Which of the following is not a function of merchant banks?
Answer Details
The function that is not performed by merchant banks is "Printing new bank notes." Merchant banks are financial institutions that offer a range of services to clients, such as underwriting securities, advising corporate institutions, and providing long-term loans.
Underwriting securities involves assuming the risk of selling new securities issued by corporate institutions, such as stocks and bonds, to investors. Merchant banks also advise corporate institutions on matters such as mergers and acquisitions, capital structure, and financial strategy. They also provide long-term loans to clients for various purposes such as expansion, modernization, and acquisition.
Discounting bills is another function performed by merchant banks. Discounting bills involves purchasing short-term bills of exchange from clients at a discount and then holding them until maturity. When the bills mature, the merchant bank collects the full amount due from the debtor.
However, printing new bank notes is not a function of merchant banks. This function is typically performed by central banks, which are responsible for issuing and regulating the supply of currency in circulation. The central bank is responsible for ensuring the stability of the currency and managing the money supply to maintain a healthy economy.