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FunctionsofBanksImportantBanking 14% 36%

FunctionsandServices
Post:GauravAkrani. Date:4/20/201102:53:00AMIST.
Comments(4) Label:Banking.

WhataretheFunctionsofBanks?Diagram
ThefunctionsofbanksarebrieflyhighlightedinfollowingDiagramorChart.
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Thesefunctionsofbanksareexplainedinfollowingparagraphsofthisarticle.
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A.PrimaryFunctionsofBanks Viewnow Viewnow

The primary functions of a bank are also known as banking functions. They
arethemainfunctionsofabank.

Theseprimaryfunctionsofbanksareexplainedbelow.

NEWARTICLES FEATURED
1.AcceptingDeposits

Thebankcollectsdepositsfromthepublic.Thesedepositscanbeofdifferent PrinciplesofGoodLayoutforan WorldsTop10MostPoisonous

ScrollToTop
AdvertisementCopy VenomousDeadliestSnakes
types,suchas:
BasicAssumptionsofLawof BalayamNailRubbingExercise
1.SavingDeposits Demand CuresAlopecia,HairLoss,Bald

2.FixedDeposits LimitationsofPlanningin WhatisCreditCard?Meaning

ManagementDisadvantages DefinitionSizeAnatomyGlossary
3.CurrentDeposits
ProportionalReserveSystemof DifferenceBetweenPrimaryand
4.RecurringDeposits NoteIssueExplained SecondaryData

TopInventionsandDiscoveries
a.SavingDeposits byScientistsAtoZListScience

HowtoImproveHuman
Thistypeofdepositsencouragessavinghabitamongthepublic.Therateof Relations?
interest is low. At present it is about 4% p.a. Withdrawals of deposits are
HowToPrepareForSuccessful
allowed subject to certain restrictions. This account is suitable to salary and
JobInterviews?BestInterviewTips
wageearners.Thisaccountcanbeopenedinsinglenameorinjointnames.
HowToSummarizePassage?
SummarizationSkillsTechniques
b.FixedDeposits BasicPrinciplesofInsurance
ExamplesofInsurancePrinciples
Lumpsumamountisdepositedatonetimeforaspecificperiod.Higherrateof
interestispaid,whichvarieswiththeperiodofdeposit.Withdrawalsarenot IndianMoneyMarketFeatures,
DrawbacksandRecentReforms
allowedbeforetheexpiryoftheperiod.Thosewhohavesurplusfundsgofor
fixeddeposit. ConceptofMarketingResearch
(MR)MarketingResearchProcess

c.CurrentDeposits

This type of account is operated by businessmen. Withdrawals are freely MANAGEMENT

allowed. No interest is paid. In fact, there are service charges. The account
holderscangetthebenefitofoverdraftfacility.
ManagementFunctionsAnd
Process,ManagementThought
d.RecurringDeposits PlanningFirstPrimaryImportant
FunctionOfManagement
This type of account is operated by salaried persons and petty traders. A
certainsumofmoneyisperiodicallydepositedintothebank.Withdrawalsare ManagementByObjectives
(MBO)PeterDruckerMBO
permitted only after the expiry of certain period. A higher rate of interest is
paid. DecisionMakingProcessIn
ManagementProblemSolving

Authority,Responsibilityand
2.GrantingofLoansandAdvances AccountabilityInManagement

Thebankadvancesloanstothebusinesscommunityandothermembersof PrincipleofDelegationof
the public. The rate charged is higher than what it pays on deposits. The AuthorityImportanceofDelegation

differenceintheinterestrates(lendingrateandthedepositrate)isitsprofit. OrganisationOrganizational
FINANCE StructureOrganisationalChart
Thetypesofbankloansandadvancesare:
DecentralisationAdvantages
WhatisFinance?Meaning andLimitationsofDecentralization
1.Overdraft DefinitionFeaturesofFinance
ManagerialLeadershipLeader
2.CashCredits WhatisFinancialPlanning? QualitiesLeadershipTheories
MeaningTypesofFinancialPlans
3.Loans HumanResourceManagement
WhatisFinancialManagement? HumanResourceDevelopment
4.DiscountingofBillofExchange
MeaningDefinitionScopeArticles
MotivationMotivationalFactors
WhatisCorporateFinance? IncentivesTheoriesofMotivation
a.Overdraft MeaningWhatitIncludes?
Maslow'sHierarchyofNeeds
TheTheoryofHumanMotivation
This type of advances are given to current account holders. No separate
accountismaintained.Allentriesaremadeinthecurrentaccount.Acertain FrederickHerzberg'sTwoFactor
amount is sanctioned as overdraft which can be withdrawn within a certain BANKING TheoryMotivationHygiene
Factors
period of time say three months or so. Interest is charged on actual amount
withdrawn. An overdraft facility is granted against a collateral security. It is DouglasMcGregor'sTheoryX
WhatisaBank?Introduction,
andTheoryYEmployee
sanctionedtobusinessmanandfirms. DefinitionandFeaturesofBank
Motivation
DifferentTypesofBanksWhat
DavidMcClelland'sAchievement
areVariousKindsofBanks?
b.CashCredits Motivation,ManifestNeedTheory
CommercialBanksDefinitions,
MarketingMixand4P'sofThe
Theclientisallowedcashcredituptoaspecificlimitfixedinadvance.Itcanbe PrimarySecondaryFunctions
MarketingManagementArticle
given to current account holders as well as to others who do not have an
BalanceSheetofCommercial
account with bank. Separate cash credit account is maintained. Interest is WhatisMarketSegmentation?
BankLiabilitiesandAssets
ImportanceInModernMarketing
chargedontheamountwithdrawninexcessoflimit.Thecashcreditisgiven
HowtoOpenBankAccount?7
against the security of tangible assets and / or guarantees. The advance is 5m'sofadvertisingand
StepsToOpenBankAccount
givenforalongerperiodandalargeramountofloanissanctionedthanthat advantagesofadvertising
WhataretheAdvantagesof
ofoverdraft. QualityControlTotalQuality
OpeningBankAccount?
ManagementTQMQualityCircles
SavingAccountBankMeaning,
c.Loans FeaturesandAdvantagesofIt
 FixedDepositAccountofBank
It is normally for short term say a period of one year or medium term say a Meaning,Features,Advantages NEWCOMMENTS
period of five years. Nowadays, banks do lend money for long term.
WhatisCurrentBankAccount?
Repaymentofmoneycanbeintheformofinstallmentsspreadoveraperiod ItsFeaturesandAdvantages thanksforthevaluable
of time or in a lumpsum amount. Interest is charged on the actual amount information.Iwasnotget...
RecurringDepositAccountIn
sanctioned, whether withdrawn or not. The rate of interest may be slightly
BankMeaningandFeatures Veryimpressivematerial.Itwas
lowerthanwhatischargedonoverdraftsandcashcredits.Loansarenormally
reallyperfectan...
securedagainsttangibleassetsofthecompany. WhatisaCheque?Definition
KindsandTypesofCheques Yougavethepropermeaning
andimportanceofInte...
WhatareFeaturesofCheques?
d.DiscountingofBillofExchange MainCharacteristicsofChecks thankusomuch

The bank can advance money by discounting or by purchasing bills of WhatisCrossingofCheque? Greatarticle.Thankyouso
DifferentTypesofCheckCrossing much!Helpedmealot...
exchangebothdomesticandforeignbills.Thebankpaysthebillamountto
thedrawerorthebeneficiaryofthebillbydeductingusualdiscountcharges. AutomatedTellerMachine(ATM)
Onmaturity,thebillispresentedtothedraweeoracceptorofthebillandthe TheAdvantagesofATMMachine

amountiscollected. EBankingOnlineBanking
MainAdvantagesofEBanking

B.SecondaryFunctionsofBanks PrinciplesofGoodLending
EveryBankerFollowsLoans
The bank performs a number of secondary functions, also called as non DifferentFormsofAdvancesby
bankingfunctions. CommercialBanksLoanTypes

DutiesandResponsibilitiesof
Theseimportantsecondaryfunctionsofbanksareexplainedbelow.
ComputerOperatorinBank

NationalisationofBanksinIndia
1.AgencyFunctions IntroductionObjectivesDemerits

NarasimhamCommitteeReportI
Thebankactsasanagentofitscustomers.Thebankperformsanumberof
1991II1998Recommendations
agencyfunctionswhichincludes:
NewEconomicReformsofthe
BankingSectorInIndiaBrief
1.TransferofFunds

2.CollectionofCheques FunctionsofReserveBankof
India(RBI)CreditPolicyofRBI
3.PeriodicPayments

4.PortfolioManagement

5.PeriodicCollections CATEGORY
6.OtherAgencyFunctions
AdministrativeLaw

a.TransferofFunds Advertising

Banking
The bank transfer funds from one branch to another or from one place to
another. BusinessDevelopment

CommunicationSkills

b.CollectionofCheques DistinguishBetween

The bank collects the money of the cheques through clearing section of its Economics

customers.Thebankalsocollectsmoneyofthebillsofexchange. Education

Finance
c.PeriodicPayments IndustrialPsychology

On standing instructions of the client, the bank makes periodic payments in KalyanCity
respectofelectricitybills,rent,etc. Management

MarketingResearch
d.PortfolioManagement Photos

Thebanksalsoundertakestopurchaseandsellthesharesanddebentures ProductionPlanning
on behalf of the clients and accordingly debits or credits the account. This Snakes
facilityiscalledportfoliomanagement.

e.PeriodicCollections
The bank collects salary, pension, dividend and such other periodic
collectionsonbehalfoftheclient.

f.OtherAgencyFunctions

They act as trustees, executors, advisers and administrators on behalf of its

clients. They act as representatives of clients to deal with other banks and
institutions.

2.GeneralUtilityFunctions

Thebankalsoperformsgeneralutilityfunctions,suchas:

1.IssueofDrafts,LetterofCredits,etc.

2.LockerFacility

3.UnderwritingofShares

4.DealinginForeignExchange

5.ProjectReports

6.SocialWelfareProgrammes

7.OtherUtilityFunctions

a.IssueofDraftsandLetterofCredits

Banks issue drafts for transferring money from one place to another. It also
issues letter of credit, especially in case of, import trade. It also issues
travellers'cheques.

b.LockerFacility

Thebankprovidesalockerfacilityforthesafecustodyofvaluabledocuments,
goldornamentsandothervaluables.

c.UnderwritingofShares

The bank underwrites shares and debentures through its merchant banking
division.

d.DealinginForeignExchange

ThecommercialbanksareallowedbyRBItodealinforeignexchange.

e.ProjectReports

The bank may also undertake to prepare project reports on behalf of its
clients.

f.SocialWelfareProgrammes

Itundertakessocialwelfareprogrammes,suchasadultliteracyprogrammes,
publicwelfarecampaigns,etc.

g.OtherUtilityFunctions

It acts as a referee to financial standing of customers. It collects

creditworthinessinformationaboutclientsofitscustomers.Itprovidesmarket
informationtoitscustomers,etc.Itprovidestravellers'chequefacility.
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Translation

4Comments:

Anonymoussaid...
January7,2014at2:40PM
Thankstotheauthor.Reallyuseful.Everythingexplainedindetail.If
possiblecanyouprovidetheexactdifferencebetweencashcreditand
overdraft?

AnilKumarVarmasaid...
January8,2014at4:18PM
Wow..!,
It'sReallyUsefulforthecandidateswhowantstosettlethemselvesinthe
 BankingIndustry
Thanks'alotforsuchawonderfulmaterial..

GauravAkranisaid...
March22,2014at12:25AM
DifferencebetweenCashCreditandOverdraft:

Cashcreditisalongtermborrowingandonaregularbasis.
Overdraftisatemporaryborrowingandisusuallyforaveryshortperiod.

Cashcreditneedsopeningofaseparateaccountwithbank,namelycash
creditaccount.
Overdraftfacilitiesmaybeavailableinthesamecurrentaccountheldwith
thebank.

Cashcreditisgivenagainsttangiblesecuritieslikethevalueofstock(raw
material),workinprogressorfinishedgoods.
OverdraftisgivenagainstpapersecuritieslikeBillReceivables,Bonds,
Certificates,etc.

RateofInterestoncashcreditfacilityishigher.
Rateofinterestonoverdraftfacilityisrelativelylower.

Anonymoussaid...
June9,2014at8:59AM
EXCELLENT!ITISJUTAFANTASTICJOBTHANKYOUEVERYONE
INVOLVEDHEREEXPLAININGDETAILSABOUTTHEFUNCTIONSOF
BANKALLTHINGAREVERYHELPFULTONEWACCOUNTHOLDERS

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