Question

what are the function of commercial banks?

Answer 1

a) Current Account or Demand Deposit:

Under this account the depositor can withdraw the money whenever he requires it. Normally no interest is paid by the bank because the bank cannot utilise this money in earning and he must keep himself ready to meet the demand of the customer. He must keep cent per cent reserve against the deposit. In this account the depositor has to maintain minimum balance. Occasionally a small interest is paid to the people who keep large balances.

(b) Savings Bank Account:

Under this account the depositor is not free to withdraw any amount like current account. He can withdraw only a specified sum of money in a week. Here the depositor gets less interest in comparison to Fixed Account.

Answer 2

The main functions of commercial banks are accepting deposits from public's and advancing them loans. However, besides these functions there are many other functions which these banks perform. All these functions can be divided under the following heads: Accepting deposits.

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