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Question

Which of these conditions is needed for a financial institution to become a bank?

A
Accepting deposits
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B
Advancing Loans
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C
Both (a) and (b)
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D
Neither (a) nor (b)
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Solution

The correct option is C Both (a) and (b)
Accepting deposits and advancing loans are the needed function which is needed for a financial institution to become a bank. Through these two functions banks can perform credit creation function.

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