Banking (Doubt)

Question 1

Bank gives __ progress

Answer 1

Commercial and Industrial

Question 2

Bank derived from

Answer 2

Banco meaning joint stock fund

Question 3

What are the types of banks?

Answer 3

1. Central Bank
2. Commercial Bank
3. Cooperative banks
4. Indigenous banks
5. Industrial Bank
6. EXCHANGE bANK
7. Agricultural Bank
8. Post office saving banks

Question 4

Central bank:

Types

Answer 4

DEFINITIONS
By vera smith
By Kent
Reserve bank of India is the country’s central bank

Question 5

Commercial Banks:

(Types):

Answer 5

An institution which accpets deposits of money from the public and provides loans and advances to businessman and others

also other related functions

Commercial Banks are Joint stock companies

Question 6

Examples of Comemrical bank in India:

Answer 6

State bank Of India —> Largest
Bank of Barode
Punjab National Bank
Syndicate and allahabad bank

Question 7

Types of Comercial bank in India:

Answer 7

1 Public sector: Owned and controlled by Governemtn.
Ex: Union bank of India
2. Private secotr (Owned ande contriolled by private business men.
Ex: ICICI and Global Trust Bank
3. Foreign Banks. Citi bank, American Express bank

Question 8

Cooperative Bank:

Answer 8

Bank which are organized on the principles of cooperation.
Set up as Co-operative societies
Encourage saving among memebers
Accept Deposits and Advances loans
Ex: TNSC and PSC

Question 9

industrial banks:

Answer 9

Thes provide long term finance to industries
Offer technical and managerial assistance
Purpose is to assist in the promotoion of new industrial units
AKA Develpoment banks

Ex: Industrial finance corporation of India
Industrial development bank of India

Question 10

Indigenous bansk:

Answer 10

In rual and semi-urban ares
oneylenders carry on business.
They charge a high rate of interest
not managed by RBI—> not organized

Question 11

Agricultural bank:

Answer 11

AKA Land mortage banks —> Loans are granted against mortage of agri land
Long term finance to agricultural secotr
National bank for agricultural and rural development (NABARD)
- Offers resonance facilitis to banks which provide loans to agri

Question 12

Short term finance is provided by:

Answer 12

Regional Rural banks
Cooperative banks
Comemrcial banks

Question 13

Ecnahange banks:

Answer 13

TYPE OF COMMERICAL BANK

Services:

1. Financing foreign trade
2. Facilitating foreign remittances
3. Discounting foreign bills of exhanges
4. Buying gold and silver

Direction and control of RBI
Ex: EXIM

Question 14

Post office saving banks:

Answer 14

Only deposits, no loans
Mobilize small savings of public ancourage habit of thrift
Senior citizen saving scheme: Ex.

Question 15

Necessity of credit control:

Answer 15

Preventing too much money supply in economy

Prevent price rise

Question 16

1. Bank rate policy:

Answer 16

The rate at which he central bank rediscounts the first class secutites of the commercial bank
Bank rate determines the market rate of interest at which commercial bank grant loans to burrowers

To reduce credit —-> Increase Bank rate

Question 17

2. Open market operations;

Answer 17

The sale and purchase of securities by central bank in open market

Reduce the credit —> Sells securities, Props up cash reserves of commercial towards central bank
and vice versa, increases money in the banking system

Question 18

In comparison to ____, ___ are a more direct and effective method

Answer 18

Bank rate, Open market

Question 19

4. Statutory Liquid Ratio:

Answer 19

Commercial bank has to keep a certain percentage of
Demand time liabilities
in liquid form
Consisting of cash and government securities
High –> Reduce credit —> MORE liquid assets

Question 20

5. Margin Requirements:

Answer 20

Commercial banks has to keep a margin between

amount of loan granted and the market value of the security against which the loan is granted

SELECTIVE METHOD

Question 21

6. Credit rationing:

Answer 21

Central bank fixes a limit to credit facilities available to commercial banks

Available credit is rationed according to the purpose of credit

Question 22

Which method is used in exceprional situation of money stringency and cant be used to raise credit

Answer 22

Credit rationing

learn q too

Question 23

7. Moral suassion:

Answer 23

Under this method, Cnetral ban requests and persuades not to grant credit for speculative and non-essential purposes.

Informal and non-statutory method. Central bank is honored.
Directives to commercial banks to refrain from certain types of lending

Question 24

8. Publicity:

Answer 24

Issues reports and review statements of assets and liabilities
Keep comemrcial banks aware of conditions in:
1. Money market
2. Public Finance
3. Trade and Industry

Adjust their credit activities accordingly