Operations and Performance of Commercial Banks

The nation’s financial institution system is dominated by the nation’s government banks, which number twenty at the present time. Commercial banks are institutions that operate for the purpose of making a profit. They are those institutions that accept deposits from the general public and give money (loans) to individuals such as households, entrepreneurs, businessmen, and others. Profitability in the form of interest, commission, and other forms is the primary focus of these financial institutions. The Reserve Bank of India, which is India’s central bank as well as the country’s highest financial authority, is in charge of overseeing and controlling how all of these commercial banks conduct their business.

The following are the primary responsibilities of commercial banks

Deposit Acceptance

Being in the business of providing credit for shorter terms, commercial banks are happy to take the public’s savings in the form of the following deposits:

• Fixed Term deposits

• Current A/c deposits

• Deposits made on a regular basis

• Saving A/c deposits

• Tax saving deposits

Deposits for Non-Resident Indians Money Lending: A second primary function is to extend credit in the form of loans and advances and to collect interest on that credit. This function is the primary contributor to the income that the banks bring in.

The term “overdraft facility” refers to the authorization given to a current account holder to withdraw an amount that is greater than the amount that he or she has deposited in their account.

Loans and advances are both secured and unsecured forms of credit that are taken out against some form of collateral. Bill of exchange discounting entails presenting the bill of exchange to the appropriate commercial bank in order to have it discounted in the event that the bearer of the bill requires immediate access to funds.

Credit in Expenses:

It is a service that allows one to withdraw a predetermined sum of money from a particular security.

Commercial banks also perform the following secondary functions:

Agency functions: As an agent, the bank makes payments on behalf of its customers, and in exchange, the bank receives a fee for performing agency functions such as the following:

1. Taxes and bills must be paid.

2. Bills, checks, and other forms of payment are used in the collection of funds.

3. Transfer of funds- transaction involving the purchase and sale of shares and debentures

4. The accrual and distribution of dividends or interest

5. Trustees and executors of the properties they oversee

6. Transactions involving foreign exchange

7. Locker facility is part of the General Utility Services.

8. The Establishment of Credit: It is regarded as one of the most essential tasks performed by commercial banks. Credit is generated by a bank on the basis of the primary deposits it receives. After that, it loans the money to standard borrowers, corporations, and investors. People who have extra money and who want to earn a consistent return on that money deposit it in landed money because they know they will get it back. When it comes to interest rates, commercial banks typically charge their customers, also known as borrowers, a higher percentage than they offer to those who deposit money with the bank.

Listed below are the various commercial banks in India.

The SBI and Associates Team

Banks That Were Nationalised By the State Bank of India

Allahabad Bank

Andhra Bank

Bank of Baroda, also known as the Bank of India

Bank of Maharashtra Canara Bank

The Corporation Bank of the Central Bank of India

Dena Bank

Indian Bank

Bank of Indian Settlements

Punjab & Sind Bank Oriental Bank of Commerce

Punjab National Bank Syndicate Bank

UCO Bank

This is the Union Bank of India.

The United Commercial Bank of India

Vijaya Bank Foreign Banks:

ABN Amro Bank

Abu Dhabi Commercial Bank

AB Bank, also known as American Express Banking Corporation

The Bank of America Inc.

Bank of Bahrain & Kuwait

Ceylon’s Central Bank

Barclays Bank

BNP Paribas

Commercial Bank of China (Chinatrust)

Citibank

DBS Bank

Deutsche Bank

Hongkong & Shanghai Banking Corporation

JP Morgan Chase Bank

United Bank of Switzerland Standard Chartered Bank

What Does It Mean to Have a Commercial Bank

A financial institution that accepts deposits, provides checking account services, makes a variety of loans, and provides fundamental financial products to individuals and small businesses is referred to as a commercial bank. Commercial banks also offer basic financial products such as certificates of deposit (CDs) and savings accounts. The majority of customers conduct their financial transactions at commercial banks.

Commercial banks generate revenue by acting as lenders and collecting interest payments from borrowers of various types of loans, including mortgages, auto loans, business loans, and personal loans. The capital necessary for the banks to make these loans comes from the deposits of their customers.

Conclusion 

The most fundamental banking services, such as deposit accounts and loans, are provided by commercial banks to individual customers as well as to small and medium-sized businesses.

Commercial banks generate revenue through the collection of a wide variety of fees as well as the accumulation of interest income from loans. Commercial banks have traditionally maintained physical locations, but an increasing number of these institutions are instead conducting all of their business online.

The ability of commercial banks to generate capital, credit, and liquidity in the market is one reason for their significance to the economy.