Q.What are the secondary functions of commercial banks? Explain with examples.

Beyond deposits and loans, a bank behaves like a broader financial-services counter, and this wider role has its own two-part structure.

Beyond its primary deposit-and-loan business, a commercial bank performs a wide range of secondary functions, grouped into agency functions and general utility services.

Agency functions are performed strictly on a specific customer's instruction, with the bank acting as that customer's agent: collecting and paying cheques, bills, dividends and interest due to the customer; transferring funds between accounts or places on instruction; buying and selling securities such as shares on the customer's behalf; acting as a trustee or executor of a customer's property when appointed; and making standing-instruction payments such as insurance premiums on the customer's behalf.

General utility services are made available to the public more broadly, not tied to any one customer's specific instruction: providing locker facilities for safe custody of valuables; issuing letters of credit and travellers' cheques so a customer can transact away from home without carrying cash; underwriting new share and debenture issues; supplying trade and credit information about a prospective customer's creditworthiness; and dealing in foreign exchange for customers engaged in international trade. …

Present the two-way split explicitly, list at least three examples under each, and explain …

Do not lump underwriting or letters of credit under agency functions — they are general utility services offered to the public, not ca …