b a n k i n g
Commercial banks
s y s t e m
Bank
Commercial bank or clearing banks provide banking services to individuals businesses and the
government through a range of branches operating in a country
Functions of commercial banks
ACCEPTANCE OF DEPOSITS
Demand deposits the type of bank account where depositors can withdraw cash upon
demand
carries low interest rate
Time deposits the type of deposits made for a specific time, and receiving high rate of interest.
The money cant be withdrawn or transferred by means of cheque book on demand.
They require 7 days of notice
Savings account the type of account where depositors have to maintain a specific balance for
which a reasonably good rate of interest is offered
PROVISION OF A SYSTEM FOR MAKING PAYMENTS
Cheque system a printed piece of paper that you can use instead of money.
Cheques are not money
it is commonly used in the transfer of money
Credit cards a card that can be used to buy goods and services.
Prepaid Cards
Debit Cards
Credit Cards
Direct debit customers authorize payees to withdraw irregular amounts at regular intervals
from their account
Direct debits are a variation of standing orders
O→ Customers of dhiraagu can pay their telephone bills using direct debit facility.
Bank giro credit a system where depositors use one cheque to pay multiple bills
O→ A lot of big companies use this method to pay their expenses like employee wages and
salaries.
PROVISION OF FINANCE
Loans the amount of money that you can borrow from a bank
o( can be short-term or long-term )
They are charged regular interest on the amount borrowed
The loan is repaid by paying regular fixed amounts to the bank
Bank overdrafts the amount of money that you owe a bank when you have taken out more
money than you had in your account