Assignment:1
Submitted by: Asfa Nadeem
Roll number: 58
Submitted to: Raima Adeel
Course Title: Money Banking and Finance
Program: BBA Banking and Finance
Functions of Banks
Primary Functions of Banks
Acceptance of Deposits: Checking accounts, savings accounts,
time deposits, and current accounts.
Advances and Loans: Personal loans, business loans, mortgage
loans, overdraft facilities, and credit facilities.
Payment and Remittance Services: Cheque payment and
clearing, electronic funds transfer (EFT), online banking
transactions, remittances, and bill payment services.
Cash Management: Cash deposits and withdrawals, ATM
services, and cash handling and storage.
Agency Services: Collection of cheques and bills, payment of
utility bills, and purchase and sale of securities.
Clearing and Settlement: Clearing of cheques and other
instruments, and settlement of transactions.
Credit Creation: Creation of new money through lending, thereby
increasing the money supply in the economy.
Secondary Functions of
Banks
Agency Services: Banks act as agents for their customers,
providing services like collection of cheques and bills, payment of
utility bills, and purchase and sale of securities.
Trustee Services: Banks serve as trustees for trusts, estates, and
debenture holders, managing assets, overseeing investments,
and ensuring adherence to trust deeds and legal frameworks.
Foreign Exchange Services: Banks facilitate foreign exchange
transactions, manage currency risk, and provide hedging
solutions for individuals and businesses engaging in international
trade and investment.
Guarantee Services: Banks issue guarantees, letters of credit,
and performance bonds, mitigating risk for counterparties, and
ensuring compliance with regulatory requirements.
Portfolio Management Services: Banks provide discretionary
and non-discretionary portfolio management services, creating
customized investment strategies, and managing assets for
individuals, institutions, and corporations.
Overdraft facility: It is an advance given to a customer by
keeping the current account to overdraw up to the given
Discounting bills of exchange: It is a written agreement
acknowledging the amount of money to be paid against the
goods purchased at a given point of time in the future. The
amount can also be cleared before the quoted time through a
discounting method of a commercial bank
