Commercial Applications
Assertion (A): Commercial banks primarily engage in profit-oriented activities.
Reason (R): Commercial banks have the authority to set monetary policies, establish reserve requirements, and conduct financial stability assessments to ensure the sound functioning of the banking system.
- A is true but R is false
- A is false but R is true
- Both A and R are true and R explains A
- Both A and R are true but R does not explain A
Banking
1 Like
Answer
A is true but R is false
Reason — The Assertion is TRUE — commercial banks are profit-oriented institutions; their main aim is to earn profit by accepting deposits at lower rates and lending at higher rates. The Reason is FALSE — commercial banks do NOT have authority to set monetary policies, establish reserve requirements or conduct financial stability assessments. These are functions of the Central Bank (RBI). Commercial banks function under the control of the central bank.
Answered By
2 Likes
Related Questions
If the central bank decides to promote economic growth by lowering the bank rate, which of the following is a likely consequence for commercial banks?
- They will increase interest rates on loans to maintain profitability.
- They will decrease their lending activity to reduce risks.
- They will expand their lending activities due to lower borrowing costs.
- They will raise the Cash Reserve Ratio to align with central bank policies.
Central bank is owned by the while commercial bank is owned by .
- Shareholders, shareholders
- Government, shareholders
- Shareholders, government
- None of these
Which of the following is/are the function(s) of central bank?
- Banker's bank
- Provides overdraft facility to the public.
- Receive deposits from the public and business firms
- Provide short-term and medium-term loans to customers
It means signing on the back of the negotiable instrument with the objective of transferring its ownership.
- Endorsement
- Pay-in slip
- Crossing a cheque
- Bank draft