IndexDepositsLoans and AdvancesSecondary/Non-Banking FunctionsModern commercial banks perform a variety of functions. They keep the wheels of commerce, trade and industry ever turning. The main functions of a commercial bank are: Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original EssayPrimary or Banking FunctionsSecondary or Non-Banking Functions.Subsidiary ActivitiesPrimary/Banking Functions: Commercial banks have two important banking functions. One accepts deposits and the other advances loans. Deposits One of the main functions of a bank is to accept deposits from the public. Deposits are accepted by banks in various forms: Current account deposits: Current accounts are usually opened by businessmen who have a number of regular transactions with the bank, both deposits and withdrawals. No interest is paid on current deposits. Banks may also charge interest for providing this facility. Deposits into Savings Accounts: Savings accounts are opened by salaried people and other people with lower income. There is no restriction on the number and amount of deposits. Withdrawals are subject to certain restrictions. It earns interest but less than fixed deposits. Fixed Account Deposits: Fixed account deposits are time deposits. The money in this account is deposited for a certain fixed period of time which varies from 15 days to several years. A high rate of interest is paid on such deposits. Recurring Account Deposits: In recurring deposits, a specific amount is regularly deposited by the account holder, typically with an internal maturity of one month. This is to create the habit of small savings among people. At the end of the expiry period, the account holder receives a considerable amount. The interest on this type of deposit is almost the same as fixed deposits. Loans and Advances Banks not only mobilize money but also lend to their credit-worthy customers to minimize profits. Loans and advances are given to: Business and commerce: Commercial banks grant short-term loans to trade and commerce in the following forms: Overdraft Cash credit Bill discounting Cash on call Direct loans Agriculture loans Gigantic credit banks in the short term to agriculture at a lower interest rate. Loans are given for irrigation, purchase of equipment, inputs, livestock, etc. Loans to Industries: Banks provide secured loans to small and medium industries to meet their working capital needs. The time period can vary from one to five years. It can be in the form of overdraft, cash credit. Foreign Trade Loans: Loans are given for export and port of 1 million in the form of direct loans, bill discount, deferred payment guarantee, etc. Here the interest rate is low. Consumer Credit/Personal Bars: Provide credit to families in a limited amount to purchase some consumer durables such as televisions, refrigerators, washing machines, etc. This consumer credit is repayable in installments. Under the 20-point programme, the scope of consumer credit has been extended to also cover expenses of wedding, funeral etc. Miscellaneous Advances: Banks also grant advances such as packing credits to exporters, purchased or discounted export invoices, import financing, financing for self-employed workers, credit to the weakest sections of society at subsidized rates, etc. Secondary/Non-Banking FunctionsBanks provide various forms of services to the public. These services are called functions.