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

Reserve

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Loan

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Collateral

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Demand deposit

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Solution

The correct option is B Loan
The credit given by a bank to the public is known as loan. The loans given are recovered with an extra amount known as interest. Interest rates vary among different sources as well as banks.

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Q. Which of the following statements about banking operations is correct as they help banks to run their shops?
A. The public holds as much currency (M) as it desires to hold with it and therefore any additional money earned by it is placed in the form of deposits with banks.
B. The banks lend all the deposits received by them from public up to the minimum legal cash reserve ratio requirement determined by the RBI. It means banks do not keep any excess cash reserves with themselves.
C. The minimum legal Cash Reserve ratio is set by the RBI.
D. Bank's assets are only in the form of Cash Reserves and loans and its liabilities comprise only of the demand deposits.

A ___________ is the most developed credit instrument of the bank, for the withdrawal of deposits.

From the following particulars, find balance as per cash book as at March 31, 2018.
(i) Credit balance as per pass book Rs 9,250
(ii) Credit card bill paid by bank Rs 3,200
(iii) Dividend received directly in bank Rs 2,500
(iv) Direct deposits by customers Rs 2,750

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

The correct option is B LoanThe credit given by a bank to the public is known as loan. The loans given are recovered with an extra amount known as interest. Interest rates vary among different sources as well as banks.

The correct option is B Loan
The credit given by a bank to the public is known as loan. The loans given are recovered with an extra amount known as interest. Interest rates vary among different sources as well as banks.