In today’s financial world, the interplay between commercial banks and central banks shapes the economy’s very foundation. This article explores the essential functions of commercial banks, the process of credit creation, and the critical role of central banks in regulating credit. By understanding these dynamics, we can grasp how money flows through our economy.

The Functions of Commercial Banks

A commercial bank is a financial institution that accepts deposits, offers checking account services, makes loans, and offers basic financial products to individuals and businesses.

Commercial banks are essential to the financial system, offering a range of services that support economic activities for individuals and businesses alike.

Functions of Commercial Banks:

Accepting Deposits

A primary function of commercial banks is to accept deposits from the public, which can include savings accounts, current accounts, and fixed deposits. Not only do banks provide a secure place to save money, but they also help people feel financially secure.