The document discusses the primary and secondary functions of commercial banks. The primary functions are accepting deposits, advancing loans, credit creation, and investing funds. Accepting deposits includes savings, current, and fixed deposit accounts. Advancing loans includes cash credit, overdrafts, demand loans, and bill discounting. Secondary functions include agency services like fund transfers, collections, and foreign exchange; as well as general utility services like lockers, travelers checks, and credit information. The top 15 commercial banks in India are also listed.

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Function of Commercial Bank
RAM RAJ G
BY
POST GRADUATE RESEARCH SCHOLAR
Christ University, Bengaluru

2. © Ram Raj GChrist University, Bangalore
Commercial
Bank
I - Primary
Function
II -Secondary
Function
1. Agency
Function
2. General
Utility

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Primary
Function
Accepting
Deposits
Advancing
Loans
Credit
Creation
Investing
Fund

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1. ACCEPTANCE OF DEPOSITS
• Commercial banks receive deposits from the people who have surplus
money and willing to deposit with banks for the purpose of safety and
interest etc.
Savings Deposit account
Current Deposit account
Fixed Deposit account

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 SAVINGS DEPOSIT ACCOUNT
 Depositor Can make deposit of Money any number of times in a day
 There are restriction on the withdrawals from this account
 This type of account holders can have cheque facility also
 They have interest for the deposited amount .
 It encourage customers savings habit  CURRENT DEPOSIT ACCOUNT
 This kind of account, generally maintained by businessmen
 There is no restriction in number of withdrawal per day
 It’s floating deposit account, so there is no interest paid by banker
 But, banks impose service charge for running these account
 Depositor can withdrawal the money from account whenever they need

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 FIXED DEPOSIT ACCOUNT
 Money is accepted for a fixed period of time.
 This is called ‘time deposit’ or ‘term deposit’
 The deposited amount cannot be withdrawn before the period of maturity.
 This type of account have very high rate of interest compared to other accounts
 There is no cheque facility for this account holders
 If the customer withdraw the amount before maturity period, bank charges
penalty fee early withdraw

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2. ADVANCING LOANS
• The deposits received by banks are not allowed to remain idle. So, after keeping certain
cash reserves, the balance is given to needy borrowers and interest is charged from them,
which is the main source of income for these banks
 Demand Loan
 Cash Credit
 Overdraft
 Discounting of Bill

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 CASH CREDIT
 This loan which can be recalled on the demand by bank at any time.
 The entire sum of demand loan is credited to the account and interest is payable on the entire sum
 The sum of money against some collateral security.
 OVER DRAFT
 This scheme, bankers allows the borrower to overdraw his account through cheque.
 This facility only for respectable and reliable customers & current a/c holders
 Interest is payable by borrower only on the amount overdrawn by him

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 DEMAND LOAN
 It refers to a loan given to the borrower against his current assets like shares, bonds, etc.
 A credit limit is sanctioned and the amount is credited in his account.
 The borrower may withdraw any amount within his credit limit
 Interest is charged on the amount actually withdrawn
 DISCOUNTING BILLS
 This scheme, bankers provides financial accommodation by discounting eligible bills
 Bankers charges commission and the balance amount of bill is provided by way of loan
 Bankers secures payment of the bill from the drawee on the maturity date of bill
 Commercial bills may rediscounted with the apex bank, namely RBI

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3. CREDIT CREATION
• This is most significant function of commercial banks, While sanction a loan to a customer,
they do not provide cash to the borrower.
• They open a deposit account from which the borrower can withdraw, and bankers credited
amount to that account.
4. INVESTING FUND
• They are investing surplus amount in government securities, stocks etc.
• Earns interest from investment of government securities
• As per act 1949, bankers are invest their funds in government approved securities
• Such investment are made for reason of safety, liquidity, and profitability of funds

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AGENCY
SERVICES
Fund
Transfer
Fund
Collection
Portfolio
Management
Trustee
and
Executor
Foreign
Exchange
dealing
Income Tax
Consultant

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 FUND TRANSFER
• This helps customers in transferring funds from one place to another. This facilities though the
instruments such as bank draft, traveller’s cheque, etc. For this service bank collects a commission
from the customers
 FUND COLLECTION
• Bankers collect funds on behalf of customers from other banks and credit
them to their accounts
 PORTFOLIO MANAGEMENT
• Banks purchase and sale of securities on behalf of customer. Securities include both of the
corporate and government also.

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 TRUSTEE AND THE EXECUTOR
• Banker is to preserve the ‘will’ of the customers and to execute its after their death
 INCOME TAX CONSULTANT
• Bankers advice to customers relating to tax management and even undertake to file the
tax return also, they collect certain fee for this service
 FOREIGN EXCHANGE DEALING
• They are undertake the business of buying and selling foreign currencies, and they charge
some commission for exchange

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GENERAL
UTILITY
Locker
facility
Business
Information
Traveler’s
Cheque
Underwriting
service
Credit
Information

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 LOCKER FACILITY
• This facility, customers to keep their valuables, like gold ornaments,
documents, certificate, etc
 TRAVELER’S CHEQUES
• Bankers provides letter of credit, they reduce the customer
from risk of carrying cash during travel
 CREDIT INFORMATION
• They furnish reliable information about the credit worthiness of the customers to those who
are need of information.

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 BUSINESS INFORMATION
• In addition to providing credit information about the customer, also engages in the task of collection
of statistics pertaining to money, banking, trade and commerce. This is helpful to customer to know
the latest economic condition.
 UNDERWRITING SERVICE
• They undertakes to subscribe the issue of debenture made by corporate
entities. So bankers are providing guarantee and confidence to the
investors. And they charging underwriting commission

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1. State Bank Of India
2. ICICI Bank Limited
3. Punjab National Bank
4. Canara Bank
5. Bank Of Baroda
6. Bank Of India
7. Union Bank Of India
8. Industrial
Development Bank Of
India Limited
9. Central Bank Of India
10. HDFC Bank Limited
11. UCO Bank
12. Syndicate Bank
13. Indian Overseas
Bank
14. Oriental Bank Of
Commerce
15. Allahabad Bank
TOP RANKING COMMERCIAL BANKS IN INDIA

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THANK YOU