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Banks have developed around 200 years ago. The natures of banks have changed as
the time has changed. The term bank is related to financial transactions. It is a financial
establishment which uses, money deposited by customers for investment, pays it out
when required, makes loans at interest exchanges currency etc. however to understand
the concept in detail we need to see some of its definitions. Many economists have tried
to give different meanings of the term bank.
While defining the term banks it is taken into account that what type of task is performed
by the banks. Some of the famous definitions are given below:
According to
, "A bank is an institution whose debts are widely accepted in
settlement of other people's debts to each other." In this definition Sayers has
emphasized the transactions from debts which are raised by a financial institution.
Commercial bank being the financial institution performs diverse types of functions. It
satisfies the financial needs of the sectors such as agriculture, industry, trade,
communication, etc. That means they play very significant role in a process of economic
social needs. The functions performed by banks are changing according to change in
time and recently they are becoming customer centric and widening their functions.
Generally the functions of commercial banks are divided into two categories viz. primary
functions and the secondary functions. The following chart simplifies the functions of
banks.
Commercial Banks performs various primary functions some of them are given below
Along with the primary functions each commercial bank has to perform several
secondary functions too. It includes many agency functions or general utility functions.
The secondary functions of commercial banks can be divided into agency functions and
utility functions.
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