Define the term Banker. Explain the Functions of a Modern Commercial Bank.
A person who in the ordinary course of his business honors cheques drawn upon him by persons from and for whom he receives money on current accounts is said to be a banker. The duty of the banker is to deal with the money that belongs to the public and he acts as an intermediary in connecting public at large with the bank.
Functions of a Modern Commercial bank:
Collection of Deposits: The main aim of such banks is to accept deposits from the customers. Bank orders interest on the deposits and deposits made by public are safely kept in. banks. This helps a development of savings habit in the public.
Facilitate payments: Payments can be made through cheques offered by banks which is a very safe mode in order to make payments. Cheques help in avoiding the trouble of counting the cash and one doesn’t have to carry large amounts of cash with view to make payments.
Collection of Cheques etc: On behalf of the customers of the bank; banks even collect the amount of cheques, drafts, bills of exchange etc.
Safety of valuables: Safe deposit lockers are provided by banks where one can keep the valuables like jewellery, ornaments, documents etc safely.
Provide loans and advances: Loans and credit facilities are also provided by commercial banks. They provide instant credit by allowing overdraft facilities. Businessmen can easily deal with strangers because of banks, as payment is guaranteed. Letters ‘of credit are also issued by banks.
Discounting of Bills: It means advancing of loan against a promise that loan will be paid in future. Money is Tended by banks through discounting bills. The reason that loans are self liquidating, this method of lending is very popular.
Remittance of Money: Banks help in remitting money to some other place. ATM facility is provided by banks now-a-days 24 hours ATM service is also provided by certain banks and with this service, one can withdraw money at any time by just providing one’s personal identity number.
Provide credit information: Information regarding credit worthiness of the customers is provided by banks. Businessman can ask his banker about the financial position of the other businessman with whom he may be dealing for the first time.