Commercial Bank & Central Bank

Functions of Commercial Banks:

PRIMARY FUNCTIONS: There are TWO types of primary function of Commercial Banks:

·       Accepting Deposits:  Commercial Banks accepts deposits from their customers in different forms of Accounts, Like Savings A/C, Current A/C, Recurring A/C etc.

·       Granting Loans: Commercial Banks grants loan to individuals, business, firms etc for different purpose. Like they provides Industrial Loan, Housing Loan, Personal Loan, Education Loan, Car Loan etc.

SECONDARY FUNCTIONS: They perform following secondary functions:

·       Exchange of foreign currency.

·       Provides safe deposit lockers.

·       Provide insurance policies.

·       Pay different types of bills for customers.

·       They provide credit and debit card facility.

·       They provide on-line banking and transfer of money.

·       Provides financial advice to the customers.

·       Buying and selling of shares.

Central Banks

Central Banks are charged with regulating the size of a nation’s money supply, the availability and cost of credit, and the foreign-exchange value of its currency. Regulation of the availability and cost of credit may be designed to influence the distribution of credit among competing uses. The principal objectives of a modern central bank in carrying out these functions are to maintain monetary and credit conditions conducive to a high level of employment and production, a reasonably stable level of domestic prices, and an adequate level of international reserves.

Function of a Central Bank

A central bank usually carries out the following responsibilities:

1. ·         Implementation of monetary policy.
2. ·         Controls the nation's entire money supply.
3. ·         The Government's banker and the bankers' bank ("Lender of Last Resort").
4. ·         Manages the country's foreign exchange and gold reserves and the Government's stock register;
5. ·         Regulation and supervision of the banking industry
6. ·         Setting the official interest rates- used to manage both inflation and the country's exchange rate - and ensuring that this rate takes effect via a variety of policy mechanisms
7.