CMA Foundation · Fundamentals of Business Economics and Management · Money and Banking
Which of the following is a primary function of a commercial bank?
Accepting deposits from the public and lending them to borrowers is a primary function of a commercial bank. The other options, such as lender of last resort, note issue and monetary policy formulation, belong to the central bank and not to commercial banks.
- AActing as the lender of last resort to other banks
- BAccepting deposits from the public and lending them to borrowersCorrect
- CIssuing currency notes of higher denominations
- DFormulating the country's monetary policy
Explanation
The primary functions of commercial banks are accepting deposits and granting loans and advances. Lender of last resort, note issue and monetary policy are functions of the central bank, so those options are wrong.
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