Commercial banks What is a commercial bank? · A commercial bank are institutions which perform the function of accepting deposits, granting loans and making investing on the aim of earning profits. · They act as intermediaries by collecting money from household in the form of savings and lend them to the productive sector in the form of lending money. · The rate at which the bank borrows money is known as ‘borrowing rate’ and the rate at which it lends money is known as ‘lending rate’. Functions of a commercial banks 1. Primary functions A. Accepting deposits n Current account deposits/demand deposits: - deposits that are repayable by banks on demand. Mostly maintained by businessmen. Banks do not pay interest on these accounts but charge you for the services they provide. n Fixed deposits/time deposits: - deposits are d...
This is Commerce in Simple words