Commercial Applications
An open cheque is safer than a crossed cheque because it can be cashed by anyone.
- True
- False
Answer
False
Reason — A crossed cheque is safer than an open cheque, not the other way around. An open cheque is payable across the counter of the bank to anyone who presents it, which makes it risky if lost or stolen. A crossed cheque (with two parallel lines drawn across its face) can be paid only through a bank account, so payment is made only into the payee's account, reducing the risk of fraud or wrongful encashment.
Related Questions
A commercial bank is considering increasing its lending to small businesses. Which of the following actions by the Central Bank would most likely constrain the bank's ability to do so?
- Reducing the Statutory Liquidity Ratio (SLR).
- Increasing the Cash Reserve Ratio (CRR).
- Lowering the Bank Rate.
- Conducting open market operations to purchase government securities.
A recurring deposit account allows the account holder to withdraw the entire deposited amount along with interest at any time before the maturity period.
- True
- False
A country is facing economic instability, and the central bank decides to implement strict credit control measures. Which combination of actions is the central bank most likely to take to stabilize the economy?
- Increase the bank rate and sell government securities.
- Decrease the Cash Reserve Ratio (CRR) and lower the bank rate.
- Increase the Statutory Liquidity Ratio (SLR) and buy government securities.
- Lower the reserve requirement and reduce the statutory liquidity ratio.
When considering the functions of commercial banks, which statement(s) is (are) correct?
(1) Commercial banks provide loans and advances to individuals and businesses.
(2) Commercial banks are solely responsible for issuing currency.
(3) Commercial banks have no involvement in government transactions.
(4) Commercial banks play a crucial role in the money creation process through lending.
- 1 & 3
- 2 & 4
- Only 1
- 1 & 4