You can download Financial Institutions and Services Questions and Answers, Summary, Activity, Notes, Kerala Syllabus 10th Standard Social Science Solutions Part 2 Chapter 9 help you to revise complete Syllabus and score more marks in your examinations.
Kerala State Syllabus 10th Standard Social Science Solutions Part 2 Chapter 9 Financial Institutions and Services
Financial Institutions and Services Text Questions and Answers
Name the central bank of India
Reserve Bank of India (RBI)
………….. is the headquarters of RBI
Complete the following.
What do you mean by financial institutions?
The institution that undertakes economic transactions like accepting deposits and giving loans are called financial institutions.
RBI was nationalized in:
Complete the following chart
The deposit that allows to deposit and withdraw money many times in a day
1. Current deposit
2. Recurring deposit
3. Saving deposit
1. Current deposit
Industrial Finance Corporation is an example for
1. Commercial Banks
2. Development Banks
3. Non-Banking Financial Institution
2. Development Banks
Point out the functions of RBI.
1. Issue of Currency Notes
2. Controller of Credit
3. Banker’s Bank
4. Government’s Bank
Explain the different phases in the growth of banks in India.
First phase (1771 to 1969):
- English East India Company set up 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):
- Banking operations became fast.
- The awareness that bunks should operate with the objective of social welfare became prevalent.
- Bank nationalization of 1969 and 1980.
Third phase (From 1991 onwards):
- Along with the performance of basic functions, implemented services that would speed up banking procedures.
- Implemented new trends in banking like ATM, credit card, phone banking, net banking, etc.
- Operations of New Generation Banks.
Prepare a list of nationalized banks in India.
- Bank of India
- United bank of India
- Indian Bank
- United Commercial Bank
- Syndicate Bank
- Bank of Maharashtra
- Vijaya bank
- Oriental Bank of Commerce
- Andhra Bank
- Punjab and Sindh Bank
- Centra Bank of India
- Union Bank of India
- Indian Overseas Bank
- Allahabad Bank of India
- Canara bank
- Corporation Bank
Question 12. Name the first. modern bank in India.
Bank of Hindustan (1770)
In India, coins and one rupee notes are issued by
The Ministry of Finance
Explain the features of new generation banks.
The private banks which are given license after 1991, in the third phase of the growth of banking sector are called New Generation Banks. 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 proceeding easy and simple.
Name the different types of commercial banks.
- Public sector banks
- Private Indian banks
- Private Foreign banks
Write on the different types of deposits accepted by commercial banks?
Commercial banks accept the following deposits.
It is a scheme for depositing surplus income by individuals and institutions. Banks offer low rate of interest for this deposit. Depositor can withdraw money from this deposit subject to certain restrictions.
A scheme for 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 deposits are suitable for depositing money for a fixed period. Interest is fixed on the period (tenure) of the deposit. It can be normally withdrawn only after the expiry of the period. Rate of interest will decrease if withdrawn before the expiry period. Recurring Deposit Depositing a fixed sun monthly for a fixed period is the recurring deposit. It offers a rate of interest higher than that of saving deposit, but less fixed deposit.
This is the next major function of commercial banks. Banks provide loans by using the amount deposited by the public. Banks give loans to individual as well as institutions. Interest rates charged for loans will be higher that of deposits. Rate of interest vary depending upon the duration of loans.
Apart from the basic functions like accepting deposits and lending money, commercial banks render certain other services to their customers. The services rendered by the banks include.
its offer locker facility to keep costly articles (gold, title deed of property) of their customers. Banks charge a fixed amount as service charge for this.
Demand draft is a facility provided by banks to send money from one place to another. Bank account is not necessary for this.
Mail transfer is a facility provided by banksto transfer money from any place 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 a system of transfer of money through message.
Automated Teller Machine helps the customers to withdraw money without stepping into the banks. Most banks have ATM facility today. Today money can be deposited and withdrawn through the ATM of some banks. Th.e bank gives ATM debit card for this.
Customers can purchase goods with the help of credit card. This system enables the customers to purchase goods even if there is no balance in the account. Money should be deposited in the bank within fixed days.
Banks help the customers to ‘remit their insurance premium, telephone bills, and electricity bills and to purchase travel tickets. Pension amount to the retired officials is disbursed through banks.
Define Commercial Banks
Commercial banks are those banks which accept deposits and lend money for commercial purposes, industrial and agricultural purposes.
Distinguish between private Indian bank and private foreign banks.
Private Indian commercial banks are owned by private individuals. These banks operate subject to the regulations of RBI. Banks owned by private individuals and registered in India, with their headquarters abroad are called private foreign commercial banks. These also function subject to regulations of RBI.
Who all are getting the benefits of RRBs
Small scale farmers
Describe the functions of commercial banks.
Commercial banks perform various functions. They are discussed below:-
Accepting deposits is the main function of commercial banks. These banks accept four types of deposits. These deposits are
- Saving Deposit
- Fixed Deposit
- Current Deposit
interest is not given for current deposits. Why?
Current deposits are not given interest. This is because in current deposit scheme money can be deposited and withdrawn many times in a day without any restrictions.
Point out the factors influencing difference in the rate of interest on loans?
- Tenure of loan
- Mode of repayment
- Purpose of loan
What do you mean by overdraft?
Overdraft is a type of loan given by commercial banks to customers. This facility enables a customer to withdraw money over and above the credit balance.
Banks give this facility to permanent and reliable customers. This facility is provided to those who have current account deposit.
Give examples of plastic money
Credit Card Debit Card
What are the two trends in banking?
Electronic banking Core banking
Prepare a note on the facilities offered by electronic banking?
Today banking, services are easily available through any banks with the computerization of banks and the ATM facility. Doing all banking transactions through net banking and telebanking is called electronic banking. Banking at any time and banking at any place, net banking, and mobile banking are part of electronic banking. It does not need the support of employees and banking instruments. Only bank account and net banking facility are needed for this.
Customers can send money anywhere in the world and remit the bills from home itself without stepping into a bank. Banking activities can be completed within a short time. Not expensive as the service charge for this is very less.
Banking operations become easy with core banking. Explain.
Core banking is a banking facility under which all the branches of the banks are brought under a central server to enable transactions from one bank to another. It operates with the help of internet. Making use of this facility, an individual can send money from his account to his friend’s account in another place. Facilities like ATM, debit card, credit card, net banking, telebanking, mobile banking, etc. are brought under one umbrella through core banking. This made bank transactions easy.
What are the things to be taken care of while using ATM cards?
- Make sure that nobody is in the counter.
- Do not disclose your ATM pin number to anyone.
- Check the cash withdrawals against your bank statement and keep receipts from the ATM to check back against your statement. Do not throw away the receipt carelessly.
Match the following.
Point out the functions of NABARD?
The institutions that give financial assistance for the development of certain areas only are called specialized banks. NABARD is a specialized bank. Its features are:
- The apex bank operating for agricultural and rural development.
- Co-ordinates all banks working for rural development.
- Gives financial assistance to agriculture, handicrafts and small scale industries.
Define Mudra Bank
Mudra bank stands for micro-units development and refinances agency banks. It is a public sector financial institution in India that provides loans to low rates of interest to microfinance institutions and small scale entrepreneurs.
What are the objectives of Mudra bank?
- Provide small lending
- Provide financial help to microfinance and small entrepreneurs.
NABARD stands for?
National Bank for Agricultural and Rural Development
What are co-operative banks? Mention their objectives?
Co-operative banks operate on the basis of principles like co-operation, self-help and mutual help. They have been set up for rural development. Co-operative banks were set up with the aim of extending financial help to farmers, handicrafts men, small scale industrialists, etc.
The objectives of Co-operative banks are
- Give loans to people
- Save the rural folk from the exploitation of private money lenders
- Give loan at low rate of interest
- Promote saving habits among the rural folk
Complete the following chart
a – State Co-operative Bank
b – District Co-operative Bank
c – Primary co-operative Bank
Write the difference between life insurance company and non – life insurance company. Write example for each.
Life Insurance Company :
Life insurance companies are institutions that provide security to life 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
Which among the following is a private sector bank?
i) Vijaya Bank
ii) Canara Bank
iii) Syndicate Bank
iv) Federal Bank.
iv) Federal Bank
Which is the major non-banking financial company operating in Kerala? What are the services they provide?
Kerala State Financial Enterprises (KSFE)
- Operate chitties
- Housing loan
- Gold loan
- Hire purchase
Mutual fund helps common man to overcome the constraints in investing money in share market. Explain.
Mutual fund is a deposit scheme. Common man cannot directly involve in share market. Mutual fund helps investors to overcome this constraint. Money is mobilized from common man and small scale farmers for investing in shares and other assets like debentures and infrastructure. The profit or loss resulting from this is distributed among them.
Name any two mutual fund operations in public sector.
i) SBI mutual fund
ii) Unit Trust df India
Let Us Assess
Reserve Bank acts as the last resort in monetary matters of all banks. Substantiate the statement based on the functions of RBI
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 instructions and advice. It acts as the last resort in the monetary matters of all banks.
The functions of RBI are:
Issue of currency notes:
RBI has the legal right to issue all currency notes except one rupee note and subsidiary coins. The finance ministry is authorized to issue one rupee note and subsidiary coins. A proportional value of gold and foreign exchange are kept as reserve for issuing notes.
Controller of credit:
The availability money supply in the economy increases when the RBI issues and distributes currency notes and also by loans. Controlling credit is an important function of RBI. This is done by changing the rate of interest. When the rate of interest increases, the amount of loan decreases. Rate of interest decreases and the amount of loan increases.
The RBI acts the bank of both the Central Government and the State Governments. As per this, the RBI accepts deposits from central and state governments, gives them loans and other banking services, The Reserve Bank does not accept any remuneration for these services for the governments.
Reserve Bank controls all the banks. It is the functions of the RBI to help in the operations of other banks and to advise them when needed. It regulates commercial banks and help them in emergency.
Thus the RBI acts as the last resort of all the other banks in monetary matters.
Explain the basic functions performed by banks.
Banks are those institutions which accept deposits from the public and lend out money to the borrower on certain conditions. They operate on the basis of common bye-law and criteria prepared by the Reserve Bank of India.
Banks accept deposits from people, institutions, and government and disburse this amount as loans to people, institutions and government. The banks take back the loan amount with interest after a particular period and repay the depositors with interest. Thus the banks acts as the intermediary between borrowers and lenders.
Mahila banks, Payment banks, and Mudra banks have recently entered the banking sector. Write their aims.
Mahila banks, Payment banks, and Mudra banks are the new entrants in the banking sector formed for specific purposes.
The slogan of Mahila bank is ‘Empowering Women, Empowering India’. The bank accepts deposits from everyone, but lending is predominantly for women.
Payment banks are set up to help low-income groups, small scale industrialists and migrant laborers. They do not undertake all the services rendered by banks.
Mudra banks are set up to provide small credit (up to ? 10 lakh), especially in agriculture and self-employment sector. It provides financial assistance to small entrepreneurs and microfinance.
Evaluate how microfinance is beneficial to common people?
The objective of microfinance is ‘to provide financial services to common people including small lendings. It helps to promote saving habits and self-employment. activities among the poor. This helps members to avail themselves of loans without providing any collaterals. Kudumbasree and Self Help Group for men are examples for this.
Aims of microfinance:
- Promotes saving habits.
- Helps to improve the standard of living of the poor.
- Helps to mobilize fund from individuals and use it for collective economic activities.
- Individual abilities are used for the benefit of the group.
- Gives loans to members when required.
- Sets up small enterprises.
Question 45. (Qn. Pool-2017)
List the various types of banks that function in your area.
Commercial bank SBI, Federal bank, Co-operative banks.
Who is responsible for issuing one rupee note and its subsidiary coins?
Central Finance Department
A measure adopted by the Reserve Bank to Control Credit is ……………
a. To abolish tax
b. To bring stringent measures
c. To incerease tax rate
d. To reduce tax rate
c. To increase tax rate
Which is the largest commercial bank in India?
State Bank of India
Differentiate public sector commercial banks and private sector commercial banks.
Public Sector Banks are totally under the ownership of the government. The ownership of the private sector bank is with private individuals.
What type of Banks are called private foreign commercial banks?
Banks which have registered in India but have headquarters in a foreign country.
The statement given below belongs to which type of deposit?
“The interest rate is calculated on the basis of the time period for which the money is deposited.”
a. Savings Deposit
b. Current Deposit
c. Fixed Deposit
d. Recurring Deposit
c. Fixed Deposit
Elucidate Cash Credit.
Cash credit are loans provided by banks to institutions accepting collateral and salary certificate.
What is the name of the facility provided by the bank to withdraw more money than in the account?
What is mail transfer?
Facility provided by the bank to send money to one’s own account or its others account from anywhere in the world is mail transfer.
Differentiate Banks and non-banking financial institutions.
Non-banking financial institutions do not provide facilities like withdrawal of cash by cheque, mail transfer, lockers, etc.
List down the name of two mutual fund institutions functioning in India.
Unit Trust of India
Life Insurance Corporation Mutual Fund
Explain the functioning of Kudumbasree and Men self-help group.
At least 20 women/men of a locality join to form small groups. Each member deposits a fixed amount. Banks provide loans at a lower rate to these groups. The funds thus collected will be distributed among the members who need it or start small scale enterprises.
Question 58. (Qn. Pool-2017)
Write a note on the functioning of banks.
Accepting deposits, providing loans. Providing locker facilities for safekeeping issuing checks and demand drafts. ATM, CDM, Netbanking and care banking facilities.
Bank nationalization strengthened the banking sector in India. Give your opinion on this statement.
The major banks in India were nationalized with the view that banks should operate with the view that banks should operate with the aim of social progress with nationalization banking sector strengthened with more government control and banking spread to rural areas.
What are newb generation banks? How are they different from other banks?
Banks that started after 1991. Mainly city-centered. New management and functions with modern technologies.
Explain the important functions of commercial banks.
Two important functions of the banks are accepting deposits and granting loans. Deposits are classified into savings deposit. Which is aimed to encourage saving habits. Current deposits which is used by industrial and traders fixed deposit with more interest and recurring deposits. Banks give loans of different types for various purposes. Some are short terms and some are long-terms loans are granted on the basis of asset security or personal security.
Prepare a short note on public sector commercial banks.
Commercial banks functions in the public sector and private sector. The banks which are under government control are called public sector banks. They accept
deposit, provide loans, locker facilities, net banking, care banking facilities are provided.
Write about the different of deposits in commercial banks and their features.
Deposits are of mainly four types savings deposits. Ant one can open on account any amount can be deposited and withdraw comparatively low interest.
Current deposit: This deposits facility depositing and withdrawing many times in a day. Used mainly by traders and industrialists. No interest.
Fixed deposit: Ideal for depositing money for a fixed period. Comparatively high interest.
Recurring deposit: A specific amount is deposited every month for a fixed period of time. Receives high rate of interest.
Explain the grounds under which overdrafts are issued.
Overdraft is a credit facility provided to individuals by banks. This allows an account holder who have frequent transactions to withdraw an amount over and above the balance in the account.
The upcoming trends in banking sector makes banking more people-friendly.
Electronic banking is a method by which all transactions can be carried out through not banking and telebanking. Its features are money can be sent and bills can be paid anywhere in the world. Saves time and low service charges.
Core banking: Core banking is the facility which is arranged in such a way that the branches of all banks are brought under a control server. This facility helps and individual to send money to his account from anywhere.
Cooperation, self-help, and mutual help are the working principles of Co-operative banks.’To what extent did the objectives of Co-operative Banks justify this? Write your inferences.
Provide loans to the public, protect the villages from private money lenders, provide loans at low-interest rates, encourage saving habits amoung people. Co¬operative banks have strengthened banking activities in remote areas.
Which are the different levels of the co-operative banks? Write their different type of functions.
State Co-operative Banks. 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 district centres. Provides assistance and guidance toprimary Co-operaitve banks.
Primary Co-operative banks Function in villages area of functions is limited. Encourage saving habit in villagers. Provides loansto villages at low interest rates.
Write a short note on the development banks.
Development banks provide long term loans for various needs such as modernisation of industries. There banks work as an agent that helps in the development of different sectors. Provide loans for construction of house small scale industry and infrastructure development. .
What are specified banks? Write examples for them.
Specified banks provide financial help for the development of certian sectors.
e.g: Exim bank, Small Industries Devlopment Banks, NABARD
Write down the features of the specialized banks given below.
1. Exim bank of India
2. Indian Small Scale Industries Development Bank
Exim Bank (Export-Import Bank) : Provides loans for exporting and importing products Provides instructions to individuals who come into this sector
Small Industries Development Bank of India (SIDBI) : Provides help to establish new small scale industries and modernizing existing industries Aimc is to vitalizes.
National Bank for Agricultural and Rural Development (NABARD) : Apex bank in India which functions for the development of villages and agriculture Unites all the banks which operate for the development of villages Provides financial assistance to agriculture handicraft small scale industries etc.
What is the slogan of Bharathiya Mahila Bank? What is its contemporary significance?
In the contemporary world Bharathiya Mahila Bank plays a significant role in helping women to become self-reliant.
What are payment banks? Write down their features.
Payment Banks have been established to help the low-income groups small scale industrialists and migrated employees.
The main features are
1. Accept deposit up to only one lakh rupees from individuals.
2. Provide interest on deposits as specified by the Reserve Bank of India.
3. Do not provide loans.
4. Charge a specific fee as commission for bank transactions.
5. Debit card will be provided but no credit card.
What are non-banking institutions? Why are the following institutions non-banking institutions?
1. Mutual fund institutions
2. Insurance companies
Non-Banking financial institutions that operate under the supervision of the Reserve Bank of India. They are registered under the Company Act 1936 and carry out the basic functions of the Banks. Mutual fund institutions and insurance companies are non-banking financial companies because they do not carry out all the functions of Banking institutions
Which are the Mutual fund institutions that function in the Public and Private sectors?
SBI Mutual Fund LIC Mutual Fund ICICI Mutual Fund HDFC Mutual Fund
Which is the major institution in India, that functions for the protection of the health and life of the individuals?
Self-help groups are formed to encourage saving habits among low-income groups in the society and to seek self employment. Men/women in a locality join together and form small groups, normally 20 members. Each member invest a fixed amount in the group and with the help of Bank loans are provided to member at low rate to find self-employment.