The correct option for the question regarding the bank giro system is C. a customer uses a cheque to pay several bills. Let's break down the reasoning behind this answer and clarify why the other options are incorrect. Explanation of the Correct Answer (Option C) Bank Giro System: - The bank giro system is a payment method that allows customers to make payments to multiple creditors using a single cheque or payment instruction. - It is particularly useful for businesses and individuals who need to pay several bills at once, as it simplifies the payment process. - In this system, the customer writes a cheque or uses a giro slip to authorize their bank to transfer funds to the accounts of various payees. The bank then processes these payments on behalf of the customer. Step-by-Step Breakdown: 1. Customer Initiation: The customer decides to pay multiple bills (e.g., utility bills, rent, etc.). 2. Payment Instruction: Instead of writing separate cheques for each bill, the customer fills out a giro slip or a single cheque that specifies the amounts and the payees. 3. Bank Processing: The bank receives this instruction and processes the payments, transferring the specified amounts to each creditor's account. 4. Confirmation: The customer receives confirmation of the payments made, often through a bank statement. Why the Other Options Are Incorrect Option A: A commercial bank can give loans to all customers - Reasoning: This statement is not related to the bank giro system. While commercial banks do provide loans, the bank giro system specifically pertains to payment processing and does not involve lending or borrowing activities. Therefore, this option is irrelevant to the question. Option B: A central bank opens accounts for commercial banks - Reasoning: This option describes a function of central banks, which is to provide banking services to commercial banks, including opening accounts. However, it does not relate to the bank giro system, which focuses on customer payments rather than the relationship between central and commercial banks. Option D: A customer closes his account by writing a cheque - Reasoning: This option suggests that a customer can close their bank account by writing a cheque, which is misleading. Closing an account typically involves a formal process that may require the customer to withdraw remaining funds and submit a closure request to the bank. Writing a cheque does not equate to account closure and is not a function of the bank giro system. Common Pitfalls

• Misunderstanding Payment Systems: Students may confuse different banking systems and their functions. It's essential to understand the specific purpose of each system.
• Overlooking Context: When answering multiple-choice questions, always consider the context of the question. In this case, the focus is on payment methods, not lending or account management.

Revision Summary

• The bank giro system allows customers to pay multiple bills using a single cheque or payment instruction.
• It simplifies the payment process by enabling bulk payments to various creditors.
• Options A, B, and D do not pertain to the bank giro system and describe unrelated banking functions.
• Understanding the specific functions of banking systems is crucial for answering related questions accurately.