Loan Activities

Q.

What is an interest suspense account and how is it calculated?

Q. Identify the main source of income for banks.

1. Renting out assets attached as collateral for loans
2. Collecting high interest on loans and offering low interest on savings
3. Collecting low interest on loans and offering high interest on savings
4. Collecting charges for transactions

Q.

How do banks mediate between those who have surplus money and those who need money?

Q. People deposit money in banks. A certain percentage of the total deposit is kept as cash for depositors to withdraw. What happens to the remaining proportion of the total deposit?

1. Deemed to be profit for the banks
2. Given out as loans
3. Paid to the government
4. Paid to the RBI

Q. Why does the Reserve Bank of India require banks to hold back a portion of their deposits as cash with themselves?

1. To pay the depositors back
2. To pay employees their salaries
3. To pay for bank expenses
4. To lend special loans

Q. Identify the source of money for banks to give loans.

1. Funds from the Reserve Bank of India
2. Funds from the World Bank
3. Funds from the deposits
4. Funds from the owner's savings

Q. ____ is the money you receive from a bank or financial institution in exchange for a commitment to repay the borrowed amount with interest.

1. Cheque
2. Promissory note
3. Loan
4. Bill

Q. Can banks use all deposits as loans?

1. No
2. Yes

Q. What would happen if banks stored all the deposits without lending?

1. People will be free from the trouble of paying interests.
2. The banks will use the deposits as a profit.
3. The banks will not be able to make profit from the deposits.
4. People will not have money for production activities.

Q. connect the depositors with the borrowers.

1. Loans
2. Banks
3. Demand deposits
4. Investors

Q. What do banks do with deposits?

1. Banks give loans.
2. Banks distribute the deposits to the poor.
3. Banks keep the deposits idle.
4. Banks pay salaries.

Q. Identify the role of banks in the loan process.

1. Banks act as middlemen between the depositors and the borrowers.
2. Banks act as middlemen between the depositors and the RBI.
3. Banks act as middlemen between the RBI and the borrowers.
4. Banks act as middlemen between the farmers and the customers.