SEBA Class 9 An Introduction to Commerce Chapter 7 Basic Concept of Banking Solutions in English Medium to each chapter is provided in the list so that you can easily browse throughout different chapters SEBA Class 9 An Introduction to Commerce 7 Basic Concept of Banking Question Answer, SEBA Class 9 Elective An Introduction to Commerce Notes in English Medium and select need one.
SEBA Class 9 An Introduction to Commerce Chapter 7 Basic Concept of Banking
Also, you can read the SCERT book online in these sections Solutions by Expert Teachers as per SEBA (CBSE) Book guidelines. SEBA Class 9 An Introduction to Commerce Chapter 7 Basic Concept of Banking Notes. These solutions are part of SCERT All Subject Solutions. Here we have given Elective An Introduction to Commerce Class 9 SEBA Solutions for All Chapters, You can practice these here.
Basic Concept of Banking
Chapter – 7
| UNIT – III BANKING |
| Questions |
1. Define Bank. What do you mean by Banking Service?
Ans: Bank is a financial institution which accepts deposits from the public in order to provide loans to various parties, subject to repayable such deposits on demand and provide various financial services for the public.
Banking services are the financial activities that banks perform for their customers. These services include accepting deposits, lending money, and providing access to funds.
2. Write the characteristics of Bank.
Ans: The characteristics of Bank are mentioned below:
(i) It may be an Individual/Firm/Company.
(ii) It is a profit and service oriented institution.
(iii) It acts as a connecting link between borrowers and lenders.
(iv) It deals with money.
(v) It accepts deposits from public.
(vi) It provides Advances/Loans/Credit to customers.
(vii) It provides payment and withdrawals facilities.
(viii) It provides agency and utility services.
3. What are the primary functions of Bank?
Ans: The primary functions of commercial banks can be classified into two types:
(a) Accepting of Deposits: Banks accepts deposits from the public and provide safe custodian to their fund. Deposits are an important source of a bank’s funds. They can be classified into following categories.
(i) Saving Deposits: These are the small amounts accepted by the banks in form of deposits from the public to encourage savings. Here, a customer can make limited number of withdrawals from such deposits.
(ii) Fixed Deposits: These deposits are made for a long term. Highest rate of interest is given on such deposits. Customers can withdraw money only at the end of the term, not before that.
(iii) Current Deposits: These deposits are mainly used by the business personals. Here, a customer can make unlimited numbers of deposits as well as withdrawals. All money are payable on demand. Usually, banks do not pay any interest in respect of such deposits.
(iv) Recurring Deposits: Recurring Deposits is one form of saving deposit. In this type of deposit, at the end of every week or month, a fixed amount is deposited regularly. The amount can be withdrawn only after specified period. The rate of interest on such amount stands favourably as compared to the rate of interest on the saving deposits.
(b) Lending of money: A major portion of the deposits received by a bank is lent by it. This is also the major source of a bank’s income. However, lending money is not without risk and, Therefore, a banker must take proper precautions in this process.
The lending may be in any of the following forms:
(i) Loan: When certain amount of money in the form of an advance is given for a certain period to the customers is called Loan. Interest is charged on it.
(ii) Cash Credit: It is an agreement between a banker and a customer to draw a certain amount of money. A customer can withdraw the money as and when required in installment. Interest is charged only on the amount withdrawn by Him.
(iii) Overdraft: Overdraft is an arrangement between a banker and his customer by which the customer is allowed to withdraw over and above the credit balance in the current account upto an agreed limit. The interest is charged only for the amount sanctioned. It is given either on personal security or on the security of Assets.
(iv) Discounting and purchasing of bills: Bank grants advance to their customers by discounting bills of exchange. When the bank grants advance on the bills before the date of maturity, then the interest till the date of maturity from the date of sanctioning the advance is deducted. This deduction is called discounting.
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