Question

Write Short Notes on.
Agency function of Commercial Bank.

Answer 1

A commercial bank is a financial institution which accepts deposit from people and offers loans for the purpose of consumption or investment. Commercial banks perform agency function for its customers by providing them the following basic facilities at an agreed bank charge depending on the nature of the activity:

• They collect bills, draft, cheques, etc.
• They pay the insurance premium, rent, loan installments, etc.
• They work as a representative of a customer for purchasing or redeeming different types of securities in the stock exchange.
• They also prepare income tax returns, claim tax refunds, etc. on behalf of the customers.