Nature of Commercial Banks– Commercial banks are an organization which normally performs certain financial transactions. It performs the twin task of accepting deposits from members of the public and make advances to needy and worthy people from society. When banks accept deposits its liabilities increase and it becomes a debtor, but when it makes advances its assets increases and it becomes a creditor. Banking transactions are socially and legally approved. It is responsible for maintaining the deposits of its account holders.
The market for financial services and products is a global dynamic. The growth of international banking has however been restricted to Euro currency and off-shore banking centers because of protectionist financial policies, restrictions on banking practices, and unpromising financial environment.
Banking can be defined as the business activity of accepting and safeguarding money owned by other individuals and entities and then lending out this money in order to earn a profit. A commercial bank is where most people do their banking. Commercial banks make money by producing and receiving interest from loans such as mortgages, business loans, auto loans, and personal loans. Customer deposits present banks with the capital to make these loans.
Commercial banks have traditionally been located in buildings where customers come to use teller window services and automated teller machines (ATMs) to do their routine banking. With the rise in technology, most banks now allow their customers to do most of the same services online that they could do in person including transfers, deposits, and bill payments.
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