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CBSE Class 12-commerce Answered

What are the primary functions of Commercial banks?

Asked by Topperlearning User | 18 Apr, 2016, 12:16: PM
Expert Answer

Primary functions of Commercial banks are

  1. A bank accepts deposits from the public. They deposit their cash balances as chequeable or non-chequeable deposits. Money in these deposits is kept as reserve with the bank for certain fixed period of time and these deposits are called as fixed deposit. 
  2. Banks advance loans for investments project against security. Amount loan is lesser than the value of security. Loans are not paid in cash but it is reflected as demand deposits with the banks. Thus, the banks create the supply of money in an economy.
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