Module: | Pledge, Lien, Agency, and Discharge
Q17: In which of the following situations, is the bank acting as an agent for the customer?
1. Collecting cheques for the customer's account.
2. Making payments based on standing instructions.
3. Distributing mutual fund products.
4. Granting a housing loan to the customer.
2. Making payments based on standing instructions.
3. Distributing mutual fund products.
4. Granting a housing loan to the customer.
✅ Correct Answer: B
A bank acts as an agent (agency relationship) when it performs services on behalf of the customer (the principal). This includes collecting cheques, paying bills via standing instructions, and acting as a broker for third-party products like mutual funds.
When granting a loan, the relationship is that of a Creditor and Debtor.
When granting a loan, the relationship is that of a Creditor and Debtor.