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Questions
Mention two necessary conditions for a financial institution to become a commercial bank.
What are the two essential conditions for a financial institution to become a bank?
Solution
There are two essential functions that a financial institution must perform to become a commercial bank.
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Acceptance of demand deposits with cheque facilities: This means the bank must accept deposits that can be withdrawn by the depositor at any time, often through cheques or other means like ATMs or electronic transfers.
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Lending: The institution must engage in lending money to individuals, businesses, or other entities, generating interest income.
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