Define the term Commercial Bank. Explain the main functions of Commercial Banks.

A Commercial Bank is a financial institution that provides various financial services, such as accepting deposits, offering business loans, and offering basic investment products. Commercial banks are regulated by the country's central bank and are subject to government regulations.

The main functions of Commercial Banks are:

1. Accepting Deposits: The most important function of commercial banks is to accept deposits from the public. People who have surplus income and savings find it convenient to deposit the amounts with banks.

2. Granting Loans and Advances: The second important function of commercial banks is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts.

3. Overdraft Facilities: Commercial banks provide overdraft facilities to their customers through which they are allowed to withdraw more than their account balance.

4. Discounting of Bills: Banks provide short-term financial assistance by discounting bills. That is, banks buy the bill (Bills of Exchange or Promissory Notes) before it is due and credits the value of the bill after a discount charge to the customer's account.

5. Agency Functions: Commercial banks act as agents of their customers. They perform various functions such as collection and payment of credit instruments like cheques, bill of exchange, promissory notes etc.

6. General Utility Services: Along with the above-mentioned functions, banks also perform many general utility services for their customers. For example, banks provide locker facilities, underwriting of shares, dealing in foreign exchange transactions, issuing drafts and letter of credits, etc.

In summary, commercial banks play a crucial role in the financial system and the economy of a country. They are centers for maintaining savings of the public and they supply a substantial part of the money supply.