Question

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

Answer 1

Three primary functions

1. Accepting Deposits : Banks accepts deposits from various entities in an economy. Usually there are three tpes of deposits Savings deposit, Time Deposits and Current deposits.

2.Lending of Funds : The second function is lending these cash reserves ( from depositors) to creditors. Crediotrs are the main source of income for banks and why banks are able to pay inteest on deposits.

3.Bank as an agent : bank has various other roles like collecting drafts , insurance premium and taxes. Wroking as an agent in trading.

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