They accept and safeguard deposits from the public by permitting people to open up various types of accounts such as savings account, current account and the fixed deposit account.
They extent credit facilities to the public in form of bank loans and bank overdrafts.
Besides the primary functions of accepting deposits and lending money, banks perform a number of other functions which are called secondary functions. These include;
- They provide excellent means of payment by use of facilities such as cheques, credit transfers and standing orders.
- They act as trustees to the execution of wills of the deceased persons.
- They act as custodians of valuable documents such as land titles, wills, academic certificates, etc.
- They advise their customers on investment decisions.
- They act as agents of the stock exchange by buying and selling shares and securities on behalf of their customers.
- They facilitate international trade by opening up letters of credit to intending importers and granting payment in international transactions as well as issuing traveler’s cheques.
- They assist the central bank in implementing the tools of monetary policy.
- They provide foreign exchange to their customers i.e. commercial banks deal in buying and selling of foreign .exchange.
- The create credit through the process of credit creation whereby customers’ deposits are lent out several times to other customers.