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Functions of a Bank

Introduction

functions of a bank को समझना Banking Awareness के सबसे basic लेकिन highly scoring topics में से एक है। SBI और IBPS exams में primary and secondary functions of banks पर direct questions अक्सर पूछे जाते हैं।

ये questions आमतौर पर straightforward होते हैं और quick marks दिलाने में मदद करते हैं।

Pattern: Functions of a Bank

Pattern

मुख्य idea यह है कि bank की activities को primary functions (core banking work) और secondary functions (supporting services) में classify किया जाए।

Step-by-Step Example

Question

निम्नलिखित में से कौन-सा एक commercial bank का primary function माना जाता है?

Options:

  • A. Issuing debit cards
  • B. Accepting deposits
  • C. Acting as trustee
  • D. Providing locker facilities

Solution

  1. Step 1: Core banking activities identify करें

    Primary functions वे activities होती हैं जिनके बिना bank operate नहीं कर सकता।

  2. Step 2: Core और supporting services को अलग करें

    Accepting deposits और lending loans, banking की foundation बनाते हैं।

  3. Step 3: Correct option से match करें

    Accepting deposits bank का primary function है।

  4. Final Answer:

    Accepting deposits → Option B

  5. Quick Check:

    Deposits के बिना bank lending नहीं कर सकता और effectively operate नहीं कर सकता ✅

Quick Variations

• Primary functions → Accepting deposits, Lending loans, Credit creation.

• Secondary functions → Agency services और Utility services.

• Agency functions → Cheques और dividends का collection, agent के रूप में कार्य करना।

• Utility functions → Locker facility, ATM services, remittance services.

Trick to Always Use

  • Step 1: खुद से पूछें: “क्या bank इस function के बिना exist कर सकता है?”
  • Step 2: अगर NO → यह primary function है।
  • Step 3: अगर YES → यह secondary function है।

Summary

Summary

  • Primary functions bank की core activities होती हैं।
  • Accepting deposits और lending loans essential banking functions हैं।
  • Credit creation, primary functions का एक key outcome है।
  • Agency और utility services को secondary functions माना जाता है।

याद रखने का example:
“Deposit + Loan = Bank’s primary role.”

Practice

(1/5)
1. Which of the following activities directly helps a bank in earning interest income?
easy
A. Granting loans and advances
B. Issuing ATM cards
C. Providing locker facility
D. Collecting dividends on behalf of customers

Solution

  1. Step 1: Identify income-generating activity

    Interest income is earned when banks lend money.

  2. Step 2: Match with core function

    Granting loans and advances allows banks to charge interest.

  3. Final Answer:

    Granting loans and advances → Option A

  4. Quick Check:

    Loans earn interest; services earn fees only ✅
Hint: Interest income always comes from lending.
Common Mistakes: Confusing fee-based services with interest-earning activities.
2. Which of the following is classified as an agency function of a bank?
easy
A. Providing ATM services
B. Collection of cheques on behalf of customers
C. Accepting fixed deposits
D. Granting cash credit

Solution

  1. Step 1: Identify agency role

    Agency functions involve acting on behalf of customers.

  2. Step 2: Match the activity

    Collecting cheques is done by the bank as an agent.

  3. Final Answer:

    Collection of cheques on behalf of customers → Option B

  4. Quick Check:

    Acting on behalf = agency function ✅
Hint: If bank acts for customer → agency function.
Common Mistakes: Treating ATM or deposit activities as agency functions.
3. Which of the following functions results in the creation of additional money in the economy?
easy
A. Providing locker facility
B. Issuing demand drafts
C. Credit creation
D. Acting as custodian of valuables

Solution

  1. Step 1: Identify money expansion

    The question refers to increasing money supply.

  2. Step 2: Recall banking concept

    Credit creation allows banks to create deposits through lending.

  3. Final Answer:

    Credit creation → Option C

  4. Quick Check:

    Loans lead to new deposits in the system ✅
Hint: Money expansion = credit creation.
Common Mistakes: Assuming only central bank creates money.
4. Which of the following is NOT a primary function of a commercial bank?
medium
A. Lending loans
B. Credit creation
C. Accepting deposits
D. Providing locker facility

Solution

  1. Step 1: Recall primary functions

    Primary functions include deposits, lending, and credit creation.

  2. Step 2: Identify supporting service

    Locker facility is a utility service.

  3. Final Answer:

    Providing locker facility → Option D

  4. Quick Check:

    Utility services are secondary, not primary ✅
Hint: If bank can exist without it → not primary.
Common Mistakes: Including customer services as core functions.
5. Which group correctly represents the primary functions of a bank?
medium
A. Accepting deposits, lending loans, credit creation
B. Locker facility, ATM service, remittance
C. Cheque collection, dividend payment, agency work
D. ATM services, credit cards, mobile banking

Solution

  1. Step 1: Recall core banking roles

    Primary functions are essential for banking operations.

  2. Step 2: Match with correct group

    Deposits, loans, and credit creation form the core.

  3. Final Answer:

    Accepting deposits, lending loans, credit creation → Option A

  4. Quick Check:

    These three define basic banking activity ✅
Hint: Deposit → Loan → Credit creation = primary.
Common Mistakes: Selecting customer service-oriented activities.

Mock Test

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