Tag: functions of commerical banks

Questions Related to functions of commerical banks

State the following statement is True or False:
Request of secretary to the bank not to make the payment of cheque is known as stop payment.

business organisation and correspondence functions of commerical banks other services and modern trends in banking sector types of banks diversified banking functions

  1. True

  2. False

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Correct Option: A
Explanation:

Request of secretary to the bank not to make the payment of cheque is known as stop payment- this is a true statement. This request is made in order to stop the payment of the cheque so that misuse of  the cheque is prevented. This request is to be made by the customer who issued the cheeque.

Joint Stock Company opens a saving account.
business organisation and correspondence functions of commerical banks other services and modern trends in banking sector types of banks diversified banking functions

  1. True

  2. False

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Correct Option: B
Explanation:
(i) Bank is a financial institution.
(ii) It helps a company. in solving the difficulties of money. 
(iii) It also provides number of services to the Joint Stock Company. 
(iv) Joint Stock Company mostly deals, with the Commercial Banks / Co-operative Bank. 
(v) The company receives number of cheques, demand drafts to be encashed and also number of cheques for payment. 
(vi) The Joint Stock Company takes help of banks for short term credit facilities and long term financial assistance.
(vii) For all this, it has to open a current account with the bank. 
(viii) To encourage saving habit among people, a bank allows depositors to open saving account. 
(ix) In such type of account, the depositor can withdraw money only two times in a week. 
(x) Trading or business concerns, firms or Joint Stock Company should not open saving account.

State with reasons whether the following statements are True or False.
In cash credit, customers account is credited by a bank with the sanctioned amount.

business organisation and correspondence functions of commerical banks other services and modern trends in banking sector types of banks diversified banking functions

  1. True

  2. False

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Correct Option: A
Explanation:

Cash credit is a facility given to current account holder of the bank, to withdraw money even when there is no credit balance. 

There is a limit fixed to the borrowing. The interest on this facility is charged on the running balance and not on the borrowing limit.

Bank is a ________ institution.
business organisation and correspondence functions of commerical banks other services and modern trends in banking sector types of banks diversified banking functions

  1. financial

  2. social

  3. cultural

  4. all of above

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Correct Option: A
Explanation:

Bank is a financial  institution. It accepts deposits from the lenders and gives loans tot he borrowers. Banks help to improve the financial stability of an economy.

Board resolution is not required to open the current account with a bank.

business organisation and correspondence functions of commerical banks other services and modern trends in banking sector types of banks diversified banking functions

  1. True

  2. False

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Correct Option: B
Explanation:

As a Company is a separate legal entity, the board resolution is required in addition to the other documents for opening a bank account.

Stop payment letter is usually made to prevent the misuse of the cheque when the cheque is _______.
business organisation and correspondence functions of commerical banks other services and modern trends in banking sector types of banks diversified banking functions

  1. lost

  2. issued

  3. credit

  4. None of these

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Correct Option: A
Explanation:

Stop payment letter is usually made to prevent the misuse of the cheque when the cheque is lost. A customer who issued the cheque can write a stop payment letter. This stop payment letter is used to issue in order to stop the misuse of the lost cheque.

State the following statement is True or False:
Pay-in-slip is commonly called as a deposit-slip.

business organisation and correspondence functions of commerical banks other services and modern trends in banking sector types of banks diversified banking functions

  1. True

  2. False

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Correct Option: A
Explanation:

Pay-in-slip is also called as a deposit slip. When a person deposits cheque or cash into a bank account, pay-in=slip is filled in. It has the details viz account number, amount, date, etc. Depositor need not be account holder.

_________ account is suitable for salaried people.
business organisation and correspondence functions of commerical banks other services and modern trends in banking sector types of banks diversified banking functions

  1. Current

  2. Saving

  3. Over draft

  4. None of these

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Correct Option: B
Explanation:

Salary Account opened with a bank is a form of savings account. It is generally as 'Zero balance' account. It encourages savings among salaried people.

Current account is opened by business entities who have numerous transactions.
Overdraft is a facility given by the bank to the account-holders (basically current account holders).