FREE Bachelor of Commerce: Banking & Insurance Questions and Answers

Question 1

Demand deposit is also referred to as _____________ .

Accepted Answer

Current a/c

Answer

Demand deposits are funds held in bank accounts that can be withdrawn by the account holder at any time without prior notice. Current accounts are a type of demand deposit, primarily used by businesses for frequent transactions, offering high liquidity and often no interest. They allow for immediate access to funds, fitting the definition of a demand deposit.

Question 2

It is known as———— for commercial banks to increase deposit by increasing their loans and advances.

Accepted Answer

Credit creation

Answer

Credit creation is the process by which commercial banks expand the money supply by granting loans and advances. When a bank gives a loan, it credits the borrower's account, which is a new deposit. This new deposit can then be used, leading to further deposits in other banks, thus multiplying the initial deposit and creating more credit in the economy.

Question 3

The central bank levies interest at a rate known as __________ for rediscounting and providing advances.

Accepted Answer

Bank rate

Answer

The Bank Rate is the rate at which the central bank (like RBI in India) lends money to commercial banks without collateral, primarily for rediscounting bills of exchange or providing long-term advances. It serves as a benchmark rate and influences other interest rates in the economy, acting as a key tool for monetary policy.

Question 4

On ___________ , 14 commercial banks were nationalized.

Accepted Answer

19 July 1969

Answer

On July 19, 1969, the Indian government, under Prime Minister Indira Gandhi, nationalized 14 major commercial banks. This landmark decision aimed to align the banking sector with the government's socialist objectives, ensuring that credit was directed towards priority sectors like agriculture and small industries, rather than being concentrated in the hands of a few industrialists.

Question 5

On _________ , the State Bank of India was created under the State Bank of India Act.

Accepted Answer

1955

Answer

The State Bank of India (SBI) was established on July 1, 1955, under the State Bank of India Act, 1955. It was formed by nationalizing and renaming the Imperial Bank of India, with the objective of extending banking facilities to rural areas and supporting economic development, particularly in agriculture and small-scale industries.

Bcom Bachelor of Commerce Practice Test

Bcom Bachelor of Commerce Practice Test

FREE Bachelor of Commerce: Banking & Insurance Questions and Answers