Banking

Commercial banks
And
The Central Bank
What are Banks?
Banks are those financial institutions
who maintain the balancing in money
supply in the economy, so that our
economy run smoothly.
Types of Banks
•Retail Banks
•Investment Banks
•Agricultural Banks
•Cooperative Banks
•Commercial Banks
•Central Bank
 Commercial Banks

These are those financial institution

which accepts deposits from the
public and give loans for purposes of
consumption and investment.
 Functions of Commercial Banks
(i)Primary Functions
•Accepting Deposits
(a) Saving Deposits
(b) Current Deposits
(c) Recurring Deposits
(d) Fixed Deposits
•Advancing Loans
(a) Cash Credit
(b) Demand Loans
(c) Short and Long term Loans
(d) Overdraft Facilities
(ii) Agency Functions

• Collection of cheques, bills and drafts.

• Payment of interest, installments of loans,
insurance premium etc.
• Purchase and sale of securities
• Collection of interest, dividend etc.
• Transfer of funds through demand drafts, mail
transfer etc.
• Purchase and sale of foreign exchange.

(iii) General Utility Services

• Issuing traveler cheques
• Offering locker facilities for keeping
valuables in safe custody
•Also, issuing debit cards and credit
cards, etc.
 Central Bank
It is an apex institution in the
banking and financial structure of a
country. It is sole authority who
issues currency in our country. Our
countries central bank name is
“Reserve Bank of India”.
 Functions of Central Bank
1) Issue of currency
2) Banker to the Government
• As Banker
• As an agent
• As advisor
3) Banker to the banks
4) Lender of the last resort
5) Clearing House function
6) Custodian of foreign exchange
7) Control on credit