Question

What is a core function of commercial banks?

	A.	To gather savings from depositors and use these funds to make loans to customers
	B.	To ensure there is stability in a financial system
	C.	To diversify their business
	D.	To provide a wide range of products and services to customers

Answer 1

The core function of commercial banks is collects deposits from public and advancing it as loan

Option A : Is correct option

To gather savings from depositors and use these funds to make loan to customers.

The commercial banks collect funds from public and lend these money as loan.

Option B : Is incorrect option

To ensure stability in financial system is responsibility of Central Bank.

Option C : Is incorrect option

To diversifying the business is not a core function

Option D : Is incorrect option

To provide a wide range of products and services to customers is secondary function

e.g. Collection of bills, Cheques, Paying different kind of bills on behalf of customer like

insurance premium,loan installment etc. acting as agent on behalf of its customer.

So, Option A is correct option,as the core function of commercial bank is to gather savings from depositors

and use these funds to make loans to customers.