State with reasons whether you agree or disagree with the following statements.
Accepting deposits is the only primary function of commercial banks.
Accepting deposits is the only primary function of commercial banks.
I do not agree with this statement.The primary functions of a commercial bank are Accepting Deposits and Lending Funds.
1. Commercial banks accept deposits from people, businesses, and other entities in the form of:
- Savings deposits
- Time deposits
- Current deposits
2. Another important activity is lending funds to customers in the form of loans and advances, cash credit, overdraft and discounting of bills, etc.
Loans are advances that a bank extends to his customers with or without security for a specified time and at an agreed rate of interest. Under the cash credit facility, the bank offers its customers a facility to borrow cash up to a certain limit against the security of goods. Further, an overdraft is an arrangement that a bank offers to customers wherein a temporary facility is offered to overdraw from the current account without any security.
The primary functions of a commercial bank are Accepting Deposits and Lending Funds.
1. Commercial banks accept deposits from people, businesses, and other entities in the form of:
- Savings deposits
- Time deposits
- Current deposits
2. Another important activity is lending funds to customers in the form of loans and advances, cash credit, overdraft and discounting of bills, etc.
Loans are advances that a bank extends to his customers with or without security for a specified time and at an agreed rate of interest. Under the cash credit facility, the bank offers its customers a facility to borrow cash up to a certain limit against the security of goods. Further, an overdraft is an arrangement that a bank offers to customers wherein a temporary facility is offered to overdraw from the current account without any security.
