Banking Terms Questions - 1

Which of the following is a Negotiable instrument?
  • Bills of Exchange
  • Travellers Cheques
  • Promissory Note
  • Demand Draft
  • All the above
Explanation   

According to Negotiable Instruments Act 1881, Negotiable instrument means ‘an unconditional order or promise to pay certain sum of money only to a person or to the bearer of it’.

It includes Promissory Notes, Bills of Exchange, Cheques, Demand Drafts and Currency.

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The term Balance Sheet refers to?
  • A statement which balances the income and expenditure.
  • An accounting statement of receipts and payments.
  • A report showing the financial position of a Bank/ Company on a particular date.
  • A report on profit and loss of a Bank.
  • Report on Loans given and Deposits taken by a Bank.
Explanation   

Balance sheet is a financial statement which is presented from time to time.

Balance sheet shows the financial position of a concern on a particular date.

A Balance Sheet consists of Assets at one side and Liabilities at another side.

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Term Bills of Exchange refers to?
  • A instrument in writing containing an unconditional undertaking to pay certain sum of money.
  • It is a Debit.
  • A bill to be discharged.
  • An instrument in writing directing a person to pay certain sum of money.
  • An exchange rate payable by an exporter.
Explanation   

Bill of Exchange is and instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.

This bill can be discounted in the bank, and can have loan in that bank.

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Term CRR refers to
  • Credit Reserve Ratio
  • Cash Reserve Ratio
  • Currency Reserve Ratio
  • Cash Rate Return
  • Capital Reserve Ratio
Explanation   

Cash Reserve Ratio is the minimum amount that a bank required to deposit with RBI, Rate this Ratio may be changed by RBI, from time to time. This ratio ranges between 3% to 15% of the Bank Deposits.

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CRR is intended to
  • Meet future requirements
  • To maintain minimum balance
  • To use for specific purposes as directed by RBI
  • To control Money supply in the open market
  • None of the above
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SLR refers to
  • Statutory Liquidity Ratio
  • Statutory Liability Ratio
  • Statutory Liability Rate
  • Statutory Leverage Ratio
  • None of the above
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SLR is intended to
  • Maintain same nature of accounts
  • It is the portion of deposits that a bank has to maintain by itself in form of liquid assets
  • It is an obligation imposed by RBI, to restrict a bank to give loans
  • A portion of liquid assets to be sold by the Bank
  • None of the above
Explanation   

Statutory Liquidity Ratio is the minimum percentage of deposits that the bank has to maintain in form of Cash, Gold or Government Securities.

This is intended to regulate credit control in India, and to regulate Inflation.

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Term Debtor refers to
  • Person who lent an amount to the concern
  • A share holder
  • Customer of the concern
  • A person who is liable to pay to the concern [who owes to the concern]
  • None of the above
Explanation   

Debtor

When a person [here individual, Firm, Concern, Bank.etc] receives monitory benefit or a loan, from the concern at present and is liable to pay in future. Or a person who owes to the concern. [Is a current asset]

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Term Creditor refers to
  • Who owes an amount to the company
  • A person to whom money is owing or payable
  • A company which woes to another person
  • A share holder of a concern
  • None of the above
Explanation   

Is a current liability to the concern.

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Term ‘Cash Credit’ refers to
  • An agreement by which the customer is granted the right of borrow money from time to time
  • A loan sanctioned by a bank under certain terms
  • An amount borrowed by a Bank
  • A deposit by a customer
  • None of these
Explanation   

Cash credit is usually given on hypothecation or pledge of stock at high rate of interest.

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