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Samacheer Kalvi 11th Commerce Solutions Chapter 12 Functions of Commercial Banks
Get the Questions and Answers, in Tamilnadu State Board 11th Commerce Solutions for Chapter 12 Functions of Commercial Banks. Learn the concepts of 11th Commerce Chapter-Wise by referring to the Tamilnadu State Board Solutions for Chapter 12 Functions of Commercial Banks Questions and Answers. Hence we suggest the students to Download Samacheer Kalvi 11th Commerce Book Solutions Questions and Answers pdf to enhance your knowledge.
Samacheer Kalvi 11th Commerce Functions of Commercial Banks Textbook Exercise Questions and Answers
I. Choose the Correct Answer
Question 1.
Electronic banking can be done through ………………
(a) Computers
(b) Mobile phones
(c) ATM
(d) All of the above
Answer:
(d) All of the above
Question 2.
Minimum how much amount can be transferred through RTGS?
(a) Any amount
(b) 50,000
(c) 2 lakh
(d) 5 lakh
Answer:
(c) 2 lakh
Question 3.
The largest commercial bank of India is ………………
(a) ICICI
(b) SBI
(c) PNB
(d) RBI
Answer:
(b) SBI
Question 4.
In which kind of account, it is compulsory to deposit certain amount at certain time?
(a) Saving deposit
(b) Fixed deposit
(c) Current deposit
(d) Recurring deposit
Answer:
(d) Recurring deposit
Question 5.
Which of the following is not a type of advance provided by commercial bank?
(a) Collecting and supplying business information
(b) Overdraft
(c) Cash credit
(d) Discounting of bills
Answer:
(a) Collecting and supplying business information
II. Very Short Answer Questions
Question 1.
What is Mobile Banking?
Answer:
Most of the commercial banks have designed computer programs called apps which can be downloaded in smartphones. With this app in the smartphone a customer can operate his account transactions from anywhere. This service is known as mobile banking.
Question 2.
Briefly explain the need for Debit card.
Answer:
ATM card is also called debit card. This card is more useful in purchase of goods and services anywhere in India if the shop maintains a swiping machine facility.
Question 3.
Briefly explain the term – Credit card.
Answer:
Banks issue credit cards to customers and other eligible persons. With this card, the holder can purchase goods and services on credit at any shop in India. .
Question 4.
What do you mean by ATM?
Answer:
ATM (Automated Teller Machine) card. A customer can withdraw money any time, anywhere in India from the ATM machine using the ATM card given by his / her bank.
Question 5.
Write a note on – ECS.
Answer:
Electronic Clearing Service (ECS) was launched by the RBI in 1995. It is an electronic method of fund transfer from a bank to another bank.
III. Short Answer Questions
Question 1.
What is E-Banking?
Answer:
E – Banking is a method of banking in which the customer conducts transactions electronically via the internet.
Question 2.
Write a short note on – RTGS.
Answer:
Real Time Gross Settlement Systems (RTGS) was launched by the RBI in 2013. The transactions are settled on real time basis. Gross settlement means the transaction is settled between one bank and another bank without adding any other transactions.
Question 3.
Briefly explain the Diversified banking services of commercial banks.
Answer:
Competition in the banking industry has reduced their profits. Therefore the commercial banks started identifying and offering new and diversified financial services. They are purely other than banking services. Providing all such banking and other financial services is also called universal banking. Such services are as follows: Bank Assurance, Merchant Banking, Retail Banking (Personal Banking), Housing Finance, Mutual Fund, Venture Capital Fund, Factoring.
Question 4.
Explain – NEFT.
Answer:
National Electronic Fund Transfer (NEFT) was launched by the RBI in 2005. Under this electronic funds transfer system, bulk transfer of transactions are settled in batches during specific timings across India. Individuals and institutions which maintain accounts with a NEFT enabled bank branch are eligible for using NEFT.
Question 5.
What do you mean by Core Banking Solutions?
Answer:
‘CORE’ stands for ‘Centralized Online Real time Exchange’. In the centralized server of the bank, all the details of all the accounts of all the branches of the bank are available. A customer can withdraw money through cheque at any branch of that bank throughout the world. Similarly anyone can deposit money into the account. Entry of the transactions is recorded in the centralized server of the bank in real time and can be seen in all the branches of the bank. This facility is called Core Banking Solutions.
IV. Long Answer Questions
Question 1.
Discuss the various primary functions performed by the commercial banks.
Answer:
The primary functions of a commercial bank are of three types. They are:
- Accepting Deposits
- Granting Loans and Advances
- Creation of Credit
1. Accepting Deposits : The basic deposit accounts offered by commercial banks are listed below. Broadly deposit accounts can be classified into demand deposits and time deposits.
A. Demand Deposits : These deposits are repayable on demand on any day. This consists of savings deposits and current deposits.
a. Savings Deposits: General public deposit their savings into this account. This account can be opened in one individual’s name or more than one name.
b. Current Deposits: This account is suitable for business institutions. Individuals too can open this account. A higher minimum balance should be kept in this account.
B. Time Deposits: These include fixed deposits and recurring deposits which are repayable after a period.
a. Fixed Deposits (FD): Certain amount is deposited for a fixed period for a fixed rate of interest.
b. Recurring Deposits (RD): Certain sum is deposited into the account every month for one year or five years or the agreed period. Interest rate is more than savings deposits and almost equal to fixed deposits.
Granting Loans and Advances : The second primary functions of commercial banks is lending money in order to earn interest income.
A. Advances
a. Overdraft: It is a credit facility extended mostly to current account holding business community customers.
b. Cash Credit: It is a secured credit facility given mostly to business institutions. Stock in hand, raw materials, other tangible assets, etc. are provided as collateral.
c. Discounting of Bills: Business customers approach banks to discount the commercial bills of exchanges and provide money.
B. Loans:
Short term and medium term loans are provided by commercial banks against eligible collaterals to business concerns.
a. Housing Loan
b. Consumer Loans
c. Vehicle Loans
d. Educational Loan
e. Jewel Loan
3. Creation of Credit : Apart from the currency money issued by the RBI, the credit money in circulation created by commercial banks influence economic activities of a country to a large extent. Credit money of commercial banks is far greater in volume than the currency money.
Question 2.
Explain the various secondary functions of commercial banks.
These services can be broadly classified into agency services and general utility services.
I. Agency Functions:
Banks act as agents of customers and provide certain services. They are called Agency Functions which are as follows:
1. Transfer of Funds: Banks issue demand drafts, bankers cheques, travelers’ cheques, ete. and help in transfer of funds from one place to another.
2. Periodic Payment of Premiums, Rent, etc.: After instruction from the customers, banks undertake the monthly payment of insurance premium, rent, telephone bills, etc. from the accounts of customers.
3. Collection and Payment of Cheques: On behalf of customers bank collect the cheques deposited into the accounts of customers from other banks and deposit cash in the customers’ accounts.
4. Acting as Executors, Trustees and Attorneys: Banks act as executors of will of the customers and implement their will after their death.
5. Conduct Share Market transactions: A Demat account should be opened with Depository Participant and that demat account should be linked with savings bank account by the customer.
6. Preparation of Income Tax Return: Banks prepare the annual income tax return on behalf of the customers and provide income tax related advice to them.
7. Dealing in Foreign Exchange: Banks buy and sell foreign currencies on behalf of customers.
8. Acting as Correspondent: Banks act as correspondent of customers and receive travel ticket, passport, etc.
II. General Utility Functions:
- Issue of Demand Drafts and Bankers’ Cheques
- Accepting Bills of Exchange on behalf of Customers
- Safety Lockers
- Letters of Credit
- Travellers Cheques
- Gift Cheques
- Reference Service
Samacheer Kalvi 11th Commerce Cooperative Organisation Additional Questions and Answers
I. Choose the Correct Answer:
Question 1.
The primary functions of a commercial bank are of ……………. types.
(a) One
(b) Two
(c) Three
(d) Four
Answer:
(c) Three
Question 2.
FD is also called ……………. deposit.
(a) RD
(b) Savings
(c) Term
(d) Current
Answer:
(c) Term
Question 3.
Overdraft facility is given ……………. account holders.
(a) Savings
(b) Current
(c) Fixed
(d) Recurring
Answer:
(b) Current
Question 4.
Electronic Clearing Services (ECS) was launched by the RBI in …………….
(a) 1995
(b) 1998
(c) 1990
(d) 1991
Answer:
(a) 1995
Question 5.
National Electronic Funds Transfer (NEFT) was launched by the RBI in …………….
(a) 1995
(b) 2000
(c) 2005
(d) 2010
Answer:
(c) 2005
II. Very Short Answer Questions
Question 1.
Give the features of Smart card.
Answer:
Now a days smart card is used for day to day purposes.
- Strong device security.
- Biometrics
Question 2.
What is Internet Banking?
Answer:
Internet banking refers to performing banking operations through internet, using computers and mobile phone.
Question 3.
What is Capital Formation?
Answer:
Banks encourage savings habit among people and accumulate their small dormant savings. These funds can be fruitfully channelized for productive purposes of the economy.
Case Study
Question 1.
A person forgot his password of Debit card, How to get password? Give guidelines to him.
Answer:
First step we ask his registered phone number in the bank. If he has given phone number, we can get onetime password though the registered phone number and get new password easily. Second step, he can get the password with the mobile in the ATM also. He has to insert the debit card in ATM machine. It will ask the password. If he has forgotten the password, it will ask the phone number. If he types the phone number, he can get new password from the bank through his mobile number.
Third step : He can ask the branch manager, who will guide him properly and help him get the new password.
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