Different Functions Of Commercial Banks

By Jason Brandt|October 10, 2016|Business Services|

Commercial banks offer investing as well as financial services for different businesses. The primary role of a commercial bank in the developing world is to provide a range of financial products and services for small business opportunities like loans, withdrawals, deposits and others. The local economy and its development are also supported by commercial banks.
Storehouse of wealth
A commercial bank can be considered as a storehouse of the wealth of a region or a country. The funds of clients that are deposited in the business accounts are taken care of in different ways. This money is invested by banks in the interest of the clients as well as to maximize the profits of a bank. The profits are then added as financial resources which can be handed out as loan products to businesses or to fund social support programs in a community. There are different kinds of accounts that are designed for the varying needs of the businesses like offshore credit card merchant account.
New business investments
Many commercial banks invest in new businesses. They act as lenders and offer start up loans and financing for purchases of capital equipments. Trade and industrial activities are promoted by the commercial banks in the form of different accounts like offshore credit card merchant account. The other services bakery business for sale include processing of credit card, foreign currency exchange and international banking. Many of these financial institutions also offer business advice to the clients. They act as intermediary in the case of insurance purchase and active interest in taking in managing the financial affairs of companies as well.
Assistance for new businesses
The new businesses are usually in need of credit. Personal and retail banks might not be able to fund these business ventures without the presence of collateral. For these reasons, these business owners usually turn to the credit facilities offered by the commercial banks. New ventures can avail of loans offered by the commercial banks in order to purchase inventory, set up their premises and so forth.
Role of large commercial banks

Some commercial banks are large and they have a greater role to play in an economy. Businesses usually have funds deposited in these banks. If any of the large commercial banks collapse, there is a ripple effect created. If the loans that are sent out by these banks fail and are not recovered, that leads to collapse of these banking institutions. As a large amount of funds is parked in these institutions, it causes a ripple effect of damages in an economy. To safeguard against the losses that these banks might incur, the governments in different countries or regions have regulatory norms that are set up. The role of the commercial banks is to oversee the activities of the business clients and to intervene if any regulation or norm is neglected.