What is commercial bank? How does it work.
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Commercial banks take deposits from their depositors, and lend those funds in longer term loans (at higher interest rates) to commercial borrowers, mortgagers, and personal loans. They make money when the short term rates (for deposits) is lower that the longer term interest rates at which they lend the money.
The primary functions of a commercial bank are accepting deposits and also lending funds. Deposits are savings, current, or time deposits. Also, a commercial bank lends funds to its customers in the form of loans and advances, cash credit, overdraft and discounting of bills, etc.
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