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Question

Difficulty: HardBanking: Functions and Services to Trade

Match each specific trading operation or financial requirement of a commercial enterprise with the corresponding banking service or facility designed to address it.

  • A retail store manager securing daily cash sales proceeds after normal banking operating hours.Night Safe Facility
  • A trader making simultaneous payments to multiple trade creditors using a single batch payment order.Credit Transfer
  • An importer releasing imported goods from custom custody under bank pledge to resell before paying off the credit.Trust Receipt
  • A logistics enterprise obtaining commercial vehicles without immediate capital outlay by paying rental installments.Equipment Leasing

Answer

The correct pairings are: Retail store securing cash after hours matches Night Safe Facility; Simultaneous payments to multiple trade creditors matches Credit Transfer; Releasing imported goods under bank pledge matches Trust Receipt; Obtaining commercial vehicles via rental installments matches Equipment Leasing.
Each trading requirement aligns with a specific commercial bank auxiliary service: storing late cash collections uses the night safe facility; bulk multi-recipient payments use credit transfer; releasing pledged import merchandise for resale uses a trust receipt; acquiring capital assets via rental payments uses equipment leasing.

Step-by-Step Solution

1
Analyze the financial requirement of storing cash after standard closing hours.
Identify that banks provide a night safe facility equipped with a secure chute for off-hour cash deposits.
Traders require protection against night-time theft or robbery before the bank opens next morning.
2
Examine the payment method involving one debit to pay several creditors across different accounts.
Match this operation to a credit transfer (bank giro system).
Credit transfer simplifies bulk settlement of accounts payable without issuing individual cheques.
3
Evaluate the international trade financing instrument for releasing pledged imported goods for sale.
Match this transaction to a trust receipt.
A trust receipt acts as a credit instrument permitting the buyer to act as a trustee for the bank while liquidating inventory.
4
Identify the facility for financing capital machinery and transport equipment without lump-sum purchase.
Match this facility to equipment leasing.
Leasing preserves working capital while providing full productive use of capital equipment.

Key Concept

Functions and auxiliary banking services provided to domestic and foreign trade
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Topics

Banking: Functions and Services to Trade

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