BANKING Past Paper 2nd year 2011 (Private) Karachi Board

SECTION”A” (MULTIPLE CHOICE QUESTIONS)

1. Choose the correct answer for each from the given options:

(i) Bank deals in:
* Money
* Money & credit
* Credit
* All of these

(ii) To open an account, the applicant must be introduced usually by:
* Bank employee
* Businessman
* Account Holders
* None of these

(iii) Bank registered with central bank are referred as:
* Commercial Bank
* Mudarba Bank
* Registered Bank
* Scheduled bank

(iv) Central bank advances loan to Commercial bank by:
* Clearing House
* Credit Control
* Re-discounting bill of exchange
* Maintaining cash reserve for commercial bank

(v) Lender of last resort for commercial bank is:
* Central Bank
* World Bank
* Mortgage Bank
* Agricultural Bank

(vi) Generally the number of parties to a cheque is:
* One
* two
* three
* four

(vii) The foreign Bank Draft is always payable on:
* Demand
* Specified Sate
* On Signature
* On-expiry of two weeks

(viii) Bank overdraft is allowed by bank for:
* A certain limit
* A fixed limit
* No limit
* All of these

(ix) Bank find comprises mainly of money borrowed from:
* Moneylender
* Loan
* Account Holder
* Other Banks

(x) When endorser signs his name only on the instrument this is known as:
* Blank endorsement
* Special endorsement
* Restricted endorsement
* Conditional endorsement

(xi) Commercial Bank acts as underwriter for:
* Shares
* Bonds
* Debentures
* All of these

(xii) Bank acts as the custodian of its customer’s:
* Property
* Valuable
* Business
* Cash

(xiii) Credit instrument includes:
* Bill of exchange
* Cheques
* Promissory note
* All of these

(xiv) A notice is served in case this is dishonoured:
* Bill of exchange
* Cheques
* Promissory note
* Letter of credit

(xv) The letter of credit is:
* An order
* A promise
* A request
* None of these

(xvi) This account is not subject to Zakat:
* Saving Account
* Fixed Deposit Account
* Current Account
* Profit or loss Account

SECTION B (SHORT-ANSWER QUESTIONS)

NOTE: Answer any 7 questions from this section. No answer should exceed 8 to 10 line.

2.(i) What are the different types of bank deposit accounts? Describe.

ANSWER: Please see Q. 2(viii) of 2011 Regular

(ii) Write a note on clearing House Service.

ANSWER:

The central bank manages and supervises the clearinghouse to facilitate the clearing of cheques between banks. Every banker usually receipts number of cheques drawn on. another banks from his customers as deposits. In other words banks receive cheques drawn on other banks from their account holders. As a result, there arises inter bank transactions e.g. National Bank receives deposits of cheques worth Rs. 6,000 drawn on Habib Bank. Habib Bank on the other hand, receives cheques worth Rs. 5,000 drawn on National Bank thus National Bank owes Rs, 5,000 to Habib Bank and Habib Bank owes Rs. 6,000 to National Bank. Inter bank transactions are settled through a central organization known as clearinghouse. A clearinghouse is a general organization of banks of a given palace having for its main purpose, the off setting of cross obligation on the form of cheques. The transaction of a member banks are settled only by paying the differences. Generally central bank of the country performs the function of clearing house by adding and deducting the account of different banks. In Pakistan State Bank of Pakistan performs the duty of clearing house.

(iii) Describe the various kinds of banks.

ANSWER:

At present the banking structure in Pakistan comprises of the following.

Central Banking:
State Bank of Pakistan is the Central Bank of the country with its offices at Karachi, Hyderabad, Sukkur, Rawalpindi, Lahore, Faisalabad, Gujranwala, Sialkot, Multan, Peshawar and Quetta. Central office is located in Islamabad.

Commercial Banking:
Commercial Banks. have been the most effective mobilizes of savings and have been providing short-term requirements of working capital to trade and commerce and industry.

National Bank of Pakistan, Habib Bank Limited, United Bank Limited, Muslim Commercial Bank, Allied Bank of Pakistan Limited. In recent years government has allowed private sector to established commercial banks due to which some bank like Askari Bank, Fidelity Bank, Bank of Punjab, Sonehri Bank etc.

Exchange Banks:
Foreign bank generally have been engaged in financing the foreign trade but they are fully authorized to discharge normal banking functions. At present there are 18 foreign banks with 64 branches.

Saving Banks:
Post office saving bank is the only saving bank of the country. The Government of Pakistan controls it. It accepts deposits from public and invests them in various government projects.

Co-operative Banks:
Generally there are 3 system of co-operative banking in Pakistan. They consist of Primary Co-operative Societies; Central Co-operative Banks -and Provincial Co-operative Banks..

Specialized Financial institutions:

These. institutions are government-sponsored cooperation. The ·main objective of this institution is to stimulate the development of country’s economy by providing capital resources and technical advises to industrial and commercial and agricultural sector. They provide long term and medium term credit to these sectors. In Pakistan some specialized financial institutions are IDBP, ADBP, PICIC, ICP, NIT, NDFC, SBFC,EDF,BEL,HBFC,

(iv) Write .Sources of Long term finance.

ANSWER: Please see Q.2 (vi) of 2014 Private

Long-term finance is the part of capital, which is required by the business enterprises to finance its blocked or fixed assets such as land, buildings, machinery and other appliances of a permanent nature.

SOURCES OF LONG TERM FINANCE:

1. Public subscription to shares:
The initial capital is obtained by a new concern by floating shares of various kinds, preference, ordinary. These shares carry different rights and privilege both as regards to payment of dividends and repayment of capital. In case of sole proprietorship and partnership the capital contributed by the proprietor or partners becomes their sources.

2. Bonds and Debenture:
A running concern issues debentures to finance its long-term financial requirements. The difference between the shareholder and debenture holder is that the former is the owner of the company and the later is its creditor.

3. Public Deposits:
This is a system by which public savings are directly obtained by industries instead of through banks.

4. Government Loans:
In some countries, government provides long term finance to industries by giving them cheap and adequate loans for long period

5. Financing Institutions:
Other financing Institutions also perform the functions of extending long-term loans. For example ICP,ADBP, IDBP, PICIC,etc.

6. Amortization of Profit:
Companies may decide not to distribute their profits among shareholders and to retain the same in the business, which can be used for meeting the additional capital needs arid expansion purposes.

(v) Under what circumstances can a cheque be dishonoured by the bank?

ANSWER: Please see Q. 4 of 2011 Regular

(vi) Explain various types of Endorsement.

ANSWER: Please see ~. 2(viii) of 2013 Regular

(vii) What is meant-by Balance of Trade?

ANSWER: Please see Q. 2(viii) of 2013 Private

(viii) What are the functions of a commercial bank? Explain any three.

ANSWER:

Functions of Commercial Bank:
1. Receiving Deposits:

2. Investing Funds:
a. Advancing Credit:
b. Purchase of Shares & Securities:
c. Discounting of Bill:
d. Money at Call & Short Notice:

3. General Unit Service:
a. Receiving of Utility Bills Cheap Media of Exchange:
b. Financing Trade:
c. Transfer of Funds:
d. Dealing in Foreign Exchange
e. Custodian of Valuables:
f. Underwriting:

1. Receiving Deposits:
The Commercial Bank receives deposits through different types of accounts. It advances interests on saving accounts and fixed deposit accounts no interest is allowed on Current account.

2. Investing Funds:
Investing Funds is another main function of Commercial Banks. The following are usual means of investment for a Commercial Bank.
Advancing Credit:
Purchase of Shares & Securities:
Discounting of Bill:
Money at Call & Short Notice

3. General Unit Service:
The Commercial Bank renders services for the public or businessperson.
Receiving of Utility Bills:
Cheap Media of Exchange:
Financing Trade:
Transfer of Funds:
Dealing in Foreign Exchange:
Custodian of Valuables:
Underwriting:

(ix) Describe. the .crossing of cheque.

ANSWER: Ple-asesee Q” 2(iv) of 2011 Regular

(x) Describe the advantages of E-Banking.

ANSWER:

The main advantages of E-banking are :-
1. The operating cost per unit services is lower for the banks.
2. It offers convenience to customers as they are not required to go to the bank’s premises.
3. There is very low incidence of errors.
4. The customer can obtain funds at any time from ATM machines.
5. The credit cards and debit cards enables the Customers to obtain discounts from retail outlets.
6. The customer can easily transfer the funds from one place to another place electronically.
The popular services covered under E-banking include-
1. ATM (Automated Teller Machines)
2. Credit Cards,
3. Debit Cards,
4. Smart Cards,
5. Electronic Funds Transfer (EFT) System,
6. Cheques Truncation Payment System,
7. Mobile Banking, 8. Internet Banking,
9. Telephone Banking, etc.

SECTION ‘C’ (DETAILED-ANSWER QUESTIONS)

NOTE: Attempt any Two questions.

3. Explain in detail the functions of State Bank of Pakistan.

ANSWER: Please see Q. 3 of 2013 Regular

4. Describe various types of exchange control. What are the objectives of exchange control?

ANSWER:

Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.

Common foreign exchange controls include:
• Banning the use of foreign currency within the country
• Banning locals from possessing foreign currency
• Restricting currency exchange to government-approved ex changers.
• Fixed exchange rates
• Restrictions on the amount of currency that may be imported or exported.

Countries with foreign exchange controls are also known as “Article 14 countries,” after the provision in the International Monetary Fund agreement allowing exchange controls for transitional economies. Such controls used to be common in most countries, particularly poorer ones, until the 1990s when free trade and globalization started a trend towards economic liberalization. Today, countries, which still impose exchange controls, are the exception rather than the rule. The following are some of the objectives of exchange control.

To restore Equilibrium:

The chief objective of exchange control is to restore equilibrium in its balance of payments. If a country finds that its balance of trade has been persistently unfavorable then it must do something set it right. The balance of payment must ultimately be made to balance.

To Protest Home Industries:

Another objective of exchange control is to protect the home industry from unfettered competition from abroad if the people at home are more interested in purchasing foreign goods it will ultimately discourage the local producers to produce more. It will directly affect the National Income and the domestic Gross Product of the country. To Conserve Foreign Reserves: To conserve foreign reserve is another major objective of exchange control. Every Country needs foreign exchange in order to maintain its stability monetarily in the present age. In addition, the countries need foreign exchange to make payments for their imports and to pay back their debts obligation. For this, a country must have foreign currencies on heir hand. If there is a deficiency of the foreign exchange, it is going to affect its liquidity position internationally and its credit rating. The following are some of the objectives of exchange control.

To restore Equilibrium:

The chief objective of exchange control is to restore equilibrium in its balance of payments. If a country finds that its balance of trade has been persistently unfavorable then it must. do something set it right. The balance of payment must ultimately be made to balance.

To Protest Home Industries:

Another objective of exchange control is to protect the home industry from unfettered competition from abroad if the people at home are more interested in purchasing foreign goods it will ultimately discourage. the local producers to produce more. It will directly affect the National Income and the domestic Gross Product of the country.

To Conserve Foreign Reserves:

To conserve foreign reserve is another major objective of exchange control. Every ·Country needs foreign exchange in order to maintain its stability monetarily in the present age. Also the countries need foreign exchange to make payments for their imports and to pay back their debts obligation. For this a country must have foreign currencies on their hand. If there is a deficiency of the foreign exchange, it is .going to affect its liquidity position internationally and its credit rating.

5. Define Bill of exchange & explain its kind

ANSWER:

According to Negotiable Instrument Act Section 5 a bill of exchange is defined as follows:

“A bill of exchange is an instrument in writing containing an unconditional order signed by the maker directing a certain person to pay on demand or at a fixed time, a certain sum of money only to, or to the bearer of the instrument”

Types and Classification of Bill of Exchange:

Types of Bill of Exchange on the Basis of Period:

On the basis of period bills are of two types:
1. Demand bills
2. Term bills

Demand Bills of Exchange:

There is no fixed date for the payment of such bill. They become payable at ay time, when they are presented before payee by the holder.

Term Bills of Exchange:
These bills are payable after specified period of time. The period after which these bill become due for payment is called tenor.

Types of Bill of Exchange on the Basis of Object:

On the basis of purpose of writing the bills, the bills can be classified as:

1. Trade Bills
2. Accommodation Bills

Trade Bills:

These bills are drawn and accepted against the sale and purchase of goods on credit. These are drawn by the seller (creditor) and accepted by the buyer (debtor).

Accommodation Bills:
Such bills do not involve any sale and purchase of goods; rather they are drawn without any consideration. The purpose of such bills is to help one party or both the parties financially beings, together with material objects used. Culture consists , of language, ideas, beliefs, customs, codes, institution, tools, technique, works of arts, ceremonies and so on.

PAKISTANI CULTURE IS AN ISLAMIC CULTURE:

Pakistan is an Ideological Islamic State. Its very existence is due to Islam, so the Pakistani culture is primarily based on the Islamic way of life.

ARCHAELOGICAL HERITAGE:
A brief review of the different civilizations which flourished and then perished with the passage of time is as under:

Moen- jo- Daro:

Moen-jo-Daro is situated at a distance of some kilometers from Larkana. A civilization flourished there some 4000 years ago. It was discovered by Sir John Marshall in 1922. Moen jo Daro stands as most spectacular of all the excavate cities of the Indus valley civilization. It is strange that at its glory, it was a beautiful city with brick walled houses, pillared halls, markets, baths, lanes, streets and public places. Every house had walls, drains and bathrooms inside it.

Harappa:

Harappa is situated in the city of Sahiwal. Scientist and archaeologists believe that Harappa also belongs to the Indus valley civilization. Remains of this city were excavated in the 1920.

Hara:

It is comparatively a new civilization, the regions comprising Northern Punjab, Peshawar valley and Eastern Afghanistan was known as hara. For a long time it remained the meeting place of various ancient cultures, as it was rule by many rulers. A distinctive art which is known as hara Art took place from here and flourished during the 2nd and 3rd century of Christian era. Thousand monasteries and stapes were widely built here Buddha’s figures, shapes & monasteries all made prominent features of ****hara Arts.

Buddhist Remains:

The Buddhist era ushered in some 500 years B.C .The Buddhist monastery Takht-i-Bahi is in N.W.F.P .It dates 2-5 century old. Some mounds were also found near Peshawar which represents Kanishka’s- mighty Pakistan. An impressive complex of Chapels, Stupas, quadrangles and monk’s cells are also found. The great Buddhist civilization now forming the heritage of the present Pakistan culture.

Taxila:

It was excavated in recent times near Rawalpindi. Taxila is the most popular name in history. It came into prominence during the Persian occupation. At its zenith, the city was the nucleus of religious and cultural activities.

Thatta: The main town of Thatta is famous for specimens of Indo-Muslim architecture in the Sub Continent. Notable among them is the great mosque built by Shah-Jahan. The principle monuments of Thatta are located on the Makli Hill.

ARCHITECTURAL HERITAGE:

Lahore Fort: It is also known as Shahi Qila .It was built by Akbar. The main structure inside the fort are the Moti Masjid, Diwan-e-Aam, Maktab Khana, the Shish Mahal and Nawlakha.The Hathi and Alamgir gates are also remarkable constructions.

Badshahi Mosque:

It was built by Aurangzeb. Its architecture is similar to the Jamia Masjid Delhi. The mosque has been built with red stones while the domes are in marble.

Jahangir Tomb:

This tomb was built by Shah Jahan. It is known as a fine building of Lahore.

Shalimar Garden:

It is situated on the Grand Trunk Road and is a magnificent remnant of Mughals Grandeur. The garden constitutes of three terraces ,one above the other.

Besides there is an elaborate and beautiful reservoir, water channels and fountains.

Masjid Wazir Khan:

It is situated in Kashmir Baazar inside .the walls of the old city .It was built by Nawab Wazir Khan who was a viceroy of Punjab under Shah Jahan.

Golden Mosque:

It is situated near the Masjid Wazir Khan .It was built during the rule of Mohammad Shah and it is also a very beautiful piece of architecture.

Mahabat Khan Mosque:

This Mosque was built by a Government of Peshawar. Mahabat Khan, during Shah Jahan’s region. It has a fine massive structured with lofty minarets.

The Fort of Bala Hasar:

This fort was built on raised platform 92 feet from the ground level. There are two gardens near the fort.

HERITAGE IN FINE ARTS:
Paintings: The art of painting has developed slowly in the Muslim of South Asia. In the beginning decorative paintings and embroidery were ‘made on the walls and ceilings of buildings. The Mughals rulers were very fond of paihtings. The traditional art of painting occupies a prominent place in the people of Pakistan. Abdul Rehman Chughtai, Haji Mohammad Sharif, Jamil Nagshare are the most distinguished painters.

Calligraphy:

The Muslim took a keen interest in the promotion of calligraphy .Its main reason is their deep love with Holy Quran. During this period many kinds of calligraphy progresses. The mosques constructed during early and medieval periods of Islam were decorated with masterpieces of calligraphy.

Music:

The Mughals contributed a great deal to the promotion of music and Pakistan has inherited musical traditions that go far back in history. Ameer Khusro and Tansain are famous musicians of the historical era.

Architecture and Sculpture:

The Muslim art of architecture was unique in every aspects. The architecture and all the miniature arts including carving, sculpture, mosaic works, tile works and paintings were called upon to build new mosques and places.

CONCLUSION:

In the development of Pakistan society, its cultural heritage has played a vital role. Pakistani nation is justly proud of the historical period which brings with nearly. 4th century B.C and continued with the advent of Islam in Sub Continent in 8th century A.D.

“Our cultural heritage expresses courage, patients and hard life. They all are in connection with life which is a fundamental part of Islamic teachings.”

4. Describe the important political events .that took place between years 1939 and 1948.

ANSWER:Please see Q. 4 of 2012 Regular

5. Describe the aims and objects for the creation of Pak.

ANSWER:Please see Q. 4 of 2013 Private

Posted on January 1, 2016 in 2nd Year 2011 Karachi Board Past Papers

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