Functions Of Banks

Banks perform many functions inwards modern times. They are enumerated below.
  1. Collection of the savings of the community : Nowadays people practise non proceed their savings at home. They deposit inwards banks. Thereby the run a hazard of loss (from theft, etc.) is avoided as well as likewise merely about involvement is earned. There are unlike kinds of deposits. Some deposits are withdrawable on demand. They are known every bit need deposits or electrical flow accounts. The involvement paid on such deposits is really small. Some times no involvement is paid. Some deposits are withdrawable afterward a fixed menses (one year, ii years etc.) Such deposits are called fourth dimension deposits. There are unlike names for the unlike varieties of fourth dimension deposits, e.g., fixed deposits, savings deposits, etc. Time deposits earn higher rates of interest.
  2. Loans as well as Investment : Banks lend coin to traders, industrialists as well as other persons. Lending is done through a diversity of methods. Sometimes the coin is paid out straight to the borrower. Sometimes an trouble organization human relationship is opened inwards the advert of the borrower as well as he is allowed to depict cheques on it. A human having an trouble organization human relationship may last given the correct to depict to a greater extent than coin than what he has inwards the account. This is known every bit ‘Overdraft facilities’. A depository fiscal establishment may likewise lend coin past times discounting a neb of central or a Hundi.
    • Banks invest coin on shares as well as debentures of companies as well as on Government Promissory Notes. They lend coin to industrial concerns against the safety of Government Promissory Notes, shares, debentures, gold, goods inwards course of didactics of manufacture, etc. Loans are likewise given to private individuals against G. P. Notes, shares, debentures, life insurance policies as well as gold.
  3. Creation of Money : Formerly banks could impress as well as final result notes payable past times them on demand. The notes were used every bit a medium of exchange. Nowadays alone the key depository fiscal establishment of the province (RBI inwards our case) tin final result notes. Banks, however, tin orbit loans inwards excess of the coin deposited alongside them. Cheques tin last drawn against such loans as well as the cheques tin last used every bit media of exchange. Hence, banks tin practise money.
  4. Other Functions : Banks perform many miscellaneous functions. For example, they proceed valuables inwards rubber custody; human activity every bit agents of their customers inwards the buy as well as sale of shares, debentures, G. P. Notes, etc., as well as for the payment of insurance premiums, bills, etc., human activity every bit executors as well as trustees of wills; and, central currencies of unlike countries for 1 another. Apart from these, at 1 time a days banks convey been providing diverse facilities similar debit, credit cards as well as online transactions etc.

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