Samuelson 1982, defined commercial bank as a financial institution, the only organization able to provide “Bank money “ that is chequable, demand deposits that can be conveniently used as a medium of exchange. The second related function is that of credit. They help to give and transfer short term mortgage loans through terms loans and over a year duration.
According to Wikipedia, commercial bank is a type of bank that provides services, such as accepting deposits, giving business loans and basic investment products.
Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposit and loans from corporation or large businesses, as opposed to individual members of the public. Essong (1974:139) also defined commercial banking “As a monetary institutions owned by private businessmen for the purpose of making profit”.
Many economists have defined commercial banking in various ways but all the definitions are similar with regard to monetary transitions.
Functions of Commercial Banks
Commercial banks such as the Union Bank (Barclys Bank) and first banks are joint stock companies which have the primary aim of making profit for their shareholders. In their attempt to operate profitably, they are like other business organization. Bank like the African Continental Bank, the National Bank and Co-operative Bank, may not have profit maximization as their dominant aim, such bank are established by various governments with sole aim of providing short term credit facilities (loan) to indigenous business men at reasonably lower rate of interest
Acceptance and Safe Keeping of Deposits
One of the primary functions of commercial bank in an economy is the provision of facilities for the mobilizations of saving, acceptance of deposits for safe-keeping from various classes of customers. There are various types of accounts through which customer’s cash lodge their money as deposits. They include current accounts saving accounts and fixed deposit account.
Disbursing Loans and Advances
Another primary function of commercial banks is the extension of credit facilities to qualified customer who request in writing for such facilities in making credit facilities available, commercial banks are empowering economic agents and bringing the economy closer to full employment of economics scarce resources through the extension of credit facilities, productivity is raised, capital investment boosted and a higher standard of living is enhanced. There are various types of credit facilities in commercial banks. These include, short term loans, medium and long term loans and overdrafts.
Transferring of Funds on the Instruction of their Customers commercial banks do make payments from time to time on behalf of their customer on request. Sometime they also render agency services on behalf of their customer -periodic payments for stock and share transactions. Other means of money transfer missions or transfer of funds include, collection of cheques, standing orders, direct debiting mail/telegraphic transfers, open creditor cashing credits, collection of electricity bills, water rates, sales of forms for admission into tertiary institutions e.t.c.
Providing Facilities for Safe/Keeping of Valuables
Commercial banks are known for their security consciousness. In other words banks don’t take security issues lightly; consequently, banks make their strong rooms safe and protected from fire, thieves, inclement weather and destructive animals. Thus, bank strong rooms are one of the safest places to keep valuables articles. Bank customers usually keep their documents and valuable assets like government stock share certificates, life assurance policies, certificates of occupancy, deeds of conveyance, will and jewelry in them for safe custody, items can either be deposited in sealed boxes or envelopes without revealing the contents even to the bank officials or made open when the articles are being listed and signed for. As soon as valuable items are received by a banker from his customer, a contract of bailment is created, if the bank charges for the services, he is a paid bailee and if he does not charge he becomes a gratuitous bailee in accordance to the law, the paid bailee is expected to show greater care in handing of the valuables.
According to Wikipedia, commercial bank is a type of bank that provides services, such as accepting deposits, giving business loans and basic investment products.
Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposit and loans from corporation or large businesses, as opposed to individual members of the public. Essong (1974:139) also defined commercial banking “As a monetary institutions owned by private businessmen for the purpose of making profit”.
Many economists have defined commercial banking in various ways but all the definitions are similar with regard to monetary transitions.
Functions of Commercial Banks
Commercial banks such as the Union Bank (Barclys Bank) and first banks are joint stock companies which have the primary aim of making profit for their shareholders. In their attempt to operate profitably, they are like other business organization. Bank like the African Continental Bank, the National Bank and Co-operative Bank, may not have profit maximization as their dominant aim, such bank are established by various governments with sole aim of providing short term credit facilities (loan) to indigenous business men at reasonably lower rate of interest
Acceptance and Safe Keeping of Deposits
One of the primary functions of commercial bank in an economy is the provision of facilities for the mobilizations of saving, acceptance of deposits for safe-keeping from various classes of customers. There are various types of accounts through which customer’s cash lodge their money as deposits. They include current accounts saving accounts and fixed deposit account.
Disbursing Loans and Advances
Another primary function of commercial banks is the extension of credit facilities to qualified customer who request in writing for such facilities in making credit facilities available, commercial banks are empowering economic agents and bringing the economy closer to full employment of economics scarce resources through the extension of credit facilities, productivity is raised, capital investment boosted and a higher standard of living is enhanced. There are various types of credit facilities in commercial banks. These include, short term loans, medium and long term loans and overdrafts.
Transferring of Funds on the Instruction of their Customers commercial banks do make payments from time to time on behalf of their customer on request. Sometime they also render agency services on behalf of their customer -periodic payments for stock and share transactions. Other means of money transfer missions or transfer of funds include, collection of cheques, standing orders, direct debiting mail/telegraphic transfers, open creditor cashing credits, collection of electricity bills, water rates, sales of forms for admission into tertiary institutions e.t.c.
Providing Facilities for Safe/Keeping of Valuables
Commercial banks are known for their security consciousness. In other words banks don’t take security issues lightly; consequently, banks make their strong rooms safe and protected from fire, thieves, inclement weather and destructive animals. Thus, bank strong rooms are one of the safest places to keep valuables articles. Bank customers usually keep their documents and valuable assets like government stock share certificates, life assurance policies, certificates of occupancy, deeds of conveyance, will and jewelry in them for safe custody, items can either be deposited in sealed boxes or envelopes without revealing the contents even to the bank officials or made open when the articles are being listed and signed for. As soon as valuable items are received by a banker from his customer, a contract of bailment is created, if the bank charges for the services, he is a paid bailee and if he does not charge he becomes a gratuitous bailee in accordance to the law, the paid bailee is expected to show greater care in handing of the valuables.
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