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