There are basically two key functions for the commercial banks:-
1. Primary functions and 2. Secondary functions
Primary functions include
a. Accepctig Deposits
One of the basic objective of banking is to procure the surplus funds from those who have excess and distribute it to the sectors where it is necessary. There are various types of accounts which a depositor can select as per the convineice. Each type of account will have different types of interest rates depending upon the tenure of accounts.
B. Granting loans and advances
Loans and advances are part of banking functions.
I.Short term loans :- for a period of less than one year
II.Medium term loans :- for a period less than 5 years and
iii. Long term loans :- for a period above ten years
c.Cash credits
This is a facility of crediting a particular sum of money or fund to the customer's account, he or she may choose to withdraw at any point of time as per their convinience. The interest will be charging against the money withdrawned.
D. Overdraft
This is the facility offers for Current acount holders to withdraw in excess of accout balance, especially those customers who has a sound track record. The interst is charged against the money withdrawned only.
E.Discounting of Bills
This is a facility provided by the banks to those who are in need of immediate financial support. They may approach the bank with the corresponding bill or receipt/promissory note
which has a longer expiry. But the bank could discout it provided they may charge an interest against that service.
Apart from the baic functions of accepting deposits and granting loans to the public and industries, banks do have other functions like
1. Agency Services and
2. General Utility services
like
letter of credits
standing orders
demand drafts, travellers's cheques
bank guarantees
foreign exchange
locker faciltiy etc.
1. Primary functions and 2. Secondary functions
Primary functions include
a. Accepctig Deposits
One of the basic objective of banking is to procure the surplus funds from those who have excess and distribute it to the sectors where it is necessary. There are various types of accounts which a depositor can select as per the convineice. Each type of account will have different types of interest rates depending upon the tenure of accounts.
B. Granting loans and advances
Loans and advances are part of banking functions.
I.Short term loans :- for a period of less than one year
II.Medium term loans :- for a period less than 5 years and
iii. Long term loans :- for a period above ten years
c.Cash credits
This is a facility of crediting a particular sum of money or fund to the customer's account, he or she may choose to withdraw at any point of time as per their convinience. The interest will be charging against the money withdrawned.
D. Overdraft
This is the facility offers for Current acount holders to withdraw in excess of accout balance, especially those customers who has a sound track record. The interst is charged against the money withdrawned only.
E.Discounting of Bills
This is a facility provided by the banks to those who are in need of immediate financial support. They may approach the bank with the corresponding bill or receipt/promissory note
which has a longer expiry. But the bank could discout it provided they may charge an interest against that service.
Apart from the baic functions of accepting deposits and granting loans to the public and industries, banks do have other functions like
1. Agency Services and
2. General Utility services
like
letter of credits
standing orders
demand drafts, travellers's cheques
bank guarantees
foreign exchange
locker faciltiy etc.
