COMMERCIAL BANKS

Among the banking institution in the organized sector, the commercial banks are the oldest institution having a wide network of branches commanding utmost public confidence and having the lions share in the commercial banking operations.

Structure of commercial banks

Public sector banks Private sector banks

SBI

Nationaliz ed banks

RRB S

India n bank s

Forei gn banks

 Functions of commercial banks:

accepts deposits of various kinds such as current deposits, time deposits, saving deposits. advance loans to traders, producers and other generally for short periods. collects cheques,bills etc on behalf of their customers. they provide general utility services such as accepting bills of

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Now it is also providing loan for agriculture and economic Development. They finance cooperative societies to enable them to expand their production credit to the farmers. Since 1975,the SBI and nationalized banks are sponsoring regional rural banks to expand cheap credit to small farmers, rural artisan and other. Kisan credit card scheme was

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Commercial banks extend financial assistance to the exporter on priority basis and relatively liberalized terms. It also extends general utility services like safety locker facility, transfer of funds, ATM facility, credit card facility, gift cheque, accepting bills and providing advice on financial matters to its customers.

Balance sheet of a bank

Liabilities 1.Share capital 2.Reserve fund 3.Deposits(demand,time,saving) 4.Borrowing from other banks 5.Acceptance and endorsements 6.Other liabilities.

 Assets 1.Cash a. Cash in hand b.Cash with the central bank c.Cash with others banks 2.Money at call and short notice 3.Bills purchased or discounted 4.Investments 5.Loans and advances 6.Accetances and endorsement 7.Building and other fixed assets

 Liabilities of the bank: 1.share capital: Bank initially raises

its funds by issuing share Capital. It is the contributions made by the shareholders. It is the actually paid up share capital which constitute the liability of the bank.

2.Reserve funds: It is the amount

accumulated over the years out of undistributed Profits.Normally,all the profits of the bank are not distributed among the shasreholders.some part is retained undistributed for meeting contingencies .This is reserved fund.

 Deposits:

Deposits from the public constitute the major portion of the banks working Capital. Deposits are the liabilities of a bank towards the depositors. sometimes the bank borrows loans from reserve bank of india,other banks and other institutions.

Borrowing from banks:

Acceptances:

The bank also creates liabilities by accepting and endorsing the bills of exchange on

 Assets of the bank:

Cash(cash in hand, cash with the central bank, cash with other banks) Money at call at short notice Bills purchased and discounted Investments Loans and advances Acceptance and endorsements Building and other fixed assets.

 Liquidity

Investment policy of banks:

Solvency Profitability