COMMERCIAL BANK IN INDIA
CHAPTER=1
COMMERCIAL BANK IN
INDIA
VERY SHORT-ANSWER TYPES QUESTIONS FOR (1
MARKS)
Q.1. In
which year the Imperial Bank of India Act was passed?
Ans:- The Imperial Bank of India Act was
passed in 1920.
Q.2. In which year the imperial bank was established
OR came in to existence??
Ans:- The
imperial bank was established on 27th January 1921.
Q.3. In
which year the Imperial Bank of India was nationalized?
Ans:- On July 1, 1955 and it is renamed as state
bank of India.
Q.4.In which year the State bank of India was established?
Ans:- The
state bank of India was established on July 1, 1955.
Q.5. What was the previous name of State bank of India?
Ans:- The
previous name of state bank of India was the imperial bank of India.
Q.6.In which year lead bank scheme was introduced?
Ans:- The lead
bank scheme was introduced in December 1969.
Q.7.Choose the correct there are 19/23/27 private sector banks in India.
Ans:- There
are 27 private sector banks in India .
Q.8. In which year fourteen Indian commercial bank were nationalised?
Ans:- 19th
July 1969
Q.9. How many Associate Banks of SBI are
there?
Ans:- There are at present 6 Associated Banks of
SBI.
Q.10.
Mention two foreign banks leading in India?
Ans:- (i)
Bank of Tokyo (ii) City Bank.
Q.11. Name three private sector bank in India?
Ans:- 1. ICICI bank (2) Axis bank (3) HDFC
bank.
Q.12. Name three public sector bank in India?
Ans:- (1) Andhra
bank (2) corporation bank (3) bank of India.
Q.13. How many public sector bank in India?
Ans:- There
are 19 public sector bank in India.
Q.14. What was the full form of the followings?
IDBI, IFCI, SIDBI,
NABARD, EXIM, UTI
Ans:- IDBI :- Industrial
development bank of India.
IFCI:
- Industrial finance corporation of India.
SIDBI:
- Small industries development bank of India.
NABARD:-
National bank of agricultural and rural development.
EXIM:-
Export-Import bank of India.
UTI:-
Unit trust of India.
Q.15. How was the imperial bank of India formed?
Ans:- The
imperial bank of India was formed into amalgamated three presidency
banks.
i) The bank of Bengal (1809)
ii) The bank of Bombay (1840)
iii) The bank of Madras (1843)
SHORT-ANSWER TYPES QUESTIONS FOR (2/3/5/6/7)
Q.1.
What is the meaning of bank?
Ans:- Bank
refers to a financial institution which deals in money. This institution
accepts deposits from the public and advance loans to those who are in need.
Besides this, providing other services to its customers and general public like
collection and payment of bills, remittance of funds, locker facility, safe
custody of valuable etc.
According to Oxford Dictionary, “Bank
is an Establishment for the custody of money. Which it pays out on customer
order.
Q.2. What is meant by private sector bank?
Ans:- Private
sector banks are those banks which are owned private individuals or business
corporations which is not by government or co-operative societies are included
in this category.
Q.3 What is meant by public sectors bank?
Ans:- public sector bank are those
bank in which the government has majority share holding at least 51% percent.
In India public sector bank are owned and controlled by the government either
directly through the reserve bank of India.
Q.4.Write a short note about imperial
bank of India?
Ans:- The three presidency banks were
amalgamated into the imperial bank of India which was brought into existence on
27th January 1921 by the imperial bank of India Act 1920.
The imperial bank performed
both central and commercial banking business. The major central banking
business, the major central banking function discharged by the bank before the
establishment of the reserve bank of India were as follows:-
·
It
acted as a banker’s bank
·
It
acted as an exchange bank and promoted foreign trade.
Q.5. What is the meaning of cash credit?
Ans :- A Cash Credit is an arrangement by which a banker allows his
customer having current account borrow money up to a certain limit against an
agreement supported by a bond of credit against securities. Also , the interest
is charged on the amount borrowed.
Q.6. What is meaning of lead bank scheme? What are the objective of lead
bank scheme?
Ans:- The lead
bank scheme was introduced in 1969 to provide lead roles to individual (both in
public sector and private sector) for the district allotted to them. The lead
bank scheme introduced because rural area were not able to enjoy the benefit of
banking. So a bank (public or private) was given some area in which that bank
had not play a lead role in providing financial services to the people.
The Objectives of lead bank scheme are
i. Opening of bank branches in the allotted
district.
ii. Mobilization
of savings of the allotted district.
iii. Extending
credit facilities for the development of allotted district.
iv.
Maintaining liaison with district administration and Promoting districts
development programme.
v. Co-ordination
of the activities of commercial banks, co-operative banks and other financial
institutions
in the allotted district.
Q.7. What is schedule commercial bank?
Ans:- Scheduled
banks refer to those banking institutions whose names are included in the
second schedule of the reserve bank of India Act 1934.
Q.8. What is presidency banks?
Ans:- The
banking business of agency houses which survived and continued to carry on
trade and banking together was progressively taken over by the presidency banks
the three presidency bank are-
i.
The
bank of Bengal (1809)
ii.
The
bank of Bombay (1840)
iii.
The
bank of madras (1843)
Were established under the charter of
the east India company at Calcutta, Bombay and madras and performed central
banking functions for their respective areas.
Q.9. What do you mean by commercial bank?
Ans:- commercial
banks are government and regulated by Indian banking regulation Act 1949 and
accepting deposits from public for the purpose of lending investment.
Q.10. What is co- operative bank?
Ans:- These
banks are governed by provision of state co-operative societies act and are
formed to provide loan and advances to its members on easy terms. There are
important sources of rural credit also.
Q.11. Write a short-note on SBI?
Ans:- SBI:- State
bank of India was originated in the early 19th century, when the
presidency bank were established the imperial bank of India on becoming the
public sector bank was renamed as the state bank of India on 1st
July 1955 under the state bank of India act 1955.
Among the factors which guided
the establishment of the state bank of India, the main consideration was that
the country should have a big commercial bank committed to national purpose and
should take banking service to the country side.
Q.12.
State the objectives of establishment of SBI?
Ans:- The objectives of establishment
of SBI are as follows:
a)
To provide
remittance facilities to the banking institution.
b) To provide financial help to the small scale
and cottage industries.
c) To helps the RBI in implementing its credit
policies.
d) To extend banking facilities on a large scale,
particularly in the rural urban and semi-urban areas.
e) To help the Government to pursue its broad
economic policies.
Q.13. Write
a brief note on growth and evolution of banking in India.
Ans:- Pre-Independence: Banking in its crude
form is as old as authentic history. The development of banking is evolutionary
in nature. In India, ht references to money lending business are found in the
manu-smrity. the bank of Hindustan was the first bank to be set up in India
under European direction in 1770.hewever the banking business of agency house
were subsequently taken over by the tree presidency banks. The bank of Bengal
(1809), the bank of Bombay (1804) and the bank of madras (1843). These bank
were established under the charter of the east India company. in 1920, the tree
presidency bank were amalgamated in to the imperial bank of India which came
into existence in 1921. In 1935 the RBI was set up under the RBI act, 1934 as
the central bank of the country.
Post Independence:- The reserve bank was
set up as a private shareholders bank in 1935. After independence, it was
decided to nationalise the reserve bank in order to have better integration of
the policies of the bank and the macro-economic policies of the government.
Accordingly on January 1st 1949, the reserve bank of India
nationalised under the reserve bank act, 1949.
After independence there was strong demand
for the nationalisation of the imperial bank. The rural credit survey committee
recommended the nationalisation of the imperial bank of India. In pursuance of
this recommendation the government of India nationalised the imperial bank of
India and renamed it as the state bank of India on July 1st 1955
Q.14. What do you mean by chain banking? What are its advantages and
disadvantages?
Ans:- chain
banking is a system of banking in which two or more banks are controlled by an
individual, or a group of individuals or members of a family.
Chain banking is a form of
bank governance that occurs when a small group of people control a t least
three bank that are independently chartered.
Q.15.
What is branch banking? What are its advantage and disadvantages?
Ans:-
Branch banking is the most popular
and important commercial banking system. In branch banking a branch has a large
network of branches scatted all over the country.
Branch banking refers to
that banking system of baking in which a bank established its office in some
big cities and operated the various branches all over the country. Some of its
branches may be in foreign countries.
The
followings are the advantages of Branch banking
1.
Benefits in large operation:- Branch banking system reaps the
benefits of large scale operation. Due to large scale operation the cost per
unit of services in case of this system is low.
2.
Effective system bank control:- The central bank of the country can
effectively and easily regulate the activities of bank in his system.
3.
Public confidence:- Branch banking system has inspired
greater public confidence on the banking system by virtue of its large scale
operation and huge financial resources
4.
Better customer services:- The customers of a bank can avail
of better service under branch banking system. Because of the large number of
branches, each branch is required to deal with a limited number of customers.
The followings are the disadvantages
of branch banking:-
1.
Problem of management:- Effective management and control of
banks under branch banking of system is difficult and the degree of difficulty
increases as the number of branch goes on increasing.
2.
Delay in decision making:- In branch banking system there is usually
a delay in taking decision. It is because the branch manager has to decide in
consultation with the head office which crated inordinate delays.
3.
Ignorance of local needs:- The branch are managed by the branch
manager according to the policies laid down by the head office. The branch
manager and the head office may not be aware of the local conditions and
special needs.
4.
Expensive:- it is an expensive system of
banking, many expenses are to be incurred to maintain coordination between
different branches of bank.
Q.16. What is Unit banking? What are the advantages and disadvantages of
Unit banking?
Ans:- Unit
banking system in which a bank operates in specified area generally small and
limited area. A unit bank performs its activities through a single office
within limited resources having no branches.
The advantages of unit banking:-
1.
Easy management and control:- Easy management and control of unit
banks is much easier and effective due to the small size and operative of local
the banks.
2.
Satisfaction of local needs:- Unit banking being a localised
banking can serve to fulfil local needs. The banks are aware of the local
problems and needs and thus are in a better position to satisfy the local
expectations.
3.
Quick decision:- In this system there is on the spot
decision making by the bank management because there is no necessity of
consultation and approval from external authority.
4.
Personalised services:- A unit bank has personal knowledge of each of his
customer asnd this can provide personalised services.
The followings are the disadvantages of
Unit banking:-
1.
No distribution of risk:- Unit bank are local based. It means
that there is no possibility of geographical distribution of risk. Unit banks
fail to diversify the risk because of high localised operations.
2.
Lack of division of labour and
specialisation:-
unit bank are small scale banks with limited scope. These banks lack division
of labour and specialisation.
3.
Lack of trained staff:- unit bank may not be able to employ
highly tainted and specialised staff because of small scale operation
4.
Lack of banking facilities in small
town:- these banks
do not open their offices in small town and confine their activities only to
big cities.
Q.17. What is group banking? What are the advantages and disadvantages of
group banking?
Ans:- Group banking is that system of
banking in which two or more bank are directly or indirectly controlled by
holding company. Under group banking, a holding company control and manages the
functioning of its subsidiary banks.
The followings are the advantages of group
banking:-
1.
Economic of large scale operations:- The participating banks can avail of
the benefits of large scale operation e.g. economic in advertisement,
purchasing stationeries, etc.
2.
Broader market:- It offer broader marker to the
member banks. This helps the member banks to improve their earning capacity and
network.
3.
Diversification of risk:- There is the possibility of diversifying
and distributing risk of business under this system.
The followings are the disadvantages of group banking:-
1.
Concentration of economic power:- Group baking is a step towards
monopoly banking. In this system there is the possible of concentration of
economic power in a few hands.
2.
Ineffective management and control:- This system suffers from inefficient
management. The control of the holding company is indirect and more flexible.
3. Chain
reaction:- In this system there is
chain reaction. In other words, failure of one bank in the group adversely
affects other member bank.
Q.18.
Explain the function of SBI? (State bank of India)
Ans:- The following function performs by SBI:
1. Government banker:- State bank receives money from the people and makes them payments on
behalf of the government. It performs some of the function of state treasuries
and central government treasury it also arrange for public loans.
2.
Agent of the reserve bank :- State bank of India acts as the
agents of RBI. It functions on behalf of RBI at places where there are no
branches of RBI.
3.
Banker’s bank:- State bank of India acts as a bank of
the banker’s it accepts deposits from the banks and gives them loans in times
of needs.
4.
Function of commercial banks:- State bank function as a commercial
bank. It accepts deposits from people advancing loans, invests in securities,
sells and purchases gold and silver coins and keeps in its custody the
valuables of the peoples etc.
5.
Holding banks:- SBI is the holding bank of seven Subsidiaries bank.
Q. 19. State the objectives of bank nationalization of India?
Ans:- The
objectives of bank nationalization of India:-
i.
To
meet the legitimate credit needs of private sector industry and trade big or
small.
ii.
To
curb the use bank credit for speculation management and other unproductive
purpose.
iii.
To
develop adequate professional management and modern managerial techniques and
practices in banking field.
iv.
To
provide adequate training and reasonable terms of service to bank staff.
v.
To
expanded the branch network of bank in all parts of country.
vi.
To
meet the needs of productive sector of economy particularly farmers, small
scale industrialist, and self employed professionals.
Q.20. What are the three functions lead bank?
Ans:- The main functions of a lead
bank are as follows:-
i.
To
ascertain the availability of resources and the scope of development of banking
in the allotted district.
ii.
To
provide assistance to other lending institution of the allotted district.
iii.
To
maintain liaison or contact with government and semi government agencies.
iv.
To
ascertain the credit needs of business and industrial units in the allotted
district.
v.
To
make provision for training of small farmers and other small borrowers so as
ensure proper utilisation of fund.
Q.21. What are the different between branch banking and unit banking
system?
Ans:- The followings ate the different between branch banking and unit
banking system:-
|
Branch banking system
|
Unit Banking system
|
|
1. Under branch banking a big bank with a single
institution and under single ownership operates through a network of
branches.
|
1. Under unit banking an individual bank operates
through a single office.
|
|
2. Under this system the bank face lower risk and greater
capacity to meet risk.
|
2. Under this system the bank operation are highly
localized.
|
|
3. In this system the banks sometime become
unmanageable due to large increase in the number of branches.
|
3. The management and supervision of unit bank is much
easier and hence there is less chances of frauds and other irregularities.
|
|
4. In this system there is transfer of resources from
rural and backward areas to big industrial and commercial centre.
|
4. There is no such transfer of resources under this
system and hence, this system tends to reduce regional imbalances.
|
Q.22. What are the differences
between public sector bank and private sector bank?
Ans:- The following are the main different between public sector
and private sectors:-
|
Public sector
|
Private sector
|
|
1.
Public Sector banks are owned by the government.
|
1. Private Sector banks are owned by private
individual or entrepreneurs.
|
|
2. Public sector banks may be set up as statutory
corporation by special Acts passed by the parliament status bank of India.
|
2. Private sectors banks are always set up as a
company under the companies act.
|
|
3. Public Sector banks are Indian banks and they do
not include foreign banks.
|
3. Private Sector banks may be Indian
banks as well as foreign banks.
|
|
4. Public Sector banks aims at serving the society
besides earning profit.
|
4. Private Sector banks are motive driven by profit
motive.
|
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