Primary Functions of a Bank

Q.

Define primary deposits.

Q.

Is borrowing by the government a revenue receipt?

Q.

Which of the following is not the function of commercial banks?

1. To accept deposits

2. To offer loans

3. To create credit

4. To fix CRR

Q.

What are the different types of depository receipts?

Q.

Commercial banks accept deposits from the public in the form of:

1. Chequeable deposits

2. Non-chequeable deposits

3. Both (a) and (b)

4. Gold deposits

Q. What is bank money?

Q. Fill in the blanks with appropriate alternatives given in the brackets.

1. Deposits from __________ account can be withdrawn without any notice. (saving/current/fixed/recurring)
2. __________ is a primary function of commercial banks. (Purchasing and selling securities/ Accepting deposits/ Safe deposit vault / Letter of credit)
3. Every loan creates a __________. (credit/ deposit/ profit/ loss)
4. Facility of E-banking is provided through __________ (telephone/ debit cards/ internet/ credit cards)

Q. Which of the following is not a function of the RBI?

1. Custodian of foreign exchange
2. Banker to the Public
3. Bank of Issue
4. Banker's Bank

Q. Assertion (A) - An increase in SLR increases the excess reserves of commercial banks and limits their lending power.
Reason (R) - A change in SLR affects the power of commercial banks to create credit.

[0.80 marks]

1. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct Explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct Explanation of Assertion (A).
3. Assertion (A) is true but Reason (R) is false.
4. Assertion (A) is false but Reason (R) is true.

Q. State with reasons whether you agree or disagree with the following statements.
A commercial bank can create credit on the basis of primary deposit.