Banking — Flashcards

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Banking refers to the activity of accepting deposits from the public and lending money to individuals and businesses. It plays a crucial role in the financial system by mobilizing savings and channeli…

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A commercial bank is a financial institution that accepts deposits from the public and provides loans and other financial services. According to the Banking Regulation Act, 1949, a bank accepts deposi…

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The two main functions of a commercial bank are: (1) Accepting deposits from the public, and (2) Advancing loans and credit. These functions help in mobilizing savings and supporting economic growth b…

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Current deposits are accounts primarily used by businesses for frequent transactions. They are repayable on demand, usually do not earn interest, and may have a service charge. Overdraft facility is a…

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Savings deposits are meant for individuals like employees and small savers. They allow deposits and withdrawals with some restrictions on frequency and amount. They earn low interest. Example: A schoo…

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Fixed deposits are deposits made for a fixed period (e.g., 1 year, 2 years). They offer higher interest rates compared to savings accounts. The money cannot be withdrawn before maturity without penalt…

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Recurring deposits allow individuals to deposit a fixed amount regularly (e.g., monthly) for a fixed period. Interest earned is higher than savings but lower than fixed deposits. Example: A student sa…

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A demand loan is a loan that can be recalled by the bank at any time. There is no fixed maturity period. The entire amount is credited to the borrower’s account. Example: Security brokers often take d…