BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Banks cannot accept demand and time deposits from public.
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Banks can accept only demand deposits from public.
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Banks can accept only time deposits from public.
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Banks can accept both demand and time deposits from public.
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Detailed explanation-1: -The money under demand deposit is liquid and can be encashed at any time. 2. Recurring account is an example of demand deposit.
Detailed explanation-2: -Banks use the major portion of deposits to extend loans. These loans are then recovered with an interest. Banks charge a higher interest for credit than deposits. Hence, the amount they receive is greater than the amount that they lend.
Detailed explanation-3: -The bank rate is the rate at which the central bank lends money to the commercial banks by buying their eligible rated securities-bills of exchange or commercial paper. The MSF is maintained at 25 bps higher than the repo rate. The Bank Rate is published under Section 49 of the RBI Act, 1934.
Detailed explanation-4: -Which entities can legally accept deposits from public? Banks, including co-operative banks, can accept deposits. Non-bank finance companies, which have been issued Certificate of Registration by RBI with a specific licence to accept deposits, are entitled to accept public deposit.