Meaning: -The bank performs a number of secondary functions, also called as
non-banking functions.
1.
Agency Functions: -The bank acts as an agent of its customers. The bank performs a number of
agency functions, which includes.
a.
Transfer of Funds: -The bank transfer funds from one branch to another or from one place
to another.
b.
Collection of Cheques: -The bank collects the money of the cheques through clearing section of
its customers. The bank also collects money of the bills of exchange.
c.
Periodic Payments: -On standing
instructions of the client, the bank makes periodic payments in respect of
electricity bills, rent, etc.
d.
Portfolio Management: -Large banks
undertake to purchase and sell the shares and debentures on behalf of its
clients and accordingly debits or credits the account. This facility is called
portfolio management.
e.
Periodic Collections: -The bank
collects salary, pension, dividend and such other periodic collections on
behalf of the client.
f.
Other Agency function: -
·
It acts as trustees, executors,
attorneys, and administrators on behalf of its clients.
·
It acts as representatives of
clients to deal with other banks and institutions.
·
Provide 24 hours ATM facilities to its customer
2.
General Utility Functions: - The
bank also performs general utility functions, such as:
a.
Issue of Drafts, LCs, etc: -Banks issues drafts for transferring money form one place to
another. It also issues letter of credit, especially in case of import trade.
It also issues travellers cheques.
b.
Locker Facility: -The bank provides
a locker facility for the safe custody of valuable documents, gold ornaments,
and other valuables.
c.
Underwriting of Shares: -The bank
underwriter’s shares and debentures through its merchant bank division.
d.
Dealing in Foreign Exchange: -The
commercial banks are allowed by RBI to deal in foreign exchange.
e.
Project Reports: -The bank may also
undertake to prepare project reports and feasibility studies on behalf of its
clients.
f.
Social Welfare Programmes: -It undertakes social welfare programmes, such as adult literacy
programmes. Public welfare campaigns, etc.
