Question

what is the function of commercial banking ?

Answer 1

Commercial banks are the basic financial institutions in any country that cater the need of industry as well as an individual. These provide financial assistance to industries and at the same time, they provide support for the ordinary man.

Their primary functions include, accepting deposits, making advance payment and providing credits. Their duties are not limited to primary; they also do a variety of tasks including the issue of credit letters, check clearance, online transfers, maintaining ATMs, Sale/purchase of share or bonds, work as nominated representative, work as the trusty, etc.

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 .