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In what ways do commercial banks provide employment opportunities?
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By offering loans at affordable rates, they promote self-employment and small business growth.
What are the primary functions of commercial banks?
Accepting deposits, providing loans and advances, and investment in government securities.
What are Overdrafts, and who are they typically available to?
Overdrafts are additional loans available to current account holders, allowing them to withdraw more than their account balance.
Describe the features of a Fixed Deposit Account (FDA).
FDAs involve depositing money for a fixed period and typically offer the highest interest rates.
How do commercial banks assist in capital formation?
By converting savings from the public into investment funds.
How do commercial banks support entrepreneurs and innovation?
By providing loans that enable new startups and innovative projects to be pursued.
What services are included under the agency functions of a commercial bank?
Collection and payment of checks, purchase and sale of securities, agency for trustees, remittance of money, providing business information, safe custody of valuables, and travelers' checks and letters of credit.
Explain the concept of Cash Credit.
Cash Credit allows borrowing up to a certain limit based on secured assets, particularly for business purposes.
List the types of deposits accepted by commercial banks.
Savings Accounts, Fixed Deposit Accounts, Current Accounts, Savings Bank Accounts, Recurring Deposit Accounts.
How do commercial banks influence the interest rate?
Through controlling interest rates, they can promote or restrict investment and influence economic growth.
What is meant by 'Safe Custody' in the banking context?
Securing customers' valuables, such as documents, jewelry, and other precious items.
Why are loans and advances critical functions of commercial banks?
They provide the necessary funding for various business and personal needs, fueling economic activities.
Explain the significance of travelers' checks and letters of credit.
They provide financial security and convenience for travelers, ensuring access to funds and facilitating transactions abroad.
What is discounting of bills in the context of commercial banking?
It refers to providing loans by discounting bills of exchange, which are promises to pay at a later date.
What function does the remittance of money serve in commercial banking?
It involves the transfer of money on behalf of customers, both domestically and internationally.
What is the purpose of commercial banks investing in government securities?
To provide funding for government projects and programs while ensuring a stable investment for the banks.
How do commercial banks boost consumer demand?
By providing loans for the purchase of consumer goods, thereby increasing overall demand.
Why is the service of providing business information important for customers?
It helps customers make informed economic and business decisions by providing valuable insights and data.
Describe one role commercial banks play in rural development.
Providing loans in rural areas, particularly for agricultural purposes.
What role do commercial banks play in the implementation of monetary policy?
They help the government manage the economy by controlling the supply of money and credit in the market.
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