Describe the various features of commercial banks.

Solution

(i) Role of an intermediary : Bank is an intermediary between those who have surplus funds, i.e., the depositors of funds and those who need these funds i.e., the borrower of money.

(ii) Mobilizes capital : It accepts deposits from all section of society. The amount so accumulated is made available to trade, industry and commerce. Thus, it directly leads to mobilization of financial resources of the society lying scattered in small amounts.

(iii) Plays the roles of creditor and debtors : A bank plays the role of creditor and debtor at the same time. It is indebted to all the depositors whose money, for the time being it is using, to advance loans, etc., to its needy clients. At the same time, it is a creditor to those whom it has granted loans and advance.

(iv) Creator of Money: Banks create money when they grant overdraft and credit facilities to account holders.

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Business Services

Describe the various features of commercial banks.

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