Question

2 explain any six services of depositories

Answer 1

Depositories are needed for several reasons. First, they provide security (by cutting back the risks of the bearer holding the physical security) and liquidity in the market, they use money deposited for safekeeping to lend to others, invest in other securities, and offer a funds transfer system. A depository must also return the deposit in the same condition upon request.

Depositories serve multiple purposes for the general public. As banks and other financial institutions, they give consumers a place to come in order to make deposits—both time or demand deposits. A time deposit is an interest-bearing account and has a specific date of maturity such as a certificate of deposit, while a demand deposit account holds funds until they need to be withdrawn such as a checking or savings account.