Page 20 - DMGT303_BANKING_AND_INSURANCE

Unit 1: Indian Banking System

Net profit ratio: The ratio of an organization's net profit to its total net sales. Comparing the net Notes
profit ratios of companies in the same sector shows which are the most efficient.
Net profit: In business and finance accounting, net profit is equal to the gross profit minus
overheads minus interest payable plus/minus one-off items for a given time period (usually:
accounting period).

Time deposits: A savings account held for a fixed-term with the understanding that the depositor
can only withdraw by giving written notice. The term generally is at least 30 days.

1.8 Review Questions

1. Explain the term banking. Discuss its role in an economy.

2. Describe the functions of bank.
3. Distinguish between
(i) Banking and other business

(ii) Demand deposit and time deposit
(iii) Saving account and fixed deposit account.
4. Write short notes on:
(i) Bank
(ii) Hundi

(iii) Agency function of bank
(iv) Relation between bank and customer.

Answers: Self Assessment

1. H. L. Henry 2. Cooperative
3. Resources 4. Urban

5. Nariman 6. False
7. True 8. True
9. True

1.9 Further Readings

Books Bank Safety and Soundness: The Bergamo Report, Proceedings of the Third
International Conference on Financial Services, “Bank Safety and Responsibility
Towards the Consumer”, Bergamo, Italy, 23 Through 25 September 1993.
Social Responsibility of Banks, By Philip J. Jennings.

The Professionals Banker, The ICFAI University Press, Hyderabad.
RBI Annual Report 2005-06.

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