These banks are governed by the Indian Banking Regulation Act 1949 and according to this act banks are not allowed to do any other business rather than banking. Bank Monetize Debt Commercial banks transform the loan to be repaid after a certain period into cash, which can be immediately used for business activities. Some of important scheduled banks are State Bank of India and its subsidiary banks, nationalised banks, foreign banks, etc. Under this set up banks open accounts of their customers and deposit the loan money. Banks pay interest on deposits at various rates on different deposits. It also helps in the transfer on the funds of the State and Central Government.
The Commercial Banks receive deposits from the general public and lends it on high interest to the individuals and organizations. They act as a mediator between the borrowers and savers. Interest paid on savings account deposits in lesser than that of fixed deposit. Apart from Retail Banking, there also exists Corporate Banking. These accounts are generally in the case of business firms, institutions and co-operative bodies. Commercial Banks aid the economic development of the nation through the capital formed by them. Further, it gives the facility to withdraw money on demand.
The establishment, which provides banking services to the public is known as Commercial Bank. Collection of Cheques The bank collects the money of the cheques through clearing section of its customers. Cheques and credit cards are two important payment mechanisms through banks. Now-a-days, banks offer very attractive schemes to attract the people to save their money with them and bring the savings mobilized to the organized. Banks do not pay any interest on these accounts.
It is a facility to a depositor for overdrawing the amount than the balance amount in his account. Commercial Banks in India are usually categorized into Scheduled Commercial Banks and Unscheduled Commercial Banks. It is mainly to increase the housing facilities in the country. Such underwriting ensures the expected minimum subscription and also convey to the investing public about the quality of the company issuing the securities. Both corporate and retail loans have recorded a growth in demand; mainly the services, real estate, consumer durables and agriculture allied sectors. A certain amount is sanctioned as overdraft which can be withdrawn within a certain period of time say three months or so.
Using Cheque System: Banks also render important services by providing an expensive medium of exchange, such as cheques. Balance sheet is a statement of assets and liabilities on a given date. Grants loan at low rate of interest b. The account holders can get the benefit of overdraft facility. This is, in fact, the main source of income of the bank.
Mind, loan is never given in cash but it is redeposited in the bank as demand deposit in favour of borrower. Sales is the term for the investment banks sales force, whose primary job is to call on institutional investors to buy the stocks and bonds, underwritten by the firm. Earning Profits Money supply Ultimate source of money supply in the economy. Securitization of Loans: Banks are recently trying to securities a part of their part of loan portfolio and sell it to another investor. What we are talking about here is Retail Banking, but banking operations extend beyond these tasks.
In fact, commercial banks, as their name suggests, axe profit-seeking institutions, i. Because the vault is holding important valuables of customers in lockers, it is also known as 'Strong Room'. On the contrary, the commercial bank does not perform such function. They do not provide, long-term credit, so that liquidity of assets should be maintained. The apex bank adopts various measures like Cash Reserve Ratio, Statutory Liquidity Ratio, Bank Rate, Repo Rate, Reverse Repo Rate, etc.
They include several nationalized banks, the State Bank of India, Regional Rural Banks and scheduled co-operative banks. This loan is available only for students whose annual family income does not exceed Rs. Cash Credit: Cash credit is a form of working capital credit given to the business firms. State Bank of Patiala f. Functions of a commercial bank include receiving deposits, disbursing payments, collections, safeguarding money, loaning money, and maintaining and servicing checking, savings, and custodial accounts.
Overdraft facilities may be available in the same current account held with the bank. This function is the main source of income for the bank. They constitute nerve centre of production, trade and industry of a country. Developing of entrepreneurship is a complex process. » Commercial Banks in India Commercial Banks in India A commercial bank is a type of financial intermediary and a type of bank. If the banks do not perform this function, savings either remains idle or used in creating assets, which are low in scale of plan priorities.