1.

What are public deposits? Explain briefly any three merits of public deposits.

Answer»

Merits: 

  • The deposits that are raised by organisations directly from the public are known as public deposits. 
  • The procedure of obtaining deposits is simple and does not contain restrictive conditions as are generally there in a loan agreement. 
  • Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions.
  • Public deposits do not usually create any charge on the assets of the company. The assets can be used as security for raising loans from other sources. 
  • As the depositors do not have voting rights, the control of the company is not diluted.


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