Lending Loans

Q. What do banks do with the major portion of deposits that they accept from the public?

1. Keep it as reserve with the RBI
2. Keep it as reserve with the public
3. Keep it with themselves
4. Lend it to the public

Q. What is the primary source of income for banks?

1. Collateral
2. Fees
3. Fines
4. Interest

Q. Collateral refers to the agreement in which the lender supplies the borrower with money, goods, or services in return for future payment.

1. False
2. True

Q. Credit is extended by a creditor, also known as a lender, to a debtor. What is the other name of a debtor?

1. Borrower
2. Poor
3. Bank
4. Moneylender

Q. While speaking to a banker you realise that there are a variety of reasons for which people approach banks for loan. In urban areas, people mostly have a high standard of living. So, they concentrate mostly on welfare activities.

Select the reasons for which urban people usually seek loan.

1. For higher education
2. For farming
3. For buying cars
4. For daily needs

Q. When the public deposits money in a bank, it lends the deposit as credit. What is this credit known as?

1. Reserve
2. Loan
3. Collateral
4. Demand deposit

Q. How do banks make money?

1. By charging higher interest for the loan given
2. By giving low interest on deposits
3. By charging high interest for the credit than what they give for the deposits
4. By charging lower interest for the credit than what they give for the deposits

Q. How do banks use the major portion of the deposits that they collect from the public?

1. By extending loans
2. By buying buildings
3. By keeping them as reserve
4. By paying the RBI

Q. From where do banks get the money that they lend to the public?

1. Reserve Bank of India
2. Government of India
3. Deposits made by the public
4. Borrowed funds

Q. Akash deposited Rs. 10000 in his bank account. Out of this amount, his bank kept a total of Rs. 2000 with the RBI as instructed. What do you call this Rs. 2000?

1. Interest
2. Collateral
3. Deposit
4. Reserve

Q. As per the RBI, commercial banks hold approximately 15% of the total cash to arrange for daily withdrawl by depositors. What do the commercial banks do with the remaining 85%?

1. Lend to the public
2. Lend to the RBI
3. Lend to other commercial banks
4. Lend to the government