Question

Explain briefly the five agency functions of a commercial bank.

Mention two/three agency function of a Commercial bank.

Explain any four agency functions of the commercial bank.

State two agency functions of a commercial bank.

Explain four important agency functions of a commercial bank.

Answer 1

1. Collection of money: Commercial banks accept standing instructions from customers regarding the collection of money, such as cheques, drafts, interest, dividends, bills, promissory notes, rents, demand drafts, etc. The bank charges a small commission for rendering such services.
2. Payments/Periodical payments: The banks can also make payments on behalf of their customers, such as insurance premiums, rent, electricity bills, telephone bills, taxes, etc. A commission is normally charged for such services.
3. Purchase and sale of securities: Commercial banks can undertake the buying and selling of securities, debentures, and shares as per the instructions and authority given by the customer. Commercial banks, on the basis of their expert knowledge, can help their customers in this regard.
4. Acting as Trustee, Executor, Administrator, or Attorney: As a trustee, the bank is the custodian of the customer's fund. The bank also acts as the executor of the customer's will in the event of death. As an attorney, the bank signs the documents on behalf of the customer. The commission is normally charged for such services.
5. E-Banking (Electronic Banking): Through electronic banking, a customer can operate his bank account through the Internet. He can transfer money from one place to another. He can also make payments for various bills, like telephone bills; E-banking helps businessmen, traders, and merchants. Banking transactions can be carried out safely and with total confidentiality with the help of E-banking.
6. Dematerialisation Account: (D-mat) account Some commercial banks provide D-mat facilities to their customers. D-mat account is useful to investors who deal in shares. Each investor has to open a separate de-mat account. The transactions relating to the buying and selling of shares are recorded. Periodically, statements about the buying and selling of shares are given by commercial banks to each investor.
7. Other functions: Commercial banks can work as agents for any government, local authority, or other person, i.e., clearing and forwarding of goods.