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Correct option is (a) 1906

(b) From the word ‘Banco’

In simple words, Commercial Banks are those which finance the trade and industry of the country by arranging short-term credit facilities. 

According to the Indian Companies Act, 1913, “Commercial Banks are Joint Stock Banks which provide short-term loans for trade and industry of the country.” The main object of these banks is to provide credit to the internal trade of the country, for which they accept deposits from the public. Commercial Banks do not provide fixed or long-term capital for trade or industries.

The functions of Commercial Banks are the following:

1. Acceptance of Deposits: 

Fixed Deposit Account: The term fixed deposit means deposits repayable after the expiry of a certain period which ordinarily varies from one year to five years. The rate of interest is higher in the fixed deposit account in comparison to other deposits. Money can also be borrowed against the security of fixed deposit.

Current Account: This account is generally opened by businessmen. Under this account, the customer can deposit or withdraw money as and when he likes. No Interest is allowed by first-class banks on such accounts.

Saving Bank Account: Such account is meant for the middle class and low-class income group persons. The main objective of such account is to develop the habit of savings. When these small savings are pooled, it forms a large capital which can be used for the economic growth of the country.

Home Safe Deposit Account: Such account is a very good means of encouraging thrift among persons having small income or among children. These accounts carry only a very small rate of interest.

Recurring Deposit Account: Any person can open this account in his personal name or joint names and in case of minor under the guardianship of someone. The term of account depends upon the wish of the account holder, which varies from 1 year to 7 years. The amount to be deposited every month in the account should be Rs. 10 or in multiples thereof but to a maximum limit of Rs. 500 per month.

2. Lending of money: Lending of money in the form of loans and advances is another important function of the banks. 

The various types of loans and advances are as follows: 

• Ordinary loans 
• Overdraft 
• Cash Credits 
• Acceptance of bills 
• Discounting of bills 
• Loans at call and short notice.

The advances made by Indian banks are against the following securities:

Personal credit

Against valuable marketable securities 

Against precious documents.

3. Agency Functions: 

• Collection of payments of cheques, bills of exchange, hundis etc. 
• Payment of insurance premium, income tax, hundis, bills of exchange etc. 
• Collecting dividends, interests etc. of the customers. 
• Sale and purchase of shares and securities for its customers.
• Transfer of funds from place to place. 
• The bank acts as the Trustee and Executor

4. Other Functions: 

Safe custody of valuable goods such as gold and silver ornaments, important papers, shares and debentures. 

• Issuing of traveller’s cheques. 
• Giving information about its customers. 
• Collection of statistics. 
• The bank also provides short-term loans to the farmers. The amount given is meant for purchasing of fertilisers, pesticides, electricity expenses etc.
• Transfer of funds from place to place.
• The bank acts as the Trustee and Executor.

5. Other Functions:

• Safe custody of valuable goods such as gold and silver ornaments, important papers, shares and debentures.
• Issuing of travellers’ cheques. 
• Giving information about its customers.
• Collection of statistics. 
• The bank also provides short-term loans to the farmers. The amount given is meant for purchasing of fertilisers, pesticides, electricity expenses etc.

Saving Bank Account is meant for the middle class and low-class income group persons. The motive of this account is to establish the habit of savings amongst these people. The bank also provides a cheque facility to the Savings Bank Account holder, but there should always be a minimum balance of Rs. 300 in the account.

In this account, the depositor can withdraw and deposit money once in a day. Thus, it is suited to those who want to deposit their small savings in a bank, which they need to withdraw only casually, and not every now and then. The interest allowed on Saving Bank Deposit is lower than given of Fixed Deposit but higher than that given on Current Account. It is calculated on the lowest balance kept during the month.

Automated Teller Machine.

Nowadays, services are provided by banks to their customers through the internet. It allows customers to carry out transactions, money transfers and other banking services 24 hours a day. This activity is done through the LOGIN ID and password provided by the bank.

Payment of this type of cheque is made to the person whose name is written on the cheque, and the money is deposited in his account only.

Cash payment on this type of cheque is made to the bearer of cheque on presentation.

Simple and Liberal monetary policy increases credit creation.

An overdraft is a facility of withdrawing the amount more than the account balance present in the account of the account holder.

Clients who have current account get the facility to withdraw more money than the amount present in the particular account. This is called overdraft facility.

It is suitable for small depositors and salaried employees.

Origin of the word ‘Bank’ is from the Italian word Banco.

Current account is suitable for businessmen.

Following are the points of difference between Savings Account and Current Account:

Savings Account:

1. A saving account is designed with the primary purpose to help you to save.
2. This type of account allows the holder to deposit money as per his/her convenience, on which the holder can earn interest.
3. A saving account holder earns interest on his/her deposits.
4. There is a limit holder on the number of withdrawal transactions.

Current Account:

1. As the name suggests, current accounts are best suited for regular transactions.
2. This type of account is more suited for big users like firms, companies, public enterprises, businessmen, etc.
3. Current account holder does not earn interest, on his/her account.
4. Current account usually does not carry a limit on the number of withdrawal transactions.

1. ncrease in extravagance
2. Fear of extra production.

1. Cash-reserve ratio
2. Banking development.

In 19th July 1969, fourteen Commercial Banks of India were nationalised.

Businessmen class of people Current Account is beneficial.

Correct option is (d) 46

1. Convenience in payments.
2. Increase in the standard of living.

Following are the two services provided by the banks presently :

1. Locker facility : Commercial banks provide locker facilities for the safe-keeping of valuables such as precious ornaments, land deal papers, legal documents, etc.

2. Credit card facility : Commercial banks provide banking facility through credit card. Banks provide credit facility to their customers upto a limited amount through credit card issued on their account. Payment at any place may be made through use of credit card in a very short time.

1. The Cash Reserve Ratio of bank remains constant.
2. Bank tends to give the loans till their maximum limit is reached.

Agency services of bank means those services which banks perform on behalf of their customers.

The term fixed deposit means deposits repayable after the expiry of a certain period which ordinarily varies from one year to five years. The rate of interest is higher in a fixed deposit account in comparison to other deposits, the rate of interest also depends upon the period of fixed deposits. The longer the period during which the money is to remain with the banker, the higher is the rate of interest. The bankers occasionally allow their customers to withdraw their fixed deposits before their due dates but in such cases, the customers have to forego their accrued interest.

The fixed deposit account is generally opened by those persons who do not have any other source of profitable investment. The persons who have excess money and which is not required by them in the near future open this type of account. The depositor can also borrow money against the security of fixed deposit.

Home Safe Deposit Account is a very good means of encouraging thrift among persons having small income or among children. A person wishing to open an account has to give an application to the bank. After completion of all the formalities, the bank supplies a safe to the depositor, which he keeps with himself and in which he drops his small savings from time to time.

Periodically the safe is taken to the bank where it is opened and the proceeds are credited to the account of the depositor. Such accounts carry only a very small rate of interest. The bank also provides withdrawal facility on this account but only after a certain amount has been deposited in the account.

Modern banking was developed in Europe.

Pass Book: Pass Book is a copy of the account maintained by the bank in its books. All the transactions whether debit or credit are likewise written in it. Generally, the passbook should be sent every month to the bank for completion of entries. If there is any mistake in the passbook, it should be immediately rectified.

Demand savings are those savings which are paid by the banks when demanded by the customers.

The Pradhan Mantri Jan-Dhan Yojana provides facility for common people to open a bank account at zero balance. Loan facility of a Rs. 5000 is provided by the bank in these accounts for account holders if accounts are operated regularly.

These are also called as secondary deposits, These deposits arise due to loans given by the banks which are assumed to be deposited in the bank.

The deposits that can be withdrawn after a specific period and which carry a high rate of interest are known as fixed deposits.

(c) Providing 24 hours banking facility a day through automatic computerised machines.

Mobile Banking is a service provided by the bank that allows its customers to conduct financial transactions remotely using a mobile device such as a smartphone or tablet. Unlike internet banking, it uses software, usually called an app, provided by the financial institution for the purpose. Mobile banking is usually available on a 24-hour basis where the customer can download the app from Google playstore and enjoy the facilities.

(d) Fixed deposit account

(b) Prime Minister Jan Dhan Yojna

Commercial bank is a financial institution which accepts deposit from the people and offers loans for the purpose of consumption or investment.

Primary deposits are those deposits which are deposited as real currency by the depositor in the bank.

(a) To accept deposits and advance loans

Smartphone, internet and an account in the bank is compulsory for mobile banking.

Reserve Bank of India is the central bank of India.

Banks create credit from customer’s deposits.

Correct option is (c) Mumbai

Two basic functions of Commercial Bank are :
(i) Accepting deposits
(ii) Advancing Loans.

The word ‘Bank’ is originated from the Italian word ‘Banco’. In Italy, people used to carry out money exchange by sitting on the benches. Another theory says that ‘Bank’ word has originated from the German word ‘Banck’. Later, this ‘Banck’ became the English language word’Bank’.

Modem banking business started from Europe. In the year 1157, Bank of Venice was established in Italy. After that, in the year 1401, Bank of Barcelona, in the year 1407, Bank of Geneva, in the year 1609, Bank of Amsterdam, in the year 1619, Bank of Hamburg, and in year 1694, Bank of England was established.

Primary deposits are such deposits, wherein monthly payment is made for a fixed period of time.

Banks provide 24-hour service to their customers through Internet banking.

A commercial bank is an institution that provides services such as accepting deposits, providing business loans, and offering basic investment products. Commercial bank can also refer to a bank, or a division of a large bank, which specifically deals with deposits and loan services provided to corporations or large/middle-sized business.

Main definitions given by economists :

1. According to Oxford dictionary, “A commercial bank is that financial institution which accepts deposits from the people and offers loans for the purpose of consumption or investment.”
2. According to the Indian Banking Companies Act, 1949, “Banking companies are the ones which transact the business of banking which means the accepting of deposits of money from the public repayable on demand or otherwise and withdrawal by cheque, draft, order or otherwise”.
3. According to the Findlay Shirras, “Banker is an individual, firm or company who has place for doing the business where the money or currency is deposited, and through this deposited money or currency, the function of credit is performed and the deposited money are paid either by draft, cheque or order”.
4. According to Crowther, “Commercial bank is an institution which collects money deposits from those who have it in spare or who are saving it out of their income, and lend this money out to those who need it”.

Functions of commercial banks are broadly classified into three categories :

1. Primary functions
2. Agency-related function
3. General utility functions

1. Primary or main functions : Commercial banks perform two primary functions : 

(a) Accepting deposits : Accepting deposits from- the public is the most important function of a bank. Customers deposit their savings in the saving account and banks pay interest on sayings. To attract deposits of public, bank offer different types of accounts. 

These are :

1. Savings Account
2. Fixed Deposit Account
3. Current Account
4. Recurring Deposit Account
5. Pradhan Mantri Jan-Dhan Yojana Account

(b) Advancing loans : Another important function of bank is advancing of loans. Banks provide loan facility to its regular customers. Bank grants loans mainly for the construction of house, education, marriage, purchase of vehicle, etc. 

Banks provide loans in the following ways:

1. Loans or Advances
2. Cash credit
3. Overdraft
4. Discounting the bills of exchange.

2. Agency-related functions : Banks also perform agency functions for and on behalf of their customers. Customers have to give the bank in writing for these services. Some services that are performed by the bank are free of cost, and for some services, banks charge an amount of fees. 

Following are the works performed by the bank as an agency :

1. Cheque bill collection
2. Cheque bill payment
3. Payment from customers .
4. Receipts from customers
5. Sale and purchase of foreign securities
6. Transfer of payments
7. Working as a trustee.

3. General Utility Functions : Modern banks also perform additional tasks along with formal functions which are as follows :

1. Providing locker facility
2. Foreign exchange facility
3. Traveller cheque facility
4. Creation of credit
5. Arrangement of public loans
6. Collection and publication of information
7. Credit card facility
8. ATM facility
9. Internet banking facility
10. Mobile banking facility.