[AHSEC Class 11 Finance Notes, AHSEC Class 11, Chapter wise Notes, Meaning and Different types of Banks]
ASHEC Class 11 Finance Notes
Unit 2: Meaning and Different types of Banks
1. How the word Bank has been
originated?
Ans:
The word Bank has been originated from many words. There is no single word or
answer to this origin of the word ‘Bank’. According to some economists, the
word ‘Bank’ has been originated from the German word ‘Banck’ which means heap
or mound or joint stock fund. From this, the Italian word ‘Banco’ has been
derived. It means heap of money. But according to this group, the word bank is
derived from the Greek word ‘Banque’ which mean a ‘bench’. It refers to a place
where money-lenders and money changers used to sit and display their coins and
transact business. Thus the origin of the word ‘Bank’ can be traced as follows.
Bank → Banco → Banque → Bank
2. What is a Bank and a commercial
bank? What are the features of Bank?
Ans:
Bank is a financial institution that
undertakes the banking activity i.e.it accepts deposits and then lends the same
to earn certain profit.
Commercial
Banks are the financial institution which accepts deposits from different
institutions and advances loans to some other institutions.
The features of a Bank are:
a)
A Bank is a profit seeking commercial
enterprises.
b)
It deals in money, i.e., it accepts
deposits from the public and advances loans to the needy borrowers.
c)
It deals with credit. It creates
credit for the purposes of lending money.
d)
The deposits made with the bank are
repayable on demand and can be withdrawn by the depositor by means of any
instruments whether a cheque or otherwise.
3.. What do you mean by a Central
Bank? Explain the nature of central bank.
Ans:
Central Bank: The central bank is the supreme monetary institution of the
country. It is established, owned, controlled and financed by the govt. of the
country. The design and control of the country’s monetary policy is its main
responsibility. India’s central bank is the Reserve Bank of India. The nature
of Central Bank is as follows:
a)
It is the head of all the banks of
India. It is the supreme monetary institution of the country.
b)
They always work for national welfare
of a country. They do not aim at earning profits.
c)
It is established, owned, controlled
and financed by the govt. of the country.
d)
It does not compete with other
financial institutions in the market.
AHSEC CLASS 11 FINANCE CHAPTER WISE NOTES
UNIT - 2: MEANING AND DIFFERENT TYPES OF BANKS
UNIT - 3: COMMERCIAL BANKING IN INDIA
UNIT - 4 (PART A) : DIFFERENT TYPES OF BANK CUSTOMER
UNIT - 4 (PART B) : DIFFERENT TYPES OF BANK ACCOUNTS
UNIT - 5: NEGOTIABLE INSTRUMENTS
4. Why is the established of Central
Bank necessary in a country?
Ans:
The Central Bank plays a vital role in economic development of a country. It
controls the whole monetary system and credit supply of a country. If there is
absence of Central Bank, then the whole economic system of that country. So, a
Central Bank is necessary in a country because:
a)
To issue currency notes in a country.
b)
To control the supply and creation of
credit in the economy to maintain stability in the monetary system.
c)
To meet the financial requirements of
the sectors of the economy.
d)
To successfully implement the monetary
policies of the govt. of the country.
e)
To promote the foreign trade of the
country through various policies.
5. Write a
brief note on Organisation Structure and Management of RBI. 2019
Ans: The Reserve Bank was set up as corporate body. The
organizational structure of the Reserve Bank is provided by the Reserve Bank of
India Act, 1934. It comprises of the: (a) Central Board and (b) Local Boards.
Central Board: The Central Board of Directors
is the supreme governing body of the Bank. It consists of 20 members. The members
include the following:
1)
A Governor and not more than four
Deputy Governors to be appointed by the Central Government.
2)
Four Directors to be nominated by the
Central Government, one each from the four local boards.
3)
Ten Directors to be nominated by the
Central Government. They are experts from the fields of business, industry,
finance and co-operation.
4)
One Government Official (Secretary,
Ministry of Finance) to be nominated by the Central Government.
The power of the Board vests with the Governor
who is the Chief Executive Officer of the Bank. The Governor has the
responsibility of directing the affairs and business of the Bank. The Governor
and Deputy Governors hold office for a period of 5years and are eligible for
the reappointment. The Governor in his work is assisted by four Deputy
Governors and four Executive Directors. The executive directors are not the
members of the Central Board but attend Board meetings by invitation. They are
subordinate to Deputy Governors.
Local Boards: Apart from Central Board of
Directors, four Local Boards are constituted representing each area specified
in the first schedule to the Act. There is a Local Board in Eastern, Western,
Northern and Southern regions of the country with headquarters at Kolkata,
Mumbai, New-Delhi and Chennai.
Local Board consists of five members, each
appointed by the Central Government. In each Local Board, a Chairman is elected
from amongst the members. The members of the Local Board hold office for a
period of four years and are eligible for reappointment.
6. What are the functions of Central
Banks? 2017
Ans:
The main functions of the Central Banks are:
a)
Issue of paper currency.
b)
Banker to the government.
c)
Banker to the bank.
d)
Credit control.
e)
Supervision and inspection of banks.
f)
Development and promotional functions.
g)
Custodian of the Nation’s Gold and
foreign exchange reserves.
7. Explain the function of Bank as the
issuer of Currency Notes. Explain two methods for issuing currency. 2015, 2016, 2019
Ans:
The first function or the primary function of money is to issue paper currency.
The Central Bank has the sole power to issue paper currency. The notes are
legal tender money. In India, the RBI issue currency notes of all types except
One Rupee note which are issued by the Ministry of Finance, Govt. of India. But
the notes are issued following some methods. The Central Banks follows
different methods or system according to the currency or banking regulations to
issue notes. These systems are:
a)
Proportional reserve system.
b)
Simple Deposit system.
c)
Fixed fiduciary system.
d)
Minimum reserve system.
e)
Maximum reserve system.
Simple
deposit system of issuing currency: The
simple deposit system is also knows as full reserve system. Under this system,
the Central Bank is required to keep 100% of metal, either gold or silver or
both as reserve for every note issued. The notes so issue becomes
representative paper money. The advantage of this system is that it enjoys a
public confidence but it is very costly and money supply cannot be increase as
and when required.
Fixed
Fiduciary System of issuing currency: Under
this system, the Central Bank issue currency notes up to a certain limit
against reserves of Govt. securities. The notes issued beyond the limit set by
the law have to be fully banked by metallic reserves.
Proportional
system of issuing currency: The proportional system of issuing
currency is very simple and elastic. According to this system, the notes issued
by Central Bank are banked by both metallic reserves and securities. A certain
percentage (25 to 40%) of the total notes issued has to be backed by gold or
silver reserves and the remaining by Govt. securities.
Minimum
reserve system: The minimum reserve system is a system in
which the Central Bank is authorized to issue notes up to any limit by keeping
a certain minimum reserve of gold and foreign securities. In India, the RBI is
required to keep the minimum reserve of Rs. 200/- crore out of which Rs. 115/-
crore should be kept in gold. The system is very elastic and economical for
developing countries as it requires only a small and fixed amount of gold
reserve. However, it lacks in public confidence due to non-convertibility of
notes.
8. How does the Central Bank acts as
the banker to the Government?
Ans:
The Central Bank is the banker to the Govt. of that country. It performs the
same function for the Govt. as the commercial banks performs for their
customers. The Central Banks plays the role of the banker to the Govt. in the
following three ways:
a)
As a banker: The Central Bank is the
banker to the Govt. Under this, it maintains the accounts of the Govt., accepts
deposits of the Govt. without interest, provides short term loans to the Govt.,
undertakes transactions of the Govt. related to purchase and sale of foreign
exchange, etc.
b)
As an agent: The Central Bank also
acts as the agent to the govt. In this, it recovers taxes and other payments
from the public, floats loans and manages public debt etc.
c)
As an advisor: The Central Bank is the
financial adviser of the Govt. It advices the Govt. on important economic
fiscal and monetary matters such as controlling of inflation or deflation,
deficit financing, trade policy, etc.
9. Explain the function of Central
Bank as the Banker to the banks? 2016
Ans:
The Central Bank is a banker to all the other banks. It is the supreme bank of
all the banks. As the supreme bank it performs various functions. Some of the
functions are:
a)
Custodian of cash reserve of the bank:
The Central Bank acts as the custodian of cash reserve of the banks. Every
Commercial bank has to keep a certain portion of their deposits and time and
demand liabilities to the Central Bank in the form of cash reserves. The
Central Bank maintains this cash reserve as the custodian and grants money to
the commercial bank in times of emergency.
b)
Lender of the last resort: The Central
Bank is the Lender of the last resort of the commercial banks. When the other
banks shortage of funds, then they can approach to the Central Bank for
financial assistance. The Central Bank lends money to them by discounting their
bills. This enables the Central Bank to establish control over the banking
system of the country. 2017
c)
Clearing agent: The Central Bank acts
as the clearing house of the commercial banks. It maintains the accounts of the
banks and settles their claims and counter claims by minimum use of money or
cash.
10. What are the different types of
bank in a country? 2016
Ans:
In modern times banking business has attained much popularity and importance.
The following are the different types of bank which are functioning in modern
times:
a)
Central Bank: Central Bank is known as
guardian bank which bank working in the country. Now a day, in every country there
is one central bank and is controlled by the govt. The central Bank manages and
control the whole monetary system and also prepares monetary policy and other
policies of the govt.
b)
Commercial Bank: The commercial bank
generally extent short terms loans to the business man and traders. They
collect deposits from the public and advance loans to the businessman and
producer commercial banks are normally owned by shareholders. In India most of
the joint stock banks are commercial banks.
c)
Co-operative Bank: Co-operatives banks
are those banks which established in co-operative sectors. Co-operative banks
offer short term and medium term loans to the agricultural sector. Farmers get
various kinds of loan for purchasing various agriculture inputs from co-operative
banks.
d)
Foreign exchange Banks: These are
special types of banks which specialize in financing foreign trade. Their main
is to make international payments through the purchase and sale of exchange
bills.
e)
Agricultural Banks: Agricultural banks
are those banks which are established to meet the credit requirements of
agriculture. The agriculture is need two types of credit namely:
1)
Short term credit for purchasing
seeds, fertilizers, ploughs and other inputs.
2)
Long-term loans to purchase land and
for permanent improvement on land.
f)
Industrial banks: Industrial banks are
those banks which advance long term loans to industries. For the development of
industries various types of industrial banks are established. In India, various
institution like Industrial and finance co-operation of India (IFCI),
Industrial development bank of India, can be termed as Industrial Banks.
g)
Savings Banks: Savings banks are those
banks which offer opportunities for saving to the small savers and also try to
develop saving habits among the people.
h)
Development Banks: Development banks
are specialized financial institutions which provide medium and long term
finance to private entrepreneurs and help in economic development of the
country.
i)
Investment Banks: Investment Banks are
those banks which are specialized in provide medium and long term financial
assistance to business and industry. They are also known as Industrial Banks as
they are mainly concerned with industrial finance.
j)
Land Development Banks: The land
development banks are the financial institutions that are organized for
providing long term credit to the agriculturists. These banks are also known as
Long Mortgage banks as they are set up to relate the burden of indebtness.
11. Write a brief note on primary and
secondary functions of banks/public sector banks. 2013
Ans:
Functions of Bank: Modern banks not only deal in money and credit creation,
other useful functions management of foreign trade, finance etc. The meaning of
modern banks is used in narrow sense of the term as commercial banks. The
various functions of banks are given below:
A) Primary
functions:
a)
Acceptance of deposits: It is the most
important function of a bank. Under this function, bank accepts deposits from
individuals and organizations and finances the temporary needs of firms.
b)
Making loans and advances: The second
important function of banks is advancing loan. The commercial bank earns
interest by lending money.
c)
Investments of Funds: Besides loans
and advances, banks also invest a part of its funds in securities to earn extra
income.
d)
Credit Creations: The Bank creates
credit by opening an account in the name of the borrower while making advances.
The borrower is allowed to withdraw money by cheque whenever he needs.
B)
Secondary functions of a bank: This function is divided into two parts:
1)
Agency
functions (2013, 2015, and 2017): These functions are performed by the
banker for its own customer. For these bank changes certain commission from its
customers. These functions are:
a)
Remittance of Funds: Banks help their
customers in transferring funds from one place to another through cheques,
drafts etc.
b)
Collection and payment of Credit
Instruments: Banks collects and pays various credit instruments like cheques,
bill of exchange, promissory notes etc.
c)
Purchasing and Sale of securities:
Banks undertake purchase and sale of various securities like shares, stocks,
bonds, debentures etc. on behalf of their customers.
d)
Income Tax Consultancy: Sometimes
bankers also employ income tax experts not only to prepare income tax returns
for their customer but to help them to get refund of income tax in appropriate
cases.
e)
Acting as Trustee and Executor: Banks
preserve the wills of their customers and execute them after their death.
f)
Acting as Representatives and Correspondent:
Sometimes the banks act as representatives and correspondents of their
customers. They get passports, travelers tickets secure passages for their
customers and receive letters on their behalf.
1)
General
Utility functions: These are certain utility functions performed
by the modern commercial bank which are: (2012, 2014, 2016, 2019)
1.
Locker facility: Banks provides locker
facility to their customers where they can their valuables.
2.
Traveler’s cheques: Bank issue
travelers cheques to help their customers to travel without the fear of theft
or loss of money.
3.
Gift cheque: Some banks issue gift
cheques of various denominations to be used on auspicious occasions.
4.
Letter of Credit: Letter of credit is
issued by the banks to their customers certifying their credit worthiness.
Letter of credit is very useful in foreign trade.
5.
Foreign Exchange Business: Banks also
deal in the business of foreign currencies.
12. What do you mean by Indigenous
banker? What are the various category of indigenous banker? Mention its
features and defects.
Ans:
An individual or a firm accepting deposits, dealing in indigenous bill and
leads money is known as Indigenous banker. Indigenous banks are the
unorganized, unregulated, unsupervised and segmented banking institutions that
have no link with the organized sector. They have been operating in India since
the Vedic age. They are confined to certain casts such as jains, banias, Seths,
etc.
The features of Indigenous bank or bankers are:
a)
They are the unorganized part of the
financial market. They have no links with the organized and monetary authority
of the country.
b)
They are unit banks and operate at one
place only.
c)
They provide loan for both productive
and unproductive purpose. They operate the banking on their own funds.
d)
They are confined to certain casts
such as jains, banias, Seths, etc.
The indigenous bankers suffer from the following defect:
a)
The financial resources of these
bankers are insufficient of meet the demand of the borrowers.
b)
These bankers are charging much higher
interest rate from their borrowers than the commercial banks.
c)
These bankers indulged in all types of
malpractice and exploited their customer in many ways.
d)
They sometime issued loans for
unproductive purposes.
13. What is Regional Rural Banks
(RRBs)? Mention its features and functions. 2017,
2019
Ans: RRBs are local level banking organisation
operating in different states of our country to fulfill the needs of small and
marginal farmers, agricultural labours and landless workers, small businessman,
etc. by providing short-term and medium-term credit.
The features or characteristics of Regional Rural Banks are:
a)
The RRBs have a particular operation
area. They remained confined to a particular district.
b)
They are sponsored by the public
sector bank.
c)
The authorized capital of RRBs is Rs.
5 crore at present and issued capital is at Rs. 1 crore.
d)
The RRBs are dependent on NABARD for
financial support. The NABARD provides refinance to the RRBs at concessional
interest rate.
The functions of RRBs are: 2018
a)
To generate employment in the rural
areas
b)
To encourage entrepreneurship in the
rural areas,
c)
To provide assistance in marketing and
storing of agricultural and other products, etc.
d)
To expand the organized banking
services among the rural people by opening bank branches.
e)
To mobilise rural saving by accepting
deposits from the rural people.
f)
To fulfill the needs of small and
marginal farmers, agricultural labours and landless workers, small businessman,
etc. by providing short-term and medium-term credit.
14. Write short note on IMF.
Ans:
INTERNATIONAL MONETARY FUND (IMF) is an international monetary organisation
established by different countries after the world-war second with an objective
of providing exchange stability throughout the world and increasing liquidity,
so that balance multilateral trade is promoted through the co-operation of the
member nation. The IMF came into existence in December 1945 and started
functioning in March, 1947.
The
objectives of I.M.F are:
a)
To promote international monetary
co-operation through a permanent institution.
b)
To secure stability in the rates of
foreign exchanges.
c)
To secure conversion of the currency
of any member into the currency of any other member.
d)
To promote the international trade by
removing all obstacles.
e)
To promote investment of capital in
backward and undeveloped countries.
f)
To make financial resources available
to members.
The functions of IMF are:
a)
It functions as a short credit
institution.
b)
It provides machinery for the orderly
adjustments of exchange rates.
c)
It keeps reserves of the currencies of
all member countries.
d)
It lends to the borrowing countries in
the currencies which they require.
e)
It promotes the expansion of
International Trade for the mutual benefits of member countries.
15. What are the features of
Co-operative Bank?
Ans:
The features of Co-operative Banks of India are:
a)
These banks are not profit seeking
institutions.
b)
They provide both short term and long
term loan.
c)
They have a particular operation area.
They remained confined to a particular district.
d)
These banks are basically rural and
agricultural based banks.
16. What are the functions of
Co-operative Banks?
Ans:
The functions of Co-operative Banks are :
a)
The co-operative bank accepts deposits
and encourages savings and investment among the people.
b)
They provide both short term and long
term finance to the customer to fulfill their demands.
c)
They provide assistance in the
marketing and processing of the products of farmers.
d)
They also supply various inputs and
equipment such as seeds, fertilizers, etc to the farmers.
e)
The also provide storing facilities to
the farmers for storing their produce.
17. What are the weaknesses of
Co-operative Banks in India?
Ans:
The weaknesses of the Co-operative Banks in India are:
a)
They co-operative banks are
financially weak due to shortage of deposits from the people.
b)
Controlled by wealthy influential persons of the
society.
c)
Lack of management qualities.
d)
Failed to meet the credit needs of the
poor and weaker sections of the society.
18. What are development banks? What
are the features or characteristics of Development Banks?
Ans:
Development bank is a specialised financial institution which provides medium
and long term finance to business units in the forms of loans, underwriting,
investments and guarantees operations, promote entrepreneurship and upgrade
knowhow and do-how. It is a multi-purpose financial institution and not just a
term-lending institution. It does not accept deposits from the public, unlike
commercial banks. A development bank does not perform ordinary banking
functions.
The features of Development Banks are:
a)
They are specialized for Economic and
Industrial development.
b)
They do not accept deposits from the
general public like Commercial Banks.
c)
They provide medium-term and long-term
loans.
d)
They provide assistance to both public
as well as private sector.
19. Mention some specific development
banks. What are the functions of Development Banks? 2016
Ans: Some Important Development Banks are given below:
a)
The Industrial Finance Corporation of
India (IFCI) was established in 1948 under a special Act of Parliament. It was
the first development bank of our country. It was set up to make medium and
long term credits to industrial concerns in India.
b)
The full form of IDBI is Industrial
Development Bank of India. It was established in July, 1964. However, in
February 1976, the IDBI was taken over by the government and was made an
autonomous institution.
c)
In order to provide finance to small
and medium scale industries need for a separate financial institution was felt.
Accordingly, the government of India passed the State Financial Corporation Act
in 1951, enabling the state government to set up State Financial Corporation.
d)
The National Bank For Agriculture and
Rural Development (NABARD), a developing bank, came into existence on July 12,
1982, under an Act of Parliament with an initial capital of Rs. 100 crores. It
is an apex institution set up for providing and regulating credit and other
facilities for the promotion and development of agriculture, small scale
industries, cottage and village industries, handicrafts and other rural crafts
and other allied economic activities in rural areas.
Functions
of Development Banks
a)
They provide risk capital.
b)
They provide long-term and medium-term
finance to industrial undertakings for purchase of new plants and machinery,
expansion, modernization, etc.
c)
They purchase the shares and
debentures of companies and thus provide them long-term capital.
d)
They help the companies in raising
capital from the capital market.
e)
They underwrite the public issues of
shares and debentures by the companies.
20. What are the functions of
Investment Banks?
Ans:
the functions of Investment Banks are:
a)
To accept deposits from public as
saving.
b)
To provide long term funds to business
and industrial organization to meet their capital requirements.
c)
To subscribe to the shares and
debentures issued by industrial concerns.
d)
To underwrite the issues of shares and
debentures and help selling these securities to the investing public.
21.
Explain the differences between Investment Bank and Commercial Bank. 2016
Ans: Investment
Banks: Investment Banks are those banks which are specialized in provide medium
and long term financial assistance to business and industry. They are also
known as Industrial Banks as they are mainly concerned with industrial finance.
Commercial Bank: The commercial bank generally extent short terms
loans to the business man and traders. They collect deposits from the public
and advance loans to the businessman and producer commercial banks are normally
owned by share holders. In India most of the joint stock banks are commercial
banks.
On the basis of above explanation, the
following differences between the investment bank and commercial bank are
arises:
a) The primary functions of investment banks is to provide medium
and long term financial assistance to business and industry. Whereas, the
primary functions of commercial banks is to accept deposit from the public and
lend them to the customers.
b) The investment
bank is set up especially for the investors, big corporation and government.
Whereas, Commercial banks are involved in providing banking and financial
services to the general public.
c) The level of
risk in the investment bank is higher. Whereas, the level of risk in commercial
bank is lower.
d) Investment
banks provides only customer specific services according to the need. Whereas,
commercial banks provide standard services to all their customers.
e) Investment
banks provides don’t provide day to day services to their clients. Whereas,
commercial banks provides day to day services to their customers.
f) Investment
banks don’t accept deposits from general public. Whereas, commercial banks
accepts deposits from general public.
22. What do you mean by scheduled
banks and Non-Scheduled banks? 2015
Ans:
Scheduled banks refer to those banking institutions whose names are included in
the Second Schedule of the Reserve Bank of India Act, 1934. Moreover, the
banking company may included in scheduled list only after must fulfill the some
conditions.
Non-Scheduled
banks refer to those banking institutions, whose names do not appear in the
Second Schedule of the RBI Act, 1934. Non-Scheduled banks were engaged in
lending money discounting and collecting bills and in providing various agency
services.
23. Distinguish between Central bank
and commercial bank. 2017,
2019
Ans:
There are some fundamental differences between them:
1)
Profit making is not the objective of
central banks, although, they do earn profits. But, the principle aim of a
commercial bank is to make large amounts of profits.
2)
The central bank is owned any
controlled by the Government. But A commercial bank is generally owned, managed
and controlled by private citizens.
3)
There is only one central bank in a
country. But, There are commercial banks operating in a country on a
competitive basis.
4)
The central bank is the only agency in
a country entrusted with the power of issuance of notes. But, The commercial
banks do not have the power of issuing notes.
5)
The central bank s the lender of the
money market. But, The commercial banks are just its sub-ordinates.
24. Write a brief note on Land Development Bank.
Ans:
The land development banks are the financial institutions that are organized
for providing long term credit to the agriculturists. These banks are also
known as Long Mortgage banks as they are set up to relate the burden of
indebtness. The Land Development Banks have a large number of branches. Earlier
they were both federal and unitary but now, they have been divided into two
federal structures. They are State Land Development Bank (SLDBs) and Primary
Land Development Bank (PLDBs). The Land Development Banks provide long term
loans to the agriculturists for purchasing land, costly machinery like
tractors, improvement of land cultivation method, etc. However, they grants
loan up to 50% of the value of land or 30 times the revenue of land and are
repayable over a period of 20-30 years.
25. Distinguish between commercial bank, development bank and
co-operative banks. 2015, 2016, 2018
|
Basis |
Commercial Bank |
Development Bank |
Co-operative bank |
|
Formation |
These
are generally set up as companies under the Companies Act. |
These
are set up under the special act passed by the government, |
These
are set up under the Co-operative Societies Act. |
|
Nature |
These
are ordinarily financial institution. |
These
are specialised multi purpose institutions. |
These
are not profit seeking institutions. |
|
Raising
of funds |
These
banks accepts deposits from the public through different types of accounts. |
Mains
source of funds for these banks are borrowings, grant, selling of securities.
They do not accept deposits from public. |
These
banks mainly accepts deposits from public of rural areas. |
|
Advances |
Commercial
banks mainly provide short and medium term loans. |
Development
banks provide medium and long term loans. |
Co-operative
banks provides both short term and long term loans. |
|
Credit creation |
Commercial
banks can create credit. |
Development
banks cannot create credit. |
Co-operative
bank can create credit. |
26. Define Public and Private sector
banks. Also distinguish between them. 2019
Ans:
Public Sector Banks: Public Sector banks are those banks in which the
Government has at least 51% shares. Public sector banks are owned and
controlled by the Government either directly or indirectly through the RBI.
These banks are also known as “National Banks”. Public sector banks are
classified into three categories (27 Banks):
a)
State Bank group: It consists of the
SBI and its 6 associate banks.
b)
Nationalized Banks: It present there
are 19 nationalized banks such as UBI, PNB (founded in 1894 in Pakistan),
and BOI etc.
c)
Regional Rural Banks (RRBs): These
banks are established with the object of proceeding credit and other facilities
in rural areas.
Private Sector Banks: Private Sector banks are
those which are owned by private individuals or business corporations. Private
sector banks may be classified into two categories:
a)
Indian Banks: these banks are
incorporated under the Indian companies Act. At present there are 21 Indian
Private Bank. E.g. ICICI Bank Ltd, HDFC Bank Ltd, Federal Bank Ltd, Yes Bank
Ltd.
b)
Foreign Banks: These banks are
originated outside India but have a place of business in India. At present
there are 45 Foreign Banks. E.g. City Bank, Standard Chartered Bank, HSBC Bank,
Bank of Tokyo.
Difference
between Public Sector Banks and Private Sector Banks
|
Basic |
Public
Sector |
Private
Sector |
|
1.Ownership |
Public
Sector banks are owned by the Govt. either directly or through the RBI. |
Private
Sector banks are owned by private individuals or business corporations. |
|
2.
Setup |
These
banks are setup under the special act of Parliament. |
These
banks are setup under the Companies Act. |
|
3.
Aim |
These
banks aim at saving the Society. |
These
banks are driven by profit motive. |
|
4.
Foreign Bank |
Public
Sector banks does not include foreign bank. |
Private
Sector banks may be Indian Banks as well as foreign banks. |
27. What is Export-import bank?
Explain briefly.
Ans:
the bank which is mainly concerned with the progress and development of foreign
trade is known as Export-import Bank or EXIM bank. These banks were established
the Export-Import Bank of Indian Act of 1983. It acts as an apex institution
relating to import and export finance.
Some of the features of EXIM Bank are:
a)
These banks are basically foreign
trade banks.
b)
The authorized capital of EXIM Bank of
Rs. 200/- crore which is now extended to Rs. 450/- crore.
c)
The EXIM bank is managed by a Board of
Directors which consists of 16 members including one Chairman.
d)
They provide financial assistance to
exports and imports.
28. What are the functions of EXIM Bank?
Ans:
The functions of EXIM Bank are:
a)
To provide financial assistance to
export-import sectors for the export and import of goods and services.
b)
To provide technical and
administrative assistance to the foreign trade oriented parties for their
promotion.
c)
To undertake merchant banking services
of concerns engaged in foreign trade.
d)
To finance research and technology
studies for the promotion of foreign trade.
29. What is Retail Banking and retail
banking?
Ans:
Retail banking is a form of commercial banking which generally deals with small
consumers for meeting current requirement of consumers such as housing loan, a
car loan, etc.
Wholesale banking refers to a situation where a bank deals with limited large-sized big customers. These banks have large accounts for few corporate clients with few transactions.