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:
- · Implementation of monetary policy.
- · Controls the nation's entire money supply.
- · The Government's banker and the bankers' bank ("Lender of Last Resort").
- · Manages the country's foreign exchange and gold reserves and the Government's stock register;
- · Regulation and supervision of the banking industry
- · 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
