[AHSEC Class 11 Finance Notes, AHSEC Class 11, Chapter wise Notes, Different Types of Bank Accounts]
AHSEC Class 11 Finance Notes
Unit 4 (Part b): Different Types of Bank
Accounts
1. Who is known as Banker and
Customer? 2018
Ans: Banker: A person or an institution or an firm or company
which accepts the deposits of the public that are to repaid on demand to the
owner and utilizes the deposits to make advances and investments in securities
is known as a Banker.
A person or an institution which opens an account in a Bank and
undertakes banking services with the Banker is known as a Customer or Bank’s
Customer. Account to D. L. Hart, ‘a customer is one who has an account with a
banker or for whom a banker habitually undertakes to act as such’. Thus, a
person who deals with the banker is a customer of bank.
2. State the different types of Bank
accounts that a customer can open with a bank? 2015,
2016, 2018
Ans: A banker provides various types of account to the customer to
be opened in a bank. These accounts are:
Demand Deposit Accounts: The demand deposit
accounts are those accounts in which the customer can deposit money many number
of times and the amount is repayable on demand by means of cheque. These
accounts are of two types: (i) Savings Deposit A/c and (ii) Current Deposit
A/c.
Time Deposit Accounts: The time deposits
accounts are those deposit accounts where the amount of deposit is repayable
only after the expiry of the period. The depositors cannot withdraw the
deposits by means of cheque. These accounts are of two types: (i) Fixed deposit
A/c and (ii) Recurring Deposit A/c.
3. What is Saving Deposit Account?
What are the features of Saving Deposit Account? 2019
Ans: Savings Deposit Account is a type of deposit account which is
opened by the customer for depositing their small savings for their future
benefits.
The features of Savings Deposits accounts are:
a) Withdrawal
is made through cheques.
b) There are
certain restrictions on withdrawal of money.
c) Small
amount of interest is given.
d) This
account is generally opened by small savers
e) No
overdraft facility is given in this type of account.
f) This type
of accounts can be held on long-term basis, i.e., more than a year. There is no
limit.
4. What is Current Deposit Account?
What are its features?
Ans: Current Deposit Account is one which the customer is allowed
to deposit or withdraw money at number of times as and when he likes. The features of Current Deposit Account are:
a) Withdrawal
is made through cheques.
b) There is
no restriction on withdrawal.
c) No
interest is given on this type of account
d) This
account is generally opened by businessmen.
e) Overdraft
facility is given to current account holders.
5. What is Fixed Deposit Account? What
are the features of Fixed Deposit Account?
Ans: Fixed Deposit account is a deposit account where money is
deposited for a specific period of time and cannot be withdraw before the
expiry of the period. The general features of fixed deposit accounts are:
a) No use of
cheques.
b) Withdrawal
is not allowed before maturity
c) High rate
of interest is given.
d) No
overdraft facility is given.
e) This
accounts may be opened by an individual in his own name, two or more person
jointly, corporate bodies.
f) A fixed
deposit of money should be deposited to the account only one time.
6. What is Recurring Deposit Account? What are its features?
Ans: Recurring Deposit Account is an account the depositor is
required to deposit a fixed amount of money at regular intervals for a fixed
period of time and the amount is repayable with interest at the end of the
period.
The features of Recurring Deposit Accounts
are:
a) This
account may be opened by individual, two or more person jointly, minor jointly
with his guardian, etc.
b) In such
accounts, the account holder is required to deposit a fixed amount of money at
regular intervals.
c) In such
accounts, the depositor is also provided loan facility.
d) The rate
of interest is such accounts are almost equal to the fixed accounts.
7. What do you mean by Operation of
Bank Accounts? What are the various services or things with the help of which a
person can operate a Bank Account?
Ans: The depositing and withdrawing of money by a customer from
the bank account according to his usefulness and needs is known as Operation of
Bank accounts. The various services or things by the use of which a person can
operate his bank account are:
Pay-in-slip book, Cheque book, ATM card, Pass book.
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
8. What do you mean by E-Banking? What
are its features? 2015
Ans: E-Banking or Internet banking: Online banking also known
as internet banking, e-banking, or virtual banking, is
an electronic payment system that enables customers of
a bank or other financial institution to conduct a range
of financial transactions through the financial institution's
website. Internet banking is a term used to describe the process whereby a
client executes banking transactions via electronic means. This type of banking
uses the internet as the chief medium of delivery by which banking activities
are executed. The activities clients are able to carry out are can be
classified to as transactional and non transactional.
The
features of E-Banking are:
a) It is the
fast, efficient and easy way of banking.
b) It helps
the customers to perform banking services easily.
c) It is
available to a customer all the time. There are no barriers to it.
d) It has no
geographical boundary.
9. What are the various E-Banking
services provided by Banks? 2016,
2017
Ans: The various E-Banking services of a Bank are: Electronic
Clearing Services (ECS), Electronic Payments, Automated Teller Machine (ATM),
Credit Card, Debit Card, Smart Card, Virtual Card, and Electronic Fund Transfer
(EFT).
10. What are the various types of
E-Banking or Electronic Banking?
Ans: The different types of E-Banking are as follows: Corporate
Banking, Personal Banking, Tele-Banking, Mobile Banking, Card Based Banking, and
Internet Banking.
11. What are the objectives of
E-Banking?
Ans: The functions or objectives of E-Banking are:-
a) To enable
the customer to operate their bank account from anywhere in the world.
b) To help
the customers to avail banking services round the clock i.e., 24 hours in a day
and 365 days in a year.
c) To provide
fast, efficient hassle free and fast fund transfer services to the customers.
d) To provide
on-line purchase and payment of goods and services to the customers.
e) To provide
general information to the customers about the products and services of a bank,
new bank branches, bank schemes, etc.
12. What are the advantages and disadvantages
of E-Banking? 2019
Ans: Advantages of
E-banking or Internet banking
1) Convenience:
Banks that offer internet banking are open for business transactions anywhere and
anytime.
2) Low cost
banking service: E-banking helps in reducing the operational costs of banking
services.
3) Higher
interest rate: Lower operating cost results in higher interest rates on savings
and lower rates on mortgages and loans offers from the banks.
4) Ease of
transaction: The speed of transaction is faster relative to use of ATM’s or
customary banking.
5) Discounts:
The credit cards and debit cards enables the Customers to obtain discounts from
retail outlets.
The
disadvantages of E-Banking are:
a) E-Banking
is an Electrical based banking.
b) E-Banking
can only be operated by a technically skilled person as it requires technical
knowledge.
c) Existence
of well-developed infrastructure is an essential element for the introduction
and effective functioning of E-Banking.
d) In
E-Banking, there is a fear and risk of sudden loss or damage of data.
13. What is ATM? When and where it was first
introduced? What are the advantages of ATM? 06,
08, 10
Ans: ATM (Automated Teller Machine) is an electronic device that
allows the customer to perform banking activities without interacting with a
human teller. It is first introduced in 1939 at New York by City Bank of the
USA.
The advantages of ATM are:
a) It
provides the facility to the customer to withdraw or deposit cash quickly.
b) It enables
the customers to avail the various other facilities provided by a bank quickly.
c) It is
available to a customer round the clock, i.e., 24 hours in a day and 365 days
in a year.
d) It enables
the bank to advertise their products on the ATM screen.
e) It saves
time of the customers to travel to a bank branch for operating of their
account.
14.
Write the procedure of use of ATM Card. 2019
Ans: Procedure to use ATM Card:
a) Step 1:
First of all go ATM of any bank and insert you ATM Card.
b) Step 2:
Select your preferred language.
c) Step 3:
Enter Four digit pin number.
d) Step 4:
Now choose the transaction type: Withdrawal, mini statement, Balance enquiry
etc.
e) Step 5:
Then select the account type – Current or savings.
f) Step 6:
Collect the cash and count or see balance on the screen or collect mini
statement.
g) Step 7:
End the session by pressing cancel or cross button.
15. What is Credit Card? When was the
first credit card issued and by whom? Who are the three parties of a credit
card? 2018
Ans: A Credit Card is a small plastic card which enables the
customers to purchase goods and services on credit and make payments later on.
The first credit card was issued by Diner’s Club in USA in 1950. The name of the
card was Diner’s Card. The three parties of a credit card are :
a) The
issuer: The organization which issues such cards like bank.
b) The
cardholders: The individuals, corporate bodies other organizations that holds
the cards.
c) The member
establishments: The organizations or
firms who accepts such cards.
16. What are the advantages and
disadvantages of Credit Cards?
Ans: The advantages of Credit Cards are:
a) It enables
us to buy goods and services and make payments anytime and anywhere.
b) It is
universally acceptable. It can be used anywhere in the world.
The disadvantages of Credit Cards are:
a) Every card
has a particular limit of payments for a particular period.
b) The cost
of operating a credit card is very high.
17. Write about the operating system of credit card. 2019
Ans: Credit
card transactions are processed through a variety of platforms such as
e-commerce sites, mobile devices etc. The entire cycle form card slide to
receipt production is passed through various process which are stated below:
1.
Authorization: In the
authorization stage, the merchant must obtain approval for payment from the
issuing bank. The acquiring bank the credit card details to the credit card
network and card network clears the payment and requests payment authorization
from the issuing bank. The authorization request includes the following: Credit
card number, Card expiration date, Billing address — for Address Verification
System (AVS) validation, Card security code — CVV, for instance and Payment
amount.
2.
Authentication: In the authentication stage, the issuing bank
verifies the validity of the customer’s credit card using fraud protection
tools such as the Address Verification Service (AVS) and card security codes
such as CVV, CVV2, CVC2 and CID.
3. Clearing & Settlement: In the
clearing stage, the transaction is posted to both the cardholder’s monthly
credit card billing statement and the merchant’s statement. It occurs
simultaneously with the settlement stage.
18. Explain the procedure of opening
any account. 2016
Ans: Following are the main steps in opening a bank account:
1. Selection of type of account: The first
step is to select the type of account to be opened . An account may have
several types such as current, saving fixed account. An account can be opened
jointly or singly.
2. Selection of bank and branch: The
prospective accountholder should now select the bank .
3. Obtaining the account opening form: An
account opening form is obtained from the bank . It should be read carefully
and filled in with utmost care.
4. Obtaining the reference: One or two
reference are obtained by the prospective account holder. The people who give
references sign the form and give their account no. and name and address.
5. Submission of the form: Now the form should
be submitted along with the required documents. These documents vary from
account to account.
6. Giving specimen signature: Now, the account
holder signs on a card called specimen signature card. These signatures are
matched with the cheques of the account holder.
7. Making initial deposit: The applicant is
allotted an account and asked to make initial deposit in his account through a
deposit slip.
8. Account is opened: As soon as the initial
deposit is made, the account is opened.
9. Receiving of cheque book/term deposit certificate:
Finally, a cheque book is issued which bears the applicant’s account no. The
money can be withdrawn with the help of these cheques.
19. Define Cheque. Mention its
features.
Ans: A ‘Cheque’ is a bill of exchange drawn on a specified banker
and not expressed to be payable otherwise than on demand”. Features of cheque
are given below:
a)
A cheque is an order, not a request.
b)
It is an unconditional order
c)
It is always drawn on a banker and
d)
It is always payable on demand.
e)
It must be in writing.
f)
It must be signed by the account holder.
g)
It must state a certain sum of money.
20.
Explain Insurance of bank deposit and Deposit Insurance Corporation (DIC) of
India.
Ans: The term insurance of bank deposit means protecting the
interest of depositors from the risk of loss arising from bank failures. For
the purpose of insurance of bank deposit, DIC was set up India in 1962. The DIC
was merged with credit guarantee corporation of India in 1978 and was renamed
as Deposit Insurance and Credit Guarantee Corporation on India. In India the
scheme of deposit insurance covers deposits to the extent of Rs.1 lakh for each
deposits account.
21. Write a note on Debit Card,
Virtual Card, EFT, ECS, Pay-in-slip, cheque book, ATM card, Pass Book.
Ans: Debit Card is an
instrument or a card with the help of which we can buy goods and services and
pay directly the amount through the bank account. In such cards, the customer
is required to have a bank account containing some amount of deposit.
A Virtual
Card is a plastic card which is offered to an existing cardholders free of
cost whose name is registered in the Bank’s website.
Electronic
Fund Transfer is a system which is used to make fast movements of funds through
electronic media. It is a medium of making fast funds transfer.
Electronic
clearing service (ECS) is a service provided by Bank to make fast
and safe payments and receipts. It is generally used by big companies and Govt.
to make payment or receive payments from customers.
Pay-in-slip
book is a book contains some slip issued by a bank to his customer to
deposit cash, cheque, drafts, bills, etc. to his account. These books are
issued to the customer having a savings, current or recurring deposit account.
A cheque
book is a book issued by a banker containing some blank cheque forms
to the savings and current account holders to enable them to withdraw money.
The current account holders are required to withdraw money be cheque but a
saving account holder can withdraw money either by cheque or withdrawal forms
available at the bank’s counter.
ATM Card is a
plastic card provided by a bank to its customer which enables the account
holder to withdraw money through a machine called ATM which is installed
outside the bank.
Pass book is a small handy booklet issued by the banker to record the transactions between the banker and the customer. It contains an authenticated copy of the customer’s account in the bank’s ledger.