Functions of commercial banks
Answer Text: Functions of commercial banksDefinition:These are financial institutions that offer banking services with a profit motive. Their activities are regulated by the Central bank-Accepting deposits: They accept deposit from members of the public inform of current accounts, savings account and fixed deposit accounts. Such accounts help individuals to keep money safely.-Provision of safe means of payments: They provide safe and reliable means of payment such as cheques, bank drafts, credit transfers, electronic funds transfers etc.-Provision of loan facilities: They provide loans to members in form of short term and long term. These loans are repayable with interests thus income to the banks.-Facilitates foreign exchange payments: They provide foreign exchange that is used in international trade. They also make payments on behalf of their customers.-Credit creation: - This is the process of creating money from the customer deposits through lending.- Money transfer:- They provide varied, safe and reliable means of money transfer. Such means include cheques, standing orders, credit transfers, bank drafts, letters of credit, credit cards, travelers cheques-Provision of financial information: - They advice their clients on financial matters affecting their businesses such as investment option and wise use of loans
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