2 Marks (Important)
1) What is Bank?
A bank is a financial institution that plays a crucial role in the economy by providing various financial services. that are receive deposits, make loans, and provide other financial services, such as wealth management, currency exchange, and safe deposit boxes.
2) What are Importance of Banking:
- Deposit mobilization.
- Granting credits.
- Creation of credit.
- Channelize funds into productive investments.
- Provision of finance to the government.
- Innovative services.
3) State any two/four functions of Bank/Commercial Bank.
- Accepting Deposits: Collects and safekeeps funds from customers through various account types.
- Providing Loans: Grants credit to individuals and businesses for various purposes.
- Facilitating Payments: Processes transactions, including bill payments and fund transfers.
- Wealth Management: Offers investment and financial planning services to clients.
4) State any 4 nationalized commercial banks in India.
- State Bank of India (SBI)
- Punjab National Bank (PNB)
- Canara Bank
- Bank of Baroda
5) Expand EXIM, NABARD, SIDBI and RBI.
- EXIM: Export-Import Bank of India
- NABARD: National Bank for Agriculture and Rural Development
- SIDBI: Small Industries Development Bank of India
- RBI: Reserve Bank of India
6) Mention any 4 types of banks in India.
Public Sector Banks
Private Sector Banks
Cooperative Banks
Foreign Banks
Commercial Banks
7) Who is Paying Banker?
A Paying Banker is a bank or financial institution that is responsible for making payments on behalf of its customers, typically by honoring checks or other payment instruments issued by the customer’s account
8) State any 4 functions of Paying Banker.
- Scrutiny and Verification: Checks the validity of the cheque, including signature and details.
- Ensuring Sufficient Funds: Confirms that the drawer’s account has enough funds to cover the cheque amount.
- Payment Processing: Debits the drawer’s account and credits the payee’s account or provides cash.
- Preventing Fraud: Detects and prevents payment of fraudulent or altered cheques.
9) What is dishonor of Cheques?
Dishonor of a cheque refers to a situation when a bank refuses to pay the amount specified in a cheque when it is presented for payment. This can happen for various reasons, and it essentially means that the cheque is not valid, and the payee will not receive the funds.
10) State any 4 reasons for dishonor of cheques.
- Insufficient Funds: The drawer’s account lacks enough funds to cover the cheque amount.
- Signature Mismatch: The signature on the cheque doesn’t match the bank’s records.
- Post-Dated Cheque: The cheque is presented before the date written on it.
- Overwriting or Alteration: Visible corrections on the cheque without proper initials.
11) Who is Collecting Banker?
A Collecting Banker is a bank or branch responsible for collecting and processing payments on cheques and other financial instruments deposited by its customers.
12) What is Holder for Value?
A Holder for Value is a legal term used in the context of negotiable instruments, such as cheques, promissory notes, and bills of exchange. It refers to a person or entity that has received a negotiable instrument in exchange for a value, which can be in the form of money, goods, services, or any consideration.
13) What do you mean by Holder in due course?
A Holder in Due Course (HDC) is a legal term used in the context of negotiable instruments, such as checks, promissory notes, and bills of exchange. It refers to a person or entity that possesses a negotiable instrument and meets certain criteria, which give them special rights and protections under the law.
14) Who is Customer in Bank?
A customer is an individual or organization that maintains an account or engages in transactions with a bank or financial institution. Customers utilize the bank’s services for various financial activities, including deposits, withdrawals, loans, investments, and other banking services.
15) Who is Account holder in Bank?
16) Who is Minor?
A minor is generally defined as an individual who is not yet legally considered an adult, typically under the age of 18 in many jurisdictions. Minors have limited legal capacity to enter into contracts and conduct financial transactions,
17) What is Negotiable Instrument?
A negotiable instrument is a written document that promises or orders the payment of a specific amount of money either on demand or at a set time. These instruments are transferable, meaning they can be passed from one person to another, and they provide certain legal rights and protections under the law.
18) Give any two examples of Negotiable Instruments.
Promissory Note
Bill of Exchange
Cheque
Certificate of Deposit (CD)
Bearer Bond
19) State any two or four features of negotiable instruments.
- Transferability: Negotiable instruments can be transferred from one party to another through endorsement or delivery.
- Payable to Order or Bearer: They can be made payable either to a specific person or to whoever holds the instrument.
- Unconditional Promise or Order: They involve an unconditional promise or order to pay a specific amount of money.
- Negotiability: The holder can transfer the instrument to others, who then gain the right to enforce it.
20) What is Promissory Note?
A Promissory Note is a written, unconditional promise by one party (the maker) to pay a specified sum of money to another party (the payee) either on demand or at a future date. It is a negotiable instrument used in financial transactions and lending agreements.
21) Who are the parties in Promissory note?
- Maker: The individual or entity that creates the note and promises to pay the specified amount.
- Payee: The individual or entity to whom the payment is owed and who will receive the money.
22) What is Bills of Exchange?
A bill of exchange is a written financial instrument that contains an order from one party (the drawer) to another party (the drawee) to pay a specified sum of money to a third party (the payee) either on demand or at a specified future date. It serves as a method of facilitating credit transactions, typically used in international trade and commerce.
23) What do you mean by Cheque?
A cheque is a written order from a bank account holder (the drawer) directing their bank (the drawee) to pay a specific amount of money from their account to a named individual or entity (the payee), either on demand or at a future date.
24) Define Cheque.
A cheque is a negotiable instrument that instructs a financial institution to pay a specified sum to the bearer or a “payee” as indicated on the cheque. It includes the date, the amount, the signature of the drawer, and the name of the payee.
25) What is crossing of cheques?
Crossing of a cheque refers to the practice of marking two parallel lines on the face of a cheque, which directs the bank to pay the amount only through a bank account, restricting it from being cashed directly at the counter. This provides additional security, as the cheque can only be deposited into a bank account.
26) What is Endorsement?
Endorsement is the act of signing a cheque or negotiable instrument on its reverse or margin to transfer its ownership to another party. The person who endorses the instrument is known as the endorser, and the party receiving the endorsed instrument is known as the endorsee.
27) What is E-Banking Service?
E-banking service, or electronic banking, refers to the use of the internet and related technologies to provide banking services and transactions. Customers can perform various financial activities, such as checking account balances, transferring funds, paying bills, and applying for loans online, making banking more convenient.
28) What is Debit Card?
A debit card is a payment card linked directly to a bank account, allowing cardholders to access their funds to make purchases or withdraw cash from ATMs. When a transaction is made, the money is deducted directly from the associated bank account.
29) What is Credit Card?
A credit card is a payment card that allows the holder to borrow funds from a financial institution up to a predetermined limit to pay for goods and services. Cardholders are required to pay back the borrowed amount, typically on a monthly basis, possibly with interest.
30) State any two differences between Debit and Credit Cards.
31) What is Electronic Fund Transfer?
Electronic Fund Transfer (EFT) is a digital method of transferring money from one bank account to another without physical exchange of cash or checks. EFT encompasses various transaction types, including direct deposits, wire transfers, and automated payments.
32) Expand MICR, RTGS, NEFT, ECS, ATM and KYC.
- MICR: Magnetic Ink Character Recognition
- RTGS: Real Time Gross Settlement
- NEFT: National Electronic Funds Transfer
- ECS: Electronic Clearing Service
- ATM: Automated Teller Machine
- KYC: Know Your Customer
33) What is MICR?
MICR (Magnetic Ink Character Recognition) is a technology used for the processing of cheques. It involves the use of magnetic ink to print characters on cheques, which can be read by machines, facilitating quicker processing and clearing.
34) What is RTGS?
RTGS (Real Time Gross Settlement) is a funds transfer system where the transfer of money occurs in real time, ensuring that transactions are processed immediately and settled individually, providing instant confirmation.
35) What is NEFT?
NEFT (National Electronic Funds Transfer) is a nationwide payment system in India that facilitates one-to-one funds transfer between banks. Transactions are processed in batches, and the funds are credited to the beneficiary’s account within a few hours.
36) What is ECS?
ECS (Electronic Clearing Service) is a mechanism used for electronic transfer of funds to multiple accounts simultaneously, typically used for bulk transactions like salary payments, dividends, and utility bill payments
37) What are Small Banks?
Small Banks are a type of commercial bank in India with a focus on providing basic banking services to the underserved and underbanked segments of the population. They are allowed to offer a limited range of financial products and services.
38) What do you mean by Payment Banks?
Payment Banks are a new category of banks in India that offer limited banking services, such as accepting deposits, providing remittance services, and offering payment services. However, they cannot issue loans or credit cards.
39) What is Digital Wallet?
A digital wallet (e-wallet) is an electronic application that allows users to store and manage payment information and funds on their devices or online. It enables users to make transactions, pay bills, and transfer money electronically.
40) What do you mean by Crypto Currency?
Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates on decentralized networks based on blockchain technology. Examples include Bitcoin, Ethereum, and Litecoin.
41) What is KYC norm?
KYC (Know Your Customer) norm is a regulation requiring banks and financial institutions to verify the identities of their customers to prevent fraud, money laundering, and terrorist financing. It involves collecting certain personal and financial information.
42) What is Basel Norm?
Basel Norms refer to a set of international banking regulations established by the Basel Committee on Banking Supervision to promote stability in the financial system. They focus on capital adequacy, risk management, and liquidity.
43) What is Mobile Banking?
Mobile banking is a service that allows customers to conduct financial transactions via mobile devices, such as smartphones or tablets. It includes features like checking account balances, transferring money, and paying bills.
44) What is E-Payment?
E-payment refers to the electronic method of conducting financial transactions, allowing individuals and businesses to pay for goods and services online using various payment methods, such as credit cards, debit cards, digital wallets, and bank transfers.
45) What is E-Money?
E-money (electronic money) refers to a digital equivalent of cash stored electronically, which can be used for online transactions. It represents a claim on the issuer and can be used for purchases or payments without needing to carry physical money.