Commercial Bank

Commercial Banks are the most common types of banks. These are the chiefly engaged in receiving deposits, advancing loans and discounting bills. They lend money for short period against easily marketable securities. They finance internal trade, deal with credit instrument and render other numbers of services to their customers and play a vital role in the commercial development of the country.

Businessman and salaried persons are provided the facility of operating bank accounts. They settle their accounts by issuing cheques. Those commercial banks who become the member of the central bank are known as scheduled banks.

Importance of Banking

Bank plays a significant role in the economic development of the country. The whole economy of a country is absolutely dependent on the efficient and well-organized banking system. Industrial, agriculture and commercial progress of a country is not possible without a good banking system.

The importance may be defined as follows:

* Banks deal in foreign exchange by purchasing and selling foreign currencies and by issuing letters of credit.

* Banks play the prime role in accumulating capital by collecting the scattered savings of the people.

* Banks utilize their collected funds by advancing loans to commercial and industrial undertakings.

* Banks perform various agency services on behalf of their customers. They collect or make payment of bills of exchange, dividend, insurance premium etc.