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Functions of Banks

Functions of Banks »

Functions of Banks
Main activities of banks
–      Financial intermediaries
–      Source of funds
ð  Through active liability management
–      Use of funds is through
ð  The provision of loans to customers
ð  The investment in securities
–      provide a range of other financial services and off-balance sheet (OBS) business
Sources of funds (Bank Deposits)
Banks offer a range of deposit and investment products that very by risk, return, liquidity and cash flow timing
Bank’s liabilities (sources of funds) may be categorised as
–      Current deposits
–      Fixed term deposits
–      Other deposits
–      Certificates of deposit
Current deposits
–      Fund deposited in cheque accounts
–      Highly liquid …

Debt Finance and Loans Explained, Functions of Banks, Short Term Debt Avenues »

Short-term debt is available from a range of institutions including banks, merchant banks, investment banks and finance companies. The debt may take a variety of forms, ranging from a loan to a situation in which the borrower sells a financial instrument directly into the market and promises to pay the holder of the instrument its face value on the maturity date. The form that the debt will take is normally determined by the credit rating of the issuer, the size of the funding requirement, and the preferences of the investors.
In …