4. Types of Bank :
1. Savings Bank
2. Commercial Bank
a) Public Sector Banks
b) Private Sector Banks
c) Foreign Banks
3. Co-operative Banks
a) Primary Credit Society
b) Central Co-operative Banks
c) State Co-operative Banks
4. Investment Banks
5. Specialized Banks
6. Central Banks .
5. Savings Bank: These banks functions with the intention to culminate saving
habits among the people, especially those who belong to low income groups or those who are
salaried. The money these people deposit in the banks are invested in securities, bonds etc.
Commercial Bank: These bank functions to help the entrepreneurs and
businesses. They give financial services to these businessmen like debit cards, banks accounts,
short term deposits, etc. with the money people deposit in such banks. They also lend money to
businessmen in the form of overdrafts, credit cards, secured loans, unsecured loans and mortgage
loan to businessmen. The commercial bank in the country were nationalized in 1969. so the
various policies regarding the loans, rate of interest and loans etc are controlled by the reserve
bank. These days, the commercialized banks provide some services given by investment bank to
their clients.
The commercial bank can be further classified as : public sector bank, private sector
banks, foreign banks and regional banks
1. The public sector banks are owned and operated by the government, who has
a major share in them. The major focus of this bank is to serve the people rather
earn profits. Some examples of these banks include State bank of India, Punjab
national bank, Bank of Maharashtra etc.
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6. 2. The private sectors banks are owned and operated by private institute.
They are free to operate and are controlled by market forces. A greater share is held by private
players and not the government. For example, axis bank, kotak Mahindra bank
3. The foreign banks are those that are based in a foreign country but have several
branches in India. Some examples of these banks includes ; HSBC, Standard chartered banks
Co-operative Banks:These banks are controlled, owned, managed and
operated by cooperative societies and came into existence under the Cooperative Societies Act
in 1912. these banks are located in the urban as well in the rural areas. Although these banks
have the same functions as the commercial banks, they provide finance to farmers, salaried
people, small scale industries, etc. and their rates of interest of interest are lower as compared to
other banks.
There are three types of cooperative banks in India, namely:
1.Primary credit societies: These are formed in small locality like a small town or
a village. The members using this bank usually know each other and the chances of
committing fraud is minimal.
2. Central cooperative banks: These banks have their members who belong to the
same district. They function as other commercial banks and provide loans to their
members. They act as a link between the state cooperative banks and the primary
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7. 3.State cooperative banks: These banks have a presence in all the states of
the country and have their presence throughout the state.
Investment banks: These are financial institutions that provide financial and
advisory assistance to their customers. Their clients can be individuals, businesses, or
government organizations. They assist their customers to raise funds when required. These
banks act as the underwriters for their customers when they want to raise capital by issuing
securities. In some cases, they also help their customers to issue securities.
When there is a merger or an acquisition, they provide their customers with the necessary
support like marketing, foreign trading, foreign exchange, sale of equities, fixed income
instruments etc. Apart from raising capital, these banks render valuable financial advise to their
customers and various kinds of businesses. Some examples of these banks include, Bank of
America, Barclays Capital, Citi Bank, Deutsche Bank etc.
Specialized banks: These provide unique services to their customers. Some
such banks include, foreign exchange banks, development banks, industrial banks, export
import banks etc. These banks also provide huge financial support to businesses and various
kinds projects and traders who have to import or export their goods or services.
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8. Central bank: The central bank is also called the banker's bank
in any country. In India, the Reserve Bank of India is the central bank. The
Federal Reserve in USA and the Bank of England in UK function as the
central bank. This bank makes various monetary policies, decides the rates of
interest, controlling the other banks in the country, manages the foreign
exchange rate and the gold reserves and also issues paper currency in a
country. The monetary control is the primary function of a central bank in
most countries and so they are considered as the lender of last resort to various
commercial banks.
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9. FUNCTIONS
OF BANK
PRIMARY
FUNCTIONS
Accepting
Deposits
Granting
Loan and
Advances
SECONDARY
FUNCTIONS
Agency
Functions
Utility
Functions
Saving Deposit
Fixed Deposit
Current Deposit
Recurring Deposit
Cash Credit
Bank Over Draft
Loans
Discounting Bills
Issue of Drafts, Letter of Credits, etc
Locker Facility
Underwriting of Shares
Dealing in foreign exchange
Project Reports
Social Welfare Programmes
Other Utility Function
Funds Transfer
Cheques Collection
Periodic
Payments/Collection
Portfolio Management
Other Functions
What are the functions of bank ?
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11. CURRENT ACCOUNT:Current accounts are
usually for businessmen and daily transactions. It doesn’t serve a
purpose of saving your investments. The transaction facility to this
account is so flexible that you can make innumerable transactions in
a day. Hence, the banks don’t pay any interest on your invested
amount but it charges certain service charges on such accounts.
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12. SAVINGS ACCOUNT: Savings Accounts are
the most popular kind of individual accounts for personal purpose
of saving your investments and getting interest rates. Savings
account provides cheque facility along with flexibility for deposit
and withdrawal of funds from your account.
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13. RECURRING DEPOSIT: Recurring deposits also
known as RD accounts who wish to invest an average amount of their
savings on a monthly basis. These accounts gain interest on the amount
available in your account. This account is specially designed for the
working public who don’t want to invest a large amount at one instance
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14. FIXED DEPOSIT: Fixed Deposits popularly known
as FD are available at various schemes with a tenure from 7 days to
10 years. This account is specially designed who want to deposit
their savings for a long term to gain good rate of interest. But the
interest rate on
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