In basic banking, which of the following is not considered a primary function of a commercial bank?

Introduction / Context:
Commercial banks perform several functions in the financial system. These are often grouped into primary functions, such as accepting deposits and lending money, and secondary or subsidiary functions, such as remittance, safe custody, and trade finance. Understanding which activities are core and which are supportive helps in answering objective questions on banking. This question asks which listed activity is not a primary function of a bank.

Given Data / Assumptions:

• Primary functions of commercial banks generally include accepting deposits from the public and granting loans and advances.
• Secondary functions include agency services, remittance facilities, safe custody, foreign exchange services, and trade finance.
• The options include facilitating imports, remittance services, safe custody, foreign exchange services, and a generic primary function of accepting deposits and lending funds.
• The question focuses on classification as primary versus non primary functions.

Concept / Approach:
In most textbooks, the primary functions of a commercial bank are stated as accepting various types of deposits and making loans and advances. These functions create the basic intermediation role of the bank between savers and borrowers. Other services provided by banks, such as issuing letters of credit to facilitate imports, providing remittance facilities, offering safe deposit lockers, and dealing in foreign exchange, are important but are usually described as secondary or ancillary functions. Among the options, facilitating the import of goods through trade finance services is a more specialised secondary function, while accepting deposits and lending funds is clearly a primary function.

Step-by-Step Solution:
Step 1: Identify the textbook definition of primary banking functions: accepting deposits and extending loans and advances.Step 2: Recognise that accepting deposits from the public and lending funds to individuals and businesses create the basic structure of banking.Step 3: Recognise that remittance facilities, safe custody, foreign exchange services, and trade finance support customers but do not define the core banking role.Step 4: Examine the options. Option e directly describes accepting deposits and lending funds, which is a primary function.Step 5: Options b, c, and d are widely known as important but secondary services that banks provide to customers.Step 6: Facilitating imports through trade finance is a specialised service and is not classified as a primary function, making option a the correct answer.

Verification / Alternative check:
Banking and financial awareness guides list the functions of commercial banks in categories. Primary functions include accepting deposits such as savings, current, and fixed deposits, and granting loans and advances. Secondary functions include agency services, remittance, safe custody, investment, and trade related services such as issuing letters of credit for importers. This classification confirms that facilitating imports falls under secondary trade finance services rather than under primary functions.

Why Other Options Are Wrong:
Remittance facilities for transferring funds are a standard service offered by banks and are a key part of their secondary functions. Safe custody of valuables through lockers and safe deposit facilities is also an established secondary function. Basic foreign exchange services, such as buying and selling foreign currency, are important banking services, especially in international business, and are recognised as secondary functions. Accepting deposits and lending funds, described in option e, are fundamental primary functions and cannot be the correct answer to a question asking for an activity that is not primary.

Common Pitfalls:
Students sometimes view any activity that banks perform as a primary function, without recognising the standard classification used in exams. Others may be misled by the importance of foreign exchange or remittance services and incorrectly label them as primary. To answer correctly, it is important to remember that the primary role of a commercial bank is financial intermediation through deposits and loans, while all other services are built around this core.

Final Answer:
Facilitating the import of goods through trade finance is not a primary function of a bank; it is a specialised secondary service.