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What are public deposits? Why do companies find public deposits attractive?
Public deposits are the source for meeting the working capital needs of the company. Companies find public deposits as attractive source due to the following reasons:
1) It is more convenient to borrow funds in the form of public deposits than borrowing the funds from banks and financial institutions.
2) Borrowing funds from banks and financial institutions is a tedious job as compared to borrowing funds from public deposits.
3) The rate of interest paid on public deposits is less in comparison with other borrowed funds.
4) They are unsecured form of borrowing.
5) Funds raised from public deposits can be used for any purpose.
6) In case of credit squeeze public deposits play very important role.
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