1. There are basically two key functions for the commercial banks:1. Primary functions and 2. Secondary functions
Primary functions include
a. Accepctig Deposits
One of the basic objective of banking is to procure the surplus funds from those
who have excess and distribute it to the sectors where it is necessary. There
are various types of accounts which a depositor can select as per the
convineice. Each type of account will have different types of interest rates
depending upon the tenure of accounts.
B. Granting loans and advances
Loans and advances are part of banking functions.
I.Short term loans :- for a period of less than one year
II.Medium term loans :- for a period less than 5 years and
iii. Long term loans :- for a period above ten years
c.Cash credits
This is a facility of crediting a particular sum of money or fund to the
customer's account, he or she may choose to withdraw at any point of time as per
their convinience. The interest will be charging against the money withdrawned.
D. Overdraft
This is the facility offers for Current acount holders to withdraw in excess of
accout balance, especially those customers who has a sound track record. The
interst is charged against the money withdrawned only.
E.Discounting of Bills
This is a facility provided by the banks to those who are in need of immediate
financial support. They may approach the bank with the corresponding bill or
receipt/promissory note
which has a longer expiry. But the bank could discout it provided they may
charge an interest against that service.
Apart from the baic functions of accepting deposits and granting loans to the
public and industries, banks do have other functions like
1. Agency Services and
2. General Utility services
like
letter of credits
standing orders
demand drafts, travellers's cheques
bank guarantees
foreign exchange
locker faciltiy etc.
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The role of commercial banks
Commercial banks engage in the following activities:
• processing of payments by way of telegraphic transfer, EFTPOS, internet
banking, or other means
• issuing bank drafts and bank cheques
• accepting money on term deposit
• lending money by overdraft, installment loan, or other means
• providing documentary and standby letter of credit, guarantees, performance
bonds, securities underwriting commitments and other forms of off balance sheet
exposures
• safekeeping of documents and other items in safe deposit boxes
• sale, distribution or brokerage, with or without advice, of insurance, unit

2. trusts and similar financial products as a “financial supermarket“
“ cash management and treasury services
“ merchant banking and private equity financing
“ traditionally, large commercial banks also underwrite bonds, and make markets
in currency, interest rates, and credit-related securities, but today large
commercial banks usually have an investment bank arm that is involved in the
mentioned activities.