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Commercial Banks  Insurance Company ICBCPICC Commercial Banks Federal-or state-chartered financial institution accepting deposits that it uses to make loans and earn profits. Functions of Commercial Banks The functions of a commercial banks are divided into two categories: Primary functions Secondary functions including agency functions Primary functions The primary functions of a commercial bank include: a) accepting deposits b) granting loans and advances A: Accepting deposits The most important activity of a commercial bank is to mobilise deposits from the public. People who have surplus income and savings find it convenient to deposit the amounts with banks. Thus, deposits with the bank grow along with the interest earned. If the rate of interest is higher, public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank . B: Grant of loans and advances The second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies depending upon the purpose, period and the mode of repayment . Secondary functions banks perform a number of other functions which are called secondary functions. These are as follows - a) Issuing letters of credit, travellers cheques, circular notes etc. b) Undertaking safe custody of valuables, important documents, and securities by providing safe deposit vaults or lockers; c) Providing customers with facilities of foreign exchange. d) Transferring money from one place to another; and from one branch to another branch of the bank. e) Standing guarantee on behalf of its customers, for making payments for purchase of goods, machinery, vehicles etc. f) Collecting and supplying business information; g) Is