A Commercial Bank provides various services including giving loans, accepting deposits, providing investment products, issuing credit cards and so on. A financial institution which is legally authorized to receive and lend money from individuals and businesses is known as a Commercial Bank.
Functions of a Commercial Bank?
A commercial bank is authorized to perform the following functions:
- Take and deposit money from businesses and individuals. Banks are hence called as depositors as well.
- It makes payment on behalf of the depositor. For instance, it honors a cheque written by a depositor.
- When a person pays you through a cheque, the bank where you have your account, will act as an agent and collect the money payable to you.
- It safeguards your money in various ways.
- It allows you to invest money in securities so that you can earn some extra funds.
- It also maintains savings, checking and custodial accounts of the depositors.
With the advancement in technology, banking has taken an new face. Some banks today have no physical branches and all the activities are supposed to be done over the phone or through internet. And as there is no physical aspect, these online banks tend to pay a higher rate of interest on deposits and investments and even charge a lower fees.
Commercial banks have a lot of benefits and of course they rule by the popularity between the depositors. It depends on how the bank works and how efficient they are. Also you can have an account in many commercial banks, whatever you like. Be aware, that you have more chances to get several credit cards from all your banks and more means major debt.