Question

In the context of the Commercial Banks, which of the following statements are correct?

1. Deposits received are liabilities for Commercial Banks.
2. They are creator of credit in the economy.
3. They accept deposits from the general public.
4. They accept deposits on behalf of the Reserve Bank of India.

Options

• (I), (II) and (III)

• (II) and (III)

• (I) and (II)

• (I) and (IV)

Answer 1

(I), (II), and (III)

Explanation:

1. Commercial banks are liable for the deposits they receive. Since they must repay the depositors, this is accurate.
2. They are the ones who give the economy credit. Commercial banks use loans to establish credit.
3. The general public can deposit money with them. Their primary function is this.
4. On behalf of the Reserve Bank of India, they take deposits. This is not true. The RBI does not accept deposits through commercial banks.