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प्रश्न
Read the given extract carefully and answer the following questions.
| Mr. X wanted to buy an expensive motorcycle for his son but he did not have sufficient money to buy it. He approached a public sector commercial bank for the loan. The bank asked Mr. X to deposit 20% cash of the loan amount and rest 80% of the loan amount was given by the bank. |
- Briefly explain a Commercial Bank.
- What is the regulation of consumer credit in selective credit control?
- Name the bank which controls all the commercial banks and financial institutions in the country.
उत्तर
- Commercial bank is defined as an organisation that accepts demand deposits and uses the deposited money to lend to the general public.
- The regulation of consumer credit involves laying down rules regarding payments and maintaining maximum number of instalment credits for the purchase of specified durable consumer goods.
Thus, consumer credit employs two aspects:
- Minimum down payment, and
- Maximum period of payment.
- Central Bank (Reserve Bank of India in case of India) controls all the commercial banks and financial institutions in our country.
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संबंधित प्रश्न
Credit creation by commercial banks is determined by (Choose the correct alternative)
Define Credit Multiplier.
The ______ creation is called credit creation.
Credit creation by the commercial bank is determined by ______.
______ is the rate of interest charged by the central bank on loans given to the commercial bank.
Access to adequate and timely credit at affordable rates is critical for the rural poor to alleviate high cost debt and invest in livelihood opportunities. Despite the Government of India's best efforts, financial inclusion of the rural poor has been beset with multiple challenges. Lack of adequate banking infrastructure and human resources in rural areas, unplanned expansion leading to unviable bank branches and low levels of financial literacy amongst the rural populace have been some of the key challenges.
The most vulnerable communities, who often had no formal credit history or ability to provide collateral, have often been the worst affected. Inability to access loans from banks meant that the poorest had to resort to moneylenders for loans at unreasonably high rates of interest that invariably led them into a toxic debt trap.
In this context, the SHG-Bank Linkage programme, formalised by the National Bank for Agriculture and Rural Development (NABARD) in 1995, synthesizes 'formal financial systems' (in terms of a formal institution providing credit) with the 'informal sector' (comprising of rural poor with no formal credit history), has emerged as a preferred vehicle for providing financial services to the hitherto unbanked poor.
Community Based Repayment Mechanisms (CBRMs) have been institutionalised at branches involved in financing SHGs to monitor and ensure timely repayment of loans by SHGs. The number of SHGs with outstanding bank loans stands at nearly 5 million today, implying that the program has brought formal banking services to over 50 million women.
Which of the following is a crucial area of improvement for rural banking?
Explain the role of legal reserve ratio and Bank rate in correcting inflationary gap in an economy.
Deposits made by the people from their own resources are called ______.
If legal reserve ratio is 20%, the value of money multiplier would be ______.
Which of these banks formulates the credit control tools?
Match the following:
| Column I | Column II | ||
| A. | Formula of Money Multiplier | (i) | Inverse |
| B. | Money multiplier = 4 | (ii) | Money multiplier = 10 |
| C. | Relationship between LRR and money multiplier | (iii) | LRR = 0.25 |
| D. | LRR = 0.1 | (iv) | `1/"LRR"` |
Explain briefly the process of credit creation by commercial banks.
What is meant by primary deposits?
What is money multiplier?
Why are the banks required to keep only a fraction of deposits as cash reserves?
