Representative Functions of Commercial Banks

Representative Functions of Commercial Banks

Representative Functions of Commercial Banks

A commercial bank is the bearer of credit. So, collecting deposit and giving loan is the main task of the commercial bank. But as an important catalyst for an economy, it has to do many diversified tasks. The commercial banks perform different significant functions regarding in general, representative, service oriented and others. Here briefly focus on representative functions of Commercial Banks.

Representative Functions: Committal bank acts some vital role as a representative of the client. Its Representative functions are given below,

Settlement of Transactions

These banks settle different transactions on behalf of the client. It pays bills as rent, interest, profit, salary etc. At the same time, it collects bills.

Purchasing and Selling of Shares and Securities

These banks buy sell shares and securities on behalf of the clients. Thus the trade and commerce are expanding.

Functions as an Underwriter

Underwriting means buying and selling of shares, securities etc., on behalf of the clients to provide capital. Commercial banks work as the underwriter for its clients.

Acts as Trustee

Taking care of something is known as trusteeship. These banks work as a trustee on behalf of the clients.

Money Transfer

Commercial banks transfer money from one branch to another or one bank to another on behalf of the clients. Commercial banks gain commission by transferring money.

An Agent of Central Bank

Commercial banks are acts as an agent of the central bank. The flow of money and credit is done by commercial banks on behalf of the central bank. Where there is no clearinghouse, commercial banks work as the clearinghouse.

Safe custody of Money and wealth

Commercial banks look after money and wealth of the clients. It provides safety of wealth by providing custody, where clients can keep their valuable assets and documents.

Maintaining of Secrecy

Commercial banks maintain the secrecy of the information of clients. By this create faith in the client.