Functions of commercial bank and central bank project class 12

The various book has given the definition of Central Bank. I am giving all definitions of the central bank as per the syllabus of class 12 in various reference books. “A central bank is a bank specially created by the government to serve as an apex bank to carry out monetary policy of the country in the public interest through the various functions assigned to it.” S.K Aggarwal “Central Bank is the Apex body, that controls operates regulates and directs the entire banking and monetary structure of the country.” Sandeep Garg “The central bank is an apex bank that controls the entire banking system of a country. It is the sole agency of note issuing and controls the supply of money in the economy. It serves as a banker to the government and manages forex reserves of the country.” T.R Jain Note:- Name of India’s Central Bank is ‘Reserve Bank of India’ and situated in Delhi. Read Here:- Functions of Central Bank in Economics class 12 Following are some traditional functions of the central bank. 1. Bank of Issue:- Bank of issue means, a bank that has the exclusive legal right to issue currency notes. The central bank has the monopoly to issue currency notes in a country Reasons for this monopoly:- There are two reasons for this exclusive right to the central bank to issue note is • It brings uniformity in note circulation. • It given a central bank some direct control over money supply. 2. Government’s banker, agent and advisor:- Government Banker:- All government departments’ ...

Central Bank and Its Functions Every country has 1 central bank, it is that bank that looks after other banks but it does not deal with the public. Today we will be learning the meaning of the central bank and its functions. What is Central Bank? Central Bankis the apex financial institution of the country, that administers the operations of the banking system. The Major Central Banks includes: • Reserve Bank of India. • U.S. Federal Reserve System. • European Central Bank – ECB. • Bank of England – BoE. • Bank of Japan – BoJ. • Swiss National Bank – SNB. • Bank of Canada – BoC. • Reserve Bank of Australia – RBA. • Reserve Bank of New Zealand. Functions of Central Bank 1.Bank of Issue Bank of the issue means central banks have the currency authority. The Central Bank has the sole authority for issuing currency in the country. For example, In India, the Reserve Bank of India has the sole authority for issuing paper currency notes except 1 Rupee notes and coins which are issued by the Finance Ministry. All the currency issued by Central Bank is its monetary liability that is, the Central Bank is obliged or is responsible to back the currency with assets of equal value. 2.Banker to the Government The Central bank acts as a banker agent and a financial advisor to the Central Government and all the State governments. As a banker, it carries out all banking business of the Government like maintaining Current Account, accepting receipts and making payment, also giving out loans f...

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Banking COMMERCIAL BANK Commercial Bank is an institution who accept money as deposits and grant loans with the aim of making profits. For Example - State Bank of India, Punjab National Bank, ICICI, HDFC etc. Commercial Bank can be both public as well as private Functions of Commercial Banks Primary Functions The two main functions of commercial banks are- a. Accepting Deposits b. Advancing of Loans Accepting Deposits - Commercial Bank accepts deposits in various forms according to the requirement of different people. The main kind of deposits are: 1)Current Account Deposits OR Demand Deposits - These are the deposits which are repayable by the bank on demand. These accounts are maintained by Businessman for making a business transaction. • There is no limit on withdrawal by cheque • Bank does not pay any interest on such deposits rather they charge a service charge for running these accounts. 2) Saving Deposit - The Basic type of account which allows customers side of a portion of income for the motive of earning some monetary return that is interested. • There is a restriction on the number of withdrawal to discourage frequent use of saving deposits • The interest rate for such account is generally less 3) Fixed Deposits - Understood deposit a particular amount is deposited for a fixed period of time. • The amount cannot be withdrawn before maturity of specific period • The rate of interest on such deposits is generally Hai depending upon time period. Advancing of Loans ...

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More • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Difference between Central Bank and Commercial Bank Banks are an important part of the economy of a nation. They are the most critical institutions that help regulate the overall economic development of a nation. Banks help mobilise the money in an economy and act as a connecting link between the government and the general population. Banks act as facilitators of credit in the economy, which is an important component that drives the growth of an economy. There are two types of banks based on the authority, these are central banks and commercial banks. Central bank can be called the apex bank, which is responsible for formulating the monetary policy of an economy. Commercial banks, on the other hand, are those banks that help in the flow of money in an economy by providing...

Central Bank Commercial Bank 1. Function: The main function of the central bank is to regulate the money supply in the country. The main function is to accept deposits from the public and lend it to industry and others. 2. Printing of Currency: The central bank can print currency notes. Commercial banks cannot print currency 3. Acceptance of Deposits: The central bank does not accept deposits from the public. Commercial banks accept deposits from the public. 4. Loans The central bank provides loans to bankers and financial institutions. Commercial banks provide loans to industry and commerce. 5. Ownership: It is owned and controlled by the government of India. It can be owned by private and/or government agencies. 6. Number of Banks: There is only one Central Bank (RBI) in India. There are many commercial banks in India. 7. Monetary policy The Central Bank frames the monetary and credit policy. Commercial banks do not frame any monetary policy 8. Control The central bank keeps a check on commercial banks. Commercial banks do not keep a check on the central bank.

Functions of Commercial Banks: Primary and Secondary Functions What is Commercial Bank? A commercial bank is a kind of financial institution that carries all the operations related to deposit and withdrawal of money for the general public, providing loans for investment, and other such activities. These banks are profit-making institutions and do business only to make a profit. The two primary characteristics of a commercial bank are lending and borrowing. The bank receives the deposits and gives money to various projects to earn interest (profit). The rate of interest that a bank offers to the depositors is known as the borrowing rate, while the rate at which a bank lends money is known as the lending rate. Related link: Function of Commercial Bank: The functions of commercial banks are classified into two main divisions. (a) Primary functions  Accepts deposit : The bank takes deposits in the form of saving, current, and fixed deposits. The surplus balances collected from the firm and individuals are lent to the temporary requirements of the commercial transactions. Provides loan and advances : Another critical function of this bank is to offer loans and advances to the entrepreneurs and business people , and collect interest. For every bank, it is the primary source of making profits. In this process, a bank retains a small number of deposits as a reserve and offers (lends) the remaining amount to the borrowers in demand loans, overdraft, cash credit, short-run loans,...