Question

explain three features of public deposits as a source of business finance​​

Answer 1

Public Deposits: Deposits accepted from public directly by the companies are called public deposits. These deposits generally carry a rate of interest higher than the deposits in commercial banks.

Merits of Public Deposits

• The procedure of obtaining deposits is simple and does not contain restrictive conditions.
• Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions.
• Public company usually does not create a charge on the assets of the company.
• As the depositors do not have voting rights, it does not dilute control in the company.