Answer the following questions: Describe the secondary functions of commercial banks.

Answer the following questions:
Describe the secondary functions of commercial banks.
ANSWER:
In addition to primary functions, commercial banks perform secondary functions. The secondary functions are divided into:
i. Agency functions - The agency functions of commercial banks can be defined as the functions in which these banks act as an agent to their customers. The following are the agency functions of commercial banks:
a. They collect cheques, dividends and interest on behalf of the customers and credit the amount in their accounts.
b. They pay rent, insurance, premium, etc., on behalf of customers and deduct the amount from their accounts.
c. They buy and sell foreign exchange.
d. They buy and sell different securities like shares and debentures.
e. They receive travel tickets and letters and book vehicles on behalf of their customers.
f. They act as a trustee, executor of will, attorney, etc.
g. They help the customers in filing tax returns.
h. They provide the facility of bank draft that helps in remitting money from place to another.
i. They act as an underwriter on behalf of a company.
j. They provide the facility of dematerialised accounts to people dealing in shares and debentures.

ii. Utility functions - A commercial bank performs various general utility functions for its customers. While performing these functions, a commercial bank does not act as an agent to its customers. The following are the utility functions of commercial banks:
a. 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.
b. 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.
c. These banks also prepare letters of credit on the request of importers; these letters help in making international trade payments.
d. These banks provide information to their customers regarding business conditions, payment rules, etc., of businesses in other countries.
e. These banks also provide the facility of gift cheque to the general public.