II. Very Short Answer Questions

Question 1. Give the meaning of Commercial Banks.

Answer: Banks which accept deposits from the public and grant loans to traders, individuals, agriculture, industries, transport etc..., in order to earn profit.

 

Question 2. What do you mean by Industrial Banks?

Answer: Huge finance required for investment, expansion and modernization of big industries and others are granted by a separate type of banks called development Banks. They are also called as industrial banks.

 

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Question 3. Briefly explain about Correspondent Banks?

Answer: A bank in a country can appoint another bank in a foreign country to act as correspondent bank.

 

Question 4. What are Foreign Banks?

Answer: Banks which have registered office in a foreign country and branches in India are called foreign banks.

 

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III. Short Answer Questions

 

Question 1. Write a short note on Local Area Banks. Give two examples.

Answer: Local Area Bank (LAB) scheme was introduced by the RBI in August 1996. LABs are small private sector banks established in rural and semi-urban areas. Each bank serves two or three adjoining districts only. Their main objective is to mobilize rural savings (accept deposits) and invest them in the same areas.

Examples:

1. Coastal Local Area Bank, Vijayawada, Andhra Pradesh.

2. Subhadra Local Area Bank Limited, Kolhapur, Maharashtra

 

Question 2.What are the objectives involved in Regional Rural Banks?

Answer: Their objective is to develop rural economy and play supplementary role to cooperative societies. They mobilize deposits from the rural public and provide finance to rural artisans, small entrepreneurs and farmers and try to avoid their dependency on money lenders. As on 31.3.2016, there were 56 RRBs in India with 14,494 branches. They are regulated and supervised by NABARD.

 

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Question 3. Mention the purposes of Agricultural and Co — operative banks.

Answer: Their foremost objective is providing service to its members for rural and agricultural development and not profit earning. They are set up in towns and villages rather than cities. Compared to the commercial banks they offer less variety of services as the bye laws do not permit all commercial bank activities.

 

IV. Long Answer Questions

Question 1. Explain the various types of banks based on organization with examples.

Answer:

1. Commercial banks: Banks which accept deposits from the public and grant loans to traders, individuals, agriculture, industries, transport etc. in order to earn profit. Their lending is in comparatively small amounts and mostly for short and medium period. e.g.., State Bank of India

 

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2. Development Banks: Huge finance required for investment, expansion and modernisation of big industries and others are granted by a separate type of banks called development Banks. They are also called industrial banks, e.g., IFCI, SIDBI.

 

3. Cooperative Banks: All cooperative banks in India are owned by its customers or members who are farmers, small traders and others. Cooperative banks in India are either urban based or rural based, example NAFED, Tamil Nadu State Apex Cooperative Bank — Head Office, Chennai.

 

4. Foreign Banks: Banks which have registered office in a foreign country and branches in India, are called foreign banks, e.g., Bank of America — USA.

 

5. Regional Rural Banks (RRBs): The RRBs were formed under the Regional Rural Bank Act 1976, jointly by the Central Government. State Government, and a sponsor bank, example Pandian Grama Bank.

 

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Question 2. Explain the types of banks based on ownership pattern.

Answer: Any bank in which not less than 51 percent of shares are owned by the Government are called Government banks or public sector commercial banks. All nationalized banks (19 banks, in 2017), SBI and IDBI Ltd. are public sector commercial banks. All of them are joint stock company type banks. There are corporation type banks. Each corporation type bank is established by a separate Act of Parliament and is fully owned by Government of India.

All banking companies owned by private people are called private sector commercial banks. All cooperative banks are owned by its members from the public.

1. Nationalized banks: Indian bank, 10B, etc.

2. Public sector banks: State Bank of India. IDBI Bank Ltd.

3. Private sector banks: Lakshmi Vilas Bank, Karur Vysya Bank.

 

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