Functions of Bank

A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets.

Functions of banks can be classified into three parts

1. Primary Functions: Banks perform two primary functions i.e. accepting the Deposits and Advancing of loans

2. Secondary Functions:

Agency Functions: Collection of Cheques , interest etc on behalf of their customer, Purchase and sale of securities, Trustee and executer, Purchase and sale of foreign exchange, letter of references etc.

General utility services: Locker facilities, issuing letters of credit, issuing of gift cheques, acting as an underwriter, Merchant banking services etc.

3. Social and development function

Capital formation, Inducement to innovations, development of rural sector etc.