Banks and their Functions
Banks plays very important role in economic and social development of a country. The development of banks started from European countries. Banks receipt deposits from public and disburse the maximum part of collected money to public, businesses and industries in the form of loan. The functions of banks can be classified into following categories:
1 Main Functions
2 General Utility Functions
3 Agency Functions
Main Functions :
(a) Acceptance of deposits from public Banks accepts deposits from public in following forms:
1. Fixed Deposits
2. Current Accounts
3. Saving Accounts
4. Home Saving Accounts
(b) Advancing the loan to public, businesses and industries Bank disburse the collected money to assist for capital to public, business and industries in following forms :
1. Overdraft
2. Cash Credit
3. Advance
4. Discounting of bills
General Utility Functions :
Following functions falls in this category :
1. Issue of Currency : This function is perform by the central bank of country. In India Reserve Bank of India is liable for this function.
2. Purchase and sale of foreign exchanges.
3. Custodian of valuable assets.
4. Issue of traveler cheques.
5. Collection of business data.
6. Creation of credit
Agency Functions:
1. Transfer of money.
2. Purchase and sale of securities.
3. Receipts of interest and dividends of their customers.
4. Payment of insurance premiums