Question

Write Short Notes on the following:

Agency functions of commercial banks

Answer 1

The agency functions of commercial banks can be defined as those functions performed by the banks in which bank act as an agent to their customers. The following are some of the agency functions of commercial banks:

i. They collect cheques, dividends and interest on behalf of the customers and credit the amount in their accounts.

ii. They pay rent, insurance, premium, etc., on behalf of customers and deduct the amount from their accounts.

iii. They buy and sell foreign exchange.

iv. They buy and sell different securities like shares and debentures.

v. They receive travel tickets and letters and book vehicles on behalf of their customers.