Commercial banks play a crucial role in the financial system by providing a variety of financial services

to individuals, businesses, and governments. The functions of commercial banks can be broadly
categorized into the following:

1. Accepting Deposits:
 Commercial banks offer various types of deposit accounts, such as savings accounts, current
accounts, and fixed deposits. Customers deposit their money with the bank, which can be
withdrawn as needed.
2. Providing Loans and Advances:
 Commercial banks lend money to individuals, businesses, and governments. They provide
various types of loans, including personal loans, home loans, car loans, and working capital loans
to businesses.
3. Credit Creation:
 Commercial banks have the ability to create credit through the process of lending. When a bank
lends money, it essentially creates new money in the form of credit, thereby contributing to the
overall money supply in the economy.
4. Facilitating Payments:
 Commercial banks offer various payment services, such as issuing checks, facilitating electronic
funds transfers, and providing debit and credit card services. These services help in the smooth
conduct of financial transactions.
5. Electronic Banking Services:
 Banks offer online and mobile banking services, allowing customers to access their accounts,
make transactions, and manage their finances electronically.
6. Safekeeping of Valuables:
 Many commercial banks provide safe deposit boxes for customers to store valuable items,
documents, and important possessions securely.
7. Investment Banking:
 Some commercial banks also engage in investment banking activities, such as underwriting
securities, facilitating mergers and acquisitions, and providing advisory services to corporations.
8. Foreign Exchange Services:
 Commercial banks facilitate international trade and finance by offering foreign exchange
services, including currency exchange, letters of credit, and trade finance.

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 9. Wealth Management:
 Banks provide wealth management and investment advisory services to help individuals and
businesses manage their financial portfolios and investments.
10. Government Banking:
 Commercial banks often act as bankers to the government, handling transactions related to
government funds, disbursement of salaries, and managing government accounts.
11. ATM Services:
 Commercial banks maintain networks of ATMs (Automated Teller Machines) to provide
customers with convenient access to cash withdrawals and other banking services.

Commercial banks offer a variety of financial services to individuals, businesses, and governments. These
services are designed to meet the diverse needs of customers and facilitate economic activities. Here are
some common services provided by commercial banks:

1. Deposits:
 Savings Accounts: These accounts allow customers to deposit and withdraw money while
earning interest on their balance.
 Current/Checking Accounts: These accounts are designed for frequent transactions, allowing
customers to write checks, make electronic transfers, and use debit cards.
2. Loans:
 Personal Loans: Banks offer loans for various personal needs such as education, travel, or debt
consolidation.
 Home Loans/Mortgages: Banks provide financing for purchasing or refinancing homes.
 Auto Loans: Financing options for purchasing vehicles.
 Business Loans: Loans tailored for business needs, including working capital, expansion, or
equipment purchase.
3. Credit Cards:
 Banks issue credit cards that allow customers to make purchases on credit, with repayment
required at a later date.
4. Investment Products:
 Fixed Deposits: Customers can invest a lump sum for a fixed period, earning a higher interest
rate than a regular savings account.

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  Mutual Funds: Banks often offer mutual fund investment options to customers.
 Stocks and Bonds: Some commercial banks provide brokerage services for buying and selling
securities.
5. Online and Mobile Banking:
 Banks provide digital platforms for customers to manage their accounts, transfer money, pay
bills, and access other banking services online or through mobile apps.
6. International Banking:
 Foreign Exchange Services: Banks facilitate currency exchange for international trade and
travel.
 Letters of Credit: Banks issue letters of credit to facilitate international trade transactions.
7. Treasury and Cash Management Services:
 Commercial banks offer services to help businesses manage their cash flow, optimize liquidity,
and streamline financial operations.
8. Safety Deposit Boxes:
 Banks provide secure storage facilities for customers to store valuable items, important
documents, and precious metals.
9. Financial Advisory Services:
 Some banks offer financial planning and advisory services to help customers manage their
wealth, plan for retirement, and achieve their financial goals.
10. Insurance Products:
 Banks often sell insurance products such as life insurance, health insurance, and property
insurance.
11. ATM Services:
 Automated Teller Machines (ATMs) allow customers to withdraw cash, check account balances,
and perform basic transactions outside of regular banking hours.

These services collectively contribute to the essential role that commercial banks play in the financial
system by facilitating economic activities and providing a range of financial solutions to individuals and
businesses.

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A commercial bank is a for-profit financial institution that offers loans to and accepts deposits from the
public, either businesses or individuals. Commercial banks play a crucial role in the economy.

But what services do commercial banks provide? And how do these services help businesses?

Let’s dive into everything you need to know.

What Are The Different Types of Commercial Banks?

There are three main types of commercial banks: public sector banks, private banks, and foreign banks.
Let’s dive in and explore each.

Public Sector Banks

This commercial banking system is a subset of the national central bank. The government acts as the
primary stakeholder in public sector banks, and they are an extension of that governing body.

Private Sector Banks

Individuals or businesses primarily own private banks. The government has little to no involvement in
these banks other than requiring that they follow central bank guidelines. Private-owned banks are at
liberty to devise their own financial strategies and often make it a priority to meet each customer’s unique
needs.

Foreign Banks

Unlike public and private sector banks, foreign banks operate outside the nation in which they are
headquartered. They have locations worldwide and make nearly 40 percent of all loans to American
businesses.

What Are The Functions of Commercial Banks?

Commercial banks have several different functions, and each function is vital to stimulating the economy
and providing intermediary financial services.

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Here are a few of their primary functions:

Accepting Deposits

Commercial banks accept deposits from both businesses and individual entities. They handle savings
deposits, time deposits, and current deposits. Time deposits carry a higher interest rate than savings
deposits, and current deposits don’t offer any interest.

Granting Loans

One of the primary functions of commercial banks is to lend funds, and these loans can be in cash credit,
advances, or otherwise. You can get many different types of loans from a commercial bank depending on
your spend limit, the timeframe you’d like to work with, and what you’re looking for in terms of interest
rates.

Acting as Agents

In addition to accepting deposits and lending credit, commercial banks act as mediators between
individuals, businesses, and government entities. They do so by collecting bills and fees, helping manage
digital banking services, and facilitating stock market trading for their users.

Dealing With Foreign Exchange

Commercial banks are responsible for handling exchanges between foreign and national currencies. They
often serve as trusted partners between foreign banks and home banks, dealing with the exchange of
money and the handling of different account types overseas.

What Services Do Commercial Banks Offer?

There is no question that commercial banks play an essential role on both a national and global scale.
They are beneficial for economic growth, particularly in developing countries, and offer customers many
financial options. But along with their core functions, what types of services do these banks perform? The
following are some of the commercial banking solutions offered by Capital One, though you can find
most through other commercial banks as well.

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1. Commercial Lending

Commercial lending refers to a borrowing relationship between a business and a commercial bank. In
essence, it provides the funds by which companies can pay for their various business expenses. You can
repay commercial loans within a short period or long-term.

2. Loan Syndications

Capital One and other commercial banking services can arrange syndicated loan transactions for
companies that require a more flexible credit structure that falls outside an individual bank’s limits. Loan
syndication services can be advantageous for several reasons. For one, they simplify negotiating multiple
credit agreements, and they also improve borrower control over financing activities. Loan syndications
can provide funding for many different corporate purposes, including acquisitions and capital
expenditures.

3. Depository Services

The hallmark of commercial banks is the ability to make deposits. Whether you’re making an individual
or company transaction, most banks offer a wide range of depository services to meet your needs
regardless of your business size. Commercial checking services may include checking with earnings
credits, checking with earnings credits and interest, and interest-only checking. Depository services are
critical to day-to-day business operations and provide the means to manage their transactions.

4. Accounts Payable Solutions

Many commercial banks offer customers solutions to streamline their accounts payable processes. Capital
One, for instance, lets users choose from a variety of card options that you can use to pay invoices.
Accounts payable solutions are an important—and convenient—way for businesses to manage their
payments owed to suppliers. By staying on top of this process, they can make payments easier and get
things taken care of in a more timely fashion.

5. Liquidity Management Solutions

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Liquidity refers to the ease by which you can readily convert assets to cash without affecting their market
prices. Many commercial banks offer liquidity management solutions to help businesses monitor their
money.

Standard liquidity management solutions involve cash concentration, automated investment and loan
sweep, and demand deposit accounts. These can help businesses keep an eye on where their funds are
going and determine their liquidity.

6. Foreign Exchange

These days, it’s almost impossible to conduct good business without dealing with foreign currency. 80-95
percent of all US businesses purchase supplies overseas or have sales overseas.

This is why commercial banks offer foreign exchange services to customers. They help with conversion
rates and mitigate the risks associated with fluctuating foreign currency. Another benefit to using
commercial banks’ foreign exchange services is that they are typically very secure.

7. Investment Banking

Investment banking services assist companies and government institutions in generating capital. They
also help facilitate acquisition transactions and other financial advisory services. Some of the services that
are generally provided through commercial banks are business valuations, fairness opinions, and
corporate debt offerings.

8. Remote Deposit Capture

Remote deposit capture, or RDC, has become essential for financial institutions to remain competitive,
and commercial banks are no exception. RDC allows users to deposit checks electronically, ensuring
quicker deposits and eliminating the need for people to have to pull up to a physical bank every time they
want to deposit something. This can be especially useful for businesses responsible for depositing large
volumes of checks over short periods of time.

Teksetra provides RDC services, including risk assessment and implementation expertise, to help
businesses start remote deposit capture. Teksetra can help companies with planning, hardware
procurement, maintenance, and every other step involved with RDC implementation.