Bank is organized financial institution which accepts the
deposits form the savior and provides them to the borrower for investment while
acting an intermediary it wants to earn for itself as well as for its client.
Some function of commercial are as under:
Deposits
Bank accepts the deposit from the customers because these
deposits are source of income and increase his balance. Bank gives the money to
the customer and earns income. Bank accepts deposits in three accounts.
- Fixed
Deposit A/C
Fixed deposit is those deposits which are repayable only after a
specified period. The longer the period of deposit the higher rate of interest.
- Current
A/C
The money deposited in the current account can be with drawn at
any time by the depositors. The banks normally do not pay interest on this
account.
- Saving
A/C
Saving account is generally popular with middle income group.
The bank undertakes to repay the money to the depositors up to a certain limit
fixed by the rules of the bank. They are draw by cheques. The saving bank
account carries a lower rate of interest.
Loan
Bank provides the deposit as loan to the borrower. Loans are
lent against collateral securities. Bank also grants loans against different
instrument of like promissory note, bill of exchange. The bank discounts all
such instrument. It also provides overdraft facility. Loans are given for
short, medium and long term.
Agency
Services to the Customer
Bank creates credit against deposit. It provides locker services
to it clients. It provides agency utility services for its clients. It s remit
the money from one place to another place through draft. It collect and clear
the cheques draw on other banks. A commercial bank also acts as agent,
correspondent or representative of his customers at home and abroad. The
commercial banks are now issuing credit cards which are acceptable worldwide.
It acts as agents to its customers in the collection and payment of cheques,
bills and promissory notes. The bank provides very useful services in the
collection of dividends on interest earned on stock and share held by his
customer.
General
Utility Services
The banks also issue traveler’s cheques for the convenience of
the travelers and charge a nominal commission.
In many countries of the world renowned commercial banks publish
a monthly bulletin which contains all information relating to trade, business,
and industry. The customers benefit a lot from this valuable economic and
financial information.
A bank provides a useful service to his customer by acting as a
referee for his credit worthiness.
A commercial bank also undertakes acceptance business in
connection with bill of exchange and thus enables his customer to obtain the
desired credit.
A bank provides transacts foreign exchange facilities for
financing the foreign trade. The transaction of foreign exchange business is a
profitable source of income for a bank
The banks have established export promotion cells. These cells
provide information and guidance to the exporter at no extra cost.
