Functions of the commercial banks: 

1. Receiving deposits: Receiving deposits is the primary function of a commercial bank. A commercial bank accepts deposits from the people for the purpose of making investments and loans. People deposit money for the sake of safety and also for the sake of interest, which is paid by the bank. The bank by accepting deposits, become indebted to the deposit holders to the extent of credit balance indicated by their account. Deposits are accepted by those banks in the form of following deposit accounts: 

• Fixed deposit account. 

• Current account. 

• Savings bank account. 

• Recurring deposit account. 

2. Lending of money: It is the most important function of a commercial bank. They lends out the money which they get in deposits from the public. A bank lends money to traders, businessmen, agriculturists, artists etc. usually for short periods. 

Commercial hanks usually lend money in the following ways: 

• Cash credit. 

• Loans and advances. 

• Credit draft and overdraft. 

• Discounting of bills. 

3. Agency functions: Commercial banks render services as the agent of their customer. These services are known as their agency functions. Some of the most important agency functions are as follows: 

• They collect the payment of the bills of exchange, promissory notes etc. on behalf of their customers. 

• They collect dividends, interest on shares, debentures, rent etc., on behalf of their customers. 

• They buy and sell shares and securities on behalf of the customers as per their instructions. 

• They transfer their funds from one branch of the bank to another and from one place to another as per instructions of their customers. 

• They make payments of loan installments, interest, insurance premium etc. on behalf of their customers. 

4. Miscellaneous functions: Commercial banks also perform several general utility and miscellaneous services not only to their customers but to the public in general. 

These are described below: 

• They provide safety vaults or lockers for the safe custody of jewellary, valuable documents and other precious possessions of their customers. 

• They issue letters of credit, like circular notes, drafts and traveller’s cheques which facilitate the customers in affecting the purchase of goods in distant places. 

• They give correct information to the customers about the credit of other customers. 

• They give reference about the financial position of their customers, when it is so required. 

• They supply various kinds of trade information which is useful to their customers.