Chapter 12: Functions of Commercial banks — Online MCQ Test
COMMERCE · CLASS 11th · Tamil Nadu State Board
Practice Chapter 12: Functions of Commercial banks with a free chapter-wise online MCQ test.
This chapter covers: This chapter covers primary and secondary services provided by commercial banks. Students study credit creation fund transfers e-banking digital payments and agency functions..
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Chapter 12: Functions of Commercial banks — Important Questions & Answers
Which of the following is considered the primary function of a commercial bank?
- A. Accepting deposits
- B. Issuing credit cards
- C. Acting as a trustee
- D. Providing locker facilities
Answer: A. Accepting deposits
Accepting deposits from the public is the core primary function of all commercial banks.
Accepting deposits from the public is the core primary function of all commercial banks.
Which of the following is an example of an agency function of a commercial bank?
- A. Granting loans
- B. Collecting cheques and bills
- C. Discounting bills of exchange
- D. Safe custody of valuables
Answer: B. Collecting cheques and bills
Collecting cheques, dividends, and interest on behalf of customers falls under agency services.
Collecting cheques, dividends, and interest on behalf of customers falls under agency services.
The process by which banks expand the money supply through lending is known as:
- A. Credit creation
- B. Bill discounting
- C. Capital budgeting
- D. Electronic fund transfer
Answer: A. Credit creation
Credit creation is the process where banks use deposits to create credit and multiply the money supply in the economy.
Credit creation is the process where banks use deposits to create credit and multiply the money supply in the economy.
Compare Savings Account and Current Account. Which statement is true?
- A. Both provide interest to the account holder
- B. Current accounts have restricted withdrawals while savings accounts do not
- C. Current accounts are meant for business, savings for individuals
- D. Savings accounts require high minimum balances compared to current accounts
Answer: C. Current accounts are meant for business, savings for individuals
Current accounts are for business convenience with no interest, while savings accounts are for individuals to encourage thrift.
Current accounts are for business convenience with no interest, while savings accounts are for individuals to encourage thrift.
Which of the following represents a strategic difference between RTGS and NEFT?
- A. NEFT is real-time, RTGS is batch-based
- B. RTGS is for high-value transactions, NEFT is for general transfers
- C. Only NEFT can be used for online banking
- D. RTGS involves a physical visit, NEFT is digital
Answer: B. RTGS is for high-value transactions, NEFT is for general transfers
RTGS is designed for large-value instantaneous transfers, whereas NEFT processes transactions in hourly batches.
RTGS is designed for large-value instantaneous transfers, whereas NEFT processes transactions in hourly batches.