Question : Which of the following is a function of a commercial bank?
Option 1: Issuing currency notes
Option 2: Providing credit facilities
Option 3: Managing the foreign exchange reserves of India
Option 4: None of the above
Correct Answer:
Providing credit facilities
Solution : The correct answer is (b). Providing credit facilities
One of the primary functions of a commercial bank is to provide credit facilities. Commercial banks play a crucial role in facilitating lending and borrowing activities in an economy. They accept deposits from customers and use those funds to provide various types of credit facilities, such as loans, overdrafts, cash credits, and trade financing, to individuals, businesses, and other entities.
Commercial banks play a vital role in the economy by channeling funds from savers to borrowers, thus facilitating economic activities and growth.
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