their money safe and earn Interest.
b. Current Account - A current account is opened by a business man to make transactions. Interest is not provided on this kind of account although fees is charged from business man to let them make transactions.
2. Provide Loans
Have you ever thought , what does a bank do with its deposits and how they earn.
Let me answer it.
A commercial bank provide loans to the public who needs and approaches the bank to lent him money. Although each banks have some criteria which should be fulfilled to get loan.
A commercial bank provides loans to the public as well as to the companies.
And in return of that we need to pay them along with the interest. And the rate of interest are higher on loans than interest provided on our deposits.
3.Works as an agent
One of the functions of Commercial Bank is, it works as an agent to us. It accepts deposits,pay bills etc. on behalf of us. Although we need to direct our banker to do so. And in return we have to pay bank charges.
e.g. I have directed my banker to pay my electricity bill on 31st of every month.
After that Bank will automatically pay my bill on behalf of me on 31st of every month without asking me.
There are many other functions performed by Banks but above are main functions.
hope it helps
#jerri
What is a commercial Bank ?
A commercial bank refers to an institution which accepts deposits and provides loan to the public or Companies with a profit motive.
What a commercial bank do and what are it's functions ?
A commercial banks performs many functions I m just mentioning few of them.
1. Accepts Deposits
A commercial bank accepts deposits of public and keep it safe in their lockers and in return of that, it provides Interest to the person. Normally Interest provided by banks are 4 -6% Per annum.
Rate of Interest is decided by the bank itself by following the directions by RESERVE BANK OF INDIA.
A person can deposit his money in the bank only if he has opened an account with the bank, and bank credits the interest in that account.
There are mainly two types of account
a. Savings account - Which is opened by general Public to keep their money safe and earn Interest.
b. Current Account - A current account is opened by a business man to make transactions. Interest is not provided on this kind of account although fees is charged from business man to let them make transactions.
2. Provide Loans
Have you ever thought , what does a bank do with its deposits and how they earn.
Let me answer it.
A commercial bank provide loans to the public who needs and approaches the bank to lent him money. Although each banks have some criteria which should be fulfilled to get loan.
A commercial bank provides loans to the public as well as to the companies.
And in return of that we need to pay them along with the interest. And the rate of interest are higher on loans than interest provided on our deposits.
3.Works as an agent
One of the functions of Commercial Bank is, it works as an agent to us. It accepts deposits,pay bills etc. on behalf of us. Although we need to direct our banker to do so. And in return we have to pay bank charges.
e.g. I have directed my banker to pay my electricity bill on 31st of every month.
After that Bank will automatically pay my bill on behalf of me on 31st of every month without asking me.
There are many other functions performed by Banks but above are main functions.
hope it helps
#jerri
There are sooo many questions which racks and Jerri solve >•< together :)
All are awesome :claps:
We are now good friends...
^_^
i know i know ;)
approve karte karte Jaan chali jayegi itne badiya answers hai aap dono ke XD
thx
ab tum mod ho itna to krna padega
:)
WoW! That's so Cool :) Thanks.
Similar questions