Question

Explain the functions of Commercial Banks.

Hint:

Commercial banks play a key role in the financial system by mobilizing savings and channeling them into productive investments.

Answer 1

Step 1: Define Commercial Banks.
Commercial banks are financial institutions that provide a wide range of financial services, including accepting deposits, making loans, and providing other financial services to individuals and businesses.

Step 2: Key functions of commercial banks.
1. **Accepting Deposits**: Commercial banks accept various types of deposits, such as savings, current, and fixed deposits from individuals and businesses.
2. **Granting Loans and Advances**: They provide loans to individuals, businesses, and governments to promote economic activity.
3. **Facilitating Payments**: Commercial banks provide payment services like issuing checks, debit and credit cards, and electronic transfers.
4. **Investment Services**: They invest in government securities and other financial instruments to earn a return on their reserves.

Final Answer: \[ \boxed{The \; functions \; of \; commercial \; banks \; include \; accepting \; deposits, \; granting \; loans, \; facilitating \; payments, \; and \; offering \; investment \; services.} \]