BANKING

PART A

1. Define bank
• A bank is a financial institution that is licensed to accept deposits from the public and create credit.
• Banks provide a range of financial services, including lending money to individuals and businesses.
2. *What is Unit Bank?*
• Unit banks operate as single entities without branches.
• They offer banking services solely through their main office.
• Unit banks are typically smaller in scale compared to branch banking systems.
3. *What is Mixed Banking?*
• Mixed banking refers to the practice of combining commercial and investment banking activities
under one institution. Banks engaging in mixed banking offer both traditional deposit and loan
services as well as investment banking services like underwriting securities.
4. *Write a Short note on Group Banking.*
• Group banking involves multiple banks operating under a single ownership or management
structure.
• Banks within the group share resources, infrastructure, and services, such as technology platforms
and back-office operations.
5. *List out the kinds of Banking.*
1. Commercial Banking 5.Development Banking
2. Investment Banking 6.Cooperative Banking
3. Central Banking 7.Retail Banking
4. Islamic Banking
6. *Explain Chain Bank.*
1. A chain bank is a group of banks with similar names and branding but operating as separate
entities.
2. Each bank in the chain is independently owned and managed.
3. Chain banks often have centralized policies and procedures but maintain individual autonomy in
day-to-day operations.
7. *What is meant by Branch banking system?*
1. Branch banking involves a network of branches connected to a central bank.
2. Customers can access banking services at any branch within the network.
8. *Demonstrate Correspondent bank.*
1. Correspondent banks provide services to other financial institutions, acting as intermediaries.
2. They facilitate transactions, such as wire transfers and foreign exchange, on behalf of their client
banks.
9. *List the types of banks.*
5th answer is 9th answer

10. *What is Money Market?*

• The money market refers to a segment of the financial market where short-term borrowing and
lending of funds occur. • It includes instruments like Treasury bills, commercial paper, certificates
of deposit, and repurchase agreements.
11. *Summarize deposit banking.*
• Deposit banking involves accepting deposits from customers and using those funds to provide
loans and other financial services. • Banks pay interest on deposits, such as savings accounts
and certificates of deposit, while earning income from interest on loans.
12. *What is mean by wholesale banking?*
1. Wholesale banking refers to banking services provided to large institutions, corporations, and
government entities.
2. It includes services like corporate lending, treasury management, investment banking, and cash
management.
13. *Define Agricultural banking.*
1. Agricultural banking focuses on providing financial services to individuals and businesses involved
in agriculture and related industries.
2. Services may include agricultural loans, financing for farm equipment and inputs, crop insurance,
and agricultural advisory services.
14. *Compose on Universal Banking.*
1. Universal banking refers to a banking model where financial institutions offer a wide range of
banking and financial services under one roof.
2. It integrates commercial banking, investment banking, and other financial activities into a single
institution.
15. *What ismeant by Regional Rural Bank?*
1. Regional Rural Banks (RRBs) are financial institutions established to provide banking and financial
services in rural areas.
2. They are jointly owned by the central government, state governments, and sponsor banks.
16. *What is meant by NABARD?*
1. NABARD stands for National Bank for Agriculture and Rural Development.
2. It is a development finance institution in India that focuses on agricultural and rural development.
3. NABARD provides credit and other financial services to farmers, rural cooperatives, and other rural
development institutions to promote agriculture, rural entrepreneurship, and sustainable rural
livelihoods.
17. Define Exim Bank.
1. EXIM Bank stands for Export-Import Bank of India.
2. It is a government-owned financial institution in India that facilitates international trade and
investment.
18. *What is meant by Home banking?*
• Home banking refers to the provision of banking services to customers from their own homes
through electronic means.
• It allows customers to perform various banking transactions, such as checking account balances,
transferring funds, and paying bills, using internet banking platforms or mobile banking apps.
19. *List out the modern functions of banks.*
1. Online and mobile banking services
2. Investment advisory and wealth management
3. Digital payment solutions and fintech partnerships
20. *Show the advantages of branch banking.*
1. Enhanced customer service and personalized assistance
2. Greater accessibility and convenience for customers in local communities
3. Efficient management of customer accounts and transactions through a centralized system
21. *List out the Monetary Implications of Bank.*
1. Money creation through lending and credit issuance
2. Monetary policy transmission and implementation
3. Management of interest rates and inflationary pressures
22. *What are called as Development Banks?*
1. Development banks are financial institutions that provide long-term capital for economic
development projects.
2. They focus on financing infrastructure, industry, agriculture, and other sectors critical for
economic growth.
23. *Define Commercial Banks.*
1. Commercial banks are financial institutions that provide a range of banking services to individuals,
businesses, and government entities.
2. They accept deposits from customers and offer loans, mortgages, and other credit facilities.
24. *What is meant by RBI?*
1. RBI stands for Reserve Bank of India.
2. It is the central bank of India responsible for monetary policy formulation, currency issuance, and
regulation of the banking and financial system.
25. *Define Mutual Funds.*
1. Mutual funds are investment vehicles that pool money from investors to invest in a diversified
portfolio of stocks, bonds, or other securities.
2. They are managed by professional fund managers who make investment decisions on behalf of the
investors.
26. *Extend the function Controller of Credit by RBI.*
• Regulation of liquidity in the banking system through open market operations, reserve
requirements, and other monetary policy tools.
• Monitoring and controlling credit creation by banks to ensure financial stability and prevent
excessive inflation or deflation.
27. *What is meant by Bank Rate?*
• 1. Bank Rate refers to the interest rate at which the central bank lends money to commercial banks
in the event of a shortfall of funds.
• 2. It serves as a benchmark for other interest rates in the economy, influencing borrowing and
lending rates across financial institutions.
28. *Explain the term Retail Banking?*
• 1. Retail banking refers to the provision of financial services directly to individual consumers and
small businesses.
• 2. It includes services such as savings and checking accounts, loans, mortgages, credit cards, and
personal financial advice.
29. *Define Factoring?*
• 1. Factoring is a financial transaction where a business sells its accounts receivable (invoices) to a
third-party financial institution, known as a factor, at a discount.
• 2. The factor provides immediate cash to the business, typically a percentage of the value of the
receivables, and assumes the responsibility for collecting payment from the customers.
30. *Define the term Draft?*
• 1. A draft, also known as a banker's draft or bank draft, is a payment instrument issued by a bank
on behalf of a payer, instructing another bank to pay a specified sum to a named beneficiary.
• 2. It is a secure and widely accepted method of making payments, especially for large transactions
or cross-border payments.
31. *What is termed as Fixed Deposits?*
• 1. Fixed deposits are investment products offered by banks where customers deposit a sum of
money for a predetermined period at a fixed interest rate.
• 2. The deposited amount and interest rate are locked in for the duration of the deposit, providing a
guaranteed return on investment.
32. *Who act as banker to the Government?*
• 1. The central bank of a country, such as the Reserve Bank of India (RBI), typically acts as the
banker to the government.
• 2. As the government’s banker, the central bank manages the government’s accounts, processes
its transactions, and facilitates borrowing and debt management.
33. *What is Merchant Banking?*
• 1. Merchant banking refers to a range of financial services provided to corporations and
governments, including advisory services, capital raising, and corporate finance.
34.What is gold banking?
Gold banking refers to the storage and management of physical gold by a financial institution on behalf
of clients. This service allows individuals to purchase, store, and sell gold through a bank or other
financial institution. Gold banking can provide a secure and convenient way for investors to hold
physical gold as part of their investment portfolio.
34.Define Teller System.*
• 1. The teller system is a banking system where bank tellers are responsible for conducting
transactions with customers, such as deposits, withdrawals, and account inquiries.
36. *Who is termed as Central Bank?*
• 1. The central bank is an institution responsible for overseeing a nation’s monetary policy,
regulating its banking system, and issuing currency.
• 2. It acts as the banker to the government and the banking sector, manages the country’s foreign
exchange reserves, and provides financial stability.
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37. *What is said to be Current Account?*
• 1. A current account is a type of bank account that is typically used for day-to-day transactions,
such as deposits, withdrawals, and payments.
• 2. Current accounts usually do not offer significant interest on deposits but provide easy access to
funds and often come with checkbooks, debit cards, and online banking services.
38. *What is meant by Cash Credit?*
• 1. Cash credit is a type of short-term loan provided by banks to their customers, typically for
business purposes.
• 2. It allows borrowers to withdraw funds up to a predetermined credit limit, similar to a line of
credit, and interest is charged only on the amount withdrawn.
39. *Define Home Banking?*
• 1. Home banking refers to the provision of banking services to customers from their own homes
through electronic channels.
• 2. It allows customers to perform various banking transactions, such as account inquiries, fund
transfers, and bill payments, using internet banking platforms or mobile banking apps.
40. *What is Gold or Platinum card?*
• 1. Gold or Platinum cards are premium credit cards offered by banks and financial institutions to
customers with high creditworthiness and income levels.
• 2. These cards typically come with higher credit limits, exclusive benefits, and rewards programs,
such as cashback, travel perks, and concierge services.
41. *Who is known as Controller of credit?*
• 1. The central bank, such as the Reserve Bank of India (RBI), is often referred to as the controller of
credit in a country.
• 2. It regulates the supply of money and credit in the economy through various monetary policy
tools, such as open market operations, reserve requirements, and interest rate adjustments.
42. *What is meant by Overdraft?*
An overdraft occurs when you don’t have enough money in your account to cover a transaction, but
the bank pays the transaction anyway.
43. *Define the term Green Card?*
A green card is a colloquial name for the identification card issued by U.S. Citizenship and Immigration
Services to permanent residents who are legally allowed to live and work in the U.S. indefinitely. Green
cards got their nickname because they were green in color from 1950 to 1964.
44. *Depict the classification of banks with a flow chart.*
45. *Who is called as Paying Banker?*
1. A paying banker refers to the bank on which a check or draft is drawn and which is responsible
for honoring the payment instructions of the drawer.
• 2. The paying banker verifies the authenticity of the check, ensures that the drawer has sufficient
funds, and processes the payment to the payee.
46. *Define the term Payment in due course.*
• 1. Payment in due course refers to the lawful and timely payment of a negotiable instrument, such
as a check or promissory note, to the intended recipient or holder in accordance with its terms.
47. *What is mean by Open / Crossed Cheque?*
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1. An open cheque is a check that is payable to the bearer and can be encashed by anyone presenting
it to the bank. •2. A crossed cheque is a check that has two parallel lines drawn across its face,
indicating that it can only be deposited into a bank account and not encashed over the counter.
48. *Define Mutilated Cheque.*
• 1. A mutilated cheque is a damaged or defaced check that may be torn, stained, illegible, or
missing essential information. • 2. Mutilated cheques may still be honored by banks if the
essential details, such as the payee’s 4 name, the amount, and the signature, are legible and intact.
• 9. *What do you mean by Material Alteration?*
• 1. Material alteration refers to any change made to a negotiable instrument, such as a check or
promissory note, that affects its validity, terms, or obligations.
• 2. Alterations that materially change the rights or obligations of the parties involved, such as
altering the amount or payee, may render the instrument void or invalid.
50. *Who is termed as Collecting Banker?*
• 1. A collecting banker refers to the bank that collects payment on behalf of its customer from the
payer or drawee of a negotiable instrument, such as a check or bill of exchange.
• 2. The collecting banker presents the instrument for payment, credits the proceeds to the
customer's account, and ensures timely collection and clearance of funds.
51. **What do you mean by Garnishee Order?**
• 1. A garnishee order is a legal order issued by a court that allows a creditor to collect a debt owed
to them directly from a third party who holds funds or assets belonging to the debtor.
52. **What is meant by Inchoate cheque?**
• 1. An inchoate cheque is a partially completed or unfinished cheque that lacks essential details
required for payment, such as the payee's name, the amount, or the date.
53. **Define Lunacy?**
• 1. Lunacy, also known as mental illness or insanity, is a medical condition characterized by severe
disturbances in thought, mood, or behavior that impair a person's ability to function in daily life.
54. **Who is a Customer to a bank?**
A customer is a person who has an account with a bank or has a relationship with the banker even
though he has no account with the bank.
55. **Define Banker.**
• 1. A banker is an individual or financial institution that provides banking services, such as accepting
deposits, making loans, and facilitating financial transactions.
• 2. Bankers may also offer a range of other financial products and services, including investment
advice, wealth management, and insurance products.
56. **What is meant by Right of Lien?**
• 1. The right of lien refers to the legal right of a creditor, such as a bank, to retain possession of a
debtor's property or assets as security for a debt owed to them.
• 2. Lien allows the creditor to hold onto the property until the debt is repaid or the obligation is
fulfilled.
57. **What is meant to be a Passbook?**
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• 1. A passbook is a booklet issued by a bank to an account holder that records all transactions,
including deposits, withdrawals, and interest earned, related to the account.
• 2. Passbooks provide a convenient and tangible record of account activity and balance, allowing
customers to track their finances and monitor transactions.
58. **When the cheques do get dishonoured?**
When a bank refuses to process a cheque you have submitted, it is known as a dishonour of
cheque. This rejection can occur for reasons such as insufficient balance in an account, a
signature mismatch, or a post-dated cheque.
59. **Define Banker and Customer relationship.**
• 1. The relationship between a banker and a customer is a contractual relationship based on the
terms and conditions agreed upon by both parties.
• 2. The banker has a duty to provide banking services to the customer in accordance with legal and
regulatory requirements and to safeguard the customer's interests and financial assets.
60. **What is meant by Internet Banking?**
• 1. Internet banking, also known as online banking or e-banking, refers to the provision of banking
services and transactions conducted over the internet.
• 2.Internet banking allows customers to access their bank accounts, make transactions, pay bills,
and manage finances through secure online portals or mobile apps.
61. **What do you mean by Tele-Banking?**
• 1. Tele-banking is a banking service that allows customers to access their accounts and conduct
banking transactions over the phone using interactive voice response (IVR) systems or speaking to
a bank representative.
62. **Define Charge Card:**
A charge card is a type of electronic payment card that charges no interest but requires that you
pay the statement balance in full, usually monthly. Charge cards are offered by a limited number of
issuers.
63. **List out any 6 types of Credit cards:**
1. Visa 4. Discover
2. Mastercard 5. Diners Club
3. American Express 6.JCB (Japan Credit Bureau)
64. *What is called Mobile Banking?**
Mobile banking refers to the use of smartphones or other mobile devices to perform banking
transactions and access financial services remotely. It allows customers to check account balances,
transfer funds, pay bills, and perform other banking activities using mobile apps or mobile web
browsers.
65. **What is known as Demat Account?**
A Demat account helps investors hold shares and securities in an electronic format. It is also
commonly known as a Dematerialised account. This account helps keep track of an investor’s
holdings in shares, exchange-traded funds, bonds, and mutual funds in one place.
66. **What is meant by Automatic Teller Machine?**
An automated teller machine (ATM) is an electronic banking outlet that allows customers to complete
basic transactions without the aid of a branch representative or teller. Anyone with a credit card or
debit card can access cash at most ATMs, either in the U.S. or other countries.
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67. **What is called as Debit Card?**
A debit card is a payment card that deducts money directly from your checking account. Also called
“check cards” or “bank cards,” debit cards can be used to buy goods or services or to get cash from
an ATM. Debit cards can help you reduce the need to carry cash, although using these cards can
sometimes entail fees.
68. **Define the term Instant Money Transfer:**
Instant Money Transfer (IMT) is an innovative domestic service that allows you to send cash to a
receiver. All you need to do is mention receiver’s mobile number, amount to be sent and set Sender’s
code. Beneficiary can withdraw cash using a debit card, from any ATM of the banks empanelled.
69. **What do you mean by E-Banking?**
E-banking is a product designed for the purposes of online banking that enables you to have
easy and safe access to your bank account. E-banking is a safe, fast, easy and efficient
electronic service that enables you access to bank account and to carry out online banking
services, 24 hours a day, and 7 days a week.
70. **Recall 3 uses of Credit card:**
• 1. Making purchases at retail stores, online merchants, or restaurants.
• 2. Booking flights, hotels, rental cars, and other travel-related expenses.
• 3. Paying bills for utilities, subscriptions, and other recurring expenses.
71. **What is mean by PIN?**
PIN stands for Personal Identification Number. It is a numeric password or code used to
authenticate the identity of a cardholder during electronic transactions, such as ATM withdrawals,
debit card purchases, and online banking transactions. PINs provide security and help prevent
unauthorized access to bank accounts and financial transactions.
72. **Define ECS:**
ECS stands for Electronic Clearing Service. It is a payment mechanism used for bulk electronic
transactions, such as salary payments, dividends, pensions, and bill payments. ECS facilitates the
automatic transfer of funds from one bank account to another through electronic means,
eliminating the need for physical checks or cash transactions.
73.**What is term Insolvents?**
Insolvents refer to individuals or entities that are unable to meet their financial obligations and are in a
state of insolvency, where their liabilities exceed their assets. Insolvents may be unable to repay
debts or honor financial commitments, leading to bankruptcy proceedings or debt restructuring.
74.Define MICR Cheque
“Magnetic Ink Character Recognition” is a technology that uses a 9-digit code printed at the bottom of
a cheque to quickly and accurately identify and process it. In addition to speeding up the
processing of cheques, MICR has other features such as: MICR is located at the bottom of the
cheque.
75. What is factoring?
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts
receivable to a third party at a discount. A business will sometimes factor its receivable assets to
meet its present and immediate cash needs.