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Questions
Give two agency functions of commercial banks.
Mention two/three agency functions of a Commercial Bank.
Explain briefly five agency functions of a commercial bank.
Solution
- Collecting Receipts: Banks collect consumer payments such as cheques, bills, promissory notes, and hundreds. They earn interest, dividends, and rent based on customer instructions.
- Making Payments: Banks fulfill customer orders by paying loan instalments, interest, rent, insurance premiums, and taxes on their behalf.
- Purchase and Sale of Securities: Banks purchase and sell securities on behalf of their customers, including shares, debentures, bonds, and government securities.
- Acting as Trustees and Executors: Commercial banks serve as Trustees and Executors for their customers. They also represent their customers at other banks.
- Transfer of Funds: Banks offer remittance services, allowing consumers to move payments both domestically and internationally.
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