Explain the primary and secondary functions of commercial banks.

Commercial banks play a crucial role in the economy by providing various financial services that facilitate trade, investment, and overall economic growth. Their functions can be broadly classified into primary and secondary functions.

Primary Functions:

1. Accepting Deposits: One of the fundamental roles of commercial banks is to accept deposits from individuals, businesses, and institutions. These deposits can take various forms, such as savings accounts, current accounts, fixed deposits, and recurring deposits. By attracting deposits, banks ensure liquidity and provide a safe place for individuals and businesses to store their funds.

2. Providing Loans and Advances: Commercial banks primarily serve as financial intermediaries, channeling funds from savers to borrowers. They provide loans and advances to individuals, businesses, and governments for various purposes, including personal loans, home mortgages, business loans, and agricultural loans. This lending activity is essential for promoting economic growth and supporting various sectors.

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