Commercial bank : Agency Functions of Commercial Bank

Commercial Bank - 

          Commercial banks are the most common and important type of banking institutions. A commercial bank is a monetary institution which serves the interests of its depositors by providing security to the deposits of money and on the other hand, makes profits by investing such deposits in the protective measures by extending loans.

Agency Functions of Commercial Bank -

Bank perform agency functions for their customers as given below -

1) Collection of cheques, Bills etc - 

           Bank collect the cheques, bills, Drafts and other Negotiable Instruments deposited by their customers.

2) Making and collecting payments - 

           Banks make payments of the premium of insurance policies, house rent etc. On behalf of their customers. Similarly, they accept/recover rents and other deposits on behalf of their customers.

3) Accepting Bills -  

            Banks accept bills of exchange as per orders of their customers. They make also the payment of cheque, bills and hundis of their customers.

4) Remittance facilities- 

            Bank remits money from one place to another for the facility of their customers.

5) Purchase and Sale of Shares and Securities - 

            Bank purchase and sell shares and securities etc. As per order of their customers.

6) Reference Letter- 

           Bank sends the information of the financial condition of their customers to the Businessman of the country and abroad. Similarly, they give the information of the financial condition of other Businessman to their customers.


7) Acting as Trustees-

           Banks take the liability for management of the properties of their customers and act as trustees.


See also...

Classification of Commercial Banks