What Is Employment Or Investment Of Bank Funds?

The employment or investment of funds by a commercial bank means the safe utilization and profitable use of its funds. The bank obtains money from different sources and pays interest on them. It is the utmost desire of every commercial bank that it should invest its funds in a manner which serves its own as well as customer's interest. Its own interest is to earn profit for the shareholders. The other interest is of the customers along with interest as and when demanded by them. These two objectives of liquidity and profitability are obtained by utilizing the surplus funds into ready convertible securities. The main types of earning assets of a bank are different which is money including at short notice, investment in government and semi government securities.

Public deposits are a powerful source of funds of banks. There are three types of the banks a deposit one is current deposits, second is saving deposits and the third one is time deposits. Due to the spread of literacy, banking habits and growth in the volume of business operations there is marked increase in deposit money with banks. So the main mainly makes its investments in the other countries of the world.