Fill in the blanks with appropriate alternatives given in the brackets. Chapter 12 - Commercial Banking Economics Solutions for Class 12 Commerce Economics

Chapter 12 - Commercial Banking


Economics Solutions for Class 12 Commerce Economics 


Fill in the blanks with appropriate alternatives given in the brackets.

1. Deposits from __________ account can be withdrawn without any notice. (savings/current/fixed/recurring)
2. __________ is a primary function of commercial banks. (Purchasing and selling securities/ Accepting deposits/ Safe deposit vault / Letter of credit)
3. Every loan creates a __________. (credit/ deposit/ profit/ loss)
4. Facility of E-banking is provided through __________ (telephone/ debit cards/ internet/ credit cards)

Answer: 

1. Deposits from current account can be withdrawn without any notice.

Explanation:

Current account deposits (also known as demand deposits) refer to those deposits that provide the depositor the liberty to withdraw money at any point of time. Such deposits prove useful for businessmen as they are required to deal with many transactions in a single day.

2. Accepting deposits is a primary function of commercial banks.

Explanation:

Accepting deposits from the general public is the basic function of a commercial bank. A portion of these deposits is then lent out by the banks to the general public as loans at some rate of interest. Other functions of commercial bank include discounting of bills, investing funds, granting loans etc.

3. Every loan creates a credit.

Explanation:
Loans are given out of deposits at a higher interest rate than what is offered on those deposits. The money spent by the borrowers again come back to the bank in the form of deposits (if it is assumed that all transactions are routed through banks). The banks again keep a portion of the deposits with them and lent the rest and so on. In this way loans by commercial banks create credit.

4. Facility of E-banking is provided through internet.

Explanation:

With the help of Internet, all the branches of banks and consumers are connected mutually so that they can avail the facilities of banks at anytime and anywhere.

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