Theory question 106
BankingCommerce 2 (essay)
(a) Explain seven functions of a commercial bank.
(b) Explain three types of accounts that are operated in a commercial bank.
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(a) Any seven, explained: accepts deposits; grants loans and overdrafts; provides means of payment (cheques, transfers, cards); safe custody of valuables; foreign exchange services; discounting bills; financial advice; agency services (paying bills, buying shares); executor/trustee services; electronic banking; issues bank drafts and letters of credit.
(b) Current account – for businesses; cheques used; no or little interest; overdraft possible. Savings account – for small savers; earns interest; withdrawals by withdrawal slip/ATM. Fixed (time) deposit account – money kept for a fixed period; higher interest; notice needed for early withdrawal.
In (b) give a feature of each account.