Understanding Commercial Banks and Their Functions
A commercial bank is a financial institution that receives deposits from the public, provides loans, and offers various financial services. It acts as a bridge between investors and savers, playing a vital role in the economy by mobilizing resources and facilitating economic activities. Banks also contribute to monetary policy through credit creation. Learn more about the meaning and functions of commercial banks in modern commerce and trade.
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Presentation Transcript
DEFINITION OF A BANK Bank means an insititution which receives funds from the public and gives loans and advances to those who need them. Banking is the life Blood of modern commerce and trade. The Banking Companies Act, 1949 defines a banking company as one which transacts the business of banking in any state of India. Banking has been defined as accepting, for the purpose of lending or investment, deposits of money from the public which are payable on demand or withdrawable by cheque, draft, order or otherwise.
Thus, banks act as a bridge between the users of capital (investors) and those who save (savers). They activate the idle resources of the community and use them for productive purposes. Banks also perform agency and general services. An important point about banks is that they have the capacity to add to the total money supply of an economy by means of credit creation. Due to all these points, banks are used extensively as an instrument of monetary policy.
MEANING OF COMMERCIAL BANK A Commercial Bank is that financial institution which accepts deposits from the people, gives loan for various purposes and performs various other functions. Primary Functions Secondary Functions Developmental Functions i. ii. iii.
