What are the Agency Functions of Commercial Banks?

By Shivank Goel|Updated : September 5th, 2022

Agency functions of Commercial banks include offering specific services to their clients 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.

Functions of Commercial Banks

A commercial bank is a type of financial institution that handles all activities relating to public money deposits and withdrawals, lending money for investments, etc. These banks are profit-driven businesses that operate solely to increase their bottom line.

The other functions of commercial banks are divided into two main categories: Primary Functions and Secondary Functions.

Primary Functions include:

  • Accepting deposit
  • Providing loans and advances
  • Crediting Cash

Secondary Functions include:

  • Discounting bills of exchange
  • Availability of overdraft facility
  • Securities being purchased and sold
  • Availability of Locker Facilities
  • Paying and Gather the Credit – It uses different instruments like promissory notes, cheques, and bills of exchange

Related Questions:-


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  • Commercial banks' primary goals are to offer financial services to the general public and to businesses, both of which contribute to the maintenance of economic stability and economic progress. Therefore, we may state that the primary goal of commercial banks is the production of credit.

  • The system of fractional reserve banking that is currently used in the majority of developed nations depends heavily on commercial banks. As a result, banks can issue new loans up to (usually) 90% of their available deposits, which should expand the economy by freeing up cash for lending.

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