This powerpoint will help to understand the functions of banks in India. People could aware with the banking system and it will help to create awareness in public also.

1. Functions of
commercial
banks in
India

2. Functions of commercial
banks in India
Primary
Function Secondary
Function

3. Primary Function
 Collection of deposits
 Making loans and advance
Secondary Function
 Agency services
 General utility services

4.  Collection of deposits
The most important activity of a commercial bank is to mobilise deposits
from the public. People who have surplus income and savings find it
convenient to deposit the amounts with banks.
• A current account is used to make payments
• Savings account is an interest yielding
account
• Fixed or term deposits are used by the customers to save
money for a specific period of time, ranging from 7 days to
3 years or more
Primary Function

5.  Making loans and advance
Loans
 Advances
a) Cash Credit
b) Overdraft
c) Discounting of Bills
A loan is granted for a specific time period. Generally, commercial banks
grant short-term loans. But term loans, that is, loan for more than a year,
may also be granted. The borrower may withdraw the entire amount in lump
sum or in instalments
An advance is a credit facility provided by the bank to its customers. It
differs from loan in the sense that loans may be granted for longer period,
but advances are normally granted for a short period of time.
Overdraft is also a credit facility granted by bank. A customer who has a
current account with the bank is allowed to withdraw more than the
amount of credit balance in his account. It is a temporary arrangement.
Banks provide short-term finance by discounting bills that is,
making payment of the amount before the due date of the bills after
deducting a certain rate of discount.

6. Secondary Function
 Agency services
The customers may give standing instruction to the banks to
accept or make payments on their behalf.
The following agency services are provided by the bankers:
• Payment of rent,
• Insurance premium,
• Telephone bills,
• Instalments on hire purchase,
• The bank collects cheques, drafts, and bills
on behalf of the customer.
• The banks can exchange domestic currency
for foreign currencies.

7.  General utility services
 Safeguarding money and valuables:
People feel safe and secured by depositing their money and valuables in the
safe custody of commercial banks. Many banks look after valuable
documents like house deeds and property, and jewellery items.
 Transferring money:
Money can be transferred from one place to another. In the same way, banks
collect funds of their customers from other banks and credit the same in the
customer’s account.
 Merchant banking:
Many commercial banks provide merchant banking services to
the investors and the firms

8. • Automatic Teller Machines (ATM):
The ATMs are machines for quick withdrawal of cash. In the last
10 years, most banks have introduced ATM facilities in
metropolitan and semi-urban areas.
 Traveller’s cheque:
A traveller’s cheque is a printed cheque of a specific
denomination. The cheque may be purchased by a person from
the bank after making the necessary payments
 Credit Cards:
Credit cards are another important means of making payments. The
Visa and Master Cards are operated by the commercial banks.

9. In developing countries like India commercial banks
perform certain promotional (developmental) activities.
For example, nationalized banks in India provide credit
to the top priority sectors of the economy such as
agriculture, and small-scale and cottage industries. In
this way commercial banks help to promote the socio-
economic development of the country.
Conclusion