Q. In which year Co-operative Credit System was introduced? (2015/2018) (1mark)
-> 1990
Q. What is Savings Bank? (2015/2018) (2marks)
-> A savings bank is a financial institution whose primary purpose is accepting savings deposits and paying interest on those deposits. In this account money can be deposited any number of times however, restrictions are put on withdrawals from the account. Saving accounts are opened to encourage the people to save money and collect their savings. Saving accounts can be opened by salaried people, children, senior citizens etc.
Q. Name any two public sector banks in India. (2015/2017/2018) (2marks)
-> Two public sector banks in India are:-
- Central Bank
- Indian Bank.
Q. Write two functions of Regional Rural Banks. (2015/2018) (2marks)
-> The two functions of Regional Rural Banks are:-
- Mobilisation of savings- To mobilise rural savings by accepting deposits from the rural masses. The main objective is to promote savings and investment habits of the rural people who were earlier lacking these habits.
- Credit facilities- To provide short term and medium term credit to the economically weaker sections of population in the rural areas. While granting credit, they are expected in particular to cater to the needs of small and marginal farmers, agricultural labourers and landless workers, rural artisans, small businessmen, retail traders and professionally self employed persons.
Q. Explain retail banking. (2015/2018) (3marks)
-> Retail banking is also known as consumer banking. It is a major form of commercial banking which is mainly targeted to small consumers rather than corporate clients. Retail banking is the provision of services by a bank to the general public, rather than to companies, corporations or other banks, which are often described as wholesale banking. Banks are primarily financing production based activities.
Most of the branches of banks in rural, semi-urban as well as urban areas do retail banking. The main reason for the banks going for retail banking is that it trends to eliminate market risk while lending money.
Q. What is an Investment Bank? (2016/2017) (2marks)
-> 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.
Features of Investment Banks:-
1. They accept long term deposits from the public.
2. They provide long term funds to business and industry to meet their fixed capital requirements.
3. They subscribe to the shares and debentures issued by industrial concerns.
4. They underwrite the issues of shares and debentures and help selling these securities to the investing public.
Q. Name any two public sector banks in India. (2015/2017/2018) (2marks)
-> Two public sector banks in India are:-
- Central Bank
- Indian Bank.
Q. Narrate five differences between co-operative bank commercial bank. (2015/2016/2018) (5marks)
->
| Basic | Commercial Bank | Co-operative Bank |
| Meaning | A bank that offers banking services to individuals and businesses I know as a commercial bank. | A bank set up to provide finance to agriculturists, rural industries and to trade and industry of urban areas (but up to a limited extent). |
| Nature | These are ordinarily financial institutions. | These are not profit seeking institutions. |
| Credit creation | Commercial bank can create credit | Co-operative bank can create credit. |
| Banking service | Commercial banks offer an array of services. | Co-operative banks have a comparatively less variety of services. |
| Interest rate on deposits | In commercial banks interest rate on deposits is less. | In co-operative banks, the interest rate on deposits is slightly higher. |
Q. What are the differences between Commercial Bank and Central Bank? (2017/2019) (5marks)
| Basis | Central Bank | Commercial bank |
| Meaning | The bank which looks after the monetary system of the country is known as the Central Bank. | The establishment, which provides banking services to the public, is known as Commercial Bank. |
| What is it? | It is a banker to the banks and the government of the country. | It is the banker to the citizens of the nation. |
| Profit motive | It does not exist for making profit for its owners. | It exists for making profit for its owners. |
| Monetary Authority | It is the supreme monetary authority with wide powers. | No such authority. |
| Deals with | Banks and Governments. | General Public. |
Q. Describe the Characteristics of Regional Rural Bank. (2017/2019) (5marks)
-> Regional Rural Banks were set up on the recommendations of a working group headed by M. Narasimham in 1975. RRBs are local level banking organisations operating in different states of our country to fulfil the needs of small and marginal farmers, agricultural labourers and landless workers, small businessmen, etc. by providing short-term and medium-term credit.
Characteristics of Regional Rural Bank:-
1. The RRBs have a particular operation area. They remained confined to a particular district.
2. They are sponsored by the public sector bank.
3. The authorized capital of RRBs is Rs. 5 crore at present and issued capital is at Rs. 1 crore.
4. The RRBs are dependent on NABARD for financial support. The NABARD provides refinance to the RRBs at concessional interest rate.
