Question

Banks differ from other financial institutions which makes them special. Explain FIVE
(5) basic type of services offered by a bank.

Answer 1

Financial institution is a broader term which also include banks and other financial institution like insurance company, Investment company, Finance firms etc.

So simply Financial Institution can be subdivided into 2 parts one is Banking Financial Institution and other is Non-Banking Financial Institution.

Bank is an intermediaries between Depositors and lenders of fund. Bank accept the deposits from customers and lend that money to them who require it. whereas non-banking financial institution gives loans or advisory service for the usage or procurement of fund.

Only Bank can take Deposits from their customer and this is thing that makes them special.

5 Basic types of service that is offered by bank:

1. Taking Deposits: Bank takes deposits from their customers and also provide some return on their savings.

2. Lending money : Bank also gives loans to their customer or others and charge finance cost on that.

3. Foreign Currency Exchange : Bank assist to exchange or covert their foreign currency with bank.

4. Credit Card Facility: Banks provides Credit card facility to their customers in which customer can spent money upto the limit available and can can later on due date.

5. Discounting of Bill of Exchange : A person can collect money by discount their bill or negotiable instrument with bank, for this service bank charge some cost.

There are also some other services that is offered by bank like Consulting service, Bank Guarantee, Remittance of fund, Cheque services, Net banking, mobile banking etc

I hope this clear your doubt.

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