TN State Board 11th Commerce Important Questions Chapter 11 Types of Banks
Give the meaning of 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. They also provide other services like remittance of funds, safe keeping of valuables, collection of cheques, issue of letters of credit, etc.
What do you mean by industrial Banks?
- These banks assist to promote industrial development by providing medium and long term loans. For eg: IDBI, ICICI, are known as industrial banks.
- Huge, finance required for investment, expansion and modernisation of big indus¬tries and others are granted by a separate type of banks called development banks.
Briefly explain about Correspondent Banks?
- Banking Correspondents (BCs) are retail agents engaged by banks for providing banking services at low cost in locations other than a bank branch/ATM. They are not separate banks recognized by the RBI.
- BC model was introduced by the RBI in 2006 to provide services at door steps.
What are Foreign Banks?
Banks which have registered office in a foreign country and branches in India are called foreign banks. These banks open their offices in big cities and port towns only.
Write a short note on Local Area Banks, Give two examples.
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.
- Coastal Local Area Bank, Vijayawada, Andhra Pradesh.
- Krishna Bhima Smruddhi Local Area Bank, Mahabubnagar, Telangana.
What are the objectives involved in Regional Rural Banks?
The RRBs were formed under the Regional Rural Bank Act 1976, jointly by the Central Government, State Government, and a sponsor bank. Their share capital is contributed by these sponsors in the ratio of 50:15:35. They are established as low cost institutions in rural areas.
Their objective is to develop, rural economy and play supplementary role to cooperative societies. They mobilise 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.
Mention the purposes of Agricultural and Co-operative 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. Rural cooperative banking structure in India has three tier structure for short term loans and two tier structure for long term loans (refer chart).
For both these structures the apex body is National Bank for Agricultural and Rural Development – NABARD. All cooperative banks in Tamil Nadu are registered under Tamil Nadu Cooperative Societies Act 1983. They are controlled by both RBI and the State Government. Their foremost objective is providing service to its members for rural and agricultural development and not profit earning.
Explain the various types of banks based on organization with examples.
On the basis of organsiation the banking may be branch banking and unit banking.
(i) Branch banking:
In most of the countries a typical commercial bank will be large institution with a network of branches scattered all over the world. Branch banking it is a big organisation with head office regional office and branches. Britain is the pioneer in this system, eg: In England big four banks. Namely Midland, Lioyds, Bardays.
(ii) Unit banking:
It refers to banking operation with only one office without any branches or some branches within the strictly limited area. The United States of America plays a vital role in unit banking system.
Explain the types of banks based on ownership pattern.
Based on the Ownership Pattern:
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 (Total21). 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, eg: IFCI, SIDBI, EXIM Bank, etc.
All banking companies owned by private people are called private sector commercial banks. All cooperative banks are owned by its members from the public.
In 1969, there were 14 private banks which were concentrated in cities and towns. Their objective was to earn more profits. In order to channelize the funds with these commercial banks towards national priorities and to develop agricultural and rural sector . nationalization of banks was undertaken.
Government paid the share capital of those banks to the private owners and took over as Government banks. This is called nationalization of banks. 6 more banks were nationalised in 1980. New Bank of India one of the nationalised bank merged with Punjab National Bank in 1980 and today there only 19 nationalised bank (2017).
(i) Nationalised Banks: Indian bank, Indian Overseas Bank, Oriental Bank of Commerce.
(ii) Public Sector Banks: State Bank of India, IDBI Bank Ltd. and all nationalised banks.
(iii) Private Sector Banks: Lakshmi Vila Bank, Karur Vysya Bank, Kotak Mahindra bank.
Note: Bharatiya Mahila Bank was established on 19, November 2013 to serve exclusively women members of the public was merged with SBI on 31 March, 2017.
Debate about the benefits of various banks.
- Savings and capital formation.
- Canalization of savings.
- Implementation of monetary policy.
- Encouragement to industries.
- Regional development.
- Development of Agriculture of other neglected sectors.
Bank visit – write an essay about the bank you visited.
While filling the form. I asked for her ID proof. To my amazement she took out a polythene bag full of all sorts of cards. Some cards had her picture on them and some were of her husband. 1 look for her Adhaar Card and filled in the details after 15 minutes of interrogation.
I completed her from where applicants signatures were required. She with all her concentration held the pen as if it was a discomforting object to hold and wrote her name in Hindi. Her hand writing similar to that of a kid of UKG class may be a bit better.
When you want loan how will you get the loan from bank?
- Banks are see the eligibility to get loans.
- Salaried people to get loan.
- Three months bank statement.
- ID proof.
- Address proof.
- Repayment sources.
- Equal asset as a surety.
Mention the names of Commercial Banks, Industrial Banks, Cooperative Banks and Foreign Banks in your areas.
Commercial banks are:
- Canara Bank
- Punjab National Bank
- Lakshmi Villas Bank.
Industrial banks are:
- IDBI : Industrial Development Bank of India.
- ICICI; Industrial Credit and Investment Corporation of India.
Co-operative banks are;
- Central co-operative bank.
- Land Development bank.
Foreign banks are:
- Standard Chartered Bank.
- Bank of England.
Collection of pictures related to different types of banks.
You are the Agricultural bank manager; a farmer approaches you for loan from your bank for purchasing a tractor and other farm equipment. How would you sanction the loan?
Regarding land details: Whether he is small farmer. Whether he is eligible to get loan repayment sources.
Due to natural calamities, the farmer could not repay the loan. He has no other way to repay the loan. How to collect loan from the farmer?
Banker collect loan from farmer by way of Personal property. But without interest banker collect loan from the farmer. Sometimes farmer has no way to repay the loan. Loan will become bad debt.
Choose the Correct Answer:
Which bank is not an Industrial Bank?
The Local Area Banks are promoting:
(a) Rural savings
(b) Business savings
(c) Industrial development
(d) Agricultural development
(a) Rural savings
Foreign banks are begun their operation since:
Samacheer Kalvi 11th Commerce Notes Chapter 11 Types of Banks
→ There are different types of banks performing different sets of functions. Though all types of banks deal in money, each type cater to the needs of different sectors, study of all these types of bank is essential.
→ In the modem money economy. Banks play a vital role in economic development. Banks are play a important role in monetary policy, Success of business is determined by volume of finance available.
→ Such finance is provided by banks. So study of banking is important in commerce. Banks provide finance to the farmers, industrialists, traders and other business organisation.
→ Function of banks. Banks accepts deposits from public and grant loans to traders and individuals.
→ Huge finance is required by industries. Loans are granted by development banks.
→ The functions of co-operative banks loan granted by co-operative banks to farmers, Small scale business.
→ In modem times internet banking and mobile banking are very popular.