BANKING (SUBJECT CODE: 811) Sample Question Paper (part 2) for Class XII (Session 2024-2025) 

Q. 12  Now-a-days single window system is adopted and cheque-drop boxes are maintained in bank branches. Explain these and discuss their significance. 2 

A. 12  It is due to Online Banking that the physical movement of customers is reduced to bank branchand also time is precious where no customer is kept waiting for depositing their cheques (account payee)  that’s why drop box concept is introduced. 

Q. 13  Distinguish between Debit card and Credit card.. 2 

A.13 In Debit card a person is spending his own money but in credit card it is borrowed funds. In debit card you need to be a accountholder of bank but it is not a necessity in credit card. 

Q. 14  List the functions of Front office of bank. 2 

A.14 Front office is responsible to take care of the customer needs and also to get new customers for the Bank. Their main activity is to sign up new customers for the Bank. 

Q. 15  Write a short note on reverse repo-rate?   2 

A.15 Reverse Repo Rate is defined as the rate at which the Reserve Bank of India (RBI) borrows money from banks for the short term. It is an important monetary policy tool employed by the RBI to maintain liquidity and check inflation in the economy. The Reverse Repo Rate helps the RBI get money from the banks when it needs. 

Q. 16  State two points of difference between BR and MIBOR. 2

A.16 BR stands for bank’s base rate whereas MIBOR stands for Mumbai Inter Bank Offered Rate. BR does not change daily but changes as and when economic situations warrant. MIBOR is decided on a daily basis based on the demand for and supply of funds among banks. 

Answer any 2 out of the given 3 questions in 30– 50 words each (3 x 2 = 6 marks) 

Q. 17  List any three Branch Manager’s duties as a Retail banker?  3 

A.17 1.He represents the bank as far as the customers are concerned and so he is entirely responsible for the smooth conduct of the branch. 
 2.The BM should take responsibility to ensure that the ambience in the branch premises is very pleasant for the customer to visit and conduct business. 
 3.He should conduct periodical meetings of all staff members to discuss the bank’s performance, the branch’s performance. 

Q. 18  What is the purpose of ATM? State any two uses of ATM. 3 

A.18 ATM is a computerized machine that provides the customers of banks the facility of accessing their account for dispensing cash and to carry out other financial & non financial transactions without the need to actually visit their bank branch. Uses of ATM:

 1. 24-hour access to cash

 2. View Account Balances & Mini-statements

 3. Change your PIN  

Q. 19  Distinguish between Simple Interest and compound Interest on any three points. 3 

A.19 1. Calculation Method

• Simple Interest: Simple Interest is calculated on the principal amount (initial amount of money) only. The formula is $SI=\frac{P\times R\times T}{100}SI\; =\; \backslash frac\{P\; \backslash times\; R\; \backslash times\; T\}\{100\}$, where P is the principal, R is the rate of interest per annum, and T is the time in years.

• Compound Interest: Compound Interest is calculated on the principal amount as well as the interest accumulated over previous periods. The formula is $CI=P{(1+\frac{R}{100})}^T-PCI\; =\; P\; \backslash left(1\; +\; \backslash frac\{R\}\{100\}\backslash right)^T\; -\; P$, where P is the principal, R is the annual interest rate, and T is the time in years.

2. Growth Over Time

• Simple Interest: The interest earned remains constant every year because it is calculated only on the initial principal. For example, if you invest ₹1000 at an interest rate of 5% per year, you will earn ₹50 every year.

• Compound Interest: The interest earned increases every year because it is calculated on the new principal, which includes previously earned interest. For example, if you invest ₹1000 at an interest rate of 5% per year, you will earn more than ₹50 in the second year because the interest is calculated on ₹1050 (the new principal).

3. Total Interest Earned

• Simple Interest: The total interest earned over time is generally lower than that earned with compound interest. This is because the interest is not accumulated and added to the principal.

• Compound Interest: The total interest earned over time is higher because the interest itself earns interest in successive periods, leading to a compounding effect.

Answer any 3 out of the given 5 questions in 50– 80 words each (4 x 3 = 12 marks) 

Q. 20  What are the advantages of keeping shares in demat account? (4)

A.20 Advantages of Demat Account 

  No Stamp duty on transfer of securities. 

  Immediate and fast transfer of securities. 

  Elimination of 'Bad Deliveries'. 

  Elimination of risk by loss, theft, mutilation etc. 

  Faster settlement and disbursement of Corporate benefits like Bonus, Rights, Dividends etc.

Q. 21  Explain the variety of services offered by the bank branches? (4)

1.Accept deposits of different types and maturities from the public, offering them interest on such deposits 

 2. Give different types of loans for different amounts and maturities to the public, depending upon their needs and creditworthiness;

 3. Cash deposit / withdrawals by customers from their deposit accounts are allowed; 

 4. Exchange unusable currency notes with fresh/usable currency notes with the customers on behalf of the RBI; 

Q. 22  M deposited ₹.1,00,000 in Punjab National bank @ 5% p.a. interest compounded annually for 3 years and N gave ₹. 1,00,000 to his friend @ 5% p.a. simple interest for 3 years.  

(1)    How much amount will be received by M?                                     (1) 

(2) How much amount will be received by N?                                          (1) 

(3) Who will get more money at the end of three years? Give reason.   (2) 

A.22

(1) Amount received by M:

• Principal (P) = ₹1,00,000

• Rate of Interest (R) = 5% per annum

• Time (T) = 3 years

For Compound Interest, the formula is:

$$A=P{(1+\frac{R}{100})}^{T}A\; =\; P\; \backslash left(1\; +\; \backslash frac\{R\}\{100\}\backslash right)^T$$

Substituting the values:

$$A=1,00,000{(1+\frac{5}{100})}^{3}A\; =\; 1,00,000\; \backslash left(1\; +\; \backslash frac\{5\}\{100\}\backslash right)^3$$

$$A=1,00,000{\left(1.05\right)}^{3}A\; =\; 1,00,000\; \backslash left(1.05\backslash right)^3$$

$$A=1,00,000\times 1.157625A\; =\; 1,00,000\; \backslash times\; 1.157625$$

$$A=1,15,762.50A\; =\; 1,15,762.50$$

So, M will receive ₹1,15,762.50.

(2) Amount received by N:

• Principal (P) = ₹1,00,000

• Rate of Interest (R) = 5% per annum

• Time (T) = 3 years

For Simple Interest, the formula is:

$$SI=\frac{P\times R\times T}{100}SI\; =\; \backslash frac\{P\; \backslash times\; R\; \backslash times\; T\}\{100\}$$

Substituting the values:

$$SI=\frac{1,00,000\times 5\times 3}{100}SI\; =\; \backslash frac\{1,00,000\; \backslash times\; 5\; \backslash times\; 3\}\{100\}$$

$$SI=15,000SI\; =\; 15,000$$

Total amount received = Principal + Simple Interest

$$Total=1,00,000+15,000Total\; =\; 1,00,000\; +\; 15,000$$

$$Total=1,15,000Total\; =\; 1,15,000$$

So, N will receive ₹1,15,000.

(3) Comparison:

M will receive ₹1,15,762.50, and N will receive ₹1,15,000.

M will get more money at the end of three years because Compound Interest takes into account the interest on accumulated interest, leading to a higher amount compared to Simple Interest, which is calculated only on the principal amount.

Q. 23  P & Q are students and are preparing a project on impact of price rise on common people of country. Not happy with the situation of price rise they asked their teacher about the ways in which increase in prices is controlled by authorities. In relation to above contest explain the monetary policy of RBI and explain any two of its tools. (4)

A.23 Monetary policy is a critical tool used by the Reserve Bank of India (RBI) to control inflation, manage the money supply, and ensure economic stability in the country. Here’s an overview and explanation of two of its key tools:

Monetary Policy of RBI

The primary aim of the RBI’s monetary policy is to maintain price stability while keeping in mind the objective of growth. This involves managing inflation, interest rates, and the overall money supply in the economy. By adjusting these factors, the RBI aims to control the cost of borrowing and lending, which in turn influences consumer spending and investment.

Key Tools of Monetary Policy

1. Repo Rate (Repurchase Rate)

• Definition: The repo rate is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds. It is used to control inflation and stimulate economic growth.

• Function: When the RBI increases the repo rate, borrowing from the central bank becomes more expensive for commercial banks. This leads to an increase in the interest rates charged by banks on loans, making borrowing more expensive for individuals and businesses. As a result, spending and investment decrease, which helps in controlling inflation. Conversely, lowering the repo rate makes borrowing cheaper, encouraging spending and investment, thus stimulating economic growth.

2. Cash Reserve Ratio (CRR)

• Definition: The CRR is the percentage of a bank's total deposits that must be maintained with the RBI in the form of reserves. It is a tool used to control liquidity and the money supply in the economy.

• Function: By increasing the CRR, the RBI reduces the amount of funds available for banks to lend out, thereby decreasing the money supply in the economy. This can help in reducing inflation. On the other hand, lowering the CRR increases the funds available with banks for lending, thereby increasing the money supply and stimulating economic activity.

These tools are crucial for the RBI to ensure that the economy remains stable, with controlled inflation and sustainable growth. By adjusting the repo rate and CRR, the RBI can influence the cost and availability of credit, which directly affects consumer spending and investment. This, in turn, helps in managing inflation and ensuring economic stability.

Q. 24  Briefly explain any four liabilities of bank indicated in its balance sheet? (4)

A.24 Sure! Here are four common liabilities of a bank that are typically indicated in its balance sheet:

1. Deposits

• Description: Deposits are the largest liability for most banks. These include savings accounts, fixed deposits, current accounts, and other deposit accounts where customers park their money. Banks pay interest on these deposits and use them to provide loans and make investments.

• Example: Savings Deposits, Fixed Deposits

2. Borrowings

• Description: Borrowings refer to funds that a bank borrows from other financial institutions, the central bank (like the RBI), or through issuing debt instruments like bonds. This is a liability because the bank has to repay these funds with interest.

• Example: Interbank Loans, Bonds Issued

3. Other Liabilities and Provisions

• Description: This category includes various other liabilities that a bank owes, such as accrued expenses, deferred tax liabilities, and provisions for loan losses. Provisions are set aside to cover potential loan defaults and other uncertain losses.

• Example: Provisions for Bad Debts, Accrued Expenses

4. Capital and Reserves

• Description: While capital and reserves are technically the equity of the bank, they also appear on the liability side of the balance sheet. This includes the initial capital invested by shareholders and the retained earnings (profits that have been reinvested in the bank). This is because the bank owes this amount to its shareholders.

• Example: Share Capital, Retained Earnings

Important links: - Employability skills class12

Employability Skills Sample paper 1 (SESSION 2024-2025) CLASS XII 

Important link: - Banking class 12 

BANKING (SUBJECT CODE: 811) Sample Question Paper (part 1) for Class XII (Session 2024-2025) 

BANKING (SUBJECT CODE: 811) Sample Question Paper (part 2) for Class XII (Session 2024-2025)