Portfolio Behavior of Commercial Banks

Portfolio Behavior of Commercial Banks- The word commercial bank leads to a financial institution that takes deposits, makes various loans, offers to check account services, and offers basic financial outcomes like certificates of deposit (CDs) and savings accounts to individuals and small businesses. 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.

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. Commercial banks give basic banking services to the general public—to both individual consumers and small to mid-sized businesses. 

In ancient India, there is evidence of loans from the Vedic period (beginning 1750 BC). Later during the Maurya dynasty (321 to 185 BC), an instrument called adesha was in use, which was an order on a banker desiring him to pay the money of the note to a third person, which corresponds to the definition of a bill of exchange as we understand it today. During the Buddhist period, there was considerable use of these instruments. Merchants in large towns gave letters of credit to one another.

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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