Page 18 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 1: Introduction to Banks

Foreign Exchange: The exchange of one currency for another or the conversion of one currency Notes
into another currency.
Loans: A thing that is borrowed, especially a sum of money that is expected to be paid back with
interest.
NBFCs: Non-banking Financial Companies.
NBFIs: Non-banking Financial Intermediaries.

NBFSCs: Non- Banking Financial Services Companies.
Overdraft: A deficit in a bank account caused by drawing more money than the account holds.
Security: A financial instrument that represents: an ownership position in a publicly-traded
corporation (stock), a creditor relationship with governmental body or a corporation (bond), or
rights to ownership as represented by an option.

1.7 Review Questions

1. Explain the meaning of bank.
2. What is the origin of the word ‘bank’?
3. Explain the characteristics of Indian Banking System.
4. What are the primary functions of commercial banks?
5. What do you understand by secondary functions of commercial banks?

6. Explain briefly the concept of discounting of bills.
7. Who performs the agency functions and briefly explain them?
8. What are the general utility services provided by commercial banks?

9. Why banks are considered as the heart of the financial system?
10. What are the two sets of institutions of Indian Banking System? Discuss in detail.

Answers: Self Assessment

1. Ancient 2. Policies
3. Lending 4. Withdrawal
5. Banking, financial 6. Promotion

7. False 8. True
9. True 10. Securities
11. Underwriting

1.8 Further Readings

Books Hajols. T. N (2009), “Money and Banking”, Gopaljee Enterprises.
Muraleedharan, D (2009), “Modern Banking: Theory and Practice”, PHI Learning
Pvt. Ltd.

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