Question

Answer the following questions in short:

State the utility functions of commercial banks.

Answer 1

A commercial bank performs various general utility functions for its customers. While performing these functions, the bank does not act as an agent to its customers. Some of the utility functions of commercial banks are:

a. These banks provide locker facility to their customers. In this facility, customers can keep their valuable things like jewellery and important documents in bank lockers.

b. They issue travellers’ cheques to their customers, because of which customers need not carry money with them while travelling (domestically or internationally). They can encash the travellers’ cheques at any branch worldwide.

c. These banks also prepare letters of credit on the request of importers; these letters help in making international trade payments.

d. The banks provide information to their customers regarding business conditions, payment rules, etc., of businesses in other countries.

e. They also provide the facility of gift cheque to the general public.