Functions of commercial banks in Kenya

  

Date Posted: 11/21/2012 1:39:28 AM

Posted By: saucer  Membership Level: Gold  Total Points: 4885

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Commercial banks are really important in the economy of the country. The main functions of commercial banks include:

1. They provide a safe place for clients to keep their money. The banks keep the money deposited by customers in volts for safe keeping. They also make the money accessible to customers when the need arises.

2. They facilitate transfer of money from one account to another. This is useful to customers when making payment directly into another account. This is convenient to the users.

3. They offer lending services. Banks offer loans to customers who need the money. The loans are to be repaid over a certain period of time. The loans attract interest on the amount borrowed.

4. Banks offer foreign exchange services. The banks sell foreign currencies to the customers at the market value of the currency. They also offer exchange of currencies to the customers.

5. They assist traders dealing in international trade. Traders who export and import need a statement from their banks so the other traders can know that they are credit worthy. Banks act as the collateral for the trader to secure the deal.

6. The banks offer their customers investment services. They can do this by selling shares to the customers on behalf of the companies. They can also sell shares their own shares to the customers offering them investment opportunities.

7. They offer financial advice to their customers. They advise their customers on the best business practices to engage in when asking for a loan to start a business. When asking for a loan they provide the customers with the best payment plan and much more.

8. The banks also keep valuable items for customers. These valuables include: title deeds and expensive jewelry. They charge a fee in the safe keeping of valuable items.

9. They offer their customers

advice on taxation matters. They give their customers information that will be useful when preparing tax returns. This is essential so as not to default on paying taxes and be charged with expensive penalties.

10. Banks act as trustees. They can manage the property of the deceased on behalf of the family. This is to prevent wrangles from destroying the profitability of the business or estate left by the deceased.

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