AHSEC| CLASS 12| FINANCE| CHAPTER - 1| COMMERCIAL BANKING IN INDIA| SOLVED QUESTIONS FOR 2/3 MARK EACH| H.S. 2ND YEAR
commercial banking in india
1. Define
Bank.
Ans: A
bank is a financial institution and a financial intermediary that accepts
deposits and engages in the activity of lending those deposits, either directly
by making loans or indirectly through capital markets. A bank is the
relationship between customers who have a capital deficit and customers with a
capital surplus.
2. Name the
first bank in the world and its year of establishment.
Ans: Banco di San Giorgio (estimated 1406 450 BC)
3. Which was
the first bank established in India? When was it established?
Ans: Bank of Hindustan in 1770.
4. Name any
two central banking functions performed by the State Bank of India.
Ans: (i)
It acts as the banker to the government. (ii) It acts as a banker's bank.
5. Explain
General Utility Services of a Bank. Exam paper: 2016
Ans: The bank
provides some general useful services to the society, which are detailed below:
(i) Locker
facility: Banks provide locker facility to their customers. Customers can
keep their valuables and important documents in these lockers for safe custody.
(ii)
Traveller's Cheque: Bank issues traveller’s check to help its customers to
travel without fear of theft or loss of money.
(iii) Gift
Cheques: Some banks issue checks of different denominations to be used on
auspicious occasions. These are known as "gift checks" because they
are given as gifts to others.
(iv) Letter of
Credit: Letter of Credit is issued by banks to their customers to prove
their creditworthiness. Letters of credit are very useful in foreign trade.
(v) Foreign
Exchange Business: Banks also do foreign exchange business. Again, they can
finance foreign trade by discounting foreign exchange bills.
(vi)
Collection of Statistics: Banks also collect statistics giving important
information relating to industry, trade and commerce, money, and banking. They
also publish journals and bulletins containing research articles on economic
and financial matters.
6. State the
differences between group banking and chain banking.
Ans: The
differences between group banking and chain banking are:
(i) In group
banking system, two or more banks in the group are controlled by the
holding company. In the chain banking system, banks are owned by an individual
or a group of individuals or family members.
(ii) The term
group banking indicates a type of multi-office banking structure in which
three or more independently incorporated banks are controlled directly or
indirectly by a corporation, business trust, association or similar
organization.
Chain banking
refers to a type of multiple office banking structure in which the
operations or policies of at least three independently incorporated banks are
controlled by one or more individuals.
7. Write a
short note on social control over the banks.
Ans: The
government launched a comprehensive scheme of 'social control' on banks on
February 1, 1969, in order to meet economic development and social objectives.
The basic objective of social control was to bring changes in the management
and credit policies of commercial banks.
8. Write a
short note on Imperial Bank of India. Exam paper: 2004,09,11, 12, 13
Ans As per
the provision of Imperial Bank of India Act, 1920.
The Imperial
Bank was formed by the amalgamation of three Presidency banks, namely, Bank of
Bengal, Bank of Bombay and Bank of Madras. It came into existence on February
27, 1921. Most of the capital of this bank was external and its management was
also in the hands of the British. The Imperial Bank carried out its operations
more in favour of the British as well as England and less in the interest of
Indians as well as India.
The Imperial
Bank was given the clearing house and the right to manage government money.
Its main
functions as a central bank were:
(a) Banker to
Govt.
(b) Bankers of
banks.
(c) Transfer of
stores.
(d) To receive
deposits from banks.
(e) Advancing
loans and acting as a clearing house etc.
9. State
differences between Scheduled and non-Scheduled banks.
Ans: The
differences between scheduled and non-scheduled banks are:
Banks whose
names are included in the Second Schedule to the Reserve Bank of India Act 1934
are called Scheduled Banks. On the other hand, the banks whose names are not
included in the second schedule of the Reserve Bank of India Act 1934 are
called non-scheduled banks.
10. Give the
meaning of Presidency Bank. Exam paper:
2005, 2010
Ans: Prior
to the establishment of the Presidency Bank, some banking institutions were
based on the British model. Banks failed to run their banking business due to
lack of management control, irrational credit policy and some other reasons.
Therefore, to overcome this problem, three banks were established in the name
of "The Bank of Bengal" in 1806, "The Bank of Bombay" in
1840 and "The Bank of Madras" in 1843. These three banks are called
Presidency Banks.
11. What do
you mean by nationalisation of banks?
Exam paper: 2005
Ans: Nationalization
of banks refers to the transfer of ownership and management of banks from
private individuals and shareholders to public authorities.
12. How was
the Imperial Bank of India formed? Exam
paper: 2006
Ans: As
per the provision of Imperial Bank of India Act 1920. Imperial Bank was
established by merging three Presidency banks i.e., Bank of Bengal, Bank of
Bombay and Bank of Madras. It came into existence on 27 February 1921.
13. What are
different types of banks?
Ans: On the
basis of specialization banks are classified under the following heads:
(i) Central
Bank, (ii) Commercial Bank, (iii) Exchange Bank, (iv) Regional Rural Bank, (v)
Investment Bank, (vi) Development Bank, (vii) Cooperative Bank, (viii)
Agricultural Bank, (ix) Indigenous Bank, (x) Savings Bank, (xi) Land
Development Bank, (xii) Export-Import Bank, (xiii) International Bank.
14. What are
the 7 subsidiaries of State Bank of India?
Ans: In 1975,
the State Bank of India Act was passed. With this act, eight more banks were
associated with State Bank of India as subsidiary banks.
The name of
the affiliated banks is:
(i) State Bank of
Bikaner. (1 January 1960)
(ii) State Bank
of Hyderabad (October, 1959)
(iii) State Bank
of Indore. (1 January 1960)
(iv) State Bank
of Mysore. (March 1, 1960)
(v) State Bank of
Patiala. (May 1, 1960)
(vi) State Bank
of Saurashtra. (May 1, 1960)
(vii) State Bank
of Travancore. (1 January 1960)
(viii) State Bank
of Jaipur. (1 January 1960)
Later, Bank of
Bikaner & Jaipur was merged into a single entity and renamed as State Bank
of Bikaner & Jaipur in 1963.
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