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What Are Agency Services And Credit Creation?

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Agency Services: - Commercial banks act as attorney for their clients. They buy and sell shares and bonds, receive and pay utility bills, premiums, dividends, rents and interest for their clients. Checks are used in most of transactions with the bank. The details are as under:-
Accepting Cheques & Bills: Businessmen receive cheques in payment from other parties. These checks may be drawn on other banks than theirs. They deposit these checks with their banks and get payment. This is very valuable service that the bank performs for its clients.

In additions, the bank also receives payments against electricity, gas, phone bill from consumers. It also receive and pays premiums, dividends, interests, and rents on behalf of its clients.
Dealings in Shares & Bonds: on the instructions of its clients the bank buys and sells shares and bonds on the stock exchange.
Acting as Attorney: - The bank acts as attorney to its clients and thus performs legal and commercial functions for them.

Credit Creation: credit money is the amount agreed upon to pay later. It is issued y commercial banks and takes in the form of checks. Cash deposits and cash reserve requirements play an important role in the expansion or contraction of credit money.
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aadil khan , Tom, answered

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