Three Important Functions of a Commercial Bank
(1) Accepting Deposits: A commercial bank accepts deposits from the public. People can deposit their cash balances as chequable or non-chqueable deposits.
(2) Advancing loans: A bank advances loans both for productive purposes as well as consumption purposes. Through credit creation (i.e., by creating demand deposits through loans), it contributes to money supply in the economy.
(3) Agency functions: Commercial banks act as an agent on behalf of their customers. Agency functions includes; transfer and collection of funds, purchase and sale of shares, collection of dividends and interest, payment of bills and premium, execution of wills etc.