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Economics · Class 12 Commerce

Ch 6Banking — Class 12 Economics, concept-first.

A bank is a financial institution that accepts deposits from the public, repayable on demand or otherwise, and uses these deposits to lend and invest, with the object of earning profit.

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Chapter contents

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1

Meaning and Classification of Banks

A bank is a financial institution that accepts deposits from the public, repayable on demand or otherwise, and uses these deposits to lend and invest, with the object of earning profit.

2

Functions of Commercial Banks

The functions of a commercial bank fall into three groups.

3

Credit Creation by Commercial Banks

Commercial banks do more than store money — collectively, they create credit, expanding the total volume of deposits (and hence money) to a multiple of the initial cash they receive.

4

The Reserve Bank of India and Its Functions

The Reserve Bank of India (RBI), established in 1935, is India's central bank and the apex institution of the country's monetary and banking system. Its main functions are:

5

Monetary Policy: Objectives and Instruments

Monetary policy is the policy of the central bank to regulate the supply and cost of money and credit in the economy in order to achieve broad objectives — price stability, economic growth, full emplo…

Exercises

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 28 questions28 questions
  1. Q1The RBI Headquarters is located at : (a) Bengaluru (b) Delhi (c) Chennai (d) MumbaiPreview
  2. Q2NABARD was set up in : (a) July 1992 (b) July 1962 (c) July 1972 (d) July 1982Preview
  3. Q3Expansion of RRBs : (a) Regional Residual Banks (b) Regional Reserve Banks (c) Regional Rural Banks (d) Regional Railway BanksPreview
  4. Q4What are the primary functions of Commercial Banks ?Preview
  5. Q5The RBI Headquarters is located at : (a) Mumbai (b) Delhi (c) Bengaluru (d) ChennaiPreview
  6. Q6A Commercial Bank is an Institution that provides services : (a) Accepting deposits (b) Providing loans (c) Both (a) and (b) (d) None of the…Preview
  7. Q7Who will act as the banker to the Government of India ? (a) ICICI (b) SBI (c) RBI (d) NABARDPreview
  8. Q8Define Commercial Bank.Preview
  9. Q9Specify the functions of IFCI.Preview
  10. Q10(a) Explain the role of Commercial Banks in economic development. OR (b) Find the Standard Deviation of the following data : 14, 22, 9, 15,…Preview
  11. Q11(a) Describe the functions of Reserve Bank of India. OR (b) Explain primary and secondary functions of Money.Preview
  12. Q12The Agricultural Refinance Development Corporation started functioning from : (a) June 1, 1963 (b) June 3, 1963 (c) July 1, 1963 (d) July 3,…Preview
  13. Q13Distinguish between CRR and SLR.Preview
  14. Q14What are the functions of NABARD ?Preview
  15. Q15Central Bank is __________ authority of any country. (a) Wage (b) Monetary (c) National Income (d) FiscalPreview
  16. Q16Mention the functions of Agriculture Credit department.Preview
  17. Q17Write about E-Banking.Preview
  18. Q18(a) Describe the functions of Reserve Bank of India. OR (b) Explain the "Vicious Circle of Poverty" with diagram.Preview
  19. Q19NABARD was started in __________. (a) July 1982 (b) July 1992 (c) July 1962 (d) July 1972Preview
  20. Q20What is Credit Creation ?Preview
  21. Q21Describe about Non-Performing Asset.Preview
  22. Q22(a) What are the objectives of Monetary Policy ? Explain. OR (b) Discuss the Modern Theory of International Trade.Preview
  23. Q23Central Bank is ______ authority of any country. (a) Wage (b) Monetary (c) National income (d) FiscalPreview
  24. Q24The RBI Headquarters is located at ______. (a) Mumbai (b) Delhi (c) Bengaluru (d) ChennaiPreview
  25. Q25Once the borrower fails to make Interest or Principal payments for ______ days the loan is considered to be a Non-Performing Asset. (a) 60 (…Preview
  26. Q26Write about Commercial Banks.Preview
  27. Q27What are the functions of NABARD ?Preview
  28. Q28(a) Explain the role of Commercial Banks in economic development. OR (b) Discuss the differences between Internal Trade and International Tr…Preview

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