Chapter 16 Bank Transactions

I. Fill in the blanks with a suitable answer:

Question 1.
The word ‘Bank’ has been derived from the French word ………
Answer:
Banque.

Question 2.
Banker’s bank is ………..
Answer:
Reserve Bank of India.

Question 3.
An example for a Nationalized bank is ………………..
Answer:
State Bank of India.

Question 4.
The national Saving Certificates are issued by ……………
Answer:
Postal Bank of India.

Question 5.
The type of account where any number of transactions can be made with Bank is ………….
Answer:
current account.

Question 6.
The deposits for a fixed term can be deposited in ………… account.
Answer:
Term deposit.

II. Answer the following questions after discussing with your friends.

Question 1.
What is a bank?
Answer:
The term bank is derived from the Italian word “Banco” or from a French word “Banque” both mean a “Bench” or money exchange table.

Question 2.
List out the characteristics relating to bank transactions.
Answer:
The list of the characteristics relating to bank transactions is as under:

1.                      Dealing with money,

2.                      Acceptance of deposits

3.                      Lending loans

4.                       Payment and withdrawal

5.                      Agency and Utility services,

6.                      Profit and Service orientation

7.                       Connecting link

8.                      Name identity.

Question 3.
What are the functions of a bank?
Answer:
The functions of the bank are:

1.                      Accepting deposits from the public and others.

2.                      Lending money to public and other institutions in the form of loans.

3.                      Transferring money from one place to another (Remittance),

4.                      Collecting money by cheques, drafts and bills.

5.                      Discounting of bills.

6.                      Providing facility of safe deposit lockers for account holders.

7.                      Performing foreign exchange transactions.

8.                      Performing government transactions.

9.                      Issuing letters of credit and guarantee.

Question 4.
Explain the relation between the bank and customers.
Answer:
The relation between bankers and customers is classified in two categories, namely

1.                      General relationship:

o    Primary relationship: It is a debtor and creditor relationship,

o     Subsidiary relationship- It it trustee and beneficiary relationship.

o    Agent and Principal relationship.

2.                      Special relationship:

o    Obligation to honour the cheques,

o    Obligation to maintain secrecy of accounts.

Question 5.
“The number of saving bank account holders is increasing” Give reasons.
Answer:
The number of saving bank account holder is increasing because:

1.                      Banks are the safe custody for depositing money.

2.                      Depositing money in the banks is helpful to meet future requirements like children’s education and wedding expenses.

3.                      Banks give interest to the deposits.

4.                      Banks provide advances in loans for agriculture and business purposes etc.

Question 6.
What are the advantages of opening a bank account?
Answer:
The advantages of opening a bank account are:

1.                      Bank account facilitates safe custody of money.

2.                      Bank account helps in making payments

3.                      Bank account helps in collection of money

4.                      Bank account holders get advances and loans.

5.                      Bank account helps in smooth financial transactions.

6.                      Bank account holders get safe deposit locker facilities.

Additional Questions and Answers

Question 1.
By whom Savings Bank account is opened?
Answer:
This type of account is generally opened in Banks by salaried persons or by the persons who have a fixed regular income.

Question 2.
Name some saving certificates.
Answer:

1.                      National Saving Certificates.

2.                      Post Office Saving Bank.

3.                      Kisan Vikas Patra

4.                      Monthly Recurring Deposits.

5.                      Postal Life Insurance.

Question 3.
What is a bank?
Answer:
A banking company may be defined as a company that transacts the business with finance.

Question 4.
How many nationalized and Foreign banks are there in India?
Answer:
There are 20 Nationalised and 19 Foreign banks are there in India.

Question 5.
Expand A.T.M.
Answer:
Automatic Teller Machine.

Multiple Choice Questions

Question 1.
The term bank is derived from the Italian word
a) Banco
b) Bench
c) Banque
d) Banks
Answer:
a) Banco

Question 2.
The special relationship between bankers and customers is
a) Primary relationship
b) Subsidiary relationship
c) Agent and principal relationship
d) Obligation to honour cheques.
Answer:
d) Obligation to honour cheques.

Question 3.
Reserve Bank of India is called a Bankers bank because
a) RBI formulates the monetary policies
b) Development is Banking policies
c) Issue the currency notes
d) All the above points
Answer:
a) RBI formulates the monetary policies

Question 4.
The main work of the postal bank of India is
a) Pension payments
b) Money transfer
c) Postal life insurance
d) All the above functions.
Answer:
d) All the above functions.

Question 5.
In this account, the amount can be deposited or withdrawn any number of times in a days
a) Term deposit account
b) Recurring deposit account
c) Current account
d) Savings bank account
Answer:
c) Current account