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Banking and Insurance

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Demand deposit is also known as __________

Discuss
  • Demand deposit is also known as Current a/c.
  • Demand deposits are often associated with current accounts, which allow account holders to make unlimited deposits and withdrawals at any time, and are typically used for day-to-day transactions by individuals and businesses.

Commercial banks to expand deposit through expanding their loans and advances is known as _______

Discuss
  • Commercial banks to expand deposit through expanding their loans and advances is known as Credit creation.
  • When commercial banks lend money to borrowers, they create new deposits in the process.
  • This is because the money that the banks lend is typically deposited back into the banking system, either by the borrower or by the recipient of the funds.
  • It creates a cycle of lending and deposit creation, which can expand the overall money supply in the economy and is known as credit creation.

Rediscounting and giving advance the central bank charges interest at a rate which is known as _________.

Discuss
  • Rediscounting and giving advance the central bank charges interest at a rate which is known as Bank rate.
  • The bank rate is the interest rate that a central bank charges on loans and advances that it provides to commercial banks through rediscounting or other means.
  • This rate is set by the central bank and is typically used as a tool for monetary policy, as changes in the bank rate can influence the level of borrowing and lending in the economy.
  • Higher bank rates make borrowing more expensive, which can help to reduce inflation, while lower rates can encourage borrowing and stimulate economic growth.

The nationalization of 14 commercial banks was on ___________.

Discuss
  • The nationalization of 14 commercial banks was on 19 July 1969.
  • This was a significant event in the history of Indian banking, as it led to the creation of a large public sector banking system, which was seen as a means of promoting financial inclusion and economic development.
  • The banks that were nationalized included several leading private banks, such as the Bank of India, the Punjab National Bank, and the Canara Bank, among others.

The State Bank of India was established under the State Bank of India Act on _________.

Discuss
  • The State Bank of India was established under the State Bank of India Act on 1959.
  • The State Bank of India (SBI) was actually established on July 1, 1955, but it was not created through the State Bank of India Act.
  • Instead, it was created by an executive order of the Government of India, which merged several existing banks, including the Imperial Bank of India, to form the State Bank of India.
  • The State Bank of India Act was actually passed in 1959, and it provided the legal framework for the operation of the State Bank of India and its associated banks.

__________ commission recommended the formation of a central bank in 1925.

Discuss
  • Hilton Young Committee commission recommended the formation of a central bank in 1925.
  • The Hilton Young Committee was a British committee established in 1925 to review and make recommendations on the financial structure and operation of the British colonies.
  • One of its key recommendations was the establishment of central banks in the colonies, including the formation of the Reserve Bank of India in 1935.

Overdraft is a credit facility granted by commercial bank to _________ holders.

Discuss
  • Overdraft is a credit facility granted by a commercial bank to Current a/c holders.
  • An overdraft is a type of credit facility provided by a bank to its current account holders, which allows them to withdraw more money than they have in their account, up to a pre-determined limit.
  • It is a flexible form of credit that can help individuals and businesses manage their cash flow and cover short-term expenses.
  • Overdrafts are typically subject to interest charges and other fees, and the borrower must repay the amount borrowed within a specified period.

Money at call and short notice is also known as ___________.

Discuss
  • Money at call and short notice is also known as the Interbank call money market.
  • "Money at call and short notice" is a type of short-term borrowing that typically refers to loans that are repayable on demand or with very short notice, usually within one day.
  • This type of borrowing often takes place in the interbank market, where banks lend and borrow from one another to manage their liquidity needs.
  • Therefore, "money at call and short notice" is sometimes used interchangeably with the term "interbank call money market".

The creation of derivative deposit out of the money from primary deposit is called _________

Discuss
  • The creation of derivative deposits out of the money from primary deposit is called Credit creation.
  • Credit creation refers to the process by which commercial banks create credit or money through the lending process.
  • When a bank receives a primary deposit, it can lend a portion of that deposit to another borrower, thereby creating a new deposit.
  • This process can continue through multiple rounds of lending, with each new loan creating additional deposits and increasing the overall money supply in the economy.
  • Derivative deposits, on the other hand, are a type of deposit that is created through financial transactions such as the purchase of a certificate of deposit or a bond.
  • These deposits are not directly related to primary deposits and do not involve the creation of new money. Instead, they represent a transfer of existing money from one form to another.

The first joint stock Bank in India?

Discuss
  • The first joint stock Bank in India is Imperial Bank.
  • The Imperial Bank of India, which later became the State Bank of India, was established in 1921 by the British colonial government as a semi-governmental entity to manage the government's accounts and provide banking services to the public.
  • While the Imperial Bank was an important institution in the history of Indian banking, it was not the first joint-stock bank in the country.

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