Samacheer Kalvi 11th Commerce Guide Chapter 11 Types of Banks

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Commerce Guide Pdf Chapter 11 Types of Banks
Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Commerce Solutions Chapter 11 Types of Banks

11th Commerce Guide Types of Banks Text Book Back Questions and Answers

EXERCISE

I. Choose the Correct Answer

Question 1.
Which bank is not an Industrial Bank?
a. ICICI
b. HSBC
c. SIDBI
d. IDBI
Answer:
b. HSBC

Question 2.
The Local Area Banks are promoting ………………….
a. Rural savings
b. Business savings
c. Industrial development
d. Agricultural development
Answer:
a. Rural savings

Question 3.
Foreign banks are begun their operation since
a. 1978
b. 1979
c. 1980
d. 1981
Answer:
c. 1980

II. Very Short Answer Questions

Question 1.
Give the meaning of Commercial Banks.
Answer:
Banks which accept deposits from the public and grant loans to traders, individuals, agriculture, industries, transport, etc., in order to earn a profit.

Question 2.
What do you mean by Industrial Banks?
Answer:
Industrial banks are- financial institutions deriving funds from the sale of investment certificates and from deposits made by individual savers and investing such funds in personal loans often secured by a mortgage. It is also called a Development banks.

Question 3.
Briefly explain about Correspondent Banks?
Answer:
A bank in a country can appoint another bank in a foreign country to act as a correspondent bank.

Question 4.
What are Foreign Banks?
Answer:
Banks which have registered office in a foreign country and branches in India are called foreign banks. In 2017 there were 42 foreign banks in India and all of them were scheduled banks.

III. Short Answer Questions

Question 1.
Write a short note on Local Area Banks, Give two examples.
Answer:
The local Area Bank (LAB) scheme was introduced by the RBI in August 1996. LABs are small private sector banks established in rural and semi-urban areas. Each bank serves two or three adjoining districts only. Their main objective is to mobilize rural savings (accept deposits) and invest them in the same areas.

Examples:

1. Coastal Local Area Bank, Vijayawada, Andhra Pradesh.
2. Subhadra Local Area Bank Limited, Kolhapur, Maharashtra

Question 2.
What are the objectives involved in Regional Rural Banks?
Answer:
The Regional Rural Banks were formed under the Regional Rural Bank Act 1976, jointly by the Central Government, State Government, and a sponsor bank, in the ratio of 50:15:35. Their objectives are as follows:

• To develop the rural economy.
• Play a supplementary role in cooperative societies.
• To mobilize deposits from the rural public
• To provide finance to rural artisans, small entrepreneurs, and farmers.
• Try to avoid the public dependency on money lenders.

Question 3.
Mention the purposes of Agricultural and Co-operative banks
Answer:
Their foremost objective is providing service to its members for rural and agricultural development and not profit earning. They are set up in towns and villages rather than cities. Compared to the commercial banks they offer less variety of services as the bye-laws do not permit all commercial bank activities.

IV. Long Answer Questions

Question 1.
Explain the various types of banks based on the organization with examples
Answer:
On the basis of organization the banking may be classified into the following:
1. Unit Banking:
Unit banking refers to a bank that is a single, usually small bank that provides financial services to its local community. A unit bank is independent and does not have any connecting banks or branches in other areas. Large financial resources are available in one branch. Decision-making is in the same branch.

So time is saved. Since the funds are allocated in one branch and no support of other branches. During financial crises, the unit bank has to close down. Hence it leads to regional imbalances or no balance growth.
E.g: Chase bank in the U.S

2. Branch Banking:
Branch banking refers to a bank that is connected to one or more other banks in an area or outside of it. To its customers, this bank provides all the usual financial services but is backed and ultimately controlled by a larger financial institution.

Loans and advances are based on merit, irrespective of the status. Larger financial resources are available in each branch. There is a delay in the decision-making process as they have to depend on the head office.
E.g. Lloyds Bank in England.

Question 2.
Explain the types of banks based on ownership patterns.
Answer:
Any bank in which not less than 51 percent of shares are owned by the Government is called Government banks or public sector commercial banks. All nationalized banks (19 banks, in 2017), SBI, and IDBI Ltd. are public sector commercial banks. All of them are joint-stock company-type banks. There are corporation-type banks. Each corporation type bank is established by a separate Act of Parliament and is fully owned by the Government of India.

All banking companies owned by private people are called private sector commercial banks. All cooperative banks are owned by members of the public.

1. Nationalized banks: Indian bank, IOB, etc.
2. Public sector banks: State Bank of India, IDBI Bank Ltd.
3. Private sector banks: Lakshmi Vilas Bank, Karur Vysya Bank.

11th Commerce Guide Types of Banks Additional Important Questions and Answers

I. Choose the Correct Answer

Question 1.
Patru, Varavu, Selavu, Laabam, Nashtam which all collectively known as ‘Iynthogai’ is otherwise called ……………..
(a) Trial Balance
(b) Ledger
(c) Journal
(d) Transaction
Answer:
(a) Trial Balance

Question 2.
In which year IDBI was transformed into a public sector commercial bank?
a. 1964
b.1694
c.2004
d.2000
Answer:
c.2004

Question 3.
The General Bank of India was established in ……………..
(a) 1786
(b) 1796
(c) 1766
(d) 1787
Answer:
(a) 1786

Question 4.
The first land Mortgage bank was established in the year …………………….
a. 1920
b. 1945
c. 1930
d. 1960
Answer:
a. 1920

Question 5.
World bank otherwise called ……………..
(a) IBRD
(b) IMF
(c) RBI
(d) SBI
Answer:
(a) IBRD

Question 6.
The share capital contributed by the central government, state government and sponsor bank is in the ratio of …………..
a. 50:15:35
b. 25:25:35
c. 35:25:15
d. Equal
Answer:
a. 50:15:35

Question 7.
The state bank of India came into being in ……………..
(a) 1995
(b) 1945
(c) 1955
(d) 1965
Answer:
(c) 1955

Question 8.
The bank which helps in promote housing finance institutions is known as ……………
a. EXIM Bank
b. RRB
c. NHB
d. SBI
Answer:
c. NHB

Question 9.
Which of the following is the example of a payment bank?
a. EXIM Bank
b. Indian Bank
c. NABARD
d. Paytm
Answer:
d. Paytm

Question 10.
…………………………. was established to serve exclusively for women members.
a. Dena Bank
b. Bharatiya MaIìila Bank
c. Women Bank
d. SBI
Answer:
b. Bharatiya MaIìila Bank

II. Very Short Answer Questions:

Question 1.
What do you mean by Cooperative banks?
Answer:
All cooperative banks in India are owned by their customers or members who are farmers, small traders, and others. Cooperative banks in India are either urban-based or rural-based.

Question 2.
What do you mean by private sector banks?
Answer:
All banking companies owned by private people are called private sector commercial banks. E.g Lakshmi Vilas Bank, Kotak Mahindra Bank.

Question 3.
Explain Islamic banking:
Answer:
Islamic banking is a system of banking based on Islamic principles of bank or Sharia. It is practiced in UAE, Qatar, Pakistan, Kuwait, Bahrain, etc.

Question 4.
What are the two principles of Islamic Banking?
Answer:

• No interest is charged on loans
• No interest is charged on deposits

III. Short Answer Questions

Question 1.
What is the meaning of Scheduled Banks:
Answer:
All the banks which satisfied the norms and included in the second schedule to the RBI Act, 1934 are called scheduled banks.

Question 2.
What are non-scheduled Banks?
Answer:
The banks which are not listed in the second schedule of the RBI act, 1934 are known as non-scheduled banks.
Banks with a reserve capital of less than 5 lakh rupees are qualified as non-scheduled banks. There are five urban cooperative banks and three local area banks which function as non-scheduled banks in India.

Question 3.
Write a note on Moneylenders:
Answer:
An individual, as well as an institution, lends money in rural and urban areas. Certain community-based businessmen provided loans for interest in different parts of India. The reasons for their indispensable existence are:

• They disburse loans at doorstep at any time of the day with or without security.
• They provide the required amount and at the required time.
• Very little documentation and procedures.
• Banks are not willing to advance loans to farmers or labourers with less income levels.

Question 4.
How does the interest is calculated by Moneylenders?
Answer:
Moneylenders charge exorbitant rates as high as 20 percent per day. (12.16 percent per annum). It is called ‘Kandhuvatti’ or ‘flight Vatti’ in Tamil. The Usurious Loans Act 1918 of the Government of India and the Tamil Nadu Prohibition of Charging Exorbitant Interest Act 2003 prohibit charging such interest rates.

5. Write a note on Nidhi Companies:
Nidhi companies promote thrift and savings habit among members and they are registered under the Companies Act, 2013. Only Nidhi companies fulfilling certain norms are registered and regulated by the RBI. Others are not regulated.

IV. Long Answer Questions:

Question 1.
Explain the types of banks on the basis of their functions: (Any 5)
Answer:
Based on the Functions the banks can be classified into the following:
1.Central Bank:
According to the Bank of International Settlement (BIS), “A Central Bank is the bank in any country to which has been entrusted the duty of regulating the volume of currency and credit in that country.” Central banks are known by different names in different countries.

Their functions also vary from country to country. A Central bank is set up as an autonomous or quasi-autonomous body. Stability and growth of the country’s economy are the main goals of a central bank. In India, the Reserve Bank of India (RBI) is the central bank.

2.Commercial Bank:
Banks which accept deposits from the public and grant loans to traders, individuals, agriculture, industries, transport, etc. in order to earn a profit. They also provide other services like remittance of funds, safekeeping of valuables, collection of cheques, issue of letters of credit, etc. They operate with a head office and a network of branch offices spread throughout the country. E.g: State Bank of India, Karur Vysya Bank.

3.Development Banks:
Huge finance required for investment, expansion, and modernization of big industries and others are granted by a separate type of bank called development Banks. They are also called industrial banks. The objectivé of development banks is not profit.

Their aim is to develop the country and create employment opportunities. Finance is provided for medium and long terms ranging from five to twenty years. E.g. Industrial Finance Corporation of India- IFCI; MUDRA bank (fõr the development of micro industries)

4. Cooperative Banks:
All the agriculture and cooperative banks in India are owned by their customers and members who are farmers, small traders and others. These banks are either urban-based or rural-based. Their main objective is to provide’ service to its members for rural and agricultural development and not profit earning.

Compared to the commercial banks they offer less variety of services as the bye-laws do not permit all commercial bank activities. National Cooperative Development Corporation (NCDC) concentrates on providing loans and grants to State Governments for financing cooperative societies. NCDC concentrates on projects like water conversation, irrigation, Agri insurance, rural sanitation, etc.

5.Foreign Banks:
Banks which have registered office in a foreign country and branches in India are called foreign banks. These banks open their offices in big cities and port towns only. Their profitability is higher than Indian banks. 1n20 17, there were 42 Foreign Banks in India and all of them were scheduled banks. Eg: Bank of America — USA, Deutsche Bank – Germany.

Question 2.
Write a note on small Finance Banks:
Answer:
Small Finance Banks (SFBs) are private sector banks set up in unbanked and underbanked regions of the country to achieve a financial conclusions. E.g: Ujjivan SFB Limited, Bengaluru, Karnataka. The objectives of Small Finance Banks are Mobilising rural savings (accepting deposits) and Providing credit to small and marginal farmers, to micro and small industries, and other unorganized sector entities.

Question 3.
What do you mean by Payment Bank?
Answer:
Payment Banks are formed to widen the spread of payment and financial services to small businesses, low-income households, and migrant labourers. These banks should be fully networked from the beginning. They offer doorstep banking payment for a small fess prescribed on the basis of the amount. They issue ATM/Debit cards, Internet banking and third-party fund transfers. But they can’t lend money and issue credit cards. In August 2015, the RBI gave ‘in principle’ licenses to Payment Banks.

Question 4.
Is there India that needs large-sized banks?
Answer:
Yes. India is in need of large-sized banks. Because Industrial and Commercial bank of China is the first ranked bank in the world with an asset size of USD 3,893.23 billion. Punjab National Bank, the largest nationalized bank in India has an asset base of USD 100 billion and its rank is 717. SBI a public sector bank merged with its five associates and Bharatiya Mahila Bank with effect from April 1, 2017, and after the merger, its asset size is USD 573 billion. This will boost it among the top 50 banks(SBI earlier rank 272).

National Bank of Australia has an asset base of USD 578.46 billion and its rank is 49. To compete with large-sized banks in the world India needs more large-sized banks. Therefore merger of many nationalized banks is under consideration.