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प्रश्न
Write the mechanism of credit creation by commercial banks.
उत्तर
Mechanism / Technique of Credit Creation by Commercial Banks:
- Bank credit refers to bank loans and advances.
- Money is said to be created when the banks, through their lending activities, make a net addition to the total supply of money in the economy.
- Money is said to be destroyed when the loans are repaid by the borrowers to the banks and consequently, the credit already created by the banks is wiped out in the process.
- Banks have the power to expand or contract demand deposits and they exercise this power through granting more or less loans and advances and acquiring other assets.
- This power of commercial bank to create deposits through expanding their loans and advances is known as credit creation.
APPEARS IN
संबंधित प्रश्न
State whether the following statement is true or false :
Credit control is the function of commercial banks.
Write short Answer for the following question:
Explain various types of Bank Deposits ?
Write explanatory note.
Primary functions of commercial bank.
Write answers in ‘one’ or ‘two’ paras each.
What are the primary functions of commercial banks?
State whether the following statements are True or False with reason:
Interest rate is more for fixed deposits.
Answer with reasons whether you agree or disagree with the following statement:
The commercial banks perform many useful works for the people.
Fill in the blank with appropriate alternatives given below
Deposits from __________ account can be withdrawn without any notice.
Match the following:
| Group A | Group B |
| 1. D-mat account | a. Current account |
| 2. Over draft facility | b. Agency function |
| 3. ATM facility | c. Share brokers |
| 4. Commercial bank | d. General function |
| 5. Credit creation | e. Recurring account |
| f. Profit making | |
| g. Central bank | |
| h. Commercial bank |
State whether the following statement is True or False.
Commercial banks are the backbone of modern economy.
State whether the following statement is True or False.
The saving bank deposit can be opened with a small amount.
Define explain the following concept.
Cash credit
Define explain the following concept.
Safe deposit vault
Give reason or explain the following statement:
Overdraft facility is provided to current account holders.
Write short note on:
Long term loans
Answer in detail:
Explain the process of credit creation.
Answer in detail:
What are the secondary functions of commercial banks?
Answer the following question.
Explain the money creation function of commercial banks.
What are the important features of a capitalist economy?
The process of money creation or credit creation is done by ______
_________ is an institution that accept deposits for lending purposes.
