1. What are the needs for banking?

• Savings and capital formation
• Canalization of savings
• Implementation of Monetary Policy
• Encouragement of Industries
• Regional development
• Development of Agriculture and other neglected sectors

2. What do you mean by a bank?

In simple words bank is an institution, which deals in money and credit. Banks accept deposits and lend money to the public.

3. Define banking?

According to Banking Regulation Act “Banking means the 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, order or otherwise”.

4. What are the features of a bank?

• Acceptance of deposits of money from the public.
• Obligation to refund deposits on demand. 
• Lending or investing money for promotion and development of business. 
• Profitable employment of funds received as deposits from the public.
• Money is withdrawable by cheque or draft.

5. What do you mean by commercial banks?

Banks, which help for the development of trade and commerce, are called Commercial Banks. The commercial banks may be owned by government or owned by private sector. For e.g.: Canara Bank, Punjab National Bank.

6. What you mean by industrial bank?

These banks assist to promote industrial development by providing medium and long-term loans, underwrites the shares and debentures, assisting in the preparation of project reports, providing technical advice and managerial service to the industries.

7. What are Regional rural banks?

These banks are established in rural areas. Its object is to develop the rural economy by providing credit and other facilities for agriculture, trade, commerce, industry and other productive activities in the rural areas.

8. What are Exchange banks?

Exchange banks deal in foreign exchange and specialize in foreign trade. It plays an important role in promoting international trade. It encourages flow of foreign investments into India and helps in capturing international capital markets.

9. What do you mean by central bank?

Every country has a central bank of its own which is called as central bank. It is the apex bank and the statutory institution in the money market of a country. The central bank occupies a central position in the monetary and banking system of the country and is the superior financial authority. In India, the Reserve Bank of India is the central bank of our country.

10. What are the functions of central bank?

a) It regulates and supervises the whole banking system in the country.
b) It controls the credit in the country.
c) It has the sole right of note issue.
d) It is the lender of last resort and custodian of foreign exchange of the country.
e) It acts as the banker for the government.
f) It acts as the bankers’ bank.

11. What are public sector banks?

These types of banks are owned and controlled by the government. The nationalized banks and regional rural banks come under this category.

12. What are co-operative banks?

These banks are operated on cooperative principles. It is a voluntary association of members for self-help and caters to their financial needs on a mutual basis.

13. What do you mean by scheduled banks?

These types of banks are included in the second schedule of the Reserve bank of India Act 1934. The banks, which fulfill the following conditions, are classified into scheduled banks.
i) Its paid up capital and reserves are at least Rs.5 Lakhs.
ii) Its operations are not detrimental to the interest of the depositors.
iii) It is a corporation or co-operative society and not a partnership or a single owner firm.

14. What are non-scheduled banks?

The banks, which are not covered by the second schedule of Reserve Bank of India, are called as non-scheduled banks.

15. What are the primary functions of commercial banks?

•    Accepting deposit
  a) Fixed deposit
  b) Current deposit
  c) Savings deposit
  d) Recurring deposit
•    Making loans and advances
a) Loans
b) Cash credits
c) Overdrafts
d) Purchasing and discounting of bills

16. What is fixed deposit account?

When money is deposited for a fixed period it is called fixed deposit. Interest rate increases with the increase in period of deposit. The longer the period, the higher will be the interest rate. The bank issue deposit receipt after collecting the amount towards fixed deposit. The depositor can borrow money against the security of the fixed deposit receipt.

17. What is savings bank deposit account?

In this account money can be deposited for any number of times but can be withdrawn only once or twice in a week. These restrictions are made to discourage the habit of frequent withdrawals. Any person can open a saving account.

18. What do you mean by current deposit account?

It is also called as an open account. In this account money can be deposited and withdrawn at any time during the working hours. As the amount in this account is repayable on demand, the bank pays no interest on such accounts. These types of accounts are useful for businessmen, companies, public institutions etc.

19. What you mean by Recurring deposit account?

In this account, the depositor deposits a fixed sum of money every month for an agreed period .At the end of the specified period; he gets back the amount deposited along with the interest accrued thereon. The rate of interest is higher than in any other account.

20. What are overdrafts?

It is an agreement with a bank by the current account holder to withdraw more than the balance to his credit up to a specified limit. Interest is charged on daily overdrawn balances. The overdraft is allowed only for a short period and is only a temperorary accommodation.