9 basic principles that commercial banks follow- Nelson
1. Principle of Liquidity
Principle of liquidity is very important for
commercial bank. Liquidity refers to
the ability of an asset to convert into cash
without loss within short time. Paying the
deposited money on demand of' customers is
called liquidity in sense of banking.
2. Principle of Solvency
Solvency means the financial capability or sufficiency
in capital. To stray in these competitive market
commercial banks must have sufficient capital. If the
funds are not sufficient the bank cannot run
The main source of fund of the commercial bank is
the deposited money by the depositors’ through
different type of account. Depositors keep cash in the
bank especially for safety. So commercial bank must
ensure the safety against deposited fund.
3. Principle of Profitability
The main objective of commercial bank is
to earn profit. For earning profit
commercial bank have to make
investment by providing short term loan,
before providing loan commercial bank
have to compensate certain amount of
money as liquidity.
4. Principle of Loan and Investment
The main source of profit of bank
is granting loans to any
individual or organization.
Investment is profitable and
sound source of income.
Commercial banks invest in
business and investment sector.
5. Principle of Savings
Commercial banks collect fund by
creating savings facilities. Commercial
banks try to collect savings from society
surplus. Commercial bank makes
investment from this savings to
generate profit. So, more savings, more
investment and more profit.
6. Principle of Services
Commercial bank ensures best services to
their customers. The success of a bank
depends on the services provided by
bank. Customer chooses those banks that
provide improved services.
7. Principle of Secrecy
Customers want to keep secret about
their valuable assets and money. So
banks must have to keep secret
about their customers account. If
commercial bank does not maintain
secrecy the customer will be
8. Principle of Efficiency
Commercial bank should operate their business
efficiently. So that they can be succeed at the
objective. In this competitive market there is
no alternative way without efficiency
in management. So commercial bank must
train their employees to increase the
efficiency in management.
9. Principle of Location
Commercial banks must have to locate
their branches in the commercial
area where many customers are
available. The location must be safe
for the customers and easy
communication system must exist.
1. Hot water will turn into ice faster than cold water.
2. The Mona Lisa has no eyebrows.
3. The sentence, “The quick brown fox jumps over the lazy
dog” uses every letter in the English language.
4. The strongest muscle in the body is the tongue.
5. Ants never sleep!
6. “I Am” is the shortest complete sentence in the English
7. Coca-Cola was originally green.
8. The most common name in the world is Mohammed.
9. When the moon is directly overhead, you will weigh