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Question
Write Short Note on the following:
Utility functions of commercial banks
Solution
The following are some of the utility functions of commercial banks:
i. These banks provide locker facility to their customers. In this facility, customers can keep their valuable things like jewellery and important documents in bank lockers.
ii. These banks issue travellers’ cheques to their customers, because of which customers need not carry money with them while travelling (domestically or internationally). They can encash the travellers’ cheques at any branch worldwide.
iii. These banks provide information to their customers regarding business conditions, payment rules, etc., of businesses in other countries.
iv. These banks also provide the facility of gift cheque to the general public.
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The secondary function of commercial banks?
Read the passage given below and answer the questions that follow.
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The Monetary Policy Committee (MPC) increased the repo rate, at which the RBI lends short-term funds to commercial banks, from 6.25 percent to 6.50 percent. This increase in the repo rate is based on the increase in the key rate by 250 bps. The Committee also decided to continue the withdrawal of money supply in the economy. |
- Which function of the central bank is hinted at in the passage given above? (1)
- In which situation does central bank adopt the measure given in the above passage? (1)
- Explain any two monetary measures that can be used to accomplish a similar objective, other than the one given in the above passage. (4)
- Differentiate between Reserve Bank of India and Commercial banks by giving any two points. (2)
