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What is a bank?
What is a bank?
An establishment authorized by a government to accept deposits, pay interest, clear cheques, advance loans, and provide other financial services.
What do banks guarantee to their depositors?
What do banks guarantee to their depositors?
Safety of deposits and the ability to withdraw deposits whenever needed.
Which of the following is a function of a bank?
Which of the following is a function of a bank?
Banks perform the same function as moneylenders.
Banks perform the same function as moneylenders.
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A bank acts as ________ between people having surplus money and those borrowing money.
A bank acts as ________ between people having surplus money and those borrowing money.
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Banking facilitates business activities and is considered as an important auxiliary to ___________.
Banking facilitates business activities and is considered as an important auxiliary to ___________.
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Match the types of banks with their descriptions:
Match the types of banks with their descriptions:
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What type of banks advance money out of their own private wealth and do not accept deposits?
What type of banks advance money out of their own private wealth and do not accept deposits?
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What are the three levels at which banks are organized?
What are the three levels at which banks are organized?
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What is the primary purpose of Primary Credit Societies?
What is the primary purpose of Primary Credit Societies?
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What role do Central Co-operative Banks play?
What role do Central Co-operative Banks play?
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What is the main function of State Co-operative Banks?
What is the main function of State Co-operative Banks?
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What is the purpose of Specialized Banks like EXIM Bank?
What is the purpose of Specialized Banks like EXIM Bank?
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What type of assistance does the Small Industries Development Bank of India (SIDBI) provide?
What type of assistance does the Small Industries Development Bank of India (SIDBI) provide?
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What is NABARD's main focus area?
What is NABARD's main focus area?
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Which bank primarily issues currency notes?
Which bank primarily issues currency notes?
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Loans and advances are both granted by banks to customers for a long period of time.
Loans and advances are both granted by banks to customers for a long period of time.
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Banks keep customers' jewelry and important documents safe with them.
Banks keep customers' jewelry and important documents safe with them.
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Discounting of bills of exchange is done by banks free of cost.
Discounting of bills of exchange is done by banks free of cost.
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A _______ is a credit facility provided by the bank to its customers.
A _______ is a credit facility provided by the bank to its customers.
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Match the following deposit account types with their characteristics:
Match the following deposit account types with their characteristics:
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Counterfoil of the pay-in-slip is returned to the ________________ by the bank.
Counterfoil of the pay-in-slip is returned to the ________________ by the bank.
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The right-hand part of the pay-in-slip is called the ________.
The right-hand part of the pay-in-slip is called the ________.
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A cheque needs to be attached to the ________ of the pay-in-slip before depositing.
A cheque needs to be attached to the ________ of the pay-in-slip before depositing.
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Before payment of a cheque, the signature of the account-holder is verified with the ___________.
Before payment of a cheque, the signature of the account-holder is verified with the ___________.
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The Teller system helps quick ___________ of cash by account-holders.
The Teller system helps quick ___________ of cash by account-holders.
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Deposit of cash into savings bank account can be made at the ___________ counter.
Deposit of cash into savings bank account can be made at the ___________ counter.
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What is E-banking?
What is E-banking?
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What is an Automated Teller Machine (ATM)?
What is an Automated Teller Machine (ATM)?
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What is a Debit Card?
What is a Debit Card?
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What is a Credit Card?
What is a Credit Card?
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What is Net Banking?
What is Net Banking?
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What is Phone Banking?
What is Phone Banking?
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Which of the following is not a function of the Central Bank?
Which of the following is not a function of the Central Bank?
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Which of the following is not a commercial bank?
Which of the following is not a commercial bank?
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Which of the following is not a type of advance provided by commercial banks?
Which of the following is not a type of advance provided by commercial banks?
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Fixed Deposit Account facility is availed by:
Fixed Deposit Account facility is availed by:
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Which is not a valid document to withdraw money from the bank?
Which is not a valid document to withdraw money from the bank?
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Statement (i) is true.
Statement (i) is true.
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Statement (ii) is true.
Statement (ii) is true.
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Statement (iii) is true.
Statement (iii) is true.
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Statement (iv) is true.
Statement (iv) is true.
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Statement (v) is true.
Statement (v) is true.
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Statement (vi) is true.
Statement (vi) is true.
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Statement (vii) is true.
Statement (vii) is true.
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Statement (viii) is true.
Statement (viii) is true.
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What is the term for the person who deposits money in a bank?
What is the term for the person who deposits money in a bank?
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What is the term for a thin sheet used to reduce the amount of light or to change the color of light?
What is the term for a thin sheet used to reduce the amount of light or to change the color of light?
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What is the term for the signature used to verify a person's identity on financial documents?
What is the term for the signature used to verify a person's identity on financial documents?
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What is the term used when a customer takes money out of a bank account?
What is the term used when a customer takes money out of a bank account?
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What is the institution that accepts deposits from the public?
What is the institution that accepts deposits from the public?
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Which of the following options correspond to the letters given? (i) (d), (ii) (a), (iii) (e), (iv) (b), (v) (c)
Which of the following options correspond to the letters given? (i) (d), (ii) (a), (iii) (e), (iv) (b), (v) (c)
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List an activity you can do regarding banks in your locality.
List an activity you can do regarding banks in your locality.
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What should you do to understand the requirements for opening deposit accounts?
What should you do to understand the requirements for opening deposit accounts?
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Deposits made in a savings bank account serve to meet present as well as future needs.
Deposits made in a savings bank account serve to meet present as well as future needs.
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A fixed amount is required to be deposited in a Fixed Deposit Account every month.
A fixed amount is required to be deposited in a Fixed Deposit Account every month.
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The rate of interest on deposits made in a Recurring Deposit Account is relatively higher than on savings bank deposits.
The rate of interest on deposits made in a Recurring Deposit Account is relatively higher than on savings bank deposits.
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Current Deposit Accounts can be opened only by businessmen, not by educational institutions.
Current Deposit Accounts can be opened only by businessmen, not by educational institutions.
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Home Construction Saving Deposit Account is a type of recurring deposit account.
Home Construction Saving Deposit Account is a type of recurring deposit account.
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The rate of interest allowed on fixed deposits depends on the length of the period for which the deposit is made.
The rate of interest allowed on fixed deposits depends on the length of the period for which the deposit is made.
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In the case of a savings bank account, withdrawal of money is allowed only by the account-holder.
In the case of a savings bank account, withdrawal of money is allowed only by the account-holder.
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Banks do not pay interest on the balance of current deposit accounts.
Banks do not pay interest on the balance of current deposit accounts.
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Savings Bank Account can be opened with a ______ amount of deposit.
Savings Bank Account can be opened with a ______ amount of deposit.
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A Fixed Deposit Account carries interest at a rate, which is ______ than that on savings bank account.
A Fixed Deposit Account carries interest at a rate, which is ______ than that on savings bank account.
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Overdraft facility is allowed to holders of ______ deposit accounts.
Overdraft facility is allowed to holders of ______ deposit accounts.
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Money can be withdrawn from current account by issuing ______.
Money can be withdrawn from current account by issuing ______.
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The rate of interest allowed on the balance of recurring deposit account is ______ than the rate allowed on fixed deposit account.
The rate of interest allowed on the balance of recurring deposit account is ______ than the rate allowed on fixed deposit account.
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What is the procedure to open a savings bank account?
What is the procedure to open a savings bank account?
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What must be done to withdraw money from a savings bank account by cheque?
What must be done to withdraw money from a savings bank account by cheque?
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Match the following banking terms with their definitions:
Match the following banking terms with their definitions:
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Study Notes
Banking Services Overview
- Banks are establishments authorized by the government to accept deposits, pay interest, clear checks, advance loans, and provide various financial services.
- Key reasons for using banks include safety for savings, access to loans for significant expenses, and the promotion of saving habits among the public.
Definition and Functions of Banks
- Financial institutions that provide a safe place for depositing money and offer loans for personal, business, and investment purposes.
- Banks assure depositors of the safety of their funds and the ability to withdraw them as needed.
- Banks earn income primarily through interest on loans, fees for services, and investment of deposits.
Role of Banking
- Banking encourages savings and provides funds for productive use, facilitating economic development.
- Functions include acting as intermediaries between savers and borrowers, facilitating business transactions, and providing credit for various purposes.
Difference Between Banks and Moneylenders
- Banks are organized institutions that accept deposits while moneylenders are individuals who lend their private wealth.
- Banks have regulated interest rates governed by the Reserve Bank of India, while moneylenders often charge higher, unregulated rates.
Types of Banks
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Central Bank: Governs and regulates banking systems (e.g., Reserve Bank of India); operates without dealing directly with the public.
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Commercial Banks: Accept deposits and provide loans with three subcategories:
- Public Sector Banks: Majority stake held by government (e.g., State Bank of India, Punjab National Bank).
- Private Sector Banks: Majority held by private entities (e.g., ICICI Bank, HDFC Bank).
- Foreign Banks: Operate locally but headquartered abroad (e.g., HSBC, Citibank).
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Development Banks: Provide financial assistance for longer-term capital needs and support public sector projects (e.g., Industrial Finance Corporation of India).
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Co-operative Banks: Owned and operated by members for their mutual benefit, structured at three levels: primary credit societies, central co-operative banks, and state co-operative banks.
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Specialised Banks: Focus on specific sectors or activities (e.g., EXIM Bank, NABARD) to support industry-specific financing needs.
Importance of Public Confidence
- Banks rely on public trust to function appropriately; lack of confidence could jeopardize their viability.
- Legal regulations are in place to ensure the stability and security of banking operations.
Summary of Banking Activities
- Banking activities include accepting deposits, providing loans, facilitating transactions, and contributing to national economic development through various financial services.### Banking Services Overview
- EXIM Bank: Supports export/import businesses with loans and market information, guidance on risks and competition.
- SIDBI (Small Industries Development Bank of India): Focuses on small-scale industries, offering loans for establishment and modernization using new technologies.
- NABARD (National Bank for Agricultural and Rural Development): Provides financial assistance for agriculture and rural sectors, including handloom and fishing, through credit for cooperative banks.
Functions of Commercial Banks
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Primary Functions:
- Accept deposits and grant loans and advances.
- Mobilizes surplus public income for effective banking operations.
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Accepting Deposits: Banks offer a safe way to save money, allowing customers to earn interest, motivating higher deposits.
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Granting Loans and Advances:
- Loans are usually granted for a specific time, can be short or long-term.
- Repayment varies, can be in installments or lump sum, secured against assets.
Types of Loans and Advances
- Loans: Reserved for specific purposes, longer duration than advances, usually requires asset security.
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Advances: Short-term credit for daily business needs, charged interest on drawn amount.
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Types of Advances:
- Cash Credit: Borrowers can withdraw up to a limit anytime; interest on drawn amount only.
- Overdraft: Allows withdrawal beyond balance for current account holders, temporarily.
- Discounting Bills of Exchange: Provides immediate funds by discounting pending bills pre-due date.
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Types of Advances:
Secondary Functions of Commercial Banks
- Issuing letters of credit and traveler’s cheques.
- Safe storage of valuables and important documents in lockers.
- Facilitation of foreign exchange dealings.
- Money transfers between accounts and branches via cheques and drafts.
- Standing guarantees for customers’ purchases.
Types of Bank Deposit Accounts
- Savings Bank Account: Ideal for limited income individuals to save for future needs, allows interest on deposits.
- Current Deposit Account: Designed for businesses needing flexibility with numerous withdrawals, no interest is paid.
- Fixed Deposit Account: Higher interest for longer deposits (15 days to more than 3 years), early withdrawal incurs lower interest.
- Recurring Deposit Account: Fixed monthly deposits for a specified tenure, interest higher than savings accounts, payouts at maturity.
Opening a Savings Bank Account
- Minimum initial deposit varies by bank; forms are requested at the inquiry counter.
- Required information includes applicant's name, occupation, residential address, signature, and details of introducer.
Central Bank Information
- Reserve Bank of India: Established on April 1, 1935, serves as the apex institution, focusing on monetary policy and economic stability, owned by the Government of India since nationalization in 1949.### Application Process for Opening a Bank Account
- Applicants must undertake to abide by the bank's rules and regulations, usually requiring a signature on the application form.
- Some banks may require two passport-sized photographs as part of the application process.
- A proper introduction by an existing account holder may be necessary. Alternatively, an attested identification (like a passport or driver's license) may suffice.
- Specimen signatures must be provided on the application form and a separate signature card that includes a photo, name, and account number.
Initial Account Setup
- Once the application is approved, an initial deposit can be made using a printed pay-in-slip.
- An account number will be allocated and recorded in both the application form and the specimen signature card.
- A passbook will be issued, recording the initial deposit and future transactions.
Depositing Money
- The pay-in-slip has two parts: the foil (right side) and the counterfoil (left side).
- For cash deposits, the pay-in-slip must include details such as date, account holder's name, account number, deposit amount, and the number of currency notes in different denominations.
- For cheque deposits, additional details like cheque number, date, and the bank on which the cheque is drawn are required on the pay-in-slip.
Withdrawing Money
- Money can be withdrawn using a withdrawal form, cheque, or ATM card.
- Withdrawal forms are printed and must include date, account number, withdrawal amount (in figures and words), and the account holder's signature.
- The withdrawal amount is recorded in the passbook; larger amounts may require a token for payment processing.
Cheque Usage
- Cheques can be issued to withdraw cash or to facilitate payments to third parties.
- The procedure for cash withdrawals via cheque mirrors that of a withdrawal form and requires signature verification.
ATM Usage
- ATM cards allow easy cash withdrawals and deposits via Automated Teller Machines.
- Cardholders must verify their identity by entering a Personal Identification Number (PIN) to access funds at an ATM.
- ATMs are available 24/7, enabling banking transactions without needing bank staff to assist.
E-Banking (Electronic Banking)
- E-banking enables automated access to banking products and services through electronic and online channels.
- Customers can perform activities such as checking account balances, fund transfers, and bill payments via secure internet connections.
- Automated Teller Machines (ATMs) have replaced manual teller counters in many banks for convenience.
Forms of Cards
- Debit cards allow customers immediate access to their funds for purchases, directly debiting their bank account.
- Credit cards provide borrowing options with pre-set limits based on credit ratings; they charge interest if the balance is not repaid within a stipulated timeframe.
- Net banking enables users to manage banking tasks via the internet, including transferring funds and paying bills.
Teller Systems
- Teller systems include manual and automatic teller counters to facilitate cash transactions.
- Manual teller counters verify transactions against specimen signatures, while ATMs handle transactions without staff intervention.
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Description
Explore the various banking services and institutions in the service sector in this quiz. Discover key concepts related to popular banks and their functions. Enhance your understanding of how banking operates within our economy.
