What do you mean by Recurring Deposit Account. Explain any four agency functions of the commercial bank.

Recurring Deposit Account — A Recurring Deposit Account is a savings plan in which the account holder is required to deposit a specific amount every month for a fixed period, usually ranging from 12 to 72 months. After the expiry of the specified period, the depositor gets back the entire amount along with interest thereon. A pass book is issued to the depositor, but no cheque book is issued.

Four Agency Functions of a Commercial Bank:

As an agent of its customers, a commercial bank performs the following functions:

1. Collecting Receipts — Banks collect amounts of cheques, bills of exchange, promissory notes and hundies on behalf of their customers. They also collect interest, dividend and rent on the customer's instructions and credit them to the customer's account.

2. Making Payments — On the instructions of customers, banks make payments of loan instalments, interest, rent, insurance premium, taxes, electricity bills, telephone bills, etc., on behalf of account holders. This saves the customer's time and effort.

3. Buying and Selling of Securities — Banks buy and sell shares, debentures and other securities on behalf of their customers in the stock market. The bank acts as the customer's agent in such transactions.

4. Trustees and Executors — Commercial banks act as trustees and executors for their customers. They also act as representatives of their customers in dealings with other banks. Banks also transfer money from one place to another within the country and abroad as per the instructions of customers.