Question

How are public deposits useful in financial needs?

Answer 1

Merits of Public Deposits

The assets can be used as security for raising loans. As the depositors do not have voting rights, the control of the company is not further diluted. Cost of public deposits is lower than the cost of borrowings from banks and financial institutions.

Answer 2

The amount raised from public deposits is generally used by the company for meeting the requirement of working capital. It can take care of both medium and short term financial requirements. ... (ii) Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions.