BANKING Past Paper 2nd year 2012 (Regular) Karachi Board

SECTION “A” (MULTIPLE CHOICE QUESTIONS)

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

(i) Exchange bank deals in:
* Negotiable Instruments
* Gold & bullion
* Foreign exchange
* none of these

(ii) The first commercial bank establish in Pakistan was
* Muslim Commercial Bank Limited
* Habib Bank Limited
* National Bank of Pakistan.
* State Bank

(iii) Auto Teller machine can operate by entering the:
* Account number
* National identity card number
* Personal identification number
* National tax number

(iv) Depositors’ money in bank account is called:
* Debit balance
* Credit balance
* Overdrafts balance
* none of these

(v) The highest credit granted to exporters is known as:
* Revocable credit
* Revolving credit
* Clean credit
* Omnibus credit

(vi) This is called Bankers bank:
* World Bank
* Central Bank
* Standard Chartered Bank
* Sindh Bank

(vii) Price stability can be achieved by adopting:
* Open market operation
* Economic reforms
* Credit control
* Regulating trade policy

(viii) Bank can pay this to anyone:
* Bearer Cheque
* Cross cheque
* Order cheque
* Pay order

(ix) The bill is originally accepted by:
* Seller
* Buyer
* Drawer
* Creditor

(x) The endorsement, which specifies the person to whom or to whose order, the instrument is payable, becomes:
* Special endorsements
* Conditional endorsements
* Restrictive endorsements
* Blank endorsements

(xi) Bank funds comprises mainly of money borrowed from:
* Account holders
* Money lenders
* other banks
* Debenture bank

(xii) The letter of credit is usually used in financing:
* Home trade
* Foreign trade
* both of these
* none of these

(xiii) Rediscounting of bills are the functions of:
* Central bank
* Commercial bank
* Scheduled bank
* specialized bank

(xiv) This bank accepts deposits and advance loans:
* Cooperative bank
* Mortgage bank
* Commercial bank
* Central bank

(xv) State bank of Pakistan is a:
* Chartered bank
* Public bank
* Cooperative bank
* Statutory bank

(xvi) Credit transactions is usually made through:
* Contract
* Simple agreement
* Credit instrument
* none of these

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 kinds of Banks according to their functions? Explain anyone.

ANSWER:

At present the banking structure in Pakistan comprises of the following.
1. Central Bank
2. Exchange Bank
3. Cooperative Bank
4. Specialized Bank.
5. Commercial Banks
6. Saving Bank

Agricultural Bank:
AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN

Agricultural Development Finance Corporation was set up in 1951. The main objective of this Corporation was to provide financial facilities to agriculture including forestry, fishery, poultry, dairy farming. Another institution to extend financial help to agricultural sector was established in 1957 as Agricultural Development Bank of Pakistan. The main objective of this bank is to provide long term, medium term & short term credit to the agriculturist for agricultural purposes .

Share Capital:
The Authorized Capital of a bank is Rs. 40 Crores and paid up capital is Rs. 36 Crores. Federal government holds about 95% capital & the provisional governments hold the remaining shares.

Management:
The Board of Directors consists of the following 12 members.
1. The Chairman
2. Two officers of central government, one from Ministry of Finance & the other from Ministry of Food and Agriculture.
3. Four officers of 4 provisional governments.
4. Four non-officials, one nominated by each province.
5. One member represents State Bank of Pakistan.

Functions:
Its main objective is advancing credit facilities to agriculturist and persons engaged in cotton industries in the rural areas. It is a banking company and therefore, it has to be abided by the credit and. monetary policies and directions issued by the State Bank of Pakistan. It also extend credit to companies and co-operative societies, which satisfy the bank that funds will utilized for the purpose of promoting the agriculture.

(ii) What is Endorsements? Describe its kinds

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

(iii) For Businessmen and salaried person, which account is better and why?

ANSWER:

There are several types of bank Account available in banks, Current Account, Saving Account or profit and Loss account, Fixed deposit account or term deposit Account. Different Accounts having different facilities. For businessmen the best option is current account, because they can withdrew cash from bank any amount any time. For salaried person the best option is saving account.

(iv) Define Bill of Exchange and mention the parties to it.

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

(v) Describe the forms of advancing money to its customers by a commercial bank.

ANSWER:

Modern banks- give mostly secured loans for productive purposes. In other words, at the time of advancing loans, they demand proper security or collateral. Generally, the value of security or collateral is equal to the amount of loan. This is done mainly with a view to recover the loan money by selling the security in the event of non-refund of the loan.

At limes, banks give loan on the basis of personal security also. Therefore, such loans are called as unsecured loan. Banks generally give following types of loans and advances:
(i) Cash Credit.
(ii) Demand loans.
(iii) Short-term loan.
(iv) Over-Draft.
(v) Discounting of Bills of Exchange.

(vi) Under what circumstances can a bank account be closed?

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

(vii) State the common Utility Services of commercial bank.

ANSWER:

The following utility services are rendered by a commercial bank:
1. A customer may leave standing instructions with the banker for payment of different sums to different institutions.
2. Bank collects dividend and interest on securities as per standing instructions of the customers.
3. Banks undertake purchase and sale of securities on behalf of customers.
4. It facilitates in transfer of fund from one bank to another.
5. It helps in collection and payment of cheques, bills and promissory notes.
6. It acts as an executor or trustee because it facilitates in the administration of a will.
7. Besides the above functions a number of general utility functions are performed by a commercial bank. These are:
8. It undertakes safe custody of valuable and important documents against theft and fire because banks provide locker facilities.
9: Banks act as a referee in respect of financial standing of the customer.
10. It provides various trade information and statistics.
11. It underwrites for the loan raised by the government.
12. It issues personal and commercial letters of credit.

(viii) Mention the factors which affect the rate of Exchange.

ANSWER:

Rate of exchange may not fluctuate in the long term under Gold Standard or Purchasing Power Parity but during short period, there may be various factors that may lead to fluctuations in the rate of exchange these factors are as under.
1. Trade Conditions
2. Movement of capital.
3. Monetary Policy.
4. Speculation
5. Stock Exchange”influences
6. Foreign Loans
7. Rate of World Bank

(ix) How does the Central bank act the lender of last resort?

ANSWER:

As the supreme bank of the count/y and the bankers bank, the central bank acts as the lender of the last resort. In other .words, in case the commercial banks are not able to meet their financial requirements from other sources, they can, as a last resort, approach the central bank for financial accommodation. The central bank provides financial accommodation to the commercial banks by re discounting their eligible securities and exchange bills.

(x) What is meant by Balance of Payments?

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

SECTION “C” (DETAILED-ANSWER QUESTIONS)

NOTE: Attempt any Two questions.

3. Describe the evolution of Modern Banking System.

ANSWER: Please, see Q.3 of 2014 Private

4. What is Credit control? Explain the various methods of credit control followed by the central bank of a country.

ANSWER: Please see Q. 3(or) of 2013 Regular

5. Give an account of the principles of employing bank funds.

ANSWER: Please see Q. 4 of 2013 Regular

Posted on January 1, 2016 in 2nd Year 2012 Karachi Board Past Papers

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