Q.Explain the primary functions of an urban co-operative bank.

The two functions that make a UCB a bank at all are accepting deposits and lending.

The primary (main) functions of an urban co-operative bank are the two activities that make it a bank:

1. Accepting deposits. The bank receives the savings of its members and the public in several forms suited to different needs:

• Current (demand) deposits — for traders, withdrawable any time by cheque, usually without interest.
• Savings deposits — for small savers, with limited withdrawals and a modest rate of interest.
• Fixed (term) deposits — a lump sum left for a fixed period at a higher rate of interest.
• Recurring deposits — a fixed sum paid in every month for an agreed term, to encourage regular saving.

2. Granting loans and advances. Out of the deposits collected, the bank lends to its members and customers — mainly for trade, small industry, self-employment and personal needs — through:

• Term loans — repayable in instalments, for buying equipment, vehicles or premises.
• Cash credit and overdraft — a running limit against stock or security, from which the borrower draws as needed. …

Do not mix the primary functions (deposits and loans) with the secondary/agency functions (collection of cheques, payments, fund transfer) or utility service …