Explain the functions of commercial banks with an example of each.
The main functions of banks can be study under two broad categories that are as follows: (a) Primary functions.
(b) Secondary functions or subsidiary functions.
Primary functions:
1. Acceptance of Deposits : Accepting of deposits from the public is the much important function of the bank by taking the savings and surplus of people. Banks provide a safe custody of the deposited cash of the people. Depositors can easily transfer their money and can make the payments through cheques too. Banks provide an attractive rate of interest offer on their deposits. There are several types of deposits which can be opened in the bank such as Fixed Deposit. Savings Deposit and Current Deposit.
2. Making Loans and Advances : It is another equally one of the important functions of bank. Banks accept surplus money of people and provide them loans and advances to the needy persons. It is through loans and advances, banks earn profit. Loans and advances are provided by the banks in the following forms :
(I)Loan, (ii) Overdraft, (iii) Cash credit, (iv) Discounting of bills and exchange.
(I) Loan: Loan is a lump sum advance made by a bank against the security. In this, specified amount is either paid to the customer in cash or is credited in his account. The borrower is required to pay a prefixed rate of interest to the bank on the amount of loan from the date of the sanction of the loan. The loan may be refunded in installment or in lump sum. Short and medium term loans are provided by the commercial banks.
(ii) Overdraft: Under this system a current account holder is allowed to overdraw his bank account i.e., he can make upto a fixed limit more than the balance in his account present and can do withdrawal at any time.
(iii) Cash-credit: In cash credit, customer is given credit upto fixed limit against surety bond or against other securities. The interest rate is charged on the amount overdrawn by the customer on the daily balance, not on the entire amount of the limit.
(iv) Discounting of Bills of Exchange: Bill of exchange is a negotiable instrument. It is drawn by the seller and is accepted by the buyer. The drawer has got a advantage to discount the bill of exchange before it got matured if money is required immediately. The bank discounts the bill and deducts some amount as discounting charges and pays the remaining money to the drawer.
Secondary functions or subsidiary functions: Secondary functions can be classified as follows:
(a) Agency functions (b) Utility functions.
(a) Agency functions: These are the functions which is performed by the banks as an agent of their customers.
1).Collection of cheques and bills: It collects local and outstation cheques, drafts, bills of exchange, and promissory notes of the customers and credit it to their account.
2). Collection of Interest and Dividend: It also collects interest and dividend on debentures and securities that is held by the customers.
3. Purchase and sale of securities: On the instructions from its customers, banks purchase or sell stock securities, debentures, bonds etc.
(b)Utility functions : Banks provide the following utility or miscellaneous functions which are described below:
1. Safe custody of customers’ valuable articles and securities: Some banks gives the facilities of lockers where on nominal customer can keep its valuable things like ornaments, jewellery etc.
2. Facility of Foreign Exchange: obtaining a license from the Reserve Bank India, commercial banks can deal in foreign exchange. The banks can exchange the several foreign currencies and can even do discount on the foreign bills of exchange.
Define services and goods.
Describe various types of insurance and examine the nature of risks protected by each type of insurance.
Write a note on various telecom services available for enhancing business.
Explain in detail the warehousing services.
Explain warehousing and its functions.
What is e-banking. What are the advantages of e-banking?
What are services? Explain their distinct characteristics.
Explain briefly the principles of insurance with suitable examples.
State any three differences between e-business and traditional business.
1. The structure in which there is separation of ownership and management is called
(a) Sole proprietorship (b) Partnership
(c) Company (d) All business organisations
2. The karta in Joint Hindu family business has
(a) Limited liability (b) Unlimited liability
(c) No liability for debts (d) Joint liability
3. In a cooperative society the principle followed is
(a) One share one vote (b) One man one vote
(c) No vote (d) Multiple votes
4. The board of directors of a joint stock company is elected by
(a) General public (b) Government bodies
(c) Shareholders (d) Employees
5. Profits do not have to be shared. This statement refers to
(a) Partnership (b) Joint Hindu family business
(c) Sole proprietorship (d) Company
6. The capital of a company is divided into number of parts each one of which are called
(a) Dividend (b) Profit
(c) Interest (d) Share
7. The Head of the joint Hindu family business is called
(a) Proprietor (b) Director
(c) Karta (d) Manager
8. Provision of residential accommodation to the members at reasonable rates is the objective of
(a) Producer’s cooperative (b) Consumer’s cooperative
(c) Housing cooperative (d) Credit cooperative
9. A partner whose association with the firm is unknown to the general public is called
(a) Active partner (b) Sleeping partner
(c) Nominal partner (d) Secret partner
1. A government company is any company in which the paid up capital held by the government is not less than
(a) 49 per cent (b) 51 per cent
(c) 50 per cent (d) 25 per cent
2. Centralised control in MNC’s implies control exercised by
(a) Branches (b) Subsidiaries
(c) Headquarters (d) Parliament
3. PSE’s are organisations owned by
(a) Joint Hindu family (b) Government
(c) Foreign Companies (d) Private entrepreneurs
4. Reconstruction of sick public sector units is taken up by
(a) MOFA (b) MoU
(c) BIFR (d) NRF
5. Disinvestments of PSE’s implies
(a) Sale of equity shares to (b) Closing down private sector/public operations
(c) Investing in new areas (d) Buying shares PSE’s
6. The equity-based joint venture does not include
(a) Cooperative development (b) Company
(c) Partnership (d) Limited liability partnership
List any five major commercial cities of ancient India?
How does outsourcing represent a new mode of business?
What is Hundi?
Describe briefly any two applications of e-business.
List the major exports and imports in ancient India.
What are the ethical concerns involved in outsourcing?
What were the different types of Hundi in use by traders in ancient times?
Define Industry. Explain various types of industries giving examples.
What is business risk? What is its nature?
Describe the activities relating to commerce.
What is Hundi?
1. A government company is any company in which the paid up capital held by the government is not less than
(a) 49 per cent (b) 51 per cent
(c) 50 per cent (d) 25 per cent
2. Centralised control in MNC’s implies control exercised by
(a) Branches (b) Subsidiaries
(c) Headquarters (d) Parliament
3. PSE’s are organisations owned by
(a) Joint Hindu family (b) Government
(c) Foreign Companies (d) Private entrepreneurs
4. Reconstruction of sick public sector units is taken up by
(a) MOFA (b) MoU
(c) BIFR (d) NRF
5. Disinvestments of PSE’s implies
(a) Sale of equity shares to (b) Closing down private sector/public operations
(c) Investing in new areas (d) Buying shares PSE’s
6. The equity-based joint venture does not include
(a) Cooperative development (b) Company
(c) Partnership (d) Limited liability partnership
Discuss the salient aspects of B2C commerce.
How would you classify business activities?
What do you understand by maritime trade?
What factors are to be considered while starting a business? Explain.
List any five major commercial cities of ancient India?