Advertisements
Advertisements
Question
Write explanatory note.
Primary functions of commercial bank.
Solution
The following are some of the functions performed by commercial banks:
i. Acceptance of Deposits- Accepting deposits from the general public is the basic function of a commercial bank. There are various kinds of public deposits such as fixed account deposit, savings account deposit and current account deposits through which the commercial banks deposit the money from the public.
ii. Discounting Bills of Exchange- The commercial banks provide financial assistance to the business community by discounting bills of exchange. A bill of exchange is a document that acknowledges the amount of money that is owed by the debtors as against the goods and services received by him. The banks purchase these bills produced by the customers (after deducting interest on the face-value of the bill). In this sense, by purchasing the bills they provide easy means of finance to the business community as and when required.
iii. Credit Creation- The commercial banks create credit in the economy through demand deposits. Credit creation paves the path for the growth of the economy.
iv. Investment of Funds- Apart from granting loans and advances, the banks also invest their surplus funds in securities. Investment in the securities helps the commercial banks to meet their future requirement of funds. The banks can borrow from the RBI against such securities. Also, if required the banks can sell their securities in the open market to meet their requirement of funds.
APPEARS IN
RELATED QUESTIONS
Explain the primary functions of commercial banks.
Explain different types of loans and advances provided by commercial banks.
Providing safe deposit vault facility is the only general function of commercial banks.
The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is
called:( choose the correct alternative)
(a) Statutory liquidity ratio
(b) Deposit ratio
(c) Cash reserve ratio
(d) Legal reserve ratio
Explain the various types of deposits.
State whether the following statement is true or false :
Credit control is the function of commercial banks.
State whether the following statement is true or false:
Central bank also performs commercial banking business.
Answer the following question :
What are the different types of loans provided by commercial banks ?
State whether the following statement is true or false.
The Cash Reserve Ratio does not affect the lending capacity of the commercial banks.
Explain with reason, whether you agree or disagree with the following statement:
Commercial banks perform agency functions to earn profit.
Write short notes (Any Two)
Types of loans of commercial bank.
State whether the following statements are TRUE or FALSE:
Commercial banks play an important role in economic development.
Give reasons or explain the following statement:
Every loan creates a deposit.
Write answers in ‘one’ or ‘two’ paras each.
What are the primary functions of commercial banks?
Define or Explain the concept
Current deposit
Answer with reasons whether you agree or disagree with the following statement:
The commercial banks perform many useful works for the people.
Distinguish between:
Central Bank and 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.
State whether the following statement is True or False.
There is no difference between primary deposit and secondary deposit of a commercial bank.
Define explain the following concept.
Cash credit
Define explain the following concept.
Discounting of bills
Write short note on:
Derivative deposit
Answer the following question:
What are the different types of loans provided by commercial banks?
Answer in detail:
Explain the process of credit creation.
State whether the following statement is True or False :
Loans given by banks for a period of less than five years is known as long - term loan.
A Commercial Bank is an institution that provides services ______.
The Functions of commercial banks are broadly classified into ______.
Define Commercial banks.
Write the mechanism of credit creation by commercial banks.
Explain the role of Commercial Banks in economic development.
What are the important features of a capitalist economy?
The process of money creation or credit creation is done by ______
What is the effect of a rise in the rate of SLR on the creation of credit?
______ is the total liability of the monetary authority of the country.
What role of RBI is known as 'lender of last resort'?
Which of the following are the agency functions of commercial banks?
M4 = ______ + Total deposits with the Post Office Saving Organization (excluding National Saving Certificate).
How Public debt imposes a burden on the economy as a whole?
Demand deposits include ______
The word 'net' implies that ______ is to be included in the money supply.
Kalpana said that Commercial Bank is the controller of credit. Geeta said that the Central Bank is the controller of credit. Bobby said that both the commercial bank and the Central Bank are the controller of credit. Who among them is not correct?
If the total deposits created by commercial banks is 10,000 crores and legal reserve requirements are 10%, the number of initial deposits will be ______
In the present COVID-19 situation, many economists have raised their concerns that the Indian economy may have to face a deflationary situation due to reduced economic activities in the country. Suppose you are a member of the high-powered committee constituted by the Reserve Bank of India (RBl). You have suggested that as the supervisor of commercial banks, ______ (restriction/release) of the money supply be ensured by the Reserve Bank of India (RBI).
Railways is an example of:
It takes Rohan 30 minutes to do an economics assignment and one hour to do a finance assignment. What is the opportunity cost of you doing two economics assignments?
Explain the functions of commercial bank.
