Q.Discuss the Secondary functions of Banks.

Secondary functions of commercial banks are the services rendered in addition to the primary functions of accepting deposits and granting loans. They are grouped into agency functions (performed on behalf of customers) and general-utility functions (services of general public use).

Secondary Functions of Banks

A. Agency Functions (performed on behalf of customers, usually for a commission)

1. Collection of cheques, bills and promissory notes on behalf of customers.
2. Payment of bills such as rent, insurance premium, electricity and telephone bills as per the customer's standing instructions.
3. Purchase and sale of securities - buying and selling shares, debentures and bonds for customers.
4. Transfer of funds from one branch or place to another through drafts, NEFT and RTGS.
5. Collection of dividends and interest on shares and securities.
6. Acting as trustee, executor and attorney in managing customers' property and wills.

B. General-Utility Functions (services of general public utility)

1. Safe-deposit lockers for keeping valuables and documents.
2. Issuing letters of credit and traveller's cheques to facilitate trade and travel.
3. Dealing in foreign exchange and financing foreign trade.
4. Underwriting of shares and debentures issued by companies and governments.
5. Collection of statistics and business information useful to trade and industry. …