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Unit 1: Introduction to Banks

1. Agency Services: Agency services are those services which are rendered by commercial Notes
banks as agents of their customers. They include:
(a) Collection and payment of cheques and bills on behalf of the customers;
(b) Collection of dividends, interest and rent, etc. on behalf of customers, if so instructed
by them;
(c) Purchase and sale of shares and securities on behalf of customers;
(d) Payment of rent, interest, insurance premium, subscriptions etc. on behalf of
customers, if so instructed;
(e) Acting as a trustee or executor;
(f) Acting as agents or correspondents on behalf of customers for other banks and
financial institutions at home and abroad.
2. General Utility Services: General utility services are those services which are rendered by
commercial banks not only to the customers but also to the general public. These are
available to the public on payment of a fee or charge. They include:
(a) Issuing letters of credit and travellers’ cheques;
(b) Underwriting of shares, debentures, etc.;
(c) Safe-keeping of valuables in safe deposit locker;
(d) Underwriting loans floated by government and public bodies;
(e) Supplying trade information and statistical customers;
(f) Acting as a referee regarding the financial status;

(g) Undertaking foreign exchange business.
Self Assessment

Fill in the blanks:
10. Agency functions include purchase and sale of shares and ……………………… on behalf of
customers.

11. General utility services comprises of …………………………. of shares and debentures.

Case Study The Rise and Fall of Global Trust Bank

“GTB had been sliding for several months now. Perhaps enough vigilance was not maintained in the
past.”
– P Chidambaram, Union Finance Minister of India

“I would have loved to see Global Trust Bank remain as an independent entity, but in the best
interests of depositors and employees this is the best decision.”
– Ramesh Gelli, Founder Promoter, Global Trust Bank (GTB)

“It is a big relief that GTB is to be merged with Oriental Bank of Commerce. I have decided never to
park any money with a private sector entity.”
– A Depositor of GTB
Contd...

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