Maharashtra Board Class 11 Secretarial Practice Important Questions Chapter 11 Correspondence with Banks

Balbharti Maharashtra State Board Class 11 Secretarial Practice Important Questions Chapter 11 Correspondence with Banks Important Questions and Answers.

Maharashtra State Board 11th Secretarial Practice Important Questions Chapter 11 Correspondence with Banks

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
Negotiable Instrument which can be discounted with the bank _____________
(a) Cheque
(b) Bills of Exchange
(c) Bank Draft
Answer:
(b) Bills of Exchange

Question 2.
Bank overdraft is a _____________ term facility provided by bank.
(a) medium
(b) short
(c) long
Answer:
(b) short

Question 3.
A loan for a period of more than 5 years is called as _____________ loans.
(a) short term
(b) long term
(c) medium-term
Answer:
(b) long term

Question 4.
Purchase and sale of securities is _____________ function of Bank.
(a) primary
(b) utility
(c) agency
Answer:
(c) agency

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Current Account	(1) Time Deposits
(b) Financial Arrangement	(2) ATM, Credit Card and Debit Card
(c) Agency Function	(3) Demand Deposits
(d) Utility Function	(4) Collection of Dividend and Interest
(e) Cash Credit	(5) Bank Overdraft
(f) Bill of Exchange	(6) Advance against the stock of raw material
(g) Letter of Credit	(7) Non-negotiable instrument
	(8) Bank Draft
	(9) Negotiable Instrument
	(10) International trade transaction

Answer:

Group ‘A’	Group ‘B’
(a) Current Account	(3) Demand Deposits
(b) Financial Arrangement	(5) Bank Overdraft
(c) Agency Function	(4) Collection of Dividend and Interest
(d) Utility Function	(2) ATM, Credit Card, and Debit Card
(e) Cash Credit	(6) Advance against the stock of raw material
(f) Bill of Exchange	(9) Negotiable Instrument
(g) Letter of Credit	(10) International trade transaction

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
Deposits generating saving habits among the people.
Answer:
Saving Deposits

Question 2.
Deposits are not repayable on demand.
Answer:
Time Deposits

Question 3.
Deposits repayable on demand.
Answer:
Demand Deposits

Question 4.
The loan was provided for a period of less than one year.
Answer:
Short Term Loan

Question 5.
The loan is provided for a period between 1 to 5 years.
Answer:
Medium-Term Loan

Question 6.
The loan was provided for a period of more than 5 years.
Answer:
Long Term Loan

1D. State whether the following statements are True or False

Question 1.
Letter of credit is issued by banks for domestic trade transactions.
Answer:
False

Question 2.
Bill of Exchange is a negotiable instrument.
Answer:
True

Question 3.
The bank acts as a trustee, attorney, and executor of the will.
Answer:
True

Question 4.
RTGS is an agency function of the Bank.
Answer:
False

Question 5.
The bank plays the role of Depository Participant (DP).
Answer:
True

1E. Find the odd one.

Question 1.
Loan, Deposit, Cash credit, Overdraft facility.
Answer:
Deposit

Question 2.
Cheque, Withdrawal slip, Pay in slip.
Answer:
Pay in slip

Question 3.
Travellers Cheque, Safe Deposit Vault, NEFT, Transfer of Money.
Answer:
Transfer of Money

Question 4.
Collection of Dividend, Collection of cheque, Buying, and Selling of Securities, Payment of Electricity Bill.
Answer:
Buying and Selling of Securities

1F. Complete the sentences.

Question 1.
The appointment of bankers of a company is made by the _____________
Answer:
Board of Directors

Question 2.
Banker is a dealer in _____________
Answer:
Money

Question 3.
Bank account in which money is deposited at regular interval is a _____________
Answer:
Recurring Deposit Account

Question 4.
The instrument which can be discounted with the bank is a _____________
Answer:
Bills of Exchange

Question 5.
Businessman, Companies etc, usually open a _____________ account with a bank.
Answer:
Current

Question 6.
There is no restriction on the withdrawals from _____________ account.
Answer:
Current

Question 7.
Interest is not paid on the _____________ account.
Answer:
Current

Question 8.
_____________ account is suitable for salaried people.
Answer:
Saving

Question 9.
Stop payment letter is sent, when the cheque is _____________
Answer:
lost/misplaced

Question 10.
Withdrawals are not permitted from the _____________ accounts.
Answer:
Fixed Deposits

Question 11.
The facility given by the bank to draw more money than the actual balance in the credit is called _____________
Answer:
Overdraft facility

Question 12.
A deposit which is kept for a fixed period in a bank is a _____________
Answer:
Fixed Deposit

Question 13.
A type of bank account which is generally opened by a businessman for his business transactions is a _____________
Answer:
Current account

Question 14.
A type of account in which the interest is paid at higher rate is a _____________
Answer:
Fixed Deposit Account

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Loans not more than one year	……………………….
(2) ……………………..	Cash Credit
(3) Collection of cheques	………………………..
(4) ……………………..	Letter of Credit

(Interest charged on, actual amount withdrawn, Agency function, Utility function, Short Term loans)
Answer:

Group ‘A’	Group ‘B’
(1) Loans not more than one year	Short Term loans
(2) Interest charged on actual amount withdrawn	Cash Credit
(3) Collection of cheques	Agency function
(4) Utility function	Letter of Credit

1H. Answer in one sentence.

Question 1.
What is a demand deposit?
Answer:
Deposits that are repayable on demand are called demand deposits. There are 2 types of demand deposits i.e Saving Deposits and Current Deposits.

Question 2.
What is a time deposit?
Answer:
Deposits that are repayable after a specific period of time are called time deposits. There are 2 types of time deposits i.e. Fixed Deposits and Recurring Deposits.

Question 3.
What do you mean by loan?
Answer:
Any amount granted or lent for a specific period of time against personal security, gold or silver, or other movable or immovable assets is called a loan.

Question 4.
What is the Bill of Exchange?
Answer:
It is a written unconditional order by the seller to the buyer, to pay a certain sum of money on a future fixed date for payment of goods or services received.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
Short-term loans are of more than 5 years.
Answer:
Long-term loans are of more than 5 years.

Question 2.
Bills of Exchange are the non-negotiable instrument.
Answer:
Bills of exchange is a negotiable instrument.

Question 3.
The collection of cheques and bills is a utility function of the bank.
Answer:
The collection of cheques and bills is the agency function of the bank.

Question 4.
The rate of interest is high for saving deposits.
Answer:
The rate of interest is high for fixed deposits.

Question 5.
Deposits that are repayable after the specific period is Demand Deposit.
Answer:
Deposits that are repayable after the specific period are Time Deposits.

2. Answer in brief.

Question 1.
Explain the types of term loans.
Answer:
A loan granted for a specific time period against personal security, gold or silver, and movable and immovable assets is called a term loan.
Types of term loans:

Short-term loan: A loan repayable within 1 year is called a short-term loan. It is generally taken by businessmen to meet their working capital requirements.
Medium-term loan: A loan repayable within 2 years to 5 years period is called a medium-term loan.
Long-term loan: A loan repayable after 5 years is called a long-term loan. It is taken by businessmen for the growth and development of the business.

Question 2.
Explain the types of Advances.
Answer:
Advance is a credit facility provided by the bank to its customers. Advances are for a shorter period than loans.
Type of Advances:

Overdraft: It is an arrangement in which a customer i.e. Current A/c holder, is allowed to overdrew money in excess of the credit balance in his account. It is allowed against collateral securities like – shares, F.D.R., Government securities, etc.
Cash credit: In this mode of advance, a separate bank account called ‘Cash Credit Account is opened in the name of the borrower. He can withdraw from this account as and when required. It is allowed against security like – stock of raw materials, finished goods, etc.
Discounting of Bills: Discounting of bills means encashing the Bills of Exchange before its due date with the banker. The bank charges a certain amount of interest for this service which is called a discounting rate.

3. Justify the following statements.

Question 1.
In cash credit, the customer’s account is credited by a bank with the sanctioned amount.
Answer:
Cash credit is another kind of credit facility given by the bank to its customers including businessmen, companies, etc.

A separate bank account known as a “Cash Credit Account” is required to be opened in the name of the borrower.
The bank credits the account as per the sanctioned cash limit from which the customer can utilize funds whenever required for cash credit.
Generally, the security of tangible assets like goods, finished stock is required to be kept.
The interest is charged only on the actual amount utilized by the customer.
Cash credit arrangement is for a longer period as compared to overdraft.
This system of lending is prevalent in India only.
Thus, in cash credit, the customer’s account is credited by a bank with the sanctioned amount.

Question 2.
Bank correspondence should be brief and to the point.
Answer:

The bank is a financial institution.
A company secretary has to conduct bank correspondence as per the instruction of the Board.
Bank correspondence needs careful and cautious drafting.
The company secretary has to use his knowledge, skill, and experience while conducting bank correspondence,
The company secretary has to conduct bank correspondence promptly and accurately.
Mistakes and delays in bank correspondence may bring financial loss to the company.
Bank correspondence should be always brief, compact, and precise.
Unnecessary or irrelevant information should be avoided in bank correspondence.
Thus, bank correspondence should be brief and to the point.

Question 3.
No interest is paid by the bank on the current account.
Answer:

The Current account is normally opened by businessmen, firms, or companies.
A current account is a running account and in practice it never becomes time-barred.
This account is opened with a minimum deposit.
There is no limit on the amount or number of withdrawals.
Interest is not payable on this account.
Overdraft facility is given only to current depositors after following the prescribed bank procedure.
Hence, interest is paid only in the case of recurring, fixed, and saving accounts and not in the case of the current account.
Thus, no interest is paid by the bank on the current account.