BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The bank branch which has narrow corridors
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the bank situated in narrow street
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the bank which accepts deposits and invests the amount in government securities
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the bank which only lends loans and not accepts any deposits from the public
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Detailed explanation-1: -In the narrow banking system, banks accept deposits and invest only in highly liquid safe securities most commonly issued by governments. In all other aspects, a narrow bank is just like any other bank.
Detailed explanation-2: -A “Narrow Bank” is a type of banking where a bank invests its money in risk-free assets with maturities that match its liability maturity profile. This prevents asset-liability mismatch issues from occurring and ensures that the quality of the assets is maintained without the emergence of subpar assets.
Detailed explanation-3: -The Narrow Banking is very much an antonym to the Universal Banking. Narrow Banking means Narrow in the sense of engagement of funds and not in activity. So, simply, Narrow Banking involves mobilizing the large part of the deposits in Risk Free assets such as Government Securities.
Detailed explanation-4: -Narrow money refers to a category of money supply that includes all the real money held by the central bank. It includes coins and currency, demand deposits, and other liquid assets.