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commercial banks - Coggle Diagram
commercial banks
terms
Liquidity refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price.
The interest rate is the amount a lender charges a borrower and is a percentage of the principal—the amount loaned.
The minimum balance is the minimum dollar amount that a customer must have in an account to receive some service benefit, such as keeping the account open or receiving interest.
Negative amortized loan, is one with a payment structure that allows for a scheduled payment to be made by the borrower that is less than the interest charge on the loan.
The term non-sufficient funds (NSF), refers to the status of a checking account that does not have enough money to cover transactions.
Mortgage refers to a loan used to purchase or maintain a home, land, or other types of real estate.
A safe deposit box (or safety deposit box) is an individually secured container—usually a metal box—that stays in the safe or vault of a federally insured bank or credit union.
The term "brick-and-mortar" refers to a traditional street-side business that offers products and services to its customers face-to-face in an office or store that the business owns or rents.
A customer deposit is a money that a company receives from a customer prior to the company earning it (by providing the customer with goods or services).
A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets
An automated teller machine (ATM) is an electronic banking outlet that allows customers to complete basic transactions without the aid of a branch representative or teller.
A credit card is a thin rectangular piece of plastic or metal issued by a bank or financial services company, that allows cardholders to borrow funds with which to pay for goods and services with merchants that accept cards for payment.
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types
2.Private Bank: When the private individuals own more than 51% of the share capital, then that banking company is a private one.
3.Public Bank: When the Government holds more than 51% of the share capital of a publicly listed banking company, then that bank is called as Public sector bank.
1.Foreign Bank: Banks set up in foreign countries, and operate their branches in the home country are called as foreign banks.
primary functions
Accepting Deposits: The primary function for which the commercial banks were established is to accept deposits from the general public, who possess surplus funds and are willing to deposit them so as to earn interest on it.
Advancing Loans: Next important function performed by the commercial bank is lending money to the individuals and companies.
Credit Creation – A unique function of commercial banks is credit creation. Instead of offering liquid cash, banks create a line of credit and transfer the loan to a business or commercial body all at once.
secondary functions
Agency Services:
Collection and payment of rent, interest and dividend.
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main purpose
to provide financial services to the general public and business, ensuring economic and social stability and sustainable growth of the economy.