XII Banking 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.