Secondary functions include agency services and general utility services
Modern commercial banks render a number of services to its customers. It acts as an agent to its customers. The following are the important agency services rendered by a commercial bank:
- It collects the cheques. bills and pronotes for and on behalf of its customers
- It collects certain incomes like dividend on shares, interest on securities etc., on behalf of its customers.
- It undertakes to purchase or sell securities for its customers.
- It accepts bill of exchange on behalf of its customers.
- It acts as a referee by supplying information regarding the financial position of its customers when inquiries made by other business people and vice versa. It supplies this information confidently.
- It acts as an executor, administrator and trustee.
General Utility Services
General utility services are rendered not only to its costumers but also to the general public. The following are the important general utility services rendered by a commercial bank.
- It facilitates easy and quick transfer of funds from one place to another place by means of cheques, drafts, MT, TT etc.
- It issues letter of credit, traveler’s cheques, gift cheques etc.
- It deals with foreign exchange transactions thereby helping the importers and exporters.
- It undertakes the safe custody of valuables. For this purpose safe deposit vaults are maintained. Vault is a strong room for keeping the valuables safe.
- Bank makes arrangements for transport, insurance and warehousing of goods.
- It underwrites the shares and debentures of the newly promoted joint stock companies.
- Some commercial banks undertake merchant banking business equipment leasing business.
- It provides tax consultancy services. It gives advice on income tax and other personal taxes. It prepares customers annual statement, files appeals etc.,
- It provides consultancy services on technical, financial, and managerial and economic aspects for the benefit of micro and small enterprises.
Modern Functions of a Commercial Bank
- Changing cash for bank deposits and bank deposits for cash.
- Transferring bank deposits between individuals and/or companies.
- Exchanging deposits for bills of exchange, government bonds, secured and unsecured promises of trade and industrial units.
- Underwriting capital issues.
- Providing 24 hours facility of payments through ATMs.
- It issues credit cards, smart cards etc.