FREE Bachelor of Commerce: Banking & Insurance Questions and Answers
The process of creating a derivative deposit using funds from a primary deposit is known as _______ .
The process of creating a derivative deposit using funds from a primary deposit is indeed known as "credit creation." Credit creation refers to the ability of banks to create new money in the economy by extending loans and advances to borrowers. When a bank receives a primary deposit (like a customer's deposit), it can use a portion of that deposit to issue loans or make investments, thereby creating new derivative deposits in the accounts of borrowers. This process contributes to the expansion of the money supply and plays a vital role in the functioning of the monetary system.
The first Indian joint-stock bank?
The "Imperial Bank of India" was not the first Indian joint-stock bank. The first Indian joint-stock bank was the "Bank of Bombay," which was established in 1840. It was later followed by the "Bank of Bengal" and the "Bank of Madras." These three banks collectively came to be known as the "Presidency Banks." The Imperial Bank of India was established in 1921 by merging the three Presidency Banks. It served as a precursor to the Reserve Bank of India (RBI), which was established in 1935 as the central bank of the country.
The company's slogan is "Buy now, pay later."
The company's slogan "Buy now, pay later" is associated with the concept of a "credit card." Credit cards are payment cards that allow consumers to make purchases on credit and defer payment until a later date, typically at the end of the billing cycle. This slogan reflects the convenience of using a credit card to make immediate purchases without having to provide immediate payment, with the understanding that the cardholder will settle the payment later according to the terms and conditions of the credit card agreement.
Global bank accounts are connected by satellite offered by ________ .
Global bank accounts are connected by satellite through the network provided by "SWIFT," which stands for the Society for Worldwide Interbank Financial Telecommunication. SWIFT is a global messaging network that facilitates secure and standardized communication between financial institutions, including banks, across the world. It enables banks to exchange messages related to financial transactions, payments, and other banking operations. While SWIFT primarily uses terrestrial communication infrastructure, including satellites, its network ensures efficient and secure communication among banks internationally.
Demand deposit is also referred to as _____________ .
Demand deposit is also referred to as a "current account" or "checking account." It's a type of bank account that allows customers to deposit and withdraw funds on demand, providing easy access to their money for day-to-day transactions. The terms "demand deposit" and "current account" are often used interchangeably to describe this type of account.
An overdraft is a credit facility made available to holders by commercial banks.
An overdraft is indeed a credit facility made available to account holders by commercial banks, often associated with a "current account" or "checking account." An overdraft allows an account holder to withdraw more money from their account than the actual balance, up to a pre-approved limit. This provides flexibility and short-term credit for individuals or businesses to manage temporary cash flow gaps or unexpected expenses. The overdraft facility is typically linked to a current account and is subject to interest charges on the amount overdrawn.
Real-time money transfers from one bank account to another are made possible by the technique ________ .
Real-time money transfers from one bank account to another are made possible by the technique known as "RTGS" or Real-Time Gross Settlement. RTGS is a payment system that enables instantaneous and individual settlement of interbank transactions, allowing funds to be transferred from one bank to another in real-time and on a gross basis. This technique ensures that each transaction is settled individually without netting, making it suitable for large-value and time-sensitive transactions.
It is known as———— for commercial banks to increase deposit by increasing their loans and advances.
It is known as "credit creation" for commercial banks to increase deposits by increasing their loans and advances. Credit creation refers to the process by which commercial banks create new money in the economy by extending loans and advances to borrowers. When banks provide loans, they essentially create new deposits in the borrower's account, effectively increasing the money supply. This process plays a significant role in the functioning of the monetary system and the expansion of the economy's money stock.
RTGS was introduced in India on ________ .
RTGS (Real-Time Gross Settlement) was introduced in India on 26 March 2004. RTGS is a payment system that allows for real-time and immediate settlement of interbank transactions. It enables funds to be transferred from one bank to another in real-time on a gross basis, meaning each transaction is settled individually and without netting. This system is used for large-value and time-critical transactions, providing a secure and efficient means of transferring funds between banks in India.
Another name for money on short notice and call is ___________ .
Another name for money on short notice and call is the "Interbank call money market." The Interbank call money market is a segment of the financial market where banks lend and borrow funds from each other on an overnight basis. This short-term lending and borrowing activity allows banks to manage their daily liquidity requirements and maintain a balanced position in their reserves. The term "call money" refers to funds that can be recalled or repaid on short notice, making it a convenient way for banks to address immediate funding needs.
__________is the electronic transfer of funds between bank accounts.
In 1926, the ______ commission advocated the establishment of a central bank.
Prepaid cards are known as e-purses and go by the name _________ .
Repaid cards are indeed known as e-purses and go by the name "Stored value cards." Stored value cards, often referred to as prepaid cards, are a type of payment card that is preloaded with a specific amount of money. Users can spend the prepaid amount by making purchases until the card's balance is exhausted. These cards are commonly used for various purposes, such as gift cards, travel cards, and general-purpose reloadable cards, providing a convenient and controlled way to manage spending without a credit line.
On _________ , the State Bank of India was created under the State Bank of India Act.
On 1 July 1955, the State Bank of India (SBI) was created under the State Bank of India Act. The SBI is the largest public sector bank in India and serves as the nation's central bank for banking operations. The creation of the State Bank of India was a pivotal moment in the Indian banking industry, consolidating several predecessor banks into a single entity and laying the foundation for a strong and centralized banking system in the country.
The central bank levies interest at a rate known as __________ for rediscounting and providing advances.
The central bank levies interest at a rate known as the "bank rate" for rediscounting and providing advances. The bank rate is the official interest rate at which the central bank lends money to commercial banks or other financial institutions. It is an important tool used by the central bank to influence the money supply, control inflation, and regulate the overall economic activity in a country. By adjusting the bank rate, the central bank can impact borrowing costs, credit availability, and overall monetary conditions within the economy.
On ___________ , 14 commercial banks were nationalized.
On 19 July 1969, 14 commercial banks were nationalized in India. This significant event marked a major step in the Indian government's efforts to bring about social and economic reforms in the country's banking sector. The nationalization of banks aimed to promote financial inclusion, provide access to banking services for a larger portion of the population, and facilitate economic development by channeling resources into priority sectors.