Kerala State Syllabus 10th Standard Social Science Important Questions

 Chapter 9 Financial Institutions and Services

Answer the following. Score 1 each

Choose the correct answer

Question 1.
Which of the following has the power to regulate the financial institutions in India?
Commercial banks
Reserve Bank of India
Ministry of Finance
Answer:
Reserve Bank of India

Question 2.
The banks established in 1975 to provide banking services in rural areas.
NABARD
Regional Rural Banks
Co-operative Banks
Answer:
Regional Rural Banks

Question 3.
The deposit that allows to deposit and withdraw money many times in a day.
Current deposit
Recurring deposit
Saving deposit
Answer:
Current deposit

Question 4.
Industrial Finance Corporation of India is an example for
Commercial Banks
Development Banks
Non Banking Financial Institution
Answer:
Development Banks

Question 5.
An example for specialised bank in India
NABARD
Bharatiya Mahila bank
Mudra bank
Answer:
NABARD

Question 6.
Kudumbasree and Self Help Groups for men are examples for
Co-operative bank
Non banking finance company
Micro finance
Answer:
Micro finance

Question 7.
Which of the following is not related to primary co-operative banks?
Area of functioning is limited
Apex body in the state co-operative sector.
Function in villages
Answer:
Apex body in the state co-operative sector.

Question 8.
The deposit not accepted by commercial banks
Current deposit
Share deposit
Saving deposit
Answer:
Share deposit

Question 9.
Which of the following is not a function of RBI?
Printing of notes
Controlling credit
Banker’s bank
Accepting deposits
Answer:
Accepting deposits

Question 10.
Which is true about current deposit?
High interest rate
Low interest rate
No interest
Receive deposits monthly
Answer:
No interest

Question 11.
The aim of MUDRA Bank.
Women empowerment
Loan to small scale entrepreneurs
Construction of house
Provide high rate of interest
Answer:
Loan to small scale entrepreneurs

Question 12.
Example for micro finance.
Kudumbasree
K.S.F.E.
L.I.C.
U.T. I.
Answer:
Kudumbasree

Question 13.
The deposit that does not receive any interest.
Saving deposit
Current deposit
Fixed deposit
Recurring deposit
Answer:
Current deposit

Question 14.
The banks which have been established to help low income groups, small scale industrialists and migrant labourers.
MUDRA bank
Development banks
Payment banks
Co-operative banks
Answer:
Payment banks

Question 15.
Name any two commercial banks.
Answer:

1. State Bank of India
2. Allahabad Bank

Question 16.
Which among the following is not an aim of co-operative banks?
Provide loans to public.
Protect the villagers from private money lenders.
Provide long-term loans for the modernization of industries.
Encourage saving habit.
Answer:
Provide long-term loans for the modernization of industries.

Question 17.
Write one feature of the EXIM Bank of India.
Answer:
Provides loans for exporting and importing products.

Question 18.
Commercial banks provide its current account holders a facility to withdraw money over and above the balance in the account. Identify the name of this facility.
Answer:
Overdraft

Question 19.
Co-operation, self help and mutual help are the working principles of
Commercial banks
Co-operative banks
NABARD
Answer:
Co-operative banks

Question 20.
Which among the following deposits receives the highest rate of interest?
Savings deposit
Fixed deposit
Recurring deposit
Answer:
Fixed deposit

Question 21.
The banker to the Central and State Governments in India.
Bank of India
Reserve Bank of India
State Bank of India
Answer:
Reserve Bank of India

Question 22.
‘Women empowerment is India’s empowerment ’ was the slogan of
MUDRA Bank
Bharatiya Mahila Bank
State Bank of India
Answer:
Bharatiya Mahila Bank

Question 23.
The deposit that does not receive any interest
Savings deposit
Fixed deposit
Current deposit
Recurring deposit
Answer:
Current deposit

Question 24.
Which of the following bank was not merged with SBI in 2017?
Bharatiya Mahila Bank
State Bank of Travancore
State Bank of Mysore
MUDRA Bank
Answer:
MUDRA Bank

Question 25.
The major financial institution in India working for the protection of individuals life and health.
Answer:
Life Insurance Corporation of India

Question 26.
The biggest bank in India
Answer:
State Bank of India

Complete the statement suitably

Question 1.
In India, the ………………… issues one rupee note and subsidiary coins.
Answer:
Finance Ministry

Question 2.
……………. are the institutions that undertake financial transactions like deposit and loan.
Answer:
Financial institutions

Question 3.
The banks which are registered in India but have their headquarters abroad are called ………………………..
Answer:
Private foreign banks

Question 4.
The banks that are set up in 1975 to provide banking services to rural areas are ……………………
Answer:
Regional Rural Ranks

Question 5
…………………. banks are the oldest banks and have many branches.
Answer:
Commercial

Question 6.
The deposit that does not offer any interest is …………………
Answer:
current deposit

Question 7.
The interest on ……………….. is more than the interest on deposit.
Answer:
loan

Question 8.
………………. helps customers to withdraw money without stepping into the banks.
Answer:
ATM

Question 9.
Banks offer ………………. to keep costly articles of their customers.
Answer:
locker facility

Question 10.
The first insurance company of India was set up in 1818 in ………………….
Answer:
Kolkata

Answer in a sentence each

Question 1.
Which institution in India has the sole right to print currency?
Answer:
Reserve Bank of India

Question 2.
How can we distinguish the currency notes of India from the currency notes of other countries?
Answer:
All the currency notes in India bear the emblem of the Reserve Bank of India.

Question 3.
Name the Central Bank in India.
Answer:
The Reserve Bank of India

Question 4.
Which is the first modem bank in India?
Answer:
Bank of Hindustan started in 1770

Question 5.
What was the major factor that led to bank nationalization in India?
Answer:
The view that banks should operate with the objective of social progress.

Question 6.
What were the reforms that occurred in banking sector in 1969 and 1980?
Answer:
14 banks were nationalized in 1969 and 6 banks were nationalized in 1980.

Question 7.
In which deposit is a certain amount deposited monthly for a fixed period?
Answer:
Recurring deposit

Question 8.
How do banks mobilize sum to give as loans?
Answer:
By accepting deposits from the public.

Question 9.
Name the facility that banks provide to send money from one place to another without the help of bank account.
Answer:
Demand draft

Question 10.
What is plastic money?
Answer:
Without keeping money in hand, all monetary requirements can be fulfilled by using cards. Such cards are called plasting money.

Answer the following. Score 2 each

Question 1.
Which are the institutions in India that issue currency notes and coins?
Answer:

• In India, the Reserve Bank of India issues all currency notes except one rupee and subsidiary coins.
• The Ministry of Finance issues one rupee note and subsidiary coins.

Question 2.
What is the criteria followed by RBI to issue note?
Answer:
The proportional value of gold and foreign exchange is kept as reserve for issuing notes of a particular amount.

Question 3.
How does the availability money supply increase in Indian economy?
Answer:

• Distribution of printed currency by RBI.
• Through credit creation by RBI.

Question 4.
How does RBI act as banker to government?
Answer:

• RBI accepts deposits from central and state governments and sanctions loans to them.
• It also renders other banking services to them.

Question 5.
Why is RBI called the bankers’ bank?
Or
Which bank in India is called Banker’s bank? Why is it called so?
Answer:

• Reserve Bank of India is called Banker’s bank.
• RBI advises and assists all banks in their operations.
• RBI acts as the last resort to all banks in their financial matters.

Question 6.
What is the main revenue of the banks?
Answer:
Banks accept deposits and give interest for it Similarly banks impose interest on loans. The rate of interest on loans will be higher than the rate of interest on deposits. The difference between these interests is the main revenue of the banks.

Question 7.
What was the speciality of the first phase of the growth of banks in India?
Answer:

• The first phase of the growth of banking in India was from 1770 to bank nationalization.
• The growth and operations of bank were slow during this phase.

Question 8.
Why did the number of nationalized banks decrease from 20 to 19?
Answer:

• In 1993, New Bank of India, the nationalized bank, was merged with Punjab National Bank.
• There are only 19 nationalized banks today.

Question 9.
Why are banks classified differently though they basically perform the same functions?
Answer:
Banks differ in their operations, though all of them basically perform the same functions. Based on the operations, banks are classifiedas commercial banks, co-operative banks, development banks and specialized banks.

Question 10.
Complete the sundiagram showing the deposits accepted by commercial banks.

Answer:

Question 11.
Write the peculiarities of New Generation Banks. How do they differ from the other banks?
Answer:
The private banks which are given license after 1991, in the third phase of the growth of banking sector are called New Generation Banks. They introduced new and innovative functions at a much quicker pace. These banks adopted new trends in banking sector like ATM, credit card, phone banking, net banking and core banking. They have also adopted steps to make the proceedings easy and simple.

Question 12.
The name of a nationalized bank is given. Add more to the list.
State Bank of India
Answer:

• Canara Bank
• Union Bank of India
• Indian Bank
• Indian Overseas Bank

Question 13.
What are the purposes for which commercial banks provide cash credit to public?
Answer:
Commercial banks provide cash credit for

• Agriculture
• Industry
• House construction
• Purchase of vehicle
• Purchase of home appliances

Question 14.
Whom do Regional Rural Banks give loans to?
Answer:

• Small farmers
• Agricultural labourers
• Small entrepreneurs

Question 15.
Why do banks not give interest on Current deposits?
Answer:
In current deposit scheme, money can be deposited and withdrawn many times in a day without any restrictions. Normally, traders and industrialists deposit money in this scheme. The banks do not offer any interest to this deposit because banks do not get the time to make use of the amount in this deposit profitably.

Question 16.
How is current deposit more beneficial to traders and industrialists?
Answer:
Normally, traders and industrialists deposit money in current deposit scheme. Banks allow the customer to deposit and withdraw money many times in a day without any restriction. Banks do not provide such a facility to any other deposit.

Question 17.
What are the factors that bring about difference in the rate of interest on loans?
Answer:

• Tenure of loan
• Mode of repayment
• Reason for taking loan

Question 18.
How does telegraphic transfer differ from mail transfer?
Answer:

• Mail transfer:
  Mail transfer is a system in which money can be transferred from any part of the world to one’s own account or to someone else’s account.
• Telegraphic transfer:
  The mechanism wh ich can transfer money through a message. It is faster than mail transfer.

Question 19.
What details are included in ATM cards?
Answer:

• Number of card
• Name of the bank
• Emblem of the bank
• Name of the customer

Question 20.
What are the advantages of credit card system?
Answer:

• Consumers can purchase goods with the help of credit card, without having to keep money on person.
• Consumers can purchase goods using credit card even without having sufficient money in their account. The money has to be remitted to the bank later within a specific period.

Question 21.
What are the two new trends in banking?
Answer:

1. Electronic banking
2. Core banking

Question 22.
How is core banking helpful to customers?
Answer:
In core banking, all the branches of the banks are brought under a central server to enable transaction from one bank to another. By using this facility, a customer can send money from his bank account to his friend’s account else where.

Question 23.
What are the working principles of Co-operative banks?
Answer:

• Co-operation
• Self help
• Mutual help

Question 24.
What was the slogan of Bharatiya Mahila bank? Which section of people benefited from it more?
Answer:

• Slogan : Women Empowerment is India’s Empowerment.
• The bank accepts money from all, but provides loans mainly to women.

Question 25.
Write the aims of Mudra bank?
Answer:

• Established to give short term loans.
• Gives financial help to microfinance and small entrepreneurs.

Question 26.
Write examples for Mutual Fund operating in public sector
Answer:

• Unit Trust of India
• SBI Mutual Fund

Question 27.
What are commercial banks?
Answer:
The banks which accept deposits from public and lend money for commercial, industrial and agricultural purposes subject to certain conditions are called commercial banks. They are the oldest banks and have many branches. These banks play a decisive role in the financial activities of a country.

Question 28.
What are public sector commercial banks?
Answer:
The banks which are owned by the government are called public sector commercial banks. Their functions are controlled by RBI. Public sector commercial banks in India include State Bank of India and its associate banks, nationalized banks and Regional Rural banks.

Question 29.
Explain the following.
a. Private Indian commercial banks
b. Private foreign commercial banks
Answer:
a. Private Indian commercial banks are owned by private individuals. These banks operate under the control of RBI.
b. Banks owned by private individuals and registered in India, with their headquarters abroad are called private foreign commercial banks. These also operate under the control of RBI.

Question 30.
Accepting deposits is an important function of commercial banks. Can you prepare a flow chart showing the different deposits accepted by the banks?

Answer:
a. Savings deposit
b. Current deposit
c. Fixed deposit
d. Recurring deposit

Question 31.
Examine the role of NABARD in rural development.
Answer:

• NABARD is the apex bank which functions for agricultural and village development.
• Co-ordinates all the banks working for development of villages.
• Provides financial assistance to agriculture, small scale industries, handicrafts, etc.

Question 32.
Examine how the role of insurance companies is helpful to the society?
Answer:

• Insurance companies are institutions that provide financial protection to individuals’ life and wealth.
• They assure social security and personal welfare.

Question 33.
Choose two features of non banking financial institutions from the following.
a. Do not provide the facility of withdrawal of cash by cheque.
b. The facility to deposit and withdraw money using ATM.
c. Demand draft facility is provided to send money from one place to another.
d. Locker and mail transfer facilities are not provided.
Answer:
a. Do not provide the facility of withdrawal of cash by cheque.
d. Locker and mail transfer facilities are not provided.

Question 34.
Different types of banks and their examples are given in columns A and B. Choose their correct order.

A	B
i. Development bank	Industrial Finance Corporation of India
ii. Public sector commercial banks	State Bank of India
iii. Specialized bank	Kerala State Financial Enterprise

A – i and ii are correct
B – i and iii are correct
C – ii and iii are correct
D – All are correct
Answer:
i and ii are correct

Question 35.
Classify the following banks based on their functions.

• NABARD
• Industrial Finance Corporation of India
• State Bank of India
• Primary Co-operative Bank

Answer:

• NABARD – Specialised bank
• Industrial Finance Corporation of India – Development bank
• State Bank of India – Commercial bank
• Primary Co-operative Bank – Co-operative bank

Question 36.
Complete the flow chart related to commercial banks.

Answer:

Question 37.
Which are the major microfinance institutions working in Kerala?
Answer:

• Kudumbasree
• Men Self Help Groups

Answer the following. Score 3 each

Question 1.
Complete the sundiagram on the functions of the Reserve Bank of India.

Answer:
a. Printing of currency
b. Controlling of credit
c. Banker to Government

Question 2.
Control of credit is an important function of RBI. Explain.
Or
What is the influence of control of credit in the economy?
Answer:
The control of credit is an important function of RBI. The RBI increases the money supply in Indian economy through the distribution of printed currency and through credit creation. This is made possible by bringing about changes in the rate of interest. As rate of interest increases, volume of loans decreases and vice versa.

Question 3.
Which were the banks established in the first phase of the growth of banks in India? What was the peculiarity of this period?
Answer:

• The first phase in the growth of banks in India stretches from 1770 to bank nationalization (1969).
• In this phase, the English East India Company established the Presidency Banks of Bank of Bengal, Bank of Bombay and Bank of Madras.
• The growth and operations of the banksin this phase were slow.

Question 4.
What were the main changes in the second phase of the growth of banks in India?
Answer:

• The second phase of the growth of banks from 1969 to 1990, witnessed a speedy development of banks.
• The view that banks should operate with the aim of social progress led to bank nationalization in 1969.
• 14 banks with assets worth more than ₹ 50 crores were nationalized in 1969 and 6 more banks were nationalized in 1980.

Question 5.
What is overdraft? To whom do the banks give this facility?
Or
Explain the grounds under which over drafts are issued.
Answer:

• Overdraft is a type of loan given by commer¬cial banks to customers. This facility enables a customer to withdraw money over and above the balance in his account.
• Banks give this facility to individuals who have frequent transactions with the bank.
• Generally this facility is provided to those who maintain current deposits. Bank charges interest for the additional amount.

Question 6.
Banking operations became easy and people friendly with core hanking. Explain.
Answer:

• Core banking is a banking facility under which the branches of all the banks are brought under a central server so that banking services from one bank to another is made possible. It operates with the help of internet.
• Facilities like ATM, debit card, credit card, net banking, telebanking, mobile banking, etc. are brought together through core banking. Naturally transactions have become simple.
• Making use of this facility, an individual can send money from his account to his friend’s account else where.

Question 7.
What are the things to be followed while using ATM cards?
Answer:

• Make sure that there is no one at the counter.
• Do not disclose your ATM pin code number to anyone.
• Assure the balance amount on receiving the receipt money withdrawal. Do not throw away the receipt carelessly.

Question 8.
Write the features of NABARD.
Answer:
The institutions that give financial assistance for the development of certain specific sectors are called specialised banks. NABARD is a specialised bank. Its features are:

• The apex bank in India which functions for the development of villages and agriculture.
• Co-ordinates all banks working for the development of villages.
• Provides financial assistance to agriculture, handicrafts and small scale industries.

Question 9.
What are non – banking financial institutions? What are the services not provided by non banking financial institutions compared to banking institutions?
Answer:
Non banking financial institutions operate in the financial sector but do not perform all the functions of a bank. They perform the basic functions of banks such as accepting deposits and lending loans. But they do not provide the following services.

• Withdrawal of cash using cheques
• Mail transfer
• Locker facilities

Question 10.
Which is the major non banking financial company operating in Kerala? What are the services they provide?
Answer:
Kerala State Financial Enterprises (KSFE)
Services

• Operate chitties
• Provide Housing loan
• Provide Gold loan
• Provide loans for Hire purchase

Question 11.
Mutual fund helps common man to overcome the constraints in investing money in share market. Explain.
Answer:
Mutual fund is a mode of investment. Common man is not always able to invest in share market directly. Mutual fund helps investors to overcome this constraint. Money is mobilized from various investors and is invested in share markets, debentures, etc. The profit or loss resulting from this is distributed among the investors.

Question 12.
Write the difference between life insurance company and non – life insurance company. Write example for each.
Answer:
Life Insurance Company :
Life insurance companies are institutions that provide security to life, health and property of individuals. Eg. Life Insurance Corporation of India.

Non – Life insurance companies :
These are institutions that provide security to individuals from the loss incurred due to accident and natural calamity. Eg. General insurance companies

Question 13.
Write the features of savings deposit.
Answer:

• A scheme that helps the public to deposit their savings.
• It offers low rate of interest.
• Depositors can withdraw money from the deposit subject to restrictions.

Question 14.
Usually banks lend to public by accepting certain collaterals. Which are the collaterals accepted by banks?
Answer:

• Physical assets like gold, title deed of property
• Salary certificate
• Fixed deposit certificate

Question 15.
How do the co-operative banks in your area help the public?
Answer:

• Provide monetary help to common people especially the villagers.
• Provide services to farmers, artisans, small scale entrepreneurs, etc.
• Provide loans to the public
• Protect the villagers from private money lenders.
• Provide loans at low interest rate
• Encourage saving habit among people.

Question 16.
Examine the statements related to specialised banks and choose the correct one.
A. Provides financial assistance to agriculture, handicraft and small scale industries.
B. Provides loans for exporting and importing products.
Hints:
a. A and B are the features of EXIM Bank of India.
b. A and B are the features of NABARD.
c. A is the feature of EXIM bank of India and B is the feature of NABARD.
d. A is the feature of NABARD and B is the feature of EXIM Bank of India.
Answer:
d. A is the feature of NABARD and B is the feature of EXIM Bank of India.

Question 17.
Answer the following questions related to money supply.
i. How does the money supply increase in Indian economy?
ii. Whose function is the control of credit?
iii. How is the control of credit made, possible?
Answer:
i. Money supply increases in Indian economy through the distribution of printed currency and through credit creation.
ii. Control of credit is the function of RBI.
iii. Control of credit is the made possible by bringing about changes in the rate of interest. As rate of interest increases, volume of loans decreases. As rate of interest decreases, volume of loans increases.

Question 18.
What are the differences and similarities between banks and non – banking financial institutions?
Answer:
Similarities

• Banks; Banks accept deposits from the public and grant loans to the needy subject to conditions. They operate on the basis of the general guidelines and conditions set by the Reserve Bank of India. ,
• Non banking financial institutions: They do basic banking functions like accepting deposits and lending loans. They also operate under the guidelines of RBI.

Differences

• Banks provide services like withdrawal of cash by cheque, mail transfer and locker facilities.
• Non banking financial institutions do not’ provide services like withdrawal of cash by cheque, mail transfer and locker facilities.

Question 19.
What are the features of fixed deposit?
Answer:
Features of fixed deposit:
Fixed deposits are ideal for depositing money for a specific period of time. The interest is high. Interest rate is calculated on the basis of the time period for which the money is deposited. Deposits could be withdrawn after maturity. If the money is withdrawn only after the completion of the specific period of time, then the specified interest rate will be provided. If the amount is withdrawn before the maturity of deposits, then the interest rate will be lower.

Question 20.
How is electronic banking helpful to customers?
Answer:
Electronic banking is a method by which all transactions can be carried out through net banking and tele banking. Any time banking, anywhere banking, net banking and mobile banking are part of electronic banking. The assistance of the bank employees is not required.

• Customers can send money and bills can be paid anywhere in the world from home.
• Save time
• Low service charge

Question 21.
Common people are not always able to invest in the share market directly. Write two examples of public sector institutions that help them in this matter. How do these institutions help the investors?
Answer:

• Life Insurance Corporation Mutual Fund
• SBI Mutual Fund.
  • The mutual fund institutions collect money from various investors and invest in share markets, debentures, etc. The profit or loss from this is distributed among investors.

Answer the following. Score 4 each

Question 1.
Write note on the functions of banks based on the hints in the diagram

Answer:
Banks are those institutions which accept deposit . from the public and grant loans to the needy subject to conditions. Banks pay interest to deposits accepted from people, institutions and government. Banks lend out money received as deposits to people, institutions and government. Banks collect the loan amount with interest. Thus banks act as financial intermediary by collecting the loan amount with interest to give back the deposit with interest.

Question 2.
Explain the functions of the Reserve Bank of India.
Answer:
Reserve Bank is the Central Bank of India. It was established in .1935 and its headquarters is in Mumbai. It is the apex bank that controls all the other banks. RBI not only regulates and supervises the banks, but also other financial institutions in the country by giving them necessary directions and advices. It acts as the last resort to all banks in their financial matters.
The functions of RBI are;

Printing of currency :
RBI has the legal right to print all currency notes except one rupee note and subsidiary coins. The Finance Ministry is authorised to issue one rupee note and subsidiary coins. A proportional value of gold and foreign exchange is kept as reserve for issuing notes.

Controlling credit :
The RBI increases the money supply in the economy through the distribution of printed currency and through credit creation. Controlling credit is an important
function of RBI. This is done by changing the rate of interest. When the rate of interest increases, the volume of loans decreases. As the rate of interest decreases, the volume of loans increases.

Banker to Government :
The RBI acts as the banker to both the Central Government and the State Governments. As banker to government, the RBI accepts deposits from central and state governments, sanctions loans and renders other banking services to them. The Reserve Bank does not charge any fees for these services.

Bankers’s bank :
The RBI is the apex bank of all banks. It is the function of the RBI to help in the operations of other banks and to advise them when needed. It acts as a last resort to all books in their financial matters.

Question 3.
The third stage in the development of banks nearly concentrated on the implementation of new systems. Explain the role played by them in modification of banks and execution of services.
Answer:
In the third phase stretching from 1991, banks started rendering services, other than their basic functions. There were several banking reforms which helped in quick and time saving services, ease of procedures, etc. Introduction of ATM, credit card, phone banking, net banking, core banking, etc. are the results of the development in third phase. The private banks that received license in this phase implemented the new and innovative functions at a quicker pace. These banks are known as new generation banks.

Question 4.
Complete the table based on the peculiarities of commercial banks.

Commercial banks	Primary function	Ownership	Control and regulation
………………………..	…………………………….	Fully owned by government	………………………..
Private Banks	……………………………..	……………………………..	……………………………

Answer:

Commercial banks	Primary function	Ownership	Control and regulation
Public sector commercial banks	Accepting deposits and lending loans	Fully owned by government	RBI regulates their operations
Private sector commercial banks	Accept deposits, lend loans	Owned by private individuals	Subject to the regulations of RBI

Question 5.
Match the following

A	B
Recurring deposit	Interest is calculated on the basis of the time period for deposit
Current deposit	Provides low rate of interest
Savings deposit	Monthly deposit for a specific period of time
Fixed deposit	Traders and industrialists use this scheme

Answer:

A	B
Recurring deposit	Monthly deposit for a specific period of time
Current deposit	Traders and industria­lists use this scheme
Savings deposit	Provides low rate of interest
Fixed deposit	Interest is calculated on the basis of the time period for deposit

Question 6.
Write on the different types of deposits accepted by commercial banks. Write their differences also.
Answer:
Commercial banks accept the following deposits:
Savings deposit
It is a scheme that helps the public to deposit their savings. Banks offer low rate of interest for this deposit. Depositor can withdraw money from this deposit subject to certain restrictions.

Current deposit
This deposit facilitates depositing and withdrawing money many times in a day. Normally traders and industrialists use this deposit scheme. It does not offer any rate of interest.

Fixed deposit
Fixed deposits are ideal for depositing money for a specific period of time. Interest rate is calculated on the basis of the time period for which the money is deposited. If the money is withdrawn only after the completion of the specific period of time, then the specified interest rate will be provided.

Recurring deposit
Recurring deposits receive a specific amount every month for a specified period of time. The interest rate of this deposit will be higher than that of saving deposits, but less than that of fixed deposits. The interest rate will be less if the deposits are withdrawn before the maturity date.

Question 7.
What is cash credit? What are the purposes for which banks give cash credit?
Answer:
The loans given to individuals and institutions by accepting collaterals are called cash credit. The collaterals that the bank accepts are:

• Salary certificate
• Fixed deposit certificate
• Physical assets like gold

Cash credit is given for the following purposes:

• For agriculture
• For industry
• For house construction
• Purchase of vehicle

Question 8.
Write a note on the other services provided by commercial banks, besides the basic functions.
Answer:

• Provide locker facilities to individuals and institutions to keep their valuable assets (gold, title deed of property).
• Demand Draft facility to send money from one ’ place to another.
• Mail transfer and telegraphic transfer to transfer money from anywhere in the world.
• ATM facility to withdraw money any time without going to the bank.
• Credit cards to purchase goods without carrying money along with.
• Banks help their customers to remit their insurance premium, telephone bills, electricity bills and to purchase travel tickets.

Question 9.
What are the working principles of co-operative banks? Write their aims also.
Answer:
Aims:
Co-operation, self help and mutual help are the working principles of co-operative banks.

• To give monetary help to common people, especially villagers like farmers, handicrafts men and small scale industrialists.
• To promote saving habits among people, especially rural folk.
• Provide loans to the public
• Protect the villagers from private money lenders.
• Provide loan at low rate of interest

Question 10.
What are development banks?
Answer:
Development banks are those that provide long term loans for various needs such as modernisation of industries. Now they provide loans to agriculture and trade sectors also.
Features of Development banks

• Act as an agent for the development of different sectors like industry, agriculture, trade, etc.
• Provide loans for house construction, small scale industry and the development of basic infrastructures. Eg. IFCI

Question 11.
Write the features of the following specialised banks.
Exim Bank of India
Small Industries Development Bank of India
Answer:

• Exim Bank of India
  • Provides loans for the export and import of products.
  • Provides instructions to individuals who come into this sector.
• Small Industries Development Bank of India (SIDBI)\
  • Provides help to start new small scale industries and to modernise existing industries.
  • To vitalize village industries.

Question 12.
What are Payment Banks? What are the features of Payment Banks compared to other banks?
Answer:
Payment banks have been established to help low income groups,, small scale industrialists and migrant labourers. They do not provide all facilities provided by other banks. Their features are:

• Accept deposits upto only one lakh rupees from individuals.
• Provide interest on deposit as specified by the RBI
• Do not provide loans
• Charge a specific fee as commission for bank transactions
• Debit card is provided but no credit card.

Question 13.
What is the objective of insurance companies? Which are the things that can be insured?
Answer:
Insurance institutions provide financial protection to life and wealth of individuals. They ensure social security and personal welfare.
Things that can be insured are :

• Individual’s life
• Wealth
• Vehicles
• Items in institutions
• Agricultural crops
• Export goods
• Temporary enterprises like circus.

Question 14.
Write the difference between fixed deposit and recurring deposit.
Answer:

Fixed deposit	Recurring deposit
Ideal for depositing money for a specific period by individuals and institutions.	Depositing a specific sum monthly for a specified period of time.
Interest is calculated on the basis of the time period for deposit	Interest rate is lower than fixed deposit, but higher than savings deposit.

Question 15.
Classify the following financial institutions suitably.

• Co-operative banks
• Mutual Fund institutions
• Commercial banks
• Development banks
• Insurance companies
• Specialised banks

Answer:

Banks	Non-banking financial institutions
Co-operative banks	Mutual Fund institutions
Commercial banks	Insurance companies
Development banks
Specialised banks

Question 16.
What are specialised banks? Give example.
Answer:
Specialised banks are those that provide financial help for the development of certain specific sectors. They provide help to start new enterprises.
Eg.

• EXIM Bank of India: Provides loans for exporting and importing products.
• Small Industries Development Bank of India: Provides help to start new small scale industries.
• National Bank for Agricultural and Rural Development : Apex bank in India which functions for the development of villages and agriculture.

Question 18.
Write an example for a microfinance institution operating in Kerala. Write the goals of microfinance also.
Answer:
Microfinance institution operating in Kerala is Kudumbasree.

Goals of Microfinance

• Encourages saving habit among low income groups in the society.
• Provides help to seek self employment
• Helps to increase the standard of living of the poor.
• Provides loans to members in need.

Question 19.
Match the following.

A	B
Commercial bank	Provides loans for basic infrastructure development
Development bank	Recurring deposits
Payment banks	Provides loans for export
EXIM Bank	Do not; provide loans

Answer:

A	B
Commercial bank	Recurring deposits
Development bank	Provides loans for basic infrastructure development .
Payment banks	Do not provide loans
EXIM Bank	Provides loans for export

Answer the following. Score 5 each

Question 1.
Complete the flowchart on financial institutions.

Answer:
a. Banks
b. Commercial banks
c. Co-operative banks
d. Development banks
e. Mutual Fund
f. Insurance companies
g. Self Help Group for Men

Question 2.
Explain the different phases in the growth of banks in India and their features,
Answer:

First phase (1770 to 1969)

• English East India Company established three Presidency Banks: Bank of Bengal, Bank of Bombay and Bank of Madras.
• The operations and growth of banks were slow.

Second phase (1969 to 1990)

• Witnessed a speedy development of banks.
• The awareness that banks should operate with the objective of social progress became prevalent.
• This view lead to the Bank nationalization of 1969 and 1980.

Third phase (From 1991 onwards)

• Banks started rendering services other than the basic functions.
• Introduced new trends in banking like ATM, credit card, phone banking, net banking, core banking, etc.
• Emergence and operations of New Generation Banks.

Question 3.
How are electronic banking and core banking helpful to the customers?
Or
The new trends in banking sector make banking more people friendly. Substantiate.
Answer:
The two new trends in banking sector are electronic banking and core banking.

Electronic banking :
Banking services have been made easy by computerisation and the availability of ATM facility. Electronic banking is a method by which all banking transactions can be carried out through net banking and telebanking. Any time banking, anywhere banking, net banking and mobile banking are part of electronic banking. It does not need the assistance of employees and banking instruments. Only bank account and net banking facility are required for this.

• Customers can send money and bills can be paid anywhere in the world from home.
• Saves time.
• Low service charge

Core banking :
Core banking is a banking facility under which the branches of all the banks are brought under a central server to enable bank transaction from one bank to another. It operates with the help of internet. As a result, facilities like ATM, debit card, credit card, tele banking and mobile banking are brought together. This made bank transactions simple. By using this facility, an individual can send money from his bank account to his friend’s account else where.

Question 4.
Explain the goals and working of microfinance.
Answer:
The aim of micro finance is to provide different financial services including micro credit to low income groups.-This helps to promote saving habits and self employment activities among low income groups. Examples for micro finance are Kudumbasree and Self Help Group for Men.

Goals of microfinance

• Helps in collective development by mobilising money from individuals.
• Helps to increase the standard of living of the poor
• Promotes saving habit
• Makes use of individual potential for group development.
• Provides loans to members in need
• Starts small scale enterprises

Functioning
Women or men in a locality join together and form small groups of 20 members each. Each member invests a fixed sum in the group. Banks provide loans to these groups at low rate of interest. The amount mobilized from members and the loans from the banks constitute the working capital of the society. This amount is disbursed as loan amount to members in need. With the assistance of the local bodies, SHGs run productive small enterprises. It is possible to protect the poor from local money lenders through self help groups. Examples for units run by SHGs

• Pickles snack units
• Hotels
• DTP centres

Question 5.
Some new banks have emerged in the banking sector with certain specific aims. Which are they? What are their features?
Answer:
The new banks that have emerged in the banking sector with specific aims are

• Mahila Banks
• Payment Banks
• Mudra Bank

Bharatiya Mahila Bank
Bharatiya Mahila Bank was started in November 2013. Its slogan is ‘Women’s Empowerment is India’s Empowerment’. This bank has branches in many states today. The bank accepts deposits from all but provides loans mainly to women. (This bank is merged with SBI in 2017).

Payment Banks
Payment banks have been established to help low income groups, small scale industrialists and migrant labourers. These banks do not provide all the services rendered by banks. Their features are:

• Accept deposits only upto ? 100000 from individuals.
• Provide interest on deposits as specified by RBI.
• Do not provide loans.
• Issue debit cards, do not issue credit cards.
• Charge a specific fee as commission for banking transactions.

Mudra Bank
Mudra bank was launched in April 2015 to provide short term loans. It provides financial help to small entrepreneurs and micro finance institutions.

Answer the following. Score 6 each

Question 1.
Besides the basic functions, commercial banks render certain other services to their customers,
What are they? Explain.
Answer:
The services rendered by banks include:
Locker facility :
Banks offer locker facility to keep costly articles (gold, title deed of property) of their customers. Banks charge a certain amount for availing this facility.

Demand Draft :
Demand draft is a facility provided by banks to send money from one place to another. It is not necessary to have an account for this.

Mail transfer :
Mail transfer is a facility j provided by banks to transfer money from anywhere in the world to one’s own account or to the account of another person, Telegraphic transfer is faster than mail transfer, Telegraphic transfer is the inechanism which can transfer money through a message.

ATM :
Automated Teller Machine helps the customers to withdraw money any time without stepping into the banks. Majority of the banks have ATM facility today. Now ATM of some banks provide the opportunity to deposit and withdraw money. The banks j provide ATM debit cards for this.

Credit card :
Banks provide credit card facility which helps in purchasing products without having to keep money on person, Using this, goods and services can be purchased even without having sufficient cash in one’s account. The money has to be remitted to the bank later within a specific period.

• Banks help the customers to remit their insurance premium, telephone bills and electricity bills and to purchase travel tickets.
• Service pension is also disbursed through banks.

Question 2.
Which are the different levels of Co-operative banks? Explain their functioning.
Answer:
The main aim of co-operative banks is to provide monetary help to common people especially villagers. Farmers, artisans, small scale entrepreneurs etc. chiefly avail the services of co-operative banks.

The aims of Co-operative banks are

• Provide loans to the public
• Protect the villagers from private money lenders
• Provide loans at low rate of interest
• Promote saving habits among the rural folk Co-operative banks function at different levels
• State Co-operative Bank
  • The apex body in the state co-operative sector.
  • Provides financial assistance to District Co-operative Banks and Primary Cooperative Banks.
• District Co-operative Banks
  • Operate at the district level.
  • Provide assistance and guidance to Primary Co-operative Banks.
• Primary Co-operative Banks
  • Function in villages
  • Area of functioning is limited.
  • Promote the saving habits in villagers
  • Provide loans to villagers at low rate of interest

Question 3.
Prepare table showing the basic functions and other services of banks.
Answer:

Question 4.
Examine the features of financial institutions and write their names.

Features of financial institutions	Names
a. Encourage saving habit and self employment activities among the poor. Microfinance	……………………………………………
b. Collect money from common man, invest in shares and the profit or loss is distributed.	……………………………………………..
c. Protection from loss due to accident, natural calamity.	……………………………………………
d. Operate chities and provide gold loan.	……………………………………………
e. Issue debit card and do not issue credit card.	……………………………………………
f. Provide long term credit for the modernisation of industries.	……………………………………………
g. Loans for export and import of products.	………………………………………………
h. Co-ordinates all banks working for the development of villages	……………………………………………
i. Financial assistance to small scale entrepreneurs and micro – finance.	………………………………………………
j. Operate on the basis of principles like self help and mutual help.	………………………………………………

Hints:

• Payment Bank
• Non Life Insurance Companies
• Mudra Bank
• EXIM Bank of India
• Non Banking Financial Companies
• NABARD
• Micro Finance
• Development Banks
• Co-operative Banks
• Mutual Fund

Answer:
a. Micro Finance
b. Mutual Fund
c. Non Life Insurance Companies
d. Non Banking Financial Companies
e. Payment Banks
f. Development Banks
g. EXIM Bank of India
h. NABARD
i. Mudra Bank
j. Co-operative Banks