Friday, May 20, 2011

What is Banking? Write down the functions of commercial bank?

    The term "Banking" refers to the performances of duties such as reception of surplus fund of individuals, trading or non-trading institution, government or private institution as deposit and supply of the money with assurance of repayment against security in exchange of profit or interest to trading or not-trading institution, government or private institution who has deficit fund and demand for money and to facilitate this process, creating various credit instruments and giving facility of withdrawal of deposit as and when needed by the financial internediary or institution called bank.

Functions of Commercial Bank:
    The functions performend by the commercial bank are briefly notified below:
  1. Commercial banks deposit the surplus amount that is scattered to the public.
  2. Commercial banks provide various loan facilities to the people,
  3. Commercial bank receives current deposit and gives teh withdrawal facilities to clients through cheque.
  4. It receives term deposit and pays interest on it,
  5. It discounts notes, approves loans, and invests in government and other credit instruments,
  6. It collects cheques, notes and drafts etc,
  7. It issues drafts and cashier's cheque,
  8. It notifies of depositor's cheque,
  9. It acts as a trustee in accordance with government permission,
  10. It helps to build a business by providing different loan policies,
  11. It purchases or sales the bonds, securities or pays for the insurance premium or tax on behalf of the client.
Source: Here

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