1. Sagar M V
B.COM S3
17/01/2014

2.  Commercial banks are banks which
accepts money deposits from the public
and lend them mainly to commerce for
short periods
 They are also called ‘DEPOSIT BANKS’
 Commercial banks are the oldest
banking institutions in the organized
sector and are found all over the world.
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3. FUCNTIONS :
The functions of a commercial bank can be mainly
classified under two main headings:A.Primary functions
i. Accepting Deposit
ii. Lending Money
iii. Credit Creation
B.Secondary functions
i. Agency Services
ii. General Utility Services
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4. PRIMARY FUNCTIONS
LENDING MONEY
ACCEPTING DEPOSTIS
CREDIT CREATION
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5. One of the most important primary function of a
commercial bank is accepting deposits. The
following are the types of deposits accepted by
the bank:
I. Fixed deposits
II. Current deposits
III.Recurring deposits
IV.Savings deposits
V. Endowment deposits
VI.Miscellaneous deposits
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6. 1. Fixed Deposits
i. Deposits with bank for a fixed period specified at time
of making deposits.
ii. Also called as Time Deposit
iii. Fixed Deposit are repayable on the expiry of specified
of period.
iv. Cheque system not allowed against Fixed Deposits
v. Banker issues FDR (Fixed Deposit Receipt) at time of
opening of Fixed Deposit Account
2. Current Deposits
i. It is an account that can be operated any number of
times in a working day.
ii. Account is opened with a minimum balance prescribed
by the bank
iii. No restriction on withdrawal
iv. Overdraft Facility Available
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7. 3. Recurring Deposit
i. Intends to increase the habit of saving on a regular
basis
ii. Higher rate of interest is provided
iii. Depositor has to deposit the required sum of money
chosen by him on his account every month.
4. Savings Deposit
i. meant for people of middle and lower classes to meet
there future needs.
ii. Restrictions imposed on opening and operation of
savings deposits.
iii. Banks restricts amount that can be deposited and
withdrawn from savings account.
5. Endowment Deposits:
such deposits can be made by customer to meet
expenses on children's education or their marriage.
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9. Commercial banks not only accept deposits
but also lend money that they have
obtained from deposit. The most popular
form of lending are :I. Overdraft
II.Cash credit
III.Discounting of bills of exchange
IV.Loans and advances
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10. 1.OVERDRAFT:
i. current account holder is permitted to
withdraw more than what stands in his credit
ii. Costumer is permitted to withdraw when he
wants.
iii. Interest is charged on overdrawn amount.
2.CASH CREDIT
i. banker specifies a limit called cash credit limit
up to which customer can withdraw.
ii. It is active account to which deposits and
withdrawal are effected.
iii. Interest is charged on actual amount
withdrawn and period utilized
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11. 3.Discounting of bills:
i. Bank give advances to their customers by
discounting bill of exchange.
ii. Amount will be given after deducting interest
from it.
4.Loans and advances:
i. The banker advances a lumpsum for a certain
period at an agreed rate of interest.
ii. The entire amount is either paid in cash or by
credit in his current account
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12. When bank advances a loan it doesn't
pay in cash. It opens account in
customers name and allow him to
withdraw amount by cheque. In this way
bank creates credit or deposit which are
regarded as money
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13. Secondary
functions
Agency
functions
General utility
fucntions
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14. 1. Payment and collection:
Banker makes payment and receive money on behalf of
their customers.
2. Purchase and sale of securities:
banks undertake to purchase and sell securities on behalf
of customers
3. Acts as Executor, Administrator and trustee.
4. Acting as Attoreny:
power of attoreny will be given to banker by a customer.
5. Acting as Correspondents/ Representatives:
banker serves as a correspondents and representative to
their customers.
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15. 6.Collection of Information:
The bank collects information on various stock
exchanges and advise the customers on
investment.
7.Remittance Of fund:
bank arrange for remittance of fund from one
place to another on behalf of customers.
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16. 1. Safe Custody Of valuables:
Banks are equipped with strong, fireproof and theft proof
rooms for safe custody of valuables.
2. Letter Of Credit:
It is a sort of guarantee to the exporter that his draft will
be honored.
3. Travellers cheque:
These are useful to person who travel frequently within
the country or abroad.
4. Merchant Banking
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17. 5. Dealings in foreign exchange business:
Banks provide varied services in respect to foreign
exchange business.
6. Lease Financing:
It is a method of financing for purchasing for machine.
7. Factoring:
Facility provided to finance on trade debt corporate.
8. Underwriting of Securities
9. Tax consultancy
10.Gift cheques
11.Teller system
12.Credit cards
13. Consultancy services
14.Debit card
15.Bank draft
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