Question

Which of the following is an essential function for a financial institution to become a bank?

• A. Accepting of chequable deposits from the public
• B. Lending to the public
• C. Both A and B
• D. None of the above

Answer 1

The correct option is C

Both A and B

The Post-office Savings Bank accepts deposits from the public but does not perform the function of lending wheresas the Life Insurance Corporation of India lends to others but does not accept deposits from the public. In the above cases both are not considered as banks. Only when the financial institution accepts deposits as well as lends money, is it considered a bank.