Commercial banks perform a variety of functions, which can be categorized as basic or primary functions and agency or general utility services. The main functions are explained below:

1. Acceptance of deposits: This is the primary function of a bank and forms the basis for loan operations. Banks act as borrowers by accepting deposits from the public through various accounts. For example, deposits can be made into a current account, which allows the depositor to withdraw funds to the extent of the balance at any time without any prior notice.

2. Lending of funds: Banks act as lenders of money to earn a profit margin. They use the money accepted as deposits to grant loans to those who need funds. For example, banks grant loans to borrowers and charge interest, which is a source of income for the bank.

3. Cheque facility: Banks provide a developed credit instrument known as a cheque, which facilitates the withdrawal of deposits. It is a convenient and inexpensive medium of exchange. For example, bearer cheques can be encashed immediately at bank counters, while crossed cheques can only be deposited into the payee's account.

4. Remittance of funds: Commercial banks help in transferring funds from one place to another due to the interconnectivity of their branches. This is administered using bank drafts, pay orders, or mail transfers. For example, a bank issues a bank draft for a nominal commission charge, allowing the payee to receive money at a different location.