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Q81 (IAS/2010) Economy › Money, Banking & Inflation › Banking operations services Answer Verified

Consider the following statements: The functions of commercial banks in India include 1. Purchase and sale of shares and securities on behalf of customers 2. Acting as executors and trustees of wills. Which of the statements given above is/are correct?

Result
Your answer: —  Â·  Correct: C
Explanation

Both statements are correct. Commercial banks perform a range of agency and secondary or 'general utility' services beyond core deposit and lending functions; these include buying and selling securities and shares on behalf of customers as part of agency/investment services [1]. Banks also act as trustees and executors — providing trustee, executor and related fiduciary services — as part of their trustee/agency role and advisory functions [1]. These activities are classified under secondary functions/agency services of commercial banks and are routinely offered alongside collection, payment and custodial services. Therefore, both (1) purchase and sale of shares and securities on customers’ behalf and (2) acting as executors and trustees are legitimate commercial bank functions.

Sources

  1. [1] https://www.geeksforgeeks.org/macroeconomics/functions-of-commercial-bank-primary-functions-and-secondary-functions/
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