Modern Banking Answers
Modern Banking Answers
Modern Banking Answers
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Modern banking descriptive Question Answers:
Central Banks:
Commercial Banks:
Industrial Banks or Financial Institutions:
Exchange Banks (Authorized Dealers in Foreign Exchange):
Co-operative Banks:
Land-mortgage Banks (Presently known as Agriculture and Rural Development Banks):
Indigenous Banks:
Savings Banks:
Supranational Banks:
International Banks:
Branch Bank is a type of banking system under which the banking operations are carried with the help of branch net
the branches are controlled by the Head Office of the bank through their zonal or regional offices.
Advantages of Branch Banking: Branch banking system has the following advantages:
1. Economies of Large Scale operations:
2. Economy of Cash Reserves:
3. Proper use of capital:
4. Economy of Costs:
5. Risks-spreading Economy:
Disadvantages or Demerits of Branch Banking: Branch banking generally suffers from the following limitations:
1. Danger of Mismanagement:
2. Delays in Decision-making:
3. Lack of Personal Contact:
4. High operating and maintenance expenses:
Functions of NABARD:
1. To serve as an apex financing agency for the institutions providing investment and production credit for promotin
developmental activities in rural areas;
2. To take measures towards institution building for improving absorptive capacity of the credit delivery system, inc
monitoring, formulation of rehabilitation schemes, restructuring of credit institutions and training of personnel;
3. To coordinate the rural financing activities of all institutions engaged in developmental work at the field level and
with the Government of India, the State Governments, the Reserve Bank and other national level institutions concern
policy formulation; and
4. To undertake monitoring and evaluation of projects refinanced by it.
5. NABARD gives high priority to projects formed under Integrated Rural Development Programme (IRDP).
6. It arranges refinance for IRDP accounts in order to give highest share for the support for poverty alleviation progr
by Integrated Rural Development Programme.
7. NABARD also gives guidelines for promotion of group activities under its programs and provides 100% refinance
for them.
8. It is setting linkages between Self-help Group (SHG) which are organized by voluntary agencies for poor and nee
areas.
1.) Cheque is issued by customer, whereas Demand draft is issued by the bank.
2.) In cheque payment is made after presenting cheque to bank, while in DD is given after making payment to bank.
3.) Cheque can bounce due to insufficient balance . DD cannot be dishonored as amount is paid before hand.
4.) Payment of cheque can be stopped by drawee, whereas payment cannot be stopped in DD.
5.) A cheque can be paid to bearer or order. While, DD is paid to person on order.
6.) In cheque drawer and payee are different person. In DD, both parties are banks.
7.) A cheque needs signature to transfer amount, While DD does not require individuals signature to transfer fund, it
have the signature of banker with his ID no.
The primary functions of a commercial bank can be classified into two as below:
Accepting Deposits, and
Lending Money.
Generally banks accept the following types of deposits:
Current Deposits.
Savings Deposits.
Fixed Deposits.
Recurring Deposits
Different types of lending by commercial banks:
Personal Loans: Most banks offer personal loans to their customers and the money can be used for any expense lik
bill or purchasing a new television. ...
Credit Card Loans: ...
Home Loans: ...
Car Loans: ...
Two-Wheeler Loans: ...
Small Business Loans: ...
Payday Loans: ...
Cash Advances:
RBI has authority to regulate and administer the entire banking and financial system. Some of its supervisory functio
given below.
Granting license to banks
The RBI grants license to banks for carrying its business. License is also given for opening extension counters, new
even to close down existing branches.
Bank Inspection
The RBI grants license to banks working as per the directives and in a prudent manner without undue risk. In additio
can ask for periodical information from banks on various components of assets and liabilities.
Control over NBFIs
The Non-Bank Financial Institutions are not influenced by the working of a monitory policy. However RBI has a rig
directives to the NBFIs from time to time regarding their functioning. Through periodic inspection, it can control the
Implementation of the Deposit Insurance Scheme
The RBI has set up the Deposit Insurance Guarantee Corporation in order to protect the deposits of small depositors.
deposits below Rs. One lakh are insured with this corporation. The RBI work to implement the Deposit Insurance Sc
case of a bank failure.