Meaning and Different types of Banks [AHSEC Class 11 Finance notes 2025 Exam]

1. How the word Bank has been originated?

Ans: The word Bank has been originated from many words. There is no single word or answer to this origin of the word ‘Bank’. According to some economists, the word ‘Bank’ has been originated from the German word ‘Banck’ which means heap or mound or joint stock fund. From this, the Italian word ‘Banco’ has been derived. It means heap of money. But according to this group, the word bank is derived from the Greek word ‘Banque’ which mean a ‘bench’. It refers to a place where money-lenders and money changers used to sit and display their coins and transact business. Thus the origin of the word ‘Bank’ can be traced as follows.

Bank → Banco → Banque → Bank

2. What is a Bank and a commercial bank? What are the features of Bank?

Ans: Bank is a financial institution that undertakes the banking activity i.e.it accepts deposits and then lends the same to earn certain profit.

Commercial Banks are the financial institution which accepts deposits from different institutions and advances loans to some other institutions.

The features of a Bank are:

a)       A Bank is a profit seeking commercial enterprises.

b)      It deals in money, i.e., it accepts deposits from the public and advances loans to the needy borrowers.

c)       It deals with credit. It creates credit for the purposes of lending money.

d)      The deposits made with the bank are repayable on demand and can be withdrawn by the depositor by means of any instruments whether a cheque or otherwise.

3.. What do you mean by a Central Bank? Explain the nature of central bank.

Ans: Central Bank: The central bank is the supreme monetary institution of the country. It is established, owned, controlled and financed by the govt. of the country. The design and control of the country’s monetary policy is its main responsibility. India’s central bank is the Reserve Bank of India. The nature of Central Bank is as follows:

a)       It is the head of all the banks of India. It is the supreme monetary institution of the country.

b)      They always work for national welfare of a country. They do not aim at earning profits.

c)       It is established, owned, controlled and financed by the govt. of the country.

d)      It does not compete with other financial institutions in the market.

4. Why is the established of Central Bank necessary in a country?

Ans: The Central Bank plays a vital role in economic development of a country. It controls the whole monetary system and credit supply of a country. If there is absence of Central Bank, then the whole economic system of that country. So, a Central Bank is necessary in a country because:

a)       To issue currency notes in a country.

b)      To control the supply and creation of credit in the economy to maintain stability in the monetary system.

c)       To meet the financial requirements of the sectors of the economy.

d)      To successfully implement the monetary policies of the govt. of the country.

e)      To promote the foreign trade of the country through various policies.

5. Write a brief note on Organisation Structure and Management of RBI.   2019

Ans: The Reserve Bank was set up as corporate body. The organizational structure of the Reserve Bank is provided by the Reserve Bank of India Act, 1934. It comprises of the: (a) Central Board and (b) Local Boards.

Central Board: The Central Board of Directors is the supreme governing body of the Bank. It consists of 20 members. The members include the following:

1)      A Governor and not more than four Deputy Governors to be appointed by the Central Government.

2)      Four Directors to be nominated by the Central Government, one each from the four local boards.

3)      Ten Directors to be nominated by the Central Government. They are experts from the fields of business, industry, finance and co-operation.

4)      One Government Official (Secretary, Ministry of Finance) to be nominated by the Central Government.

The power of the Board vests with the Governor who is the Chief Executive Officer of the Bank. The Governor has the responsibility of directing the affairs and business of the Bank. The Governor and Deputy Governors hold office for a period of 5years and are eligible for the reappointment. The Governor in his work is assisted by four Deputy Governors and four Executive Directors. The executive directors are not the members of the Central Board but attend Board meetings by invitation. They are subordinate to Deputy Governors.

Local Boards: Apart from Central Board of Directors, four Local Boards are constituted representing each area specified in the first schedule to the Act. There is a Local Board in Eastern, Western, Northern and Southern regions of the country with headquarters at Kolkata, Mumbai, New-Delhi and Chennai.

Local Board consists of five members, each appointed by the Central Government. In each Local Board, a Chairman is elected from amongst the members. The members of the Local Board hold office for a period of four years and are eligible for reappointment.

6. What are the functions of Central Banks?                        2017

Ans: The main functions of the Central Banks are:

a)       Issue of paper currency.

b)      Banker to the government.

c)       Banker to the bank.

d)      Credit control.

e)      Supervision and inspection of banks.

f)        Development and promotional functions.

g)       Custodian of the Nation’s Gold and foreign exchange reserves.

7. Explain the function of Bank as the issuer of Currency Notes. Explain two methods for issuing currency.  2015, 2016, 2019

Ans: The first function or the primary function of money is to issue paper currency. The Central Bank has the sole power to issue paper currency. The notes are legal tender money. In India, the RBI issue currency notes of all types except One Rupee note which are issued by the Ministry of Finance, Govt. of India. But the notes are issued following some methods. The Central Banks follows different methods or system according to the currency or banking regulations to issue notes. These systems are:

a)       Proportional reserve system.

b)      Simple Deposit system.

c)       Fixed fiduciary system.

d)      Minimum reserve system.

e)      Maximum reserve system.

Simple deposit system of issuing currency: The simple deposit system is also knows as full reserve system. Under this system, the Central Bank is required to keep 100% of metal, either gold or silver or both as reserve for every note issued. The notes so issue becomes representative paper money. The advantage of this system is that it enjoys a public confidence but it is very costly and money supply cannot be increase as and when required.

Fixed Fiduciary System of issuing currency: Under this system, the Central Bank issue currency notes up to a certain limit against reserves of Govt. securities. The notes issued beyond the limit set by the law have to be fully banked by metallic reserves.

Proportional system of issuing currency: The proportional system of issuing currency is very simple and elastic. According to this system, the notes issued by Central Bank are banked by both metallic reserves and securities. A certain percentage (25 to 40%) of the total notes issued has to be backed by gold or silver reserves and the remaining by Govt. securities.

Minimum reserve system: The minimum reserve system is a system in which the Central Bank is authorized to issue notes up to any limit by keeping a certain minimum reserve of gold and foreign securities. In India, the RBI is required to keep the minimum reserve of Rs. 200/- crore out of which Rs. 115/- crore should be kept in gold. The system is very elastic and economical for developing countries as it requires only a small and fixed amount of gold reserve. However, it lacks in public confidence due to non-convertibility of notes.

8. How does the Central Bank acts as the banker to the Government?

Ans: The Central Bank is the banker to the Govt. of that country. It performs the same function for the Govt. as the commercial banks performs for their customers. The Central Banks plays the role of the banker to the Govt. in the following three ways:

a)       As a banker: The Central Bank is the banker to the Govt. Under this, it maintains the accounts of the Govt., accepts deposits of the Govt. without interest, provides short term loans to the Govt., undertakes transactions of the Govt. related to purchase and sale of foreign exchange, etc.

b)      As an agent: The Central Bank also acts as the agent to the govt. In this, it recovers taxes and other payments from the public, floats loans and manages public debt etc.

c)       As an advisor: The Central Bank is the financial adviser of the Govt. It advices the Govt. on important economic fiscal and monetary matters such as controlling of inflation or deflation, deficit financing, trade policy, etc.

9. Explain the function of Central Bank as the Banker to the banks?        2016

Ans: The Central Bank is a banker to all the other banks. It is the supreme bank of all the banks. As the supreme bank it performs various functions. Some of the functions are:

a)       Custodian of cash reserve of the bank: The Central Bank acts as the custodian of cash reserve of the banks. Every Commercial bank has to keep a certain portion of their deposits and time and demand liabilities to the Central Bank in the form of cash reserves. The Central Bank maintains this cash reserve as the custodian and grants money to the commercial bank in times of emergency.

b)      Lender of the last resort: The Central Bank is the Lender of the last resort of the commercial banks. When the other banks shortage of funds, then they can approach to the Central Bank for financial assistance. The Central Bank lends money to them by discounting their bills. This enables the Central Bank to establish control over the banking system of the country.                   2017

c)       Clearing agent: The Central Bank acts as the clearing house of the commercial banks. It maintains the accounts of the banks and settles their claims and counter claims by minimum use of money or cash.

10. What are the different types of bank in a country?                   2016

Ans: In modern times banking business has attained much popularity and importance. The following are the different types of bank which are functioning in modern times:

a)       Central Bank: Central Bank is known as guardian bank which bank working in the country. Now a day, in every country there is one central bank and is controlled by the govt. The central Bank manages and control the whole monetary system and also prepares monetary policy and other policies of the govt.

b)      Commercial Bank: The commercial bank generally extent short terms loans to the business man and traders. They collect deposits from the public and advance loans to the businessman and producer commercial banks are normally owned by shareholders. In India most of the joint stock banks are commercial banks.

c)       Co-operative Bank: Co-operatives banks are those banks which established in co-operative sectors. Co-operative banks offer short term and medium term loans to the agricultural sector. Farmers get various kinds of loan for purchasing various agriculture inputs from co-operative banks.

d)      Foreign exchange Banks: These are special types of banks which specialize in financing foreign trade. Their main is to make international payments through the purchase and sale of exchange bills.

e)      Agricultural Banks: Agricultural banks are those banks which are established to meet the credit requirements of agriculture. The agriculture is need two types of credit namely:

1)      Short term credit for purchasing seeds, fertilizers, ploughs and other inputs.

2)      Long-term loans to purchase land and for permanent improvement on land.

f)        Industrial banks: Industrial banks are those banks which advance long term loans to industries. For the development of industries various types of industrial banks are established. In India, various institution like Industrial and finance co-operation of India (IFCI), Industrial development bank of India, can be termed as Industrial Banks.

g)       Savings Banks: Savings banks are those banks which offer opportunities for saving to the small savers and also try to develop saving habits among the people.

h)      Development Banks: Development banks are specialized financial institutions which provide medium and long term finance to private entrepreneurs and help in economic development of the country.

i)        Investment Banks: Investment Banks are those banks which are specialized in provide medium and long term financial assistance to business and industry. They are also known as Industrial Banks as they are mainly concerned with industrial finance.

j)        Land Development Banks: The land development banks are the financial institutions that are organized for providing long term credit to the agriculturists. These banks are also known as Long Mortgage banks as they are set up to relate the burden of indebtness.

11. Write a brief note on primary and secondary functions of banks/public sector banks.             2013

Ans: Functions of Bank: Modern banks not only deal in money and credit creation, other useful functions management of foreign trade, finance etc. The meaning of modern banks is used in narrow sense of the term as commercial banks. The various functions of banks are given below:

A) Primary functions:

a)       Acceptance of deposits: It is the most important function of a bank. Under this function, bank accepts deposits from individuals and organizations and finances the temporary needs of firms.

b)      Making loans and advances: The second important function of banks is advancing loan. The commercial bank earns interest by lending money.

c)       Investments of Funds: Besides loans and advances, banks also invest a part of its funds in securities to earn extra income.

d)      Credit Creations: The Bank creates credit by opening an account in the name of the borrower while making advances. The borrower is allowed to withdraw money by cheque whenever he needs.

B) Secondary functions of a bank: This function is divided into two parts:

1)      Agency functions (2013, 2015, and 2017): These functions are performed by the banker for its own customer. For these bank changes certain commission from its customers. These functions are:

a)       Remittance of Funds: Banks help their customers in transferring funds from one place to another through cheques, drafts etc.

b)      Collection and payment of Credit Instruments: Banks collects and pays various credit instruments like cheques, bill of exchange, promissory notes etc.

c)       Purchasing and Sale of securities: Banks undertake purchase and sale of various securities like shares, stocks, bonds, debentures etc. on behalf of their customers.

d)      Income Tax Consultancy: Sometimes bankers also employ income tax experts not only to prepare income tax returns for their customer but to help them to get refund of income tax in appropriate cases.

e)      Acting as Trustee and Executor: Banks preserve the wills of their customers and execute them after their death.

f)        Acting as Representatives and Correspondent: Sometimes the banks act as representatives and correspondents of their customers. They get passports, travelers tickets secure passages for their customers and receive letters on their behalf.

1)      General Utility functions: These are certain utility functions performed by the modern commercial bank which are:           (2012, 2014, 2016, 2019)

1.       Locker facility: Banks provides locker facility to their customers where they can their valuables.

2.       Traveler’s cheques: Bank issue travelers cheques to help their customers to travel without the fear of theft or loss of money.

3.       Gift cheque: Some banks issue gift cheques of various denominations to be used on auspicious occasions.

4.       Letter of Credit: Letter of credit is issued by the banks to their customers certifying their credit worthiness. Letter of credit is very useful in foreign trade.

5.       Foreign Exchange Business: Banks also deal in the business of foreign currencies.

12. What do you mean by Indigenous banker? What are the various category of indigenous banker? Mention its features and defects.

Ans: An individual or a firm accepting deposits, dealing in indigenous bill and leads money is known as Indigenous banker. Indigenous banks are the unorganized, unregulated, unsupervised and segmented banking institutions that have no link with the organized sector. They have been operating in India since the Vedic age. They are confined to certain casts such as jains, banias, Seths, etc.

The features of Indigenous bank or bankers are:

a)       They are the unorganized part of the financial market. They have no links with the organized and monetary authority of the country.

b)      They are unit banks and operate at one place only.

c)       They provide loan for both productive and unproductive purpose. They operate the banking on their own funds.

d)      They are confined to certain casts such as jains, banias, Seths, etc.

The indigenous bankers suffer from the following defect:

a)       The financial resources of these bankers are insufficient of meet the demand of the borrowers.

b)      These bankers are charging much higher interest rate from their borrowers than the commercial banks.

c)       These bankers indulged in all types of malpractice and exploited their customer in many ways.

d)      They sometime issued loans for unproductive purposes.

13. What is Regional Rural Banks (RRBs)? Mention its features and functions.    2017, 2019

Ans:  RRBs are local level banking organisation operating in different states of our country to fulfill the needs of small and marginal farmers, agricultural labours and landless workers, small businessman, etc. by providing short-term and medium-term credit.

The features or characteristics of Regional Rural Banks are:

a)       The RRBs have a particular operation area. They remained confined to a particular district.

b)      They are sponsored by the public sector bank.

c)       The authorized capital of RRBs is Rs. 5 crore at present and issued capital is at Rs. 1 crore.

d)      The RRBs are dependent on NABARD for financial support. The NABARD provides refinance to the RRBs at concessional interest rate.

The functions of RRBs are:                            2018

a)       To generate employment in the rural areas

b)      To encourage entrepreneurship in the rural areas,

c)       To provide assistance in marketing and storing of agricultural and other products, etc.

d)      To expand the organized banking services among the rural people by opening bank branches.

e)      To mobilise rural saving by accepting deposits from the rural people.

f)        To fulfill the needs of small and marginal farmers, agricultural labours and landless workers, small businessman, etc. by providing short-term and medium-term credit.

14. Write short note on IMF.

Ans: INTERNATIONAL MONETARY FUND (IMF) is an international monetary organisation established by different countries after the world-war second with an objective of providing exchange stability throughout the world and increasing liquidity, so that balance multilateral trade is promoted through the co-operation of the member nation. The IMF came into existence in December 1945 and started functioning in March, 1947.

The objectives of I.M.F are:

a)       To promote international monetary co-operation through a permanent institution.

b)      To secure stability in the rates of foreign exchanges.

c)       To secure conversion of the currency of any member into the currency of any other member.

d)      To promote the international trade by removing all obstacles.

e)      To promote investment of capital in backward and undeveloped countries.

f)        To make financial resources available to members.

The functions of IMF are:

a)       It functions as a short credit institution.

b)      It provides machinery for the orderly adjustments of exchange rates.

c)       It keeps reserves of the currencies of all member countries.

d)      It lends to the borrowing countries in the currencies which they require.

e)      It promotes the expansion of International Trade for the mutual benefits of member countries.

15. What are the features of Co-operative Bank?

Ans: The features of Co-operative Banks of India are:

a)       These banks are not profit seeking institutions.

b)      They provide both short term and long term loan.

c)       They have a particular operation area. They remained confined to a particular district.

d)      These banks are basically rural and agricultural based banks.

16. What are the functions of Co-operative Banks?

Ans: The functions of Co-operative Banks are :

a)       The co-operative bank accepts deposits and encourages savings and investment among the people.

b)      They provide both short term and long term finance to the customer to fulfill their demands.

c)       They provide assistance in the marketing and processing of the products of farmers.

d)      They also supply various inputs and equipment such as seeds, fertilizers, etc to the farmers.

e)      The also provide storing facilities to the farmers for storing their produce.

17. What are the weaknesses of Co-operative Banks in India?

Ans: The weaknesses of the Co-operative Banks in India are:

a)       They co-operative banks are financially weak due to shortage of deposits from the people.

b)      Controlled  by wealthy influential persons of the society.

c)       Lack of management qualities.

d)      Failed to meet the credit needs of the poor and weaker sections of the society.

18. What are development banks? What are the features or characteristics of Development Banks?

Ans: Development bank is a specialised financial institution which provides medium and long term finance to business units in the forms of loans, underwriting, investments and guarantees operations, promote entrepreneurship and upgrade knowhow and do-how. It is a multi-purpose financial institution and not just a term-lending institution. It does not accept deposits from the public, unlike commercial banks. A development bank does not perform ordinary banking functions.

The features of Development Banks are:

a)       They are specialized for Economic and Industrial development.

b)      They do not accept deposits from the general public like Commercial Banks.

c)       They provide medium-term and long-term loans.

d)      They provide assistance to both public as well as private sector.

19. Mention some specific development banks. What are the functions of Development Banks?               2016

Ans: Some Important Development Banks are given below:

a)       The Industrial Finance Corporation of India (IFCI) was established in 1948 under a special Act of Parliament. It was the first development bank of our country. It was set up to make medium and long term credits to industrial concerns in India.

b)      The full form of IDBI is Industrial Development Bank of India. It was established in July, 1964. However, in February 1976, the IDBI was taken over by the government and was made an autonomous institution.

c)       In order to provide finance to small and medium scale industries need for a separate financial institution was felt. Accordingly, the government of India passed the State Financial Corporation Act in 1951, enabling the state government to set up State Financial Corporation.

d)      The National Bank For Agriculture and Rural Development (NABARD), a developing bank, came into existence on July 12, 1982, under an Act of Parliament with an initial capital of Rs. 100 crores. It is an apex institution set up for providing and regulating credit and other facilities for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas.

Functions of Development Banks

a)       They provide risk capital.

b)      They provide long-term and medium-term finance to industrial undertakings for purchase of new plants and machinery, expansion, modernization, etc.

c)       They purchase the shares and debentures of companies and thus provide them long-term capital.

d)      They help the companies in raising capital from the capital market.

e)      They underwrite the public issues of shares and debentures by the companies. 

20. What are the functions of Investment Banks?

Ans: the functions of Investment Banks are:

a)       To accept deposits from public as saving.

b)      To provide long term funds to business and industrial organization to meet their capital requirements.

c)       To subscribe to the shares and debentures issued by industrial concerns.

d)      To underwrite the issues of shares and debentures and help selling these securities to the investing public.

21. Explain the differences between Investment Bank and Commercial Bank.     2016

Ans: Investment Banks: Investment Banks are those banks which are specialized in provide medium and long term financial assistance to business and industry. They are also known as Industrial Banks as they are mainly concerned with industrial finance.

Commercial Bank: The commercial bank generally extent short terms loans to the business man and traders. They collect deposits from the public and advance loans to the businessman and producer commercial banks are normally owned by share holders. In India most of the joint stock banks are commercial banks.

On the basis of above explanation, the following differences between the investment bank and commercial bank are arises:

a) The primary functions of investment banks is to provide medium and long term financial assistance to business and industry. Whereas, the primary functions of commercial banks is to accept deposit from the public and lend them to the customers.

b) The investment bank is set up especially for the investors, big corporation and government. Whereas, Commercial banks are involved in providing banking and financial services to the general public.

c) The level of risk in the investment bank is higher. Whereas, the level of risk in commercial bank is lower.

d) Investment banks provides only customer specific services according to the need. Whereas, commercial banks provide standard services to all their customers.

e) Investment banks provides don’t provide day to day services to their clients. Whereas, commercial banks provides day to day services to their customers.

f) Investment banks don’t accept deposits from general public. Whereas, commercial banks accepts deposits from general public.

22. What do you mean by scheduled banks and Non-Scheduled banks?                2015

Ans: Scheduled banks refer to those banking institutions whose names are included in the Second Schedule of the Reserve Bank of India Act, 1934. Moreover, the banking company may included in scheduled list only after must fulfill the some conditions.

Non-Scheduled banks refer to those banking institutions, whose names do not appear in the Second Schedule of the RBI Act, 1934. Non-Scheduled banks were engaged in lending money discounting and collecting bills and in providing various agency services.

23. Distinguish between Central bank and commercial bank.                                      2017, 2019

Ans: There are some fundamental differences between them:

1)      Profit making is not the objective of central banks, although, they do earn profits. But, the principle aim of a commercial bank is to make large amounts of profits.

2)      The central bank is owned any controlled by the Government. But A commercial bank is generally owned, managed and controlled by private citizens.

3)      There is only one central bank in a country. But, There are commercial banks operating in a country on a competitive basis.

4)      The central bank is the only agency in a country entrusted with the power of issuance of notes. But, The commercial banks do not have the power of issuing notes.

5)      The central bank s the lender of the money market. But, The commercial banks are just its sub-ordinates.

24. Write a brief note on Land Development Bank.

Ans: The land development banks are the financial institutions that are organized for providing long term credit to the agriculturists. These banks are also known as Long Mortgage banks as they are set up to relate the burden of indebtness. The Land Development Banks have a large number of branches. Earlier they were both federal and unitary but now, they have been divided into two federal structures. They are State Land Development Bank (SLDBs) and Primary Land Development Bank (PLDBs). The Land Development Banks provide long term loans to the agriculturists for purchasing land, costly machinery like tractors, improvement of land cultivation method, etc. However, they grants loan up to 50% of the value of land or 30 times the revenue of land and are repayable over a period of 20-30 years.

25. Distinguish between commercial bank, development bank and co-operative banks. 2015, 2016, 2018

Basis	Commercial Bank	Development Bank	Co-operative bank
Formation	These are generally set up as companies under the Companies Act.	These are set up under the special act passed by the government,	These are set up under the Co-operative Societies Act.
Nature	These are ordinarily financial institution.	These are specialised multi purpose institutions.	These are not profit seeking institutions.
Raising of funds	These banks accepts deposits from the public through different types of accounts.	Mains source of funds for these banks are borrowings, grant, selling of securities. They do not accept deposits from public.	These banks mainly accepts deposits from public of rural areas.
Advances	Commercial banks mainly provide short and medium term loans.	Development banks provide medium and long term loans.	Co-operative banks provides both short term and long term loans.
Credit creation	Commercial banks can create credit.	Development banks cannot create credit.	Co-operative bank can create credit.

26. Define Public and Private sector banks. Also distinguish between them.      2019

Ans: Public Sector Banks: Public Sector banks are those banks in which the Government has at least 51% shares. Public sector banks are owned and controlled by the Government either directly or indirectly through the RBI. These banks are also known as “National Banks”. Public sector banks are classified into three categories (27 Banks):

a)       State Bank group: It consists of the SBI and its 6 associate banks.

b)      Nationalized Banks: It present there are 19 nationalized banks such as UBI, PNB (founded in 1894 in Pakistan), and BOI etc.

c)       Regional Rural Banks (RRBs): These banks are established with the object of proceeding credit and other facilities in rural areas.

Private Sector Banks: Private Sector banks are those which are owned by private individuals or business corporations. Private sector banks may be classified into two categories:

a)       Indian Banks: these banks are incorporated under the Indian companies Act. At present there are 21 Indian Private Bank. E.g. ICICI Bank Ltd, HDFC Bank Ltd, Federal Bank Ltd, Yes Bank Ltd.

b)      Foreign Banks: These banks are originated outside India but have a place of business in India. At present there are 45 Foreign Banks. E.g. City Bank, Standard Chartered Bank, HSBC Bank, Bank of Tokyo.

Difference between Public Sector Banks and Private Sector Banks

Basic	Public Sector	Private Sector
1.Ownership	Public Sector banks are owned by the Govt. either directly or through the RBI.	Private Sector banks are owned by private individuals or business corporations.
2. Setup	These banks are setup under the special act of Parliament.	These banks are setup under the Companies Act.
3. Aim	These banks aim at saving the Society.	These banks are driven by profit motive.
4. Foreign Bank	Public Sector banks does not include foreign bank.	Private Sector banks may be Indian Banks as well as foreign banks.

27. What is Export-import bank? Explain briefly.

Ans: the bank which is mainly concerned with the progress and development of foreign trade is known as Export-import Bank or EXIM bank. These banks were established the Export-Import Bank of Indian Act of 1983. It acts as an apex institution relating to import and export finance.

Some of the features of EXIM Bank are:

a)       These banks are basically foreign trade banks.

b)      The authorized capital of EXIM Bank of Rs. 200/- crore which is now extended to Rs. 450/- crore.

c)       The EXIM bank is managed by a Board of Directors which consists of 16 members including one Chairman.

d)      They provide financial assistance to exports and imports.

28. What are the functions of EXIM Bank?

Ans: The functions of EXIM Bank are:

a)       To provide financial assistance to export-import sectors for the export and import of goods and services.

b)      To provide technical and administrative assistance to the foreign trade oriented parties for their promotion.

c)       To undertake merchant banking services of concerns engaged in foreign trade.

d)      To finance research and technology studies for the promotion of foreign trade.

29. What is Retail Banking and retail banking?

Ans: Retail banking is a form of commercial banking which generally deals with small consumers for meeting current requirement of consumers such as housing loan, a car loan, etc.

Wholesale banking refers to a situation where a bank deals with limited large-sized big customers. These banks have large accounts for few corporate clients with few transactions.