Chapter Exam

Chapter 12: Functions of Commercial banks — Online MCQ Test

Q: Which of the following is considered the primary function of a commercial bank?

Answer: A. Accepting deposits — Accepting deposits from the public is the core primary function of all commercial banks.

Q: Which of the following is an example of an agency function of a commercial bank?

Answer: B. Collecting cheques and bills — Collecting cheques, dividends, and interest on behalf of customers falls under agency services.

Q: The process by which banks expand the money supply through lending is known as:

Answer: A. Credit creation — Credit creation is the process where banks use deposits to create credit and multiply the money supply in the economy.

COMMERCE · CLASS 11th · Tamil Nadu State Board

Practice Chapter 12: Functions of Commercial banks with a free chapter-wise online MCQ test for Tamil Nadu State Board CLASS 11th COMMERCE. 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.. AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 12: Functions of Commercial banks — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 11th COMMERCE — Chapter 12: Functions of Commercial banks, with answers and explanations. These are sample questions; the exam has its own separate question set.

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.

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.

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.

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.

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.

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