Class 11 Finance Important Chapter 3 Banks

Class 11 Finance Important Chapter 3 Banks Solutions English Medium As Per AHSEC New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 11 Finance Important Solutions and select need one. AHSEC Class 11 Finance Additional Notes English Medium Download PDF. HS 1st Year Finance Important Solutions in English.

Class 11 Finance Important Chapter 3 Banks

Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 11 Banking Additional Question Answer are part of All Subject Solutions. Here we have given HS 1st Year Banking Important Notes in English for All Chapters, You can practice these here.

Banks

Chapter: 3

IMPORTANT QUESTION AND ANSWER

Answer the Following Question:

1. What is the primary function of a bank?

Ans: The primary function of a bank is to accept deposits from the public and advance loans to those in need.

2. What is meant by credit creation by banks?

Ans: Credit creation is the process by which banks lend more money than the actual cash reserves they hold, thereby increasing the money supply.

3. Why must a banking company include ‘bank,’ ‘banker,’ or ‘banking’ in its name?

Ans: As per the Banking Regulation Act, 1949, only companies with these words in their name are allowed to carry out banking business in India.

4. What are the different types of deposits accepted by banks?

Ans: Banks accept various deposits such as savings deposits, current deposits, fixed deposits, and recurring deposits.

5. Name any three types of banks and their main functions.

Ans: Central Bank (monetary control), Commercial Bank (accept deposits and give loans), Regional Rural Bank (serve rural sectors).

Fill in the Blanks:

1. The Banking Regulation Act was enacted in the year _______.

Ans: 1949.

2. Banks accept deposits and grant loans to _______.

Ans: Needy borrowers.

3. The unique feature of banks is the ability to create _______.

Ans: Credit.

4. A banking company must use the word ‘bank’ or ‘banking’ as part of its _______.

Ans: Name.

5. Savings, current, fixed, and recurring are types of _______ accepted by banks.

Ans: Deposits.

Short Notes:

1. Definition of Bank.

Ans: A bank is a financial institution that accepts deposits from the public and grants loans and advances to the needy borrowers. It transacts in money and credit and deals with monetary instruments like cheques, drafts, and promissory notes. It operates for profit by earning the interest rate differential.

2. Credit Creation.

Ans: Credit creation is a unique function of banks where they lend more money than their actual reserves. When banks grant loans, they create deposits, thereby increasing the money supply in the economy. This process is essential for economic growth but is regulated by reserve requirements.

3. Types of Banks.

Ans: Banks are classified based on their functions and target sectors. The central bank regulates monetary policy, commercial banks serve general public needs, regional rural banks focus on rural development, cooperative banks support cooperative societies, and development banks provide long-term finance to industries.

True or False:

1. Banks are socio-economic institutions primarily focused on welfare.

Ans: False.

2. The Banking Regulation Act, 1949, defines the term ‘banking’ in India.

Ans: True.

3. All banks are allowed to use the word ‘bank’ in their name regardless of their function.

Ans: False.

4. Banks accept deposits repayable on demand or after a fixed period.

Ans: True.

5. Credit creation is not a feature of banks.

Ans: False.