afreen
BUSINESS SERVICES
BANKING - Functions of Commercial banks.
Functions of commercial banks have been divided into four catagories:
1. Primary functions
2. Secondary functions
3. Social functions
4. Electronic Banking Services.
1. Primary functions- Banks have two primary functions-accepting deposits and advancing loans.
A) Accepting deposits-The bank accepts deposits from public. People deposit their money as per their convenience and capability in the following accounts;
i) Fixed or time deposit account:-Money is deposited in this account for a fixed period. The depositors get a fixed deposit receipt. The receipt contains the name of the depositor, the amount deposited, the rate of interest and the period of deposit. This receipt is not transferable. If the depositor needs money before the completion of the deposit time period, then bank refunds the money after charging some discount. The money deposited in this account earns maximum interest. The longer the period of deposit, the higher will be the rate of interest on deposit. The reason for it is that banks can use this money for a longer period. Money deposited in this account is also known as the Time Liability of the bank. ii) Current or demand deposit account:- In this account, a depositor can deposit money any number of time and can withdraw it as and when he requires it. In this account, generally business people deposit the money. Generally, the bank does not pay any interest on this account. If the total deposit money is less than the minimum amount required, then the bank can charge some service charges. Money is withdrawn from this account by cheque. Money deposited in this account is known as the Demand Liability of the bank. iii) Savings deposit account:- This account is to encourage the small savings. The bank pays interest on this account which is less than that of fixed deposit account. The money deposited in this account is known as Demand Liability of the bank. iv) Recurring Deposit
BANKING - Functions of Commercial banks.
Functions of commercial banks have been divided into four catagories:
1. Primary functions
2. Secondary functions
3. Social functions
4. Electronic Banking Services.
1. Primary functions- Banks have two primary functions-accepting deposits and advancing loans.
A) Accepting deposits-The bank accepts deposits from public. People deposit their money as per their convenience and capability in the following accounts;
i) Fixed or time deposit account:-Money is deposited in this account for a fixed period. The depositors get a fixed deposit receipt. The receipt contains the name of the depositor, the amount deposited, the rate of interest and the period of deposit. This receipt is not transferable. If the depositor needs money before the completion of the deposit time period, then bank refunds the money after charging some discount. The money deposited in this account earns maximum interest. The longer the period of deposit, the higher will be the rate of interest on deposit. The reason for it is that banks can use this money for a longer period. Money deposited in this account is also known as the Time Liability of the bank. ii) Current or demand deposit account:- In this account, a depositor can deposit money any number of time and can withdraw it as and when he requires it. In this account, generally business people deposit the money. Generally, the bank does not pay any interest on this account. If the total deposit money is less than the minimum amount required, then the bank can charge some service charges. Money is withdrawn from this account by cheque. Money deposited in this account is known as the Demand Liability of the bank. iii) Savings deposit account:- This account is to encourage the small savings. The bank pays interest on this account which is less than that of fixed deposit account. The money deposited in this account is known as Demand Liability of the bank. iv) Recurring Deposit