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Banks and Their Functions

is a primary ...

Question

________ is a primary function of commercial bank.

A

Purchase and sell securities

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B

Accept deposits

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C

Letter of credit

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D

Provision of lockers

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Solution

The correct option is B Accept deposits
A commercial is that financial institution which accepts deposit from people and offers loan for the purpose of consumption or investment. The primary function of commercial banks are to accept deposits without which it cannot initiate its other functions.

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Q. _______ is a primary function of commercial banks.

Q. Fill in the blanks with appropriate alternatives given in the brackets.

1. Deposits from __________ account can be withdrawn without any notice. (saving/current/fixed/recurring)
2. __________ is a primary function of commercial banks. (Purchasing and selling securities/ Accepting deposits/ Safe deposit vault / Letter of credit)
3. Every loan creates a __________. (credit/ deposit/ profit/ loss)
4. Facility of E-banking is provided through __________ (telephone/ debit cards/ internet/ credit cards)

Q. State with reasons whether you agree or disagree with the following statements.
1. A commercial bank create credit on the basis of primary deposit.
2. Commercial banks perform many general utility services.

Q. State whether the following statements are True or False.
1. Commercial banks are the backbone of modern economy.
2. The saving bank deposit can be opened with a small amount.
3. Credit money is created by the central bank of a country.
4. There is no difference between primary deposit and secondary deposit of a commercial bank.

Q. Which of the following is a function of a Commercial Bank? Give a reason to support your answer:
i. Acting as a lender of last resort
ii. Deciding what is legal tender
iii. Determining monetary policy
iv. Providing cash credit facility.

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