Question

Explain any two advantages of Public deposits.

List the advantages of public deposits.

Give one advantage of public deposit.

State any two advantages of public deposits from company’s viewpoint.

Give two advantages of public deposits from points of view of a company.

Discuss the merits of public deposits.

Answer 1

1. Simple Procedure: There are fewer legal requirements for issuing and withdrawing monies from public deposits. Unlike shares and debentures, companies do not need to seek approval from the capital controller or be listed on a stock exchange.
2. Economical: Obtaining public deposits is quite a minimal cost. Companies do not have to spend money on prospectuses or underwriting commissions. Public deposits offer lower interest rates compared to other banking organizations.
3. Convenience: Compared to bank loans or issuing debentures, public deposits are simpler to raise and need fewer administrative procedures and paperwork. They are a straightforward method for companies to obtain short to medium-term capital.
4. No change on assets: Because public deposits do not necessitate the pledge of fixed assets as security, businesses are able to reduce financial risk by keeping their assets available for other borrowing uses.
5. Flexibility: By giving businesses the freedom to modify their borrowing in accordance with their present financial requirements and ability to repay, they offer flexibility in terms of the quantity and length of the money raised.