Explain the Agency Functions of Commercial Banks
By BYJU'S Exam Prep
Updated on: November 14th, 2023
The Agency Functions of Commercial Banks include providing specialized services to their customers in exchange for a commission. Below is a list of a few of a commercial bank’s agency duties.
- Cheques, bills, and draughts are collected.
- Interest, loan installments, insurance premiums, etc.
- Securities sales and purchases
- Collecting dividends, interest, etc.
- Transfer of payments by mail transfers, demand draughts, etc.
- Purchasing and selling foreign currency.
Table of content
Agency Functions of Commercial Banks
A commercial bank is a type of financial institution that handles all activities related to deposits and withdrawals of public money, lending money for investment, etc. These banks are profit-driven businesses that operate solely to increase their bottom line.
Other agency functions of commercial banks are divided into two main categories: primary functions and secondary functions.
Primary Agency Functions of Commercial Banks
- Accepting deposit
- Providing loans and advances
- Crediting Cash
Secondary Agency Functions of Commercial Banks
- Securities being purchased and sold
- Availability of Locker Facilities
- Discounting bills of exchange
- Availability of overdraft facility
- Paying and Gather the Credit – It uses different instruments like promissory notes, cheques, and bills of exchange
Related Questions:
- What is the Difference Between a Small Finance Bank and a Commercial Bank?
- How many RBI branches are in India?
- What Is The Difference Between Stock And Reserves?
- What Steps Did The French Revolutionaries Take To Create A Sense Of Collective Identity Among The French People?
- What Is The Duplication Of Data Known As?
- What Is The Current Government Strategy For Poverty Alleviation?
