Commercial banks have primary functions of receiving deposits, lending to the public, and making investments. They receive demand and time deposits, provide overdrafts, loans, and cash credits for lending. For investments, they purchase treasury bills, government bonds, corporate securities, and more. Banks create credit by sanctioning loans and allowing customers to withdraw funds via check.
2. Primary
Function
s
Receiving
Deposits
Lending to
Public
Investment
Creation of
credit
3. Receiving Deposits
Demand Deposits: Time Deposits:
-Current Account -Fixed Deposit
-Savings Bank -Cash Certificate
Account -Recurring deposit
4. Lending to Public
Cash Credit
Overdraft Discounting Bills of
Loans Exchange
5. Investment
Treasury Bills
Government Bonds
Bonds of Public Sector Units
Money Market Instruments
Corporate Securities
Equity of RRBs and Co-
operatives
6. Creation of Credit
Process of crediting the account of the
customer for the loan sanctioned
Act of drawing cheques on the
accounts
Recipient or payee depositing the
cheque into his account
7. Secondary Functions-
Agency Services
Collection of Depository
Income & Participation
Instruments Safe-Custody
Payments Facilities
Purchase & Sale of Tax Compliance
Securities Merchant Banking
Investment Factoring Services
Counselling
Remittance of
Funds
8. General Utility Services
Trustee, Attorney & Underwriting
Administrator Lease financing
Safe Deposit Publication
Lockers Performance
Travellers’ Cheques Guarantee
Acting As Referees Dealing in Foreign
Letters of Credit Exchange
9. Changing Role of Commercial
Banks
Housing Finance Electronic Transfer
Sale of Mutual of Funds: National
Fund Units level numbering of
Bancassurance accounts, MICR
cheques,At Par
Issue of Credit Cheques, mobile
Cards/Smart Cards banking & Internet
Issue of ATM/Debit Banking
Cards
10. Electronic Banking
ATMs RTGS
Tele-banking Online Payment
Any-time Banking Mobile Banking
Any-where banking Internet Banking
Shared Payment
Network System