what do you know about the function of a commercial bank?
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what do you know about the function of a commercial bank?
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Answer:
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.
The primary functions of a commercial bank are as follows:
1. Accepting Deposits
Commercial banks accept deposits from people, businesses, and other entities in the form of:
•Savings deposits – The commercial bank accepts small deposits, from households or persons, in order to encourage savings in the economy.
•Time deposits – The bank accepts deposits for a fixed time and carries a higher rate of interest as compared to savings deposits.
•Current deposits – These accounts do not offer any interest. Further, most current accounts offer overdrafts up to a pre-specified limit. The bank, therefore, undertakes the obligation of paying all cheques against deposits subject to the availability of sufficient funds in the account.
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Answer:
A commercial bank is a kind of financial institution that carries all the operations related to deposit and withdrawal of money for the general public, providing loans for investment, and other such activities. These banks are profit-making institutions and do business only to make a profit.
Explanation:
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