Question

Write short notes on the following:
Secondary Functions of bank.

Answer 1

1. Agency Functions: The bank is an agent for its customers in a way that it invests on behalf of its customer. Acting as the agent of the customer the bank may transfer funds, the collection of cheques, periodic payments, portfolio management, periodic collections, and several other agency functions. All of these functions are the secondary functions of the bank.
2. General Utility Functions: The bank also performs several utility functions. Some of the most important utility functions of the banks may include the issue of drafts, letter of credits etc., locker facility, underwriting of shares, dealing in foreign exchange, project reports, social welfare programmes, other utility functions. The banks also provide several services like the safe deposit locker facilities, safe custody facilities and demat accounts. The opening of demat accounts allows the account holder to trade in the stock exchange or the money market directly. The customer that holds a demat account can directly buy or sell shares from the capital market.