5. Commercial bank and service offered by bank

Primary Functions of Commercial Banks are:

  • Commercial bank facilitates customers to deposit funds in various schemes like fixed deposits, term deposits, saving account deposits and recurring account deposits. These deposits are payable with interest to the customers.
  • Commercial bank facilitates loans and advances services to the customers like money at call, overdraft facility, bill discounting, cash credit and many more.
  • Commercial bank provide customers with secured loans like mortgage loan, loan on savings account, etc and unsecured loans like corporate bonds, credit card debt, lines of credit, personal loans, etc.
  • Commercial bank also generate credit creation by technique, when disbursing loan to a customer. Banks instead of providing loan in cash they request customer to open a deposit account from where borrower can withdraw funds this is known as reverse engineering of creating deposits known as a credit creation.

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