Question

What are the three basic money and credit functions of Commercial Banks?

Answer 1

1):-main functions of Commercial banks

Keeping money safe and lending which includes

loans,

overdrafts

and mortgages

Loans is defined as a sum of money given to a borrower, usually in return for a payment of interest as well as the repayment of the loan

Mortgage is defined as a borrowing to purchase land or property

Functions of Commercial Banks

1. Acceptance of deposits

2. Advancing of loans

3. Facilitation of payments through cheque

4. Transfer of funds

5. Agency functions

6. General utility services

7. Credit creation

Bank loan is defined as an amount of money offered by a bank to a borrower at a defined interest rate for a fixed period. Before granting a bank loan to a client, a bank must obtain several important documents to verify that the borrower will pay back the loan

Cash credit is defined as an arrangement between the bank and a client, and it allows the client to withdraw money beyond their account limit.

Bank overdraft is defined as a form of financing that allows the current account holders to overdraw the account up to a specified limit. It does not require any written formalities and clients use the overdraft to meet urgent needs.

Discounr bills of exchange is occur by providing money immediately to the holder of the bill. The bank deposits the money in the holder's current account, after deducting an interest rate for the loan period.

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