30 Questions
A commercial bank is a non-profit organization that deals with money and credit.
False
Modern banking has been in existence since ancient times.
False
Commercial banking has no significant impact on a country's economic activity and industrial progress.
False
Commercial banks only accept deposits from businesses, not from the public.
False
Commercial banks do not create credit by making advances to people in need.
False
Commercial banks act as a mobilizer of spending rather than savings in the economy.
False
Banks grant loans for a very short period, generally not exceeding 30 days to the borrowers against collateral securities.
False
Term loans have a maturity period varying between 1 to 5 years.
False
Participation loans or consortium finance are types of short-term loans provided by banks.
False
When a bank grants a loan to its customer, it pays the amount in cash.
False
The creation of credit by banks involves the bank creating physical cash for the borrower.
False
Commercial banks promote the use of credit cards among their customers.
False
Banks prefer settling debts through cash over cheques.
False
Commercial banks do not provide facilities for fund remittance from one place to another.
False
Secondary functions of commercial banks do not include agency services.
False
Banks do not collect dividends and interest on shares and debentures for their customers.
False
Income tax returns preparation is not part of the services that banks offer to their customers.
False
Cheques are not considered a developed type of credit instrument in the money market.
False
Derivative deposits are also known as passive deposits.
False
When a bank grants a loan, the customer receives the money in cash immediately.
False
Deposits can only arise from granting loans by a bank.
False
When a bank buys government securities, it pays the purchase price in cash immediately.
False
Bank loans do not have any impact on creating deposits according to the text.
False
Derivative deposits are considered as bank money or credit.
True
All bills in hand at the date of the balance sheet are shown on both sides of the balance sheet.
True
Bank capital represents the debt or borrowing funds of a bank.
False
Higher proportion of capital to deposits provides less protection to depositors.
False
Banks maintain higher capital accounts compared to other businesses.
False
Capital is a more important source of funds for large banks than for small banks.
False
Special reserve accounts involve setting aside cash for unanticipated losses on loans and investments.
False
Test your knowledge of the primary and secondary functions of commercial banks, including their role in settling debts, remitting funds, providing agency services, and general utility services.
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