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