What are public deposits ? Explain four merits of public deposit as a

1.	What are public deposits ? Explain four merits of public deposit as a sources of business finance.
Answer» Deposits raised by the company from public are called public deposit. Merits : (a) Procedure of obtaining is simple. (b) Cost of public deposit lower than bank loans. (c) Do not usually create any charge on asset. (d) Depositors not having voting rights. Detailed Answer : Public Deposits are raised by companies directly from the public at a fixed rate of interest for a period upto three years. Four merits of public Deposits : (a) The procedure of obtaining deposits is simple and does not contain any restrictive conditions. (b) Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions. (c) Public Deposits do not usually create any charge on the assets of the company. (d) As the depositors do not have voting rights, the control of the company is not diluted.

What are public deposits ? Explain four merits of public deposit as a sources of business finance.

Answer»

Deposits raised by the company from public are called public deposit.

Merits :

(a) Procedure of obtaining is simple.

(b) Cost of public deposit lower than bank loans.

(d) Depositors not having voting rights.

Detailed Answer :

Public Deposits are raised by companies directly from the public at a fixed rate of interest for a period upto three years.

Four merits of public Deposits :

(a) The procedure of obtaining deposits is simple and does not contain any restrictive conditions.

(b) Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions.

(d) As the depositors do not have voting rights, the control of the company is not diluted.

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