15 Questions
What is the main function of a commercial bank?
Acceptance of deposits
Which type of deposit allows individuals to earn interest and avoid the risk of theft?
Savings deposits
What is the function of accepting deposits in a bank?
Provide a safe place for savings and offer interest
What is discounting of bills?
Selling outstanding invoices to a third-party at a discounted price
What is the focus of the Personal Banking Services Department?
Meeting the needs of individuals such as opening bank accounts and providing money transfers
Why do ordinary or clean loans typically have lower interest rates?
Lenders are less likely to lose money on these loans
What does the Investment and Financial Planning Department help clients achieve?
Financial goals through investment and financial planning services
Which account type requires money to be deposited for a fixed period and cannot be withdrawn early?
Savings Deposit Accounts
What type of loan allows the bank to make payments exceeding the available balance, resulting in a negative bank balance?
Cash Credit
What is required for an ordinary or clean loan to be considered low risk for the lender?
Good credit history, stable income, and collateral
What is the primary purpose of discounting of bills?
To sell outstanding invoices at a discounted price to a third-party financier
Which department focuses on providing bank account management and financing for companies and institutions?
Corporate Banking Department
What type of loans does the Credit and Loan Department handle?
Loan and credit applications from customers
Which type of loans typically have lower interest rates?
Ordinary or clean loans
What is the function of the Personal Banking Services Department?
Opening bank accounts and providing transportation services
Study Notes
Bank Deposits and Loans Summary
- The bank accepts three types of deposits: fixed deposits, current deposits, and savings deposits.
- Fixed Deposit Accounts require money to be deposited for a fixed period and cannot be withdrawn early. The longer the period, the higher the interest rate.
- Current Deposit Accounts are for traders and businessmen who make frequent payments and do not earn interest. They have to pay incidental charges to the bank.
- Savings Deposit Accounts aim to encourage small savings and have restrictions on withdrawals. They offer a low-interest rate compared to fixed deposits.
- Cash Credit Accounts allow the bank to make payments exceeding the available balance, resulting in a negative bank balance.
- Overdraft occurs when a purchase or check exceeds the available balance, resulting in a negative account balance.
- An ordinary or clean loan is considered low risk for the lender and typically requires a good credit history, stable income, and collateral.
- Cash credit and overdraft are types of loans and advances provided by the bank.
- Cash credit allows payments exceeding the available balance, while overdraft results in a negative balance in the account.
- An ordinary or clean loan is low-risk for the lender and requires a good credit history, stable income, and collateral.
- These loans typically require the borrower to have a history of repaying debts on time, a stable and reliable income, and pledged collateral.
- In the event of default, the lender can seize the collateral and sell it to recoup their losses.
Test your knowledge of bank deposits and loans with this informative quiz. Explore different types of deposits such as fixed, current, and savings, and understand the features and limitations of each. Learn about cash credit accounts, overdrafts, and various types of loans, including their requirements and risks for both lenders and borrowers.
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