Functions of Commercial Banks

i) Primary functions, and

ii) Secondary functions including
agency functions.
Primary functions:
The primary functions of a commercial
bank include
a) accepting deposits; and
b) granting loans and advances;

Different modes of Acceptance of Deposits

i) Current deposit
ii) Saving deposit
iii) Fixed deposit
iv) Recurring deposit
v) Miscellaneous deposits
Different methods of Granting Loans
by Bank
Cash credit
Loans
Bank overdraft, and
Discounting of Bills

Secondary functions
Issuing letters of credit, travellers cheques, circular notes etc.
Undertaking safe custody of valuables, important documents,
and
securities by providing safe deposit vaults or lockers;
Providing customers with facilities of foreign exchange.
Transferring money from one place to another; and from one
branch to another branch of the bank.
Standing guarantee on behalf of its customers, for making
payments for purchase of goods, machinery, vehicles etc.
Collecting and supplying business information;
Issuing demand drafts and pay orders; and,
Providing reports on the credit worthiness of customers.

Agency Services
Collection and payment of cheques and bills on behalf of the
customers;
Collection of dividends, interest and rent, etc. on behalf of
customers, if so instructed by them;
Purchase and sale of shares and securities on behalf of
customers;
Payment of rent, interest, insurance premium, subscriptions
etc.
on behalf of customers, if so instructed;
Acting as a trustee or executor;
Acting as agents or correspondents on behalf of customers for
other banks and financial institutions at home and abroad.

General utility services

Issuing letters of credit and travellers cheques;
Underwriting of shares, debentures, etc.;
Safe-keeping of valuables in safe deposit locker;
Underwriting loans floated by government and
public bodies Supplying trade information and
statistical data useful to customers;
Acting as a referee regarding the financial
status of customers;
Undertaking foreign exchange business.

 CLASSIFICATION OF BANKS CAN BE

DONE IN MANY WAYS.
BASED ON FUNCTIONING
COMMERCIAL BANKS
CO-OPERATIVE BANKS
DEVELOPMENT BANKS
RESERVE BANK OF INDIA

 COMMERCIAL BANKS
SCHEDULED BANKS
NON-SCHEDULED BANKS

SCHEDULED BANKS
ONE WHICH IS REGISTERED IN THE SCHEDULE OF
RBI.
COME UNDER PURVIEW OF VARIOUS CREDIT
CONTROL MEASURES OF RBI.
REQUIRED TO MAINTAIN CERTAIN MINIMUM
BALANCE WITH RBI.
ENTITLED TO BORROW FROM RBI.

 PUBLIC SECTOR COMMERCIAL BANKS

STATE BANK OF INDIA AND ITS
SUBSIDIARIES; 20 NATIONALISED
BANKS;

PRIVATE SECTOR COMMERCIAL

BANKS
OTHER INDIAN SCHEDULED BANKS THAT
DO NOT FALL IN THE ABOVE GROUP

 NON-SCHEDULED BANKS
THOSE WHICH ARE NOT INCLUDED IN
SCHEDULE OF RBI
THEY ARE NOT ENTITLED TO BORROWINGS
AND REDISCOUTING FACILITIES FROM RBI

BASED ON OWNERSHIP
NATIONALISED BANKS
PRIVATE BANKS
FOREIGN BANKS
CO-OPERATIVE BANKS

1949 : Enactment of Banking Regulation Act.

1955 : Nationalisation of State Bank of India.
1959 : Nationalisation of SBI subsidiaries.
1969 : Nationalisation of 14 major banks.
1971 : Creation of credit guarantee
corporation.
1975 : Creation of regional rural banks.
1980 : Nationalisation of seven banks with
deposits over 200 crore.

Merchant banker
Merchant Banker is defined as, any
person who is engaged in the business of
issue management either by making
arrangement regarding selling, buying or
subscribing to securities as Manager,
Consultant, Adviser or rendering corporate
advisory service in relation to such issue
management.
Merchants bankers are governed by the SEBI
(Merchant Bankers) Rules, 1992.

 MUTUAL FUNDS: Mutual Fund offers

investors a proportionate claim on
portfolio of assets that fluctuates in
value with the value of the assets
that make up the intermediaries
portfolio.
permitted to float subsidiaries as
Mutual Funds.

RETAIL BANKING: Commercial banks

in India are increasingly taking up
retail banking as an attractive
market segment with opportunities
for growth and for profit.
Retail banking refers to housing
loans, consumer loans for purchase
of consumer goods.
The loan values can average between
Rs.20,000 to Rs 1 crore.

ATMs: (Automated Teller Machines , or

ANY TIME MONEY as one bank has
been wittily advertising) have emerged as
an alternative banking channel which
facilitate low cost banking transaction.
Bank customers need not go to the bank
branches but can withdraw money and
deposit checks in ATMs

 ANY WHERE BANKING: Any where Banking is the new

system of banking adopted and made popular by a few
foreign banks and is now being increasingly adopted by
X
PSB s. This facility
is a technology based customer
friendly service for the convenience of customers.
Under Any Where Banking,a customer having an
account with any select branch can operate it from other
designated branches of the bank through out the country.
The facility includes cash withdrawal, cash deposit,
transfer of funds, collection of local checks, intra-city,
and inter-city transactions, etc.
Now distance is no hindrance and banking is made more
convenient , wherever the consumer may reside.

e-banking

Fund transfer
You can transfer any amount from one account
to another of the same or any another bank.
Customers can send money anywhere in India.
Once you login to your account, you need to
mention the payees's account number, his bank
and the branch. The transfer will take place in a
day or so, whereas in a traditional method, it
takes about three working days. ICICI Bank says
that online bill payment service and fund
transfer facility have been their most popular
online services.

ATM Card

Sometimes called cash cards, they

allow the cardholder to withdraw
cash from an ATM machine after
entering a PIN that is specific to the
card. Some cards may only be used
in an ATM but most are combination
debit, ATM and cheque guarantee
cards.

CREDIT CARD
It is a card entitling its holder to buy
goods and services based on the
holder's promise to pay for these
goods and services. The issuer of the
card grants a line of credit to the
consumer (or the user) from which
the user can borrow money for
payment to a merchant or as a
cash advance to the user

Difference between Debit card &

Credit card.
debit card = decrease in credit balance of
bank a/c of a account holder.
credit card = increase in debit balance of
bank a/c of a account holder. these cards
are used in the same way, but in the case
of debit card we would have amount in
the account and in the case of credit card
no need to maintain amount in the
account but we have to pay after bill
payment to the banker.

To use a debit card a person must have sufficient

amount in his/her account and shopping is limited to
the amount avail in the account, it cannot be
exceeded. From debit card the amount is
transacted/debited at the very moment as and when
it is utilized.
To use credit card one need not have to have
money/amount in his/her account. They are the
special type of customers because banks issued
credit cards to them based on some attributions or
features. When the credit card is being swapped by
the shopkeeper, the amount does not get transacted
at the very moment infact it is being transacted
approximately after 5 or 7 days

Electronic funds transfer

or EFT
Refers to the computer-based
systems used to perform
financial transactions electronically.
The term is used for a number of
different concepts:
Cardholder-initiated transactions,
where a cardholder makes use of a
payment card.

Email Money Transfer

(EMT)
It is a funds transfer service between
personal accounts at participating
Canadian financial institutions. The
provider of this service is CertaPay, a
division of Acxsys Corporation. If
your bank is in Canada you will be
able to send the world's first,
interbank - based Interac Email
Money Transfers