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All questions of Commercial Banking for Class 10 Exam
What is a defining trait of non-scheduled banks?- a) They are included in the Second Schedule of the RBI Act.
- b) They do not meet the criteria set by the RBI.
- c) They are considered more stable than scheduled banks.
- d) They exclusively serve government clients.
Correct answer is option 'B'. Can you explain this answer?
What is a defining trait of non-scheduled banks?
a)
They are included in the Second Schedule of the RBI Act.
b)
They do not meet the criteria set by the RBI.
c)
They are considered more stable than scheduled banks.
d)
They exclusively serve government clients.
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Nk Classes answered |
Non-scheduled banks are defined by their failure to meet the criteria set by the Reserve Bank of India (RBI) for inclusion in the Second Schedule of the RBI Act. As a result, their financial position may be less stable compared to scheduled banks, which adhere to stricter regulatory standards.
What is a possible effect of nationalizing banks on employment?- a) Elimination of all banking jobs
- b) Enhanced job security due to government regulation
- c) Increased job opportunities in private sectors
- d) Job cuts due to privatization
Correct answer is option 'B'. Can you explain this answer?
What is a possible effect of nationalizing banks on employment?
a)
Elimination of all banking jobs
b)
Enhanced job security due to government regulation
c)
Increased job opportunities in private sectors
d)
Job cuts due to privatization
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EduRev Class 10 answered |
Nationalizing banks can enhance job security for employees because these institutions are often less likely to implement drastic layoffs compared to private banks that focus primarily on profit. However, it can also lead to inefficiencies and lack of competition, which might indirectly affect job stability in the long term.
Which banking sector is characterized by ownership from private shareholders?- a) Public Sector Banks
- b) Scheduled Banks
- c) Cooperative Banks
- d) Private Sector Banks
Correct answer is option 'D'. Can you explain this answer?
Which banking sector is characterized by ownership from private shareholders?
a)
Public Sector Banks
b)
Scheduled Banks
c)
Cooperative Banks
d)
Private Sector Banks
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Kamna Science Academy answered |
Private Sector Banks are characterized by ownership from private shareholders. These banks operate with a focus on maximizing profits and providing competitive banking services, often leading to innovations in products and customer service compared to public sector banks.
What is a major argument against the privatization of commercial banks?- a) Increased government oversight
- b) Enhanced competitive banking environment
- c) Greater access to financial services
- d) Potential reduction in employment opportunities
Correct answer is option 'D'. Can you explain this answer?
What is a major argument against the privatization of commercial banks?
a)
Increased government oversight
b)
Enhanced competitive banking environment
c)
Greater access to financial services
d)
Potential reduction in employment opportunities
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EduRev Class 10 answered |
One major argument against privatization is the potential reduction in employment opportunities. Privately owned banks may prioritize profit maximization, which could lead to job cuts and a focus on efficiency over employee welfare. This shift can be concerning, particularly in an economy where job security is vital for overall stability.
What is a major argument in favor of nationalizing banks?- a) Enhanced competition among banks
- b) Elimination of government intervention
- c) Greater access to banking services in rural areas
- d) Increased profitability for shareholders
Correct answer is option 'C'. Can you explain this answer?
What is a major argument in favor of nationalizing banks?
a)
Enhanced competition among banks
b)
Elimination of government intervention
c)
Greater access to banking services in rural areas
d)
Increased profitability for shareholders
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Kamna Science Academy answered |
A major argument in favor of nationalizing banks is the goal of providing greater access to banking services, especially in rural and underserved areas. Nationalized banks have often focused on expanding their branch networks to ensure that banking facilities are available to a larger population, which can help stimulate economic development in those regions.
What is the primary function of commercial banks regarding deposits?- a) To accept deposits from the public
- b) To invest in foreign markets
- c) To issue government bonds
- d) To provide free financial advice
Correct answer is option 'A'. Can you explain this answer?
What is the primary function of commercial banks regarding deposits?
a)
To accept deposits from the public
b)
To invest in foreign markets
c)
To issue government bonds
d)
To provide free financial advice
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Kamna Science Academy answered |
The primary function of commercial banks is to accept deposits from the public. This function is essential as it allows individuals and businesses to safely store their funds while also enabling banks to use these deposits to provide loans and other financial services. Accepting deposits is a foundation upon which banks build their operations, supporting both savings and lending activities within the economy.
What is one of the key differences between cash credit and overdraft facilities in commercial banks?- a) Cash credit is only available to businesses.
- b) Overdraft does not charge interest.
- c) Overdraft allows withdrawal beyond the account balance.
- d) Cash credit requires a fixed collateral.
Correct answer is option 'C'. Can you explain this answer?
What is one of the key differences between cash credit and overdraft facilities in commercial banks?
a)
Cash credit is only available to businesses.
b)
Overdraft does not charge interest.
c)
Overdraft allows withdrawal beyond the account balance.
d)
Cash credit requires a fixed collateral.
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EduRev Class 10 answered |
The overdraft facility allows account holders to withdraw more money than what is available in their account, essentially giving them access to additional funds. In contrast, cash credit provides funds based on a borrower's credit limit, and interest is charged only on the amount actually utilized. This flexibility is crucial for managing cash flow in personal and business accounts.
How do commercial banks create credit?- a) By providing loans without any collateral requirements
- b) By directly transferring funds from depositors to borrowers
- c) By using primary deposits to issue loans against collateral
- d) By holding all customer deposits in cash
Correct answer is option 'C'. Can you explain this answer?
How do commercial banks create credit?
a)
By providing loans without any collateral requirements
b)
By directly transferring funds from depositors to borrowers
c)
By using primary deposits to issue loans against collateral
d)
By holding all customer deposits in cash
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EduRev Class 10 answered |
Commercial banks create credit primarily by using primary deposits to issue loans against collateral. When deposits are received, banks retain a fraction as reserves and lend out the remainder, generating new credit in the form of derivative deposits. This process helps stimulate economic activity by making funds available for various purposes.
Why might fixed deposits offer higher interest rates compared to demand deposits?- a) They require a commitment to keep money locked in for a longer period.
- b) They are riskier investments.
- c) They are more liquid than demand deposits.
- d) They are only available to business customers.
Correct answer is option 'A'. Can you explain this answer?
Why might fixed deposits offer higher interest rates compared to demand deposits?
a)
They require a commitment to keep money locked in for a longer period.
b)
They are riskier investments.
c)
They are more liquid than demand deposits.
d)
They are only available to business customers.
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Nk Classes answered |
Fixed deposits typically offer higher interest rates compared to demand deposits because they require customers to lock in their funds for a specified duration. This allows banks to use these funds for longer-term lending and investment opportunities, which justifies the higher interest rates offered to depositors.
What type of commercial bank is defined by its inclusion in the Second Schedule of the Reserve Bank of India Act, 1934?- a) Scheduled Banks
- b) Non-Scheduled Banks
- c) Private Sector Banks
- d) Public Sector Banks
Correct answer is option 'A'. Can you explain this answer?
What type of commercial bank is defined by its inclusion in the Second Schedule of the Reserve Bank of India Act, 1934?
a)
Scheduled Banks
b)
Non-Scheduled Banks
c)
Private Sector Banks
d)
Public Sector Banks
|
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EduRev Class 10 answered |
Scheduled Banks are defined by their inclusion in the Second Schedule of the Reserve Bank of India Act, 1934. These banks meet specific criteria set by the Reserve Bank of India and are generally considered more stable and reliable, making them essential players in the financial system.
Which type of deposit allows for immediate withdrawal without penalties?- a) Fixed Deposits
- b) Demand Deposits
- c) Recurring Deposits
- d) Savings Deposits
Correct answer is option 'B'. Can you explain this answer?
Which type of deposit allows for immediate withdrawal without penalties?
a)
Fixed Deposits
b)
Demand Deposits
c)
Recurring Deposits
d)
Savings Deposits
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Kamna Science Academy answered |
Demand deposits allow for immediate withdrawal without penalties, making them very liquid. They can be accessed at any time, which is why they are commonly used for everyday transactions. In contrast, fixed deposits require the funds to be locked in for a specified period, often resulting in penalties or loss of interest if withdrawn early.
What is one of the utility functions provided by commercial banks?- a) Engaging in stock market investments
- b) Conducting real estate transactions
- c) Providing safety lockers for valuable items
- d) Offering tax consultancy services
Correct answer is option 'C'. Can you explain this answer?
What is one of the utility functions provided by commercial banks?
a)
Engaging in stock market investments
b)
Conducting real estate transactions
c)
Providing safety lockers for valuable items
d)
Offering tax consultancy services
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Kamna Science Academy answered |
One of the utility functions of commercial banks is providing safety lockers for valuable items. This service allows customers to securely store important documents, jewelry, and other valuables, ensuring peace of mind for clients regarding the safety of their possessions.
What type of loans do commercial banks typically offer to priority sectors?- a) Personal loans
- b) Unsecured loans
- c) Concessional loans
- d) High-interest loans
Correct answer is option 'C'. Can you explain this answer?
What type of loans do commercial banks typically offer to priority sectors?
a)
Personal loans
b)
Unsecured loans
c)
Concessional loans
d)
High-interest loans
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EduRev Class 10 answered |
Commercial banks typically offer concessional loans to priority sectors such as agriculture and small-scale industries. These loans are provided at lower interest rates to stimulate growth and support development in crucial areas of the economy, thereby promoting overall economic stability and growth.
Which of the following best describes the significance of commercial banks in a country's economy?- a) They operate solely on international transactions.
- b) They only manage government funds.
- c) They support financial markets by controlling interest rates.
- d) They facilitate savings and investments by providing loans.
Correct answer is option 'D'. Can you explain this answer?
Which of the following best describes the significance of commercial banks in a country's economy?
a)
They operate solely on international transactions.
b)
They only manage government funds.
c)
They support financial markets by controlling interest rates.
d)
They facilitate savings and investments by providing loans.
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EduRev Class 10 answered |
Commercial banks play a crucial role in facilitating savings and investments by providing loans to individuals and businesses. By accepting deposits and offering loans, they channel funds from savers to borrowers, which helps stimulate economic growth and production activities. This function is vital for balancing economic activity and enhancing overall financial stability.
What is one of the agency functions of commercial banks?- a) Offering investment advice to clients
- b) Providing insurance directly
- c) Engaging in stock market trading
- d) Collecting payments on behalf of customers
Correct answer is option 'D'. Can you explain this answer?
What is one of the agency functions of commercial banks?
a)
Offering investment advice to clients
b)
Providing insurance directly
c)
Engaging in stock market trading
d)
Collecting payments on behalf of customers
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Nk Classes answered |
One of the agency functions of commercial banks involves collecting payments on behalf of customers, such as insurance premiums and dividends. This service is essential for facilitating transactions and ensuring that clients can manage their financial obligations efficiently, thereby enhancing the overall utility of banking services.
What is the role of the Central Bank in regulating commercial banks?- a) To set the cash reserve ratio (CRR) that banks must maintain
- b) To provide loans directly to consumers
- c) To eliminate competition among banks
- d) To dictate the interest rates on all bank products
Correct answer is option 'A'. Can you explain this answer?
What is the role of the Central Bank in regulating commercial banks?
a)
To set the cash reserve ratio (CRR) that banks must maintain
b)
To provide loans directly to consumers
c)
To eliminate competition among banks
d)
To dictate the interest rates on all bank products
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EduRev Class 10 answered |
The Central Bank regulates commercial banks by setting the cash reserve ratio (CRR), which determines the amount of cash that banks must hold in reserve against their deposits. This regulation is crucial for maintaining liquidity and stability in the banking system, ensuring that banks do not overextend themselves in lending while safeguarding depositors' funds.
Which type of bank is owned and operated by the Government of India?- a) Foreign Banks
- b) Public Sector Banks
- c) Scheduled Banks
- d) Private Sector Banks
Correct answer is option 'B'. Can you explain this answer?
Which type of bank is owned and operated by the Government of India?
a)
Foreign Banks
b)
Public Sector Banks
c)
Scheduled Banks
d)
Private Sector Banks
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|
Kamna Science Academy answered |
Public Sector Banks are owned and operated by the Government of India. These banks are integral to implementing government policies and initiatives, particularly in areas like rural development and priority sector lending. They serve to provide financial services to a broad segment of the population, ensuring access to banking facilities.
What is one of the primary objectives of commercial banks?- a) To promote international trade exclusively
- b) To earn profits and create demand deposits
- c) To provide loans without any collateral
- d) To eliminate the need for savings accounts
Correct answer is option 'B'. Can you explain this answer?
What is one of the primary objectives of commercial banks?
a)
To promote international trade exclusively
b)
To earn profits and create demand deposits
c)
To provide loans without any collateral
d)
To eliminate the need for savings accounts
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Nk Classes answered |
The primary objective of commercial banks is to earn profits while creating demand deposits, which serve as a medium of exchange within the economy. By providing various financial services, including loans and deposit accounts, banks aim to generate income while effectively managing liquidity and customer needs.
Which of the following best describes the role of commercial banks in capital redistribution?- a) They redistribute surplus capital from wealthy regions to underdeveloped areas.
- b) They focus solely on urban development projects.
- c) They lend only to large corporations.
- d) They hoard surplus capital.
Correct answer is option 'A'. Can you explain this answer?
Which of the following best describes the role of commercial banks in capital redistribution?
a)
They redistribute surplus capital from wealthy regions to underdeveloped areas.
b)
They focus solely on urban development projects.
c)
They lend only to large corporations.
d)
They hoard surplus capital.
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Nk Classes answered |
Commercial banks play a significant role in redistributing surplus capital from regions where it is abundant to areas where it is scarce. This process helps balance regional economic disparities by facilitating investments in developing areas, thus promoting overall economic growth and stability.
What is a potential disadvantage of bank privatization?- a) Greater job security for bank employees
- b) Enhanced regulatory oversight
- c) Increased government control over banking
- d) Risk of monopoly power concentrating in private banks
Correct answer is option 'D'. Can you explain this answer?
What is a potential disadvantage of bank privatization?
a)
Greater job security for bank employees
b)
Enhanced regulatory oversight
c)
Increased government control over banking
d)
Risk of monopoly power concentrating in private banks
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Kamna Science Academy answered |
A potential disadvantage of bank privatization is the risk of monopoly power concentrating in the hands of a few private banks. This concentration can lead to reduced competition and potentially higher fees for consumers. It can also exacerbate income inequality if privately owned banks prioritize profit over community needs, leading to societal disparities.
Chapter doubts & questions for Commercial Banking - Economics Class 10 ICSE 2025 is part of Class 10 exam preparation. The chapters have been prepared according to the Class 10 exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for Class 10 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
Chapter doubts & questions of Commercial Banking - Economics Class 10 ICSE in English & Hindi are available as part of Class 10 exam.
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Economics Class 10 ICSE
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