Commercial Banks : Meaning, Types, Functions of commercial banks, Currency banking and Exchange bcom
DWIVEDI GUIDANCE・2 minutes read
Bhang and bank are initially discussed, with the definition of a bank according to the Banking Companies Act 1949 clarified as an institution accepting public money for lending and investment. Commercial banks like SBI, PNB, and ICICI offer various loans, accept deposits, and provide additional services like managing shares and facilitating payments for insurance premiums.
Insights
- Commercial banks play a crucial role in the economy by accepting public deposits and providing various types of loans, acting as intermediaries between depositors and borrowers, thus facilitating the flow of money and credit in the market.
- Beyond their primary functions of accepting deposits and offering loans, commercial banks provide a range of secondary services such as safe deposit lockers, agency services, and facilitating convenient transactions through services like UPI, showcasing their diverse role in meeting customer needs beyond basic banking operations.
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Recent questions
What is the primary function of commercial banks?
Accepting deposits and providing various loans.
What are the secondary functions of commercial banks?
Agency services, consultancy, and safe deposit lockers.
How are commercial banks classified based on ownership?
Public sector, private sector, and foreign banks.
What is the significance of locker facilities in commercial banks?
Establish lessor-lessee relationship and offer secure storage.
How do commercial banks facilitate efficient transactions for customers?
Through services like UPI, credit, and debit cards.
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Summary
00:00
Banking Regulations and Functions of Commercial Banks
- Bhang and bank are discussed initially, with the Governor being governed by the Banking Regulation Act 1949 and the RBI Act 1934.
- The definition of a bank according to the Banking Companies Act 1949 is an institution accepting public money for lending and investment, repayable on demand.
- Banks accept deposits from the public and provide loans in the form of investments, ensuring repayment on demand or through checks or DDs.
- Banking companies are established for profit motives, dealing in money and credit, acting as mediators between depositors and borrowers.
- Commercial banks convert small public deposits into significant capital, offering short-term loans not exceeding one year.
- Commercial banks provide loans for working capital, accepting deposits in various forms like savings, current, or fixed deposit accounts.
- Commercial banks like SBI, PNB, and ICICI are examples of public sector banks, private sector banks, and foreign banks, respectively.
- Commercial banks are classified based on statutory and ownership criteria, with scheduled banks following RBI regulations and non-scheduled banks lacking RBI control.
- Commercial banks' primary function includes accepting deposits and providing various loans like term loans, OD, and CC loans for working capital.
- Commercial banks also perform secondary functions like agency services, consultancy, and safe deposit lockers for storing valuable belongings, charging rent for the service.
13:23
Bank Locker Services and Efficiency Functions
- Locker facilities in banks establish a lessor-lessee relationship between the bank and the customer, offering services like managing shares, investments, and easy withdrawals through UPI provided by commercial banks, along with facilitating payments for LIC insurance, rent, and insurance premiums.
- Commercial banks also serve as agents for tasks like SIP payments, deducting premiums from accounts for LIC, and offering efficiency functions like traveler's checks, which have now been largely replaced by credit and debit cards for convenient and secure transactions during travel and other activities.
