The correct answer is Option 3: a, b, and d
Here's a breakdown of the listed functions:
a) Channelizing funds: This is a core function of commercial banks. They accept deposits from individuals and businesses ( surplus funds) and channel those funds to borrowers (individuals or businesses needing funds) through loans and investments. This facilitates financial intermediation.
b) Issue debit and credit cards: Commercial banks issue debit cards and credit cards to their customers. Debit cards allow customers to access funds in their bank accounts for purchases and withdrawals, while credit cards allow customers to make purchases on credit, with the bank extending a line of credit that must be repaid later. Issuing debit and credit cards is a service provided by commercial banks to enhance the convenience and flexibility of their customers' financial transactions.
c) Maintain foreign exchange reserves: This function is typically performed by central banks, not commercial banks. Central banks manage a country's foreign exchange reserves, which are holdings of foreign currencies used for international transactions.
d) Maintain Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR): Commercial banks are required to maintain a specific portion of their deposits as reserves with the central bank. CRR is the minimum cash reserve ratio, and SLR is the minimum amount of liquid assets (including government securities) that banks need to maintain.
Therefore, commercial banks play a crucial role in channeling funds, issuing debit cards, and maintaining CRR and SLR. They don't directly maintain foreign exchange reserves. |
