Overview of Indian banking system
to the Indian Banking Companies Act , “Banking Company is one which transacts
the business of banking which means the accepting for the purpose of lending or
investment of deposits money from the public repayable on demand or otherwise
and withdrawable by cheque, draft, order or otherwise”.
2.What are commercial banks?
accepting for the purpose of lending or investment of deposits of money from
the public repayable on demand or otherwise and withdrawable by cheque,draft
and order or otherwise
3.What are the NBFCs?
financial companies (NBFCs) are financial institutions
that provide banking services without meeting the legal definition of a bank,
i.e. one that does not hold a banking license. These institutions typically are
restricted from taking deposits from the public depending on the jurisdiction.
4.What are the scheduled banks?
Banks in India constitute those banks which have been included in the Second
Schedule of Reserve Bank of India(RBI) Act, 1934. RBI in turn includes only
those banks in this schedule which satisfy the criteria laid down vide section
42 (6) (a) of theAct.
included in this schedule list
should fulfill two
The paid capital and collected funds of bank should not be less than Rs. 5 lac.
2.Any activity of the bank will not adversely affect the interests of
5.Who is banker?
is one who in the ordinary course of his business,honours cheque drawn upon him
by person from and for whom he receives money on current account
6.Who is customer?
is the person who has the habit of resorting to the same place or person to do
7.What is balance sheet?
bank balance sheet is a record of the assets ,liabilities and networth of a
bank at a given period of time. assets=liabilities.
8.What is Net worth?
between assets &liabilities and what is claimed by or owed to the owners of
9.What is repo rate& reverse
rate is the rate at which banks borrow money from the central banks with out
any sale of securities.
rate of interest at which the central bank borrows funds from other banks for
the short term durations.
10.Define discounting of bill.
the bills of exchange means the arrangements of making payments before maturity
of bills of exchange. The payment made by the bank to the holder of bill of
exchange before its maturity is the amount of loan. The discount charged is the
earning of the bank.
11.Write about bills of exchange?
is an instrument in writing containing an unconditional order, signed by the
maker, directing a certain person to pay a certain sum of money only to, or to
the order of, a certain person or to the bearer of the instrument.
12.What is a negotiable instrument?
is a written document which creates a rights in the favour of somebody and is
freely transferable by delivery
13.Write about cheque.
“cheque is a bill of exchange drawn on a specified banker and not expressed to
be payable otherwise than on demand and it includes the electronic image of a
truncated cheque and a cheque in the electronic form.
14.Write a note on promissory note.
„Promissory Note‟ is an instrument in writing (not being a bank-note or a
currency-note) containing an unconditional undertaking, signed by the maker, to
pay a certain sum of money only to, or to the order of, a certain person, or to
the bearer of the instrument.
is a short-term loan granted by commercial banks to their account holders.
Under this type of loan, the customers are allowed to draw more than what they
have in their current account up to a certain limit. The excess amount
overdrawn is called overdraft.
16.Write about cash credit
credit is a very common form of loan granted by commercial banks to businessmen
and industrial units against the security of goods. The loan granted under this
head is credited to current account opened in the name of borrower. The
borrower can withdraw money through cheques according to his requirement. The
interest is charged on the amount actually withdrawn by the borrower.
17. Write a note on lien &set
is the right of a creditor to retain the goods &securities owned by his
debtors until the debt is repaid
name and same right, both the accounts must held in the same name & in the
same capacity. this is to avoid misuse of funds belonging to someone else but
standing in the name of the customer
18.Write about call money.
money is short-term finance repayable on demand, with a maturity period of one
to fifteen days, used for inter-bank transactions. The money that is lent for
one day in this market is known as "call money" and, if it exceeds
one day, is referred to as "notice money.
19.What is mean by authorized,
subscribed, paid up capital
is the total of the share capital which a limited company is allowed to issue.
it presents the upper boundary for the actually issued share capital.
capital - it is the portion of the issued capital which has been subscribed by
all the investors including the public.
up share capital-Is the amount of share capital paid by the shareholders. This
may be less than the called up capital as payments may be in installments
20. What is a negotiable
is a written document which creates a rights in the favor of somebody and is
freely transferable by delivery.