Explore topic-wise InterviewSolutions in Current Affairs.

• The first phase in the growth of banks in India stretches from 1770 to bank nationalization (1969). 
• In this phase, the English East India Company established the Presidency Banks of Bank of Bengal, Bank of Bombay and Bank of Madras. 
• The growth and operations of the banks in this phase were slow. 

The loans given to individuals and institutions by accepting collaterals are called cash credit. The collaterals that the bank accepts are : 

• Salary certificate 
• Fixed deposit certificate 
• Physical assets like gold 

Cash credit is given for the following purposes :

• For agriculture 
• For industry 
• For house construction 
• Purchase of vehicle 

Option : (d). Accepting deposits

(d)   accepting deposits

Option (d) : accepting deposits and advancing loans to the public.

• Canara Bank 
• Union Bank of India 
• Indian Bank 
• Indian Overseas Bank

The banks which are owned by the government are called public sector commercial banks. Their functions are controlled by RBI. Public sector commercial banks in India include State Bank of India and its associate banks, nationalized banks and Regional Rural banks.

Monopolistic Competition - It’s a market situation where there are large numbers of firms which sell closely related but differentiated product such as market of toothpaste, soap etc.

The main features of monopolistic competition are as under:

• Large Number of Buyers and Sellers: There are large number of firms but not as large as under perfect competition. 
• Free Entry and Exit of Firms 
• Product Differentiation 
• High Selling Cost 
• Lack of Perfect Knowledge 
• Less Mobility 
• More Elastic Demand

Public Sector Banks are totally under the ownership of the government. The ownership of the private sector bank is with private individuals.

Commercial banks functions in the public sector and private sector. The banks which are under government control are called public sector banks. They accept deposit, provide loans, locker facilities, net banking, care banking facilities are provided.

Option : A – i and ii are correct.

• Insurance companies are institutions that provide financial protection to individuals’ life and wealth. 
• They assure social security and personal welfare. 

a. Do not provide the facility of withdrawal of cash by cheque. 

d. Locker and mail transfer facilities are not provided.

Monopoly is a market situation where there is a single seller of a commodity which has no close substitutes.

Main features of a monopoly market are:

(i) Single seller- Under monopoly there is only seller of commodity in the industry, so the difference between firm and industry get vanished.

It means the monopolist has full control over the supply and price of commodity.

(ii) No close substitute - The monopolist produces a distinct product which has no close substitute in the market. Therefore the monopoly firm has no fear of competition from any other commodity.

(iii) Barriers on entry - There are strong or significant barrier to the entry of new firms. These barriers may be legal barriers like- patent right or licensing etc., as a result monopolist firm can earn abnormal profit in the long run. 

(iv) Price discrimination- When a monopolist charge different prices from different buyers for the same product is called price discrimination. It’s a distinct feature of monopoly market.

(v) Independent price policy - In monopoly, firm and industry are same so the firm has complete control over the output and it fixes its price by itself. Thus firm is price market in monopoly.

Non banking financial institutions operate in the financial sector but do not perform all the functions of a bank. They perform the basic functions of banks such as accepting deposits and lending loans. But they do not provide the following services.

• Withdrawal of cash using cheques 
• Mail transfer 
• Locker facilities 

Non-banking financial institutions do not provide facilities like withdrawal of cash by cheque, mail transfer, lockers, etc.

Kerala State Financial Enterprises (KSFE) Services

1. Operate chitties 

2. Housing loan 

3. Gold loan 

4. Hire purchase

Cash credit are loans provided by banks to institutions accepting collateral and salary certificate.

Facility provided by the bank to send money to one’s own account or its others account from anywhere in the world is mail transfer.

• Provide monetary help to common people especially the villagers. 
• Provide services to farmers, artisans, small scale entrepreneurs, etc. 
• Provide loans to the public 
• Protect the villagers from private money lenders. 
• Provide loans at low interest rate 
• Encourage saving habit among people.  

Economics is a science of choice. Every economy is faced with this basic problem. This has been reflected in the definition given by Prof. Lionel Robbins in his book, “An Essay on the Nature and Significance of Economic Science”. According to Robbins economics studies human wants and scarce means, which have alternative uses. Scarcity of means in relation to unlimited wants leads to the problem of making a choice. Hence, the problem of choice is the central problem of an economy.

Option : (a).NABARD

Perfect competition is a market where there are large numbers of buyers and sellers and sellers sell homogeneous commodity at uniform price. 

Under Perfect Competition a firm is only price taker. 

Main features of perfect competition are as under -

(i) Large number of buyers and sellers - Under perfect competition buyers and sellers are in such a large number so that neither a single buyer nor a single seller can influence the market. It is because each seller sells a very small portion of the market supply, similarly the demand of each buyer is also very small in the market.

(ii) Homogeneous product - The product sold in the market is homogeneous or identical in all respect i.e. shape, size, colour, composition, etc.

(iii) Free entry and exit of firms - Under perfect competition there are no barrier to entry and exit of firms in industry. But entry and exit may take time so it happens only in long runs.

(iv) Perfect knowledge of market- In this market all the sellers as well as buyers have the complete information about the market situation. It means they are well aware about the product and its price.

(v) Perfect mobility – The factors of production i.e. land, labour, capital and entrepreneur are perfectly mobile. There is no geographical and occupational restriction on their movement. It means factors of production are free to move from one place to another place and one job to another job in which they get better price.

Option : d. A is the feature of NABARD and B is the feature of EXIM Bank of India.

Correct option: 2. Development Banks

Self-help groups are formed to encourage saving habits among low-income groups in the society and to seek self employment. 

Men/women in a locality join together and form small groups, normally 20 members. Each member invest a fixed amount in the group and with the help of Bank loans are provided to member at low rate to find self employment.

Option : (b).Development Banks

Payment Banks have been established to help the low-income groups small scale industrialists and migrated employees.

The main features are:

1. Accept deposit up to only one lakh rupees from individuals. 

2. Provide interest on deposits as specified by the Reserve Bank of India. 

3. Do not provide loans. 

4. Charge a specific fee as commission for bank transactions. 

5. Debit card will be provided but no credit card.

• NABARD – Specialised bank 
• Industrial Finance Corporation of India – Development bank 
• State Bank of India – Commercial bank 
• Primary Co-operative Bank – Co-operative bank. 

• Kudumbasree 
• Men Self Help Groups 

The first insurance company of India was set up in 1818 in Kolkata.

In the third phase stretching from 1991, banks started rendering services, other than their basic functions. There were several banking reforms which helped in quick and time saving services, ease of procedures, etc. Introduction of ATM, credit card, phone banking, net banking, core banking, etc. are the results of the development in third phase. The private banks that received license in this phase implemented the new and innovative functions at a quicker pace. These banks are known as new generation banks.

The private banks which are given license after 1991, in the third phase of the growth of banking sector are called New Generation Banks. They introduced new and innovative functions at a much quicker pace. These banks adopted new trends in banking sector like ATM, credit card, phone banking, net banking and core banking. They have also adopted steps to make the proceedings easy and simple.

In mid 80’s, most of the hospitals in India were government owned and treatment was free of cost. With the advent of Private Medical Care, the need for Health Insurance was felt and various Insurance Companies introduced Health Insurance as a Product. Presently the health insurance exists primarily in the form of ‘Mediclaim policy’.

Option : (b).Fixed deposit

Accepting deposits, providing loans. Providing locker facilities for safekeeping issuing checks and demand drafts. ATM, CDM, Net banking and care banking facilities.

At least 20 women/men of a locality join to form small groups. Each member deposits a fixed amount. Banks provide loans at a lower rate to these groups. The funds thus collected will be distributed among the members who need it or start small scale enterprises.

• Private Warehouses: Private warehouses are built and owned by private business enterprises in order to store the products produced by them.
• Government Warehouses: They are created and operated by the Government to implement the programmes of the Government.
• Public Warehouse: It is open for public at large. Most of the business organisations, especially small and medium scale units cannot afford to have their own warehouses.
• Co-operative Warehouses: There are warehouses owned and managed by the marketing co-operative societies or agricultural co-operative societies. They are setup to provide warehousing facilities to their members.
• Bonded Warehouses: Bonded warehouses are those warehouses, which are licensed by the government to accept storage of imported goods which are not cleared due to non-payment of customs duty by the importer.

• Public sector banks 
• Private Indian banks 
• Private Foreign banks

The major banks in India were nationalized with the view that banks should operate with the view that banks should operate with the aim of social progress with nationalization banking sector strengthened with more government control and banking spread to rural areas.

Two important functions of the banks are accepting deposits and granting loans. Deposits are classified into savings deposit.

Which is aimed to encourage saving habits. Current deposits which is used by industrial and traders fixed deposit with more interest and recurring deposits. Banks give loans of different types for various purposes. Some are short terms and some are long-terms loans are granted on the basis of asset security or personal security.

Banks that started after 1991. Mainly city centered. New management and functions with modern technologies.

In the contemporary world Bharathiya Mahila Bank plays a significant role in helping women to become self-reliant.

• Established to give short term loans. 
• Gives financial help to microfinance and small entrepreneurs. 

• Slogan : Women Empowerment is India’s Empowerment.
• The bank accepts money from all, but provides loans mainly to women. 

Banks are those institutions which accept deposits from the public and lend out money to the borrower on certain conditions. They operate on the basis of common bye-law and criteria prepared by the Reserve Bank of India.

Banks accept deposits from people, institutions, and government and disburse this amount as loans to people, institutions and government. The banks take back the loan amount with interest after a particular period and repay the depositors with interest. Thus the banks acts as the intermediary between borrowers and lenders.

Mahila banks, Payment banks, and Mudra banks are the new entrants in the banking sector formed for specific purposes.

Mahila Bank: The slogan of Mahila bank is ‘Empowering Women, Empowering India’. The bank accepts deposits from everyone, but lending is predominantly for women.

Payment Bank: Payment banks are set up to help low income groups, small scale industrialists and migrant laborers. They do not undertake all the services rendered by banks.

Mudra bank: Mudra banks are set up to provide small credit (up to ? 10 lakh), especially in agriculture and self-employment sector. It provides financial assistance to small entrepreneurs and microfinance.

• Consumers can purchase goods with the help of credit card, without having to keep money on person. 
• Consumers can purchase goods using credit card even without having sufficient money in their account. The money has to be remitted to the bank later within a specific period. 

• Number of card 
• Name of the bank 
• Emblem of the bank 
• Name of the customer  

• Make sure that nobody is in the counter.
• Do not disclose your ATM pin number to anyone.
• Check the cash withdrawals against your bank statement and keep receipts from the ATM to check back against your statement. Do not throw away the receipt carelessly.

Commercial banks are the oldest banks and have many branches.

Current deposits are not given interest. This is because in current deposit scheme money can be deposited and withdrawn many times in a day without any restrictions.