Exchange Bank

Exchange bank deals mainly in the finance of the foreign trade of the country. It deals in foreign exchange. On the other hand, the main function of such bank is to buy and sell foreign currencies, rather titles to foreign exchange, drafts, telegraphic transfers etc. It purchases the bill of exchange which arises in connection with the import and export trade of the country and they deal in exchange.

The exchange banks liquidate the international indebtedness by exporting and importing precious metals and securities, if necessary. They purchase bills and in the international money market and deposit those with their banking agents in big commercial centers like London, Paris, New York etc. They draw and sell their own drafts on these deposit accounts.

What is Commerce?

Commerce means the exchange of items of values or the process of distribution of goods and services. Commerce is the removal of goods and services from a place where they are produce and sent to the place where they are scarce and hence in demand. We may also define it as:

"The term commerce is applied to all these activities or functions which are intended to bring about an exchange of goods and services against money or money’s worth."

Commerce is divided into two basic parts:
1. Trade
2. Auxiliaries of trade

Trade:
Selling and buying of goods is trade. A mediation of the exchange of goods between the producer and the consumer is called trade. Trade is of two kinds:
a. Import
b. Export

Buying goods from out side the country is called import and selling of goods to other countries is called export. If imports of one country are higher than exports, it means the economy of the country falls down. The economy of every country is highly depends on its import/ export.

Auxiliaries of trade:
It means aids to trade. It includes the following services; banking, insurance, warehousing and agents.