Business Services: Types of Banks and Functions of Commercial Bank: Primary and Secondary Functions

Doorsteptutor material for IAS/Mains/Optional Commerce-Accountancy is prepared by world's top subject experts: Get detailed illustrated notes covering entire syllabus: point-by-point for high retention.

Download PDF of This Page (Size: 274K)

Types of Banks

Types of Banks

Types of Banks

Types of Banks

Commercial Bank

Accept deposits from the public and grant short-term loans and advances to their customers. Also started giving medium-term and long-term loans to trade and industry.

Commercial Bank classification

Commercial Bank Classification

Commercial Bank classification

Co-Operative Bank

Co-operative society engages itself in banking business is called a Co-operative Bank. Rate of interest charged is usually low. There are three types of co-operative banks operating in India.

  • Primary Credit Societies

  • Central Co-operative Banks

  • State Co-operative Banks

Development Bank

Provide medium and long-term loans to industry. Assist the promotion, expansion and modernisation. They also provide technical advice and assistance, if needed.

Example: Industrial Finance Corporation of India (IFCI), State Financial Corporation’s (SFCs)

Specialised Bank

There are some banks which engage themselves in some specific area or activity and are thus, called specialised banks.

Example: EXIM Bank, SIDBI, NABARD

Central Bank

Entrusted with the responsibility of guiding and regulating the banking system. Apex bank and highest financial authority.

Functions of Commercial Bank

Primary Functions

Accepting deposits

  • Accept deposits from the public.

  • Public assured safety of funds deposited with bank

  • Provide different types of deposit accounts with different rates of interest like:

    • Fixed Deposit Account

    • Recurring Deposit account

    • Current Account

    • Savings Bank Account etc

Lending money

  • Lending money to the public as well as to the business houses.

  • Takes form of loans

  • Advances to the customers at the prescribed rates of interest.

  • Loans granted for a specific period.

  • Loans and advances are generally granted against the security of certain assets

  • Provide medium term and long-term loan.

Secondary Functions

Agency services

Provided by commercial banks as agents of their customers. These include:

Various agency services

Various Agency Services

Various agency services

General utility services

Rendered by commercial banks not only to the customers but also to the general public. These include:

General utility services

General Utility Services

General utility services

Developed by: