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Question
Explain, with reason, whether you Agree or Disagree with the following statement.
Commercial banks provide many general utility services.
Solution
Agree.
These utility services include: -
- Commercial banks provide safe deposit vault/ locker facility to its customers to keep their valuables.
- Remittance of funds through mail transfer, demand draft, mail transfers, etc.
- The facility of letters of credit by commercial banks enables the traders to purchase goods on credit.
- Commercial banks provide reference/ status report with respect to financial standing, the frequency of payment.
- Underwriting facility for shares and debentures is another function performed by commercial banks.
- Dealings in foreign exchange: By keeping separate foreign exchange department, bank deals in foreign exchange. Commercial bank offer services for converting one currency into another. Banks make profit in foreign exchange transactions. In India, Reserve Bank of India has a, strict control on this function.
- ATM facility, credit card, debit card: It is an electronic delivery system. It is a convenient method of withdrawing money from bank without going to the bank through automated/ automatic teller machines. It enables people to do their banking transactions at any hour of the day. Credit card is a plastic card issued by bank to its customers. It facilitates the card holders to use it for purchase on credit or draw cash. Debit card can be used for the purchase of goods and services. The amount gets debited from the debit card holders account automatically.
- Compilation of statistics/Publishing information: Some banks, publish business and financial information relating to trade, commerce and industry. Some bank also publish bulletins or journals on research, on economic and commercial matter.
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