XII Banking Chapter 2 Banking System and Kinds

XII Banking Chapter 2 Banking System and Kinds
Chapter 2 Banking System and Kinds

Short Question/Answer

Q1) List the kinds of Banks by Functions and Ownership and define Central Bank?

Kinds of Banks by Functions

ANS) 1) Central Bank

2) Industrial Bank

3) Commercial Bank

4) Exchange Bank

5) Agricultural Bank

6) Saving Bank

7) Public Bank.

Kinds of Bank by Ownership

1) Private Bank

2) Public Bank

3) National Bank

4) Partnership Bank

5) Statutory Bank

6) Chartered Bank

7) Cooperative Bank.

Central Bank

This bank is of great in the banking system of a country. Central  Bank is considered as the bank of government an directly or indirectly controls the activities of all the bank operating in the country. State Bank of Pakistan is Central Bank of Pakistan.

Q2) Describe Statutory and Private Bank?

Statutory Bank

ANS) This category comes into existence under the statute of a legislative assembly. In Pakistan its examples include State Bank of Pakistan, IDBP, ADBP, PICIC.

Private Bank

This is the bank which is formed as a private company which is run by a group of persons, relative or       a friend not exceeding 50 is number. Such banks include merchant banks, discounting and accepting houses. Discounting and accepting refers to those of bills of exchange.

 

   

 

Q3) Distinguished between an industrial Bank and Agricultural Bank?

       Industrial Bank

     Agricultural Bank

 

These types of banks provide loans to industries.

Generally these banks advance loans for long periods.

 

The main function of these banks is to provide loans for long and short period to the agriculturists. Long period loans are used for purchasing seeds, fertilizers, tractors, tube wells and for current expenditure.

 

Q4) Define a commercial Bank?

Commercial Banks

This is another important type of the banking system. It is main function is to receive deposits, advance loans and discounting of bills.

Q5) Differences between public and partnership Bank?

           Public Bank

     Partnership Bank

 

1.       These banks are established under Companies Ordinance 1984 and enjoy public investment.

2.       Most of commercial banks are founded as public banks/public companies.

3.       Their minimum number of members is seven.

 

1.       This type of bank is established under a partnership Act 1932.

2.       The capital is brought in by partners.

3.       Their minimum number is 2 and maximum 10.

 

Q6) What is the duty of a security department of a Bank?

Security Department

ANS) This department is responsible for the security of the property of the bank. It provides security systems and sends armed guards to branches. It takes all such measures necessary for the safety of the assets of the bank.

 

Q7) How does a bank’s legal department works?

Legal Department

The legal department is responsible for legal matters of the bank. Its functions include interpretation of the banking and government laws, and their enforcement. It deals with the court matters. It prepares legal suits against defaulter’s acts as a respondent to any lawsuit filed against the bank.

Q8) Explain Accounts Department and Cash Department?

Accounts Department

ANS) it gathers and keeps the record of all accounting data obtained from the head office and branches of the bank. Audit is one of its functions that come in its purview. All the accounting work in other departments is done under its supervision. The department prepares final accounts of the bank.

Cash Department

This department is responsible for the receipt and payment of cash. It maintains all records and accounting to this regard. The department conducts audit of cash so as to check any misappropriation or embezzlement of it. It also determines as to how much till cash is required.

Q9) What are the kinds of a cooperative Bank?

Cooperative Bank

ANS) Bank organized under cooperative society’s acts is called cooperative banks. They work on mutual cooperative of the members. The banks may be subdivided as follows.

Kinds of Cooperative Bank

1.       Primary Cooperative Societies.

2.       Central cooperative banking union.

3.       Provincial cooperative banks.

At present in Pakistan there are over 28,000 primary cooperative societies, 52 central cooperative banking unions, and four provincial cooperative banks one each established in all the four provinces.

 

 

Q10) Explain the concept of nationalized Bank?

Nationalized Bank

ANS) These are the ones which originally acted as public company and later were taken up  by the government. In Pakistan, in 1974, all major commercial banks in the private sector were nationalized. These banks’ equity is 100 percent owned by the government.

Q11) What is a savings Banks?

Savings Bank

Savings Bank provides incentives to people of small means to save money. These banks provide monetary facilities to the people.

Q12) Define exchange bank?

Exchange Bank

These banks deal in foreign currencies in the form of bill of exchange, drafts, telegraphic   transfers etc. They buy and sell foreign currencies.

Long Question/Answer

Q1) Discuss the kinds of bank by functions?

Kinds of Bank by Functions

ANS) Some important of bank functions are following:

1. Central Bank

This bank is of great significance in the banking system of a country. Central Bank is considered as the Bank of government and directly or indirectly controls the activities of all the banks operating in the country. State bank of Pakistan is the central bank of Pakistan.

2. Commercial Bank

This is another most important type of the banking system. It is main function is to receive deposits, advance loans and discounting of bills.

3. Industrial Bank

These types of banks provide loans to industries. Generally these banks advance loans for long periods.

4. Agricultural Bank

The main function of these banks is to provide loans for long and short periods to the agriculturists. Long period loans are used for acquisition of and improvement of land while short period loans is used for purchasing seeds, fertilizers, tractors, tube wells and for current expenditure.

5. Exchange Bank

This bank deals in foreign currencies in the form of bill of exchange, drafts, telegraphic transfers etc. They buy and sell foreign currencies.

6. Saving Bank

Saving Banks provides incentives to people of small means to save money. These banks provide monetary facilities to the people.

7. Mortgage Bank

These banks are meant to provide loans to agricultural by mortgaging their lands. An agricultural has to mortgage his land if he wants to take loan from this particular type of a bank.

Q2) What do you know of the banks by ownership?

Kinds of Bank by Ownership

ANS) The existing banking system provides for the following organizations under which a bank can be formed.

1. Private Bank

This is the bank which formed as a private company which is run by a group of persons, relatives or friends not exceeding 50 in number. Such banks include merchant banks, discounting and accepting houses. Discounting and accepting refer to those of bills of exchange.

2. Public Bank

These banks are established under companies ordinance 1984and enjoy public investment. Most of commercial banks are founded as public banks/public companies. There minimum number of members is seven.

3. Nationalized Bank

These are the ones which originally acted as public company and later were taken up by the government. In Pakistan, in 1974, all major commercial banks in the private sector were nationalized. These banks’ equity is 100 percent owned by the government.

4. Partnership bank

This type of bank is established under a partnership act 1932. The capital is brought in by partners whose minimum number is 2 and maximum 10.

5. Statutory Bank

This category comes into existence under the statute of a legislative assembly. In Pakistan its examples include State Bank of Pakistan, IDBP, ADBP, PICIC.

6. Chartered Bank

A bank may be organized as a chartered bank which is formed by the order of the king or queen of a country. Bank of England is its example.

7. Cooperative Bank

Bank organized under cooperative societies act are called cooperative banks. They work on mutual cooperation of the members. The banks may be subdivided as follows:

1.       Primary cooperative societies

2.       Central cooperative banking union

3.       Provincial cooperative banks

At present in Pakistan there are over 28,000 primary cooperative societies, 52 central cooperative banking unions, and four provincial cooperative banks one each established in all the four provinces.

Q3) Write notes on the following.

1.       Cash department of a bank

2.       Commercial Bank

3.       Partnership Bank

4.       Central Bank

1. Cash Department of a Bank

This department is responsible for the receipt and payment of cash. It maintains all records and accounting to this regard. The department conducts audit of cash so as to check any misappropriation or embezzlement of it. It also determines as to how much till cash is required.

2. Commercial Bank

This is another most important type of the banking system. It is main function is to receive deposits, advance loans and discounting of bills.

3. Partnership Bank

This type of bank is established under a partnership Act 1932. The capital is brought in by partner whose minimum is 2 and maximum 10.

4. Central Bank

This bank is of great significance in the banking system of a country. Central Bank is considered as the Bank of government and directly controls the activities of all the banks operating in the country. State Bank of Pakistan is the central bank of Pakistan.

 

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