The profitability of public-sector banks is low due to (i) Over-cautions approach to lending (ii) Reserve Bank Policies (iii) High Overhead Costs (iv) Social-sector lending Identify the correct code : Codes :
(i), (iii) and (iv)
An over-cautious approach to lending leaves funds in low-yield investments and limits interest income, so (i) is a reason for low profitability.
High overhead costs, especially large staff and establishment expenses and wide branch networks, reduce the net margin of public-sector banks, so (iii) is a reason.
Social-sector or priority-sector lending at concessional rates and in high-risk areas raises costs and non-performing assets. Public-sector banks carry the heaviest share of this burden through government-sponsored schemes, rural branch networks and directed credit, so (iv) is a reason.
Reserve Bank policies such as CRR and SLR are prudential and monetary rules that apply to all scheduled commercial banks, including private and foreign banks, which earn higher returns under the same rules. They do not explain why public-sector banks in particular are less profitable, so (ii) is left out.
The correct combination is (i), (iii) and (iv).
Hence, (i), (iii) and (iv).
Similar Questions
Match the items of List - I with List - II in terms of functions of a bank :
List - I List - II (Activities) (Functions) (a) Underwriting (i) Primary Functions (b) Transfer of funds (ii) Granting Advances (c) Overdraft (iii) Utility Functions (d) Recurring Deposits (iv) Agency Functions Codes :
(a) (b) (c) (d)
Interest earned by a depositor against a deposit with a commercial bank for custodial service :
Assertion (A) : Taking of deposits and granting of loans single out banks.
Reasoning (R) : Banks act as intermediaries when they mobilize savings from surplus units to shortage units in order to finance productive activities.
Codes :
According to the recent guidelines (2013) of the Reserve Bank of India the Private Sector Banks are required to have a minimum paid up equity capital of
According to the FDI Policy of the Government of India (2012), the FDI in banks is limited to
Match the items of List – I with List – II :
List – I List – II a. RBI Nationalization i. 1964 b. Imperial Bank Nationalization ii. 1949 c. Nationalization of 14 Commercial Banks iii. 1955 d. Establishment of IDBI iv. 1969 Identify the correct combination :
Codes :
a b c d
Select the major principles which banks strive to incorporate in their working from the following :
(a) Profitability
(b) Labour welfare
(c) Social welfare
(d) Safety
(e) HRD
(f) Liquidity
Codes :
Important Questions from Commercial Banks
Which of the following banks is the largest commercial bank in India?
Which one of the following is a primary function of commercial banks?
Which of the following is/are function(s) of a commercial bank?
- Accepting deposits
- Giving loans
- Payments and settlements
Imposition of price _______ below the equilibrium price leads to excess _______.
- Which of the following are liabilities of commercial banks ?
I. Capital and reserves
II. Cash and balances with RBI
III. Investments
IV. Borrowings
Codes :
