Commercial Banking

Today, many financial transactions are carried out by banks. Especially if we look at the activities in the commercial field, we cannot even think that banks do not take place in our lives. There are many types of banks among themselves, which are so important. Likewise, there are many types of banks in our country. They differ according to their establishment and operational purposes. The most intensively established are commercial banks.

What is Commercial Banking?

What is Commercial Banking? It is generally the duty of the central bank as well as commercial banks to advance the economic activities and maintain the monetary order of the country. You will understand that when we say commercial, the primary purpose here is profit. So they are similar to normal businesses. commercial banks; they provide various services to their customers by collecting all kinds of deposits. In this way, they not only make a profit for themselves but also meet the needs of their customers. This type of bank is also called “deposit banks” because they do their transactions with the deposits they collect.

Commercial banks have to set aside some of the funds they collect in return for the central bank, as well as serving their customers. The purpose of allocating the reserve requirement for deposits determined by the central bank is to protect the money of bank customers. Such banks have a close relationship with their customers. Because with the savings it receives from one customer, it meets the needs of the other customer with the services it provides such as loans. While doing this, it aims to generate income for itself and charges commissions in the form of interest.

What are the Duties of Commercial Banking?

What are Commercial Banking Activities? Commercial banking, also known as deposit banking, has many activities. The priority is the collection of deposits. It is another activity to offer these to other customers in cash and non-cash afterward. They do this with the deposits they collect. They also process payments and fund transfers. They also carry out checks, promissory notes and foreign exchange transactions, which are especially used in commerce. Another thing that comes to mind when talking about banks is the storage of customers’ money. Commercial banks also have such duties.

commercial banks; They also operate in many areas such as investment consultancy, portfolio management, buying and selling intermediation in the markets, and insurance transactions. They may have activities other than these, but they must be determined by the board. Considering all these transactions, deposit banks are the most active type among bank types. They gradually improve themselves for both individual and corporate clients. Since the purpose here is profit, there is a constant competition between banks of this type. Therefore, it is more likely to encounter advantageous services.

What Are the Functions of Commercial Banking?

What Are the Functions of Commercial Banking? The purposes of commercial banks are the same, but their organizational forms may be different. Although they are organized differently, their basic functions are similar. One of its main functions is fiat money creation. With this feature, they differ from other types of banks. First of all, what we mean by dematerialized money is; Payment can be made by means of checks, promissory notes, letters of guarantee. For this, demand deposit accounts in banks are used. Customers have balances in these accounts and they do not receive any interest payments from banks. Customers can use other payment instruments over these balances. Thus, they can continue their commercial activities with fiat money instead of cash.

Another function is service. The aim here is to collect more deposits and increase the trading volume. For this, they undertake different tasks and thus perform transactions on behalf of their customers. These services are; check, letter of guarantee, letter of credit transactions, money order – EFT, foreign exchange buying – selling, intermediation for import – export transactions, cashier, reference letter and various payments. The realization of such transactions by deposit banks is to serve its primary purpose. Thus, it can collect more deposits and increase the number of its customers.

Its final function is to provide and use funds. Funding can be achieved through two types of sources. These are own resources and foreign resources. Equity refers to the funds provided by the banks themselves. Foreign resources, on the other hand, refer to the funds they obtain from third parties by borrowing.

What are the commercial banks in the UK?

Many banks in the above list offer commercial banking services. The UK’s advanced banking infrastructure supports international trade. You can trade and make money transfers anywhere in the world.

Those aiming to do business in the UK may need credit support. It would be beneficial for these investors to meet with customer representatives. Banks with offices in many parts of the world such as Lloyds, HSBC, Barclays, Santander can conduct local research about your company.

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