What is the function of a commercial bank?

Correct option is C

The correct answer is (c) Accepting deposits and providing funds
The primary function of a commercial bank is to:

• Accept deposits from customers.
• Provide loans and credit to businesses and individuals.
• Facilitate payments and financial transactions.

Accepting Deposits:

• Commercial banks accept various types of deposits like savings accounts, fixed deposits, and current accounts.

Providing Funds:

• They provide loans, credit, and other financial services to support businesses, individuals, and the economy.

Functions of Commercial Banks:

• Lending and Borrowing: Banks lend funds to businesses and individuals while borrowing funds through deposits.
• Payment and Settlement Services: They offer services like bill payments, funds transfer, and facilitating transactions.
• Safeguarding Money: Commercial banks help in safeguarding individuals' savings.

Government Banker:

• Commercial banks also act as a channel for government transactions and play a role in managing public sector operations.

Payment of Bills:

• This is a service provided by commercial banks, but the primary function is broader and includes credit and deposit services.

Additional Information:

Roles of Commercial Banks:

• Financial Intermediation: Act as intermediaries between savers and borrowers.
• Promoting Economic Growth: Provide funds that support business investments and economic development.
• Regulation and Supervision: Banks are regulated by central banks to ensure financial stability and prevent crises.
• Facilitating Trade and Commerce: Offer trade financing, letters of credit, and foreign exchange services.

Types of Loans Provided:

• Short-term loans: To support working capital needs.
• Long-term loans: For capital investment in infrastructure, machinery, etc.
• Consumer loans: For personal purposes like housing, education, and car loans.