This document discusses the functions of commercial banks. It begins by defining a commercial bank as a profit-seeking business that deals in money and credit by accepting deposits from the public and lending money. It then lists the primary functions of commercial banks as accepting deposits, advancing loans, creating credit, clearing checks, financing foreign trade, and remitting funds. The document also discusses the secondary functions of commercial banks such as providing agency services and general utility services to customers. It provides examples of different types of deposits, loans, and services offered by commercial banks.

1.  Rani More
 BBA 5th Sem.

2. › A Commercial Bank is a profit-seeking business firm,
dealing in money and credit.
› "A banking company means any company which transacts
the business of banking . Banking means accepting for the
purpose of lending of investment of deposits of money
from the public, payable on demand or other wise and
withdraw able by cheque, draft or otherwise.“
› Indian Banking Company Act, 1949

3. Deposit Banks
Industrial Banks
Savings Banks
Agricultural Banks
Exchange Banks
Miscellaneous Banks

4. Primary
Functions
• Acceptance of Deposits
• Advancing Loans
• Creation of Credit
• Clearing of Cheques
• Financing of Foreign Trade
• Remittance of Funds
Secondary
Functions
• Agency Service
• General Utility Services

5. Current
Deposit
s
Savings
Deposit
s
Fixed
Deposit
s
Acceptance
of Deposits

6. Overdraft Facilities
Cash Credit
Discounting of Bills of Exchange
Money at Call
Terms Loans
Consumer Credit
Miscellaneous Advances
Advancin
g Loans

7. ›While sanctioning a loan to a customer, a bank
does not provide cash to the borrower Instead
it opens a deposit account from where the
borrower can withdraw. In other words while
sanctioning a loan a bank automatically
creates deposits. This is known as a credit
creation from commercial bank.

8. Agency
Services
Collection of
payment of
credit
Purchase of
Sale of
Securities
Collection of
Dividends on
Shares
Acts as
Corresponden
ts
Income tax
Consultancy
Executions of
Standing
Orders
Acts as
Trustee &
Executer

9. General Utility
Services
Locker
Facilities
Traveller’s
Cheque &
Credit Cards
Underwritin
g Securities
Gift Cheques
Accepting
Bills of
Exchange
Merchant
Banking