Function of Banking

Banking plays an important role in contributing economic growth through financing infrastructure,agricultural,industry,local manufacture and so on.

A bank is a financial organization that performs deposit and lending of money according to rules regulation of R.B.I.for the development of economy.

Function of Banking-

There are many functions of Banking.These functions are as below-

1.To accept deposit-It is the first function of Bank.They accept deposit from person,organization,company and return more money according to need of customers.They accept deposit as Current deposit,Saving deposit,Fixed deposit,Recurring deposit etc.

2.To provide loan-It is the second and popular function of Bank.They provide loan to Person,Personnel,Organisation,Company to perform their function by effective,efficient way.They provide short term loan,middle term loan,long term loan.They charge interest on loan according to rules,regulation,law of R.B.I.It is the main source of income of Bank.The loan charge is higher than deposit charge.

3.To provide Overdraft-It is the third function of Bank.They provide overdraft facility to current account holders.Overdraft means the extension of credit.If the current account holders have no balance in their account and any cheque comes to payments bank pay the cheque.This is called Overdraft facility.

4.Discounting of bill-Bank grants advance to customers by discounting bill of exchange.They pay the bill amount to the beneficiary of the bill by deducting usal discount charges.

Secondary function-

There are a number of secondary functions bank performs.These secondary functions are as below-

Agency function-

The bank works as an agent of customers.They perform many functions like Transfer of funds,Collection of cheques,Periodic payment,Portfolio Management,periodic collection erc.

Other function

1.They provide credit card,Debit card,Golden card,Diamond card etc.

2.They provide 24 7 hours ATM facility.

3.They issue deaft,letter of credit.

4.They provide locker facility.

5.They help to underwrite of shares.

6.They deal Foreign exchance.

7.They help us to make project report.

8.They implement social welfare programmes.