Page 49 - Office Practice and Accounting 10

only casually and not every now and then. The interest allowed on saving bank
deposits is certainly lower than that allowed on fixed account.
c. Fixed deposit account : These deposits are made for a fixed period of time,

a higher rate of interest is paid on fixed deposit. The amount deposited in this
account cannot be withdrawn before the expiry of the specified period. However,
a loan can be taken from the bank against the security of these deposits within
that period.

2. Advancing loans

Another function of commercial bank is to give loans to others. The banks make
profit by advancing loan. Bank provides loan through cash credit, overdraft,
demand loan, short loan, etc. General loans for individual are granted on the
securities of gold, silver, land, buildings, stocks, etc.

3. Transfer of money

Commercial banks transfer money from one place to another for their customers.
Bank remits the funds of the people by means of a bank draft or a cheque. Bank
may charge certain commission on transfer of money.

4. Open letter of credit (L.C.)

It opens letter of credit (L.C.) to promote and support the international trade. L.C.
is a document issued by a banker authorizing the bank to which it is addressed
to honour the bills of the person named to the extent of certain amount. It is a
guarantee issued by bank on behalf of its trusted customer.

5. Perform agency functions

Banks also act as agents of their customers and render service in that capacities.
Banks perform agency function by collecting and paying cheques, realizing
interest and dividend, by paying subscriptions and insurance premiums, by
purchasing and selling shares, debenture and securities on behalf of their
customers.

6. Miscellaneous functions
Besides these, it provides locker service, exchanges the foreign currency,
publishes the financial information, etc. for its regular and possible customer.

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