Question

Give Reason Or Explain the following statements.
Commercial banks provide agency functions to earn profits.

Answer 1

Commercial banks also perform agency function for its customers by providing them basic banking services like collecting bills; issuing drafts; paying insurance premium, rent, loan installments; working as a representative of a customer for purchasing or redeeming different types of securities in the stock exchange etc. for which they charge high fees that becomes a regular profits area for the commercial banks. Therefore, commercial banks provide agency functions in order to earn profits.