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Business Services: Types of Banks and Functions of Commercial Bank: Primary and Secondary Functions
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.
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:
General utility services
Rendered by commercial banks not only to the customers but also to the general public. These include: