Commercial banks accept the following deposits.
Saving Deposit: It is a scheme for depositing surplus income by individuals and institutions. Banks offer low rate of interest for this deposit. Depositor can withdraw money from this deposit subject to certain restrictions.
Current Deposit: A scheme for depositing and withdrawing money many times in a day. Normally traders and industrialists use this deposit scheme. It does not offer any rate of interest’
Fixed Deposit: Fixed deposits are suitable for depositing money for a fixed period. Interest is fixed on the period (tenure) of the deposit. It can be normally withdrawn only after the expiry of the period. Rate of interest will decrease if withdrawn before the expiry period. Recurring Deposit Depositing a fixed sun monthly for a fixed period is the recurring deposit. It offers a rate of interest higher than that of saving deposit, but less fixed deposit.
Giving Loans: This is the next major function of commercial banks. Banks provide loans by using the amount deposited by the public. Banks give loans to individual as well as institutions. Interest rates charged for loans will be higher that of deposits. Rate of interest vary depending upon the duration of loans.
Other Functions: Apart from the basic functions like accepting deposits and lending money, commercial banks render certain other services to their customers. The services rendered by the banks include.
Locker Facility: its offer locker facility to keep costly articles (gold, title deed of property) of their customers. Banks charge a fixed amount as service charge for this.
Demand Draft: Demand draft is a facility provided by banks to send money from one place to another. Bank account is not necessary for this.
Mail Transfer: Mail transfer is a facility provided by banks to transfer money from any place in the world to one’s own account or to the account of another person. Telegraphic transfer is faster than mail transfer. Telegraphic transfer is a system of transfer of money through message.
ATM: Automated Teller Machine helps the customers to withdraw money without stepping into the banks. Most banks have ATM facility today. Today money can be deposited and withdrawn through the ATM of some banks. The bank gives ATM debit card for this.
Credit card: Customers can purchase goods with the help of credit card. This system enables the customers to purchase goods even if there is no balance in the account. Money should be deposited in the bank within fixed days.
Banks help the customers to ‘remit their insurance premium, telephone bills, and electricity bills and to purchase travel tickets. Pension amount to the retired officials is disbursed through banks.
