Today, the story is ready to serve you what is primary functions of commercial banks. Since the commercial bank is a financial institution, they have to perform various functions in order to meet the growing demand for industrial and trade. However, does have you ever been known about the commercial bank? Yeah, many people told that commercial bank may be referred as the mother bank of all other banks. Such as Bank of America Hialeah, First Commercial Bank (USA) etc. The general public bank is the institution that the institution is aware of, mainly the commercial banks.
Definition of Commercial Bank Hotline
Commercial banks usually collect small amounts of small savings of the people in exchange for interest and provide loans to the other party for interest. The difference between these two interests is the commercial bank’s profit. The loan period of commercial banks is short and medium. Banks cannot provide long-term loans because they are trading with the money of others. Therefore, it is said in the bank that the short and medium term bank loan services dealer. Below is the opinion of various experts about the commercial bank to provide the definition of the commercial bank.
Science professor soars: “Commercial bank is not merely traders in money, but also an important manufacturer of money”.
According to Company Law of 1913: “The organization which receives money from the public through current or any other account, and provides the opportunity to make the money through check or order, is called a commercial banking company”.
Primary Functions of Commercial Banks
Generally, for the first time, you should be known the meaning of business finance. However, Since a financial institution in the commercial bank has to perform various functions in order to meet the growing demand for the industrial trade. Besides, the banks also perform various functions in order to provide services according to the needs of the common customers. The coordination of the activities of the Evangelists accelerates the economic development of the country.
Receiving Deposits Primary Functions of Commercial Banks
The commercial products of the commercial bank hotline are the deposited money. The main function of the commercial bank is to give the money to the people who are lazy. These conditions are collected by various accounts in the form of deposits. Deposits can be accepted through three accounts below.
- Current Account
- Fixed Account
- Savings Account
Banks offer checks and orders to the depositor to withdraw money. In this way, commercial banks provide utility and security of lazy people by accepting deposits.
Granting Loans Primary Functions of Commercial Banks
The grating loan is the second function of commercial bank hotline. Commercial banks make a part of the accepted deposits as liquidity to meet the claims of the depositors, and the rest is provided to the business, industry, and people as a loan. Commercial banks charge interest on these loans at a fixed rate. In contrast to various types of securities, banks offer loans, advances, deposits, and cash. Although, banks in many cases provide an unpaid loan.
Creating Loan Deposits Primary Functions of Commercial Banks
Commercial banks also generate deposits as well as receiving deposits. The bank gives a loan to the depositors by paying the loan with a check. This loan does not give cash, but rather would be credited. The borrowers withdraw the money by presenting the check according to the requirement. This bank lends itself again to that Bank loan services. Thus the bank creates debt and deposits. However, you can study more according to the similar subjects about the electronic banking services.
Bill Discounting Primary Functions of Commercial Banks
Bill discounting part is a unique function of the commercial bank. If a trader purchases goods from another businessman, instead of cash, the exchange bill is paid. As a result, the trader or the seller cannot recover his money before expiration. But during the financial crisis of the seller, the bank provides cash for the burial of its bill before maturity. As well as the fruit seller’s financial crisis is eliminated. In this case, though, some money is earned as a bank account. Even all these activities are called by the best bill discounting primary functions of commercial banks.
Creating Medium of Exchange Functions of Commercial Banks
While commercial banks can circulate notes at the beginning of banking history, the current central bank is engaged in this responsibility. But the commercial banks create a medium of exchange through checks, hoondies, bonds, securities, drafts, pay-orders etc. These all work are related hardly to the exchange of commercial banks.
Money Transfer Primary Functions of Commercial Banks
Money transfer is a valuable primary function of the commercial bank. Commercial banks offer the opportunity to transfer money easily and securely from one place to another for the needs of its customers. And transfer money from one country to other countries. In this case, the branches of these banks and their representatives are engaged in the work. It was the clear concepts of money transfer primary functions of commercial bank.
Submit Statement Primary Functions of Commercial Banks
Every scheduled bank has to compulsorily submit weekly reports of their activities to the central bank every week. Basically, they are less wrong in their banking accounts by submitting statement or reports. By presenting the Weekly Statement, the central bank simplifies the banking activities of the country.