Functions of Commercial Banks

Functions of Commercial Banks are as under:

1. ACCEPTING DEPOSITS
            Banks attract the idle savings of people in the form of deposits. These deposits may be of any of the following.

(a) Demand Deposits
            Demand deposits are also known as current accounts. These are repayable on demand without any notice. Usually no interest is paid on them because the bank cannot utilize short-term deposits and must keep almost cent percent reserve against them. On the other hand, a little commission is charged for the service rendered.

(b) Fixed Deposits
             Fixed deposits are also known as time deposits. These deposits can be withdrawn only after expiry of the period  for which these deposits are made. Higher interest is paid on them the rate with the length of the period and the amount of deposits.

(c) Saving Bank Deposits
              These deposits stand midway between current and fixed accounts. Bank accepts the saving deposits, bank also pays an interest on these deposits and depositor can draw a small amount at a time.