Commercial Banks — Flashcards

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A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit. Banks earn profit by charging higher…

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Commercial banks are important because they mobilise savings, help in capital formation, provide credit to trade and industry, and support economic development by giving funds to productive activities…

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The three main groups are Primary Functions, Agency Functions, and General Utility Functions. Primary functions include accepting deposits and advancing loans. Agency functions include collecting paym…

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The primary functions are accepting deposits and advancing loans. These are the most important basic activities of a commercial bank because they connect savers with borrowers.

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Current deposits, also known as demand deposits, are deposits that can be withdrawn by the depositor at any time by means of cheques. They are non-interest bearing accounts and are mainly used by busi…

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Savings deposit accounts are held mainly by households and salaried employees who want to save money for a short period. These accounts pay low interest and usually have restrictions on withdrawals, s…

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Fixed deposits, also called time deposits, are deposits that can be withdrawn only after a fixed period. They generally range from 7 days to 10 years and carry the highest rate of interest. The longer…

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Recurring deposits are accepted by banks at regular intervals, usually in instalments, whereas fixed deposits are accepted at a particular point of time. Recurring deposits help build saving habits, w…