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प्रश्न
Explain the pros and cons of public deposits as a source of business finance.
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उत्तर
The pros of public deposits are as follows:
- Obtaining deposits is simple and free of the restrictive requirements typically found in lending agreements.
- The cost of public deposits is generally lower than the cost of borrowing from banks and financial institutions.
- Public deposits normally do not generate a levy on the company's assets. The assets can serve as collateral for obtaining loans from other sources.
- Depositors do not have voting rights; hence, the company's control is not diluted.
The cons of public deposits are as follows:
- New enterprises usually struggle to raise cash through public deposits.
- The public may not respond to a company's financial requirements, making it an unreliable source of funding.
- Collecting public deposits can be problematic, especially for big amounts.
APPEARS IN
संबंधित प्रश्न
Draft a Letter to the depositor informing him/her about payment of interest.
Write a word, term, or phrase that can substitute for
the following statement:
The authority which has power to accept deposits.
State, with reason, whether the following statement is True or False.
A public company can receive deposits from the public to any extent.
Draft a letter to a depositor informing him about payment of interest.
With reference to business finance, explain the following:
Public Deposits
State the merits and demerits of public deposits and retained earnings as methods of business finance.
Public deposits are deposits made by the public in nationalised banks.
What are public deposits?
Discuss the importance of public deposits as sources of medium and short-term finance.
Describe the disadvantages of public deposits.
