Class 9 Banking Mock Test (ICSE)

Topics in Banking

• Functions of commercial banks
• Types of bank accounts
• Cheques and their types
• Loans, overdrafts and cash credit
• Digital banking

Banking practice questions with answers

1. Q1Multiple choice·1 mark
   Which type of cheque bears two parallel transverse lines across its face and cannot be encashed directly across the bank counter?

   1. (a)Bearer cheque
   2. (b)Open cheque
   3. (c)Crossed cheque
   4. (d)Mutilated cheque
   Show answer and step marks

   1. Correct option: (c) Crossed cheque. Recognize that a crossed cheque must be paid through a bank account and cannot be encashed over the counter.+1

   Answer: (c)
2. Q2Multiple choice·1 mark
   Which of the following bank accounts is specifically designed for individuals who wish to deposit a fixed sum of money every month for a pre-determined period to build up their savings?

   1. (a)Savings Bank Account
   2. (b)Current Account
   3. (c)Recurring Deposit Account
   4. (d)Fixed Deposit Account
   Show answer and step marks

   1. Correct option: (c) Recurring Deposit Account, as it involves regular monthly deposits for a fixed period.+1

   Answer: (c)
3. Q3Multiple choice·1 mark
   What is the full form of NEFT, an electronic funds transfer system operating across banks in India?

   1. (a)National Electronic Funds Transfer
   2. (b)National Equity Fund Transfer
   3. (c)Net Electronic Fast Transfer
   4. (d)Nationwide Efficient Funds Transaction
   Show answer and step marks

   1. Correct option: (a) National Electronic Funds Transfer. Recall the standard banking acronym NEFT stands for National Electronic Funds Transfer.+1

   Answer: (a)
4. Q4Multiple choice·1 mark
   Which credit facility allows a current account holder to withdraw money in excess of their available bank balance up to a sanctioned limit?

   1. (a)Discounting of bills
   2. (b)Overdraft facility
   3. (c)Consumer credit
   4. (d)Term loan
   Show answer and step marks

   1. Correct option: (b) Overdraft facility. Identify that temporary excess withdrawal permitted in a current account is known as an overdraft facility.+1

   Answer: (b)
5. Q5Long answer·4 marks
   Mr. Verma has recently set up a wholesale trading firm that involves multiple daily financial transactions. (a) Identify the most suitable type of bank account for Mr. Verma's firm and state any two of its distinguishing features. [2] (b) State any two differences between a Savings Bank Account and a Fixed Deposit Account. [2]
   Show answer and step marks

   1. (a) The most suitable account is a Current Account.+1
   2. (a) First feature, any one of: any number of deposits and withdrawals can be made on a working day; overdraft facility is available; no interest is paid on the balance; a higher minimum balance must be maintained; it is meant for businesses with frequent transactions; payments can be made freely by cheque; or any other valid feature.+0.5
   3. (a) Second feature, a different one from the same list.+0.5
   4. (b) First difference, any one of: withdrawals (savings account: money can be withdrawn at any time; fixed deposit: only at maturity, or earlier with a penalty); period (savings: no fixed period; fixed deposit: a fixed term); deposits (savings: money can be deposited any number of times; fixed deposit: a lump sum deposited once); rate of interest (savings: lower; fixed deposit: higher); cheque facility (savings: available; fixed deposit: not available, a fixed deposit receipt is issued); or any other valid difference.+1
   5. (b) Second difference, a different one from the same list.+1

   Answer: (a) Current Account; any two of: unlimited deposits and withdrawals, overdraft facility, no interest on the balance, higher minimum balance, meant for business transactions. (b) Any two of: savings money can be withdrawn any time while a fixed deposit is locked till maturity; savings has no fixed period while a fixed deposit has a fixed term; savings allows repeated deposits while a fixed deposit is a single lump sum; savings earns a lower interest rate than a fixed deposit; savings has a cheque facility while a fixed deposit does not.
6. Q6Long answer·4 marks
   Mr. Sharma wishes to open a bank account for his newly established retail business which requires frequent deposits and withdrawals throughout the day. His employee, Mr. Rao, wants to deposit a lumpsum amount for a fixed period of $3$ years to earn a higher rate of interest. (a) Identify the type of bank account most suitable for Mr. Sharma's business and state any two of its main features. [2] (b) Differentiate between a Savings Bank Account and a Fixed Deposit Account on the basis of (i) purpose of deposit and (ii) rate of interest. [2]
   Show answer and step marks

   1. (a) Most suitable account for the business: Current Account.+1
   2. (a) First feature, any one of: meant for businessmen and firms with many daily transactions; any number of deposits and withdrawals can be made on any working day; no interest is paid on the balance; overdraft facility is available; cheque book facility is given and payments are usually made by cheque; a higher minimum balance is usually required; or any other valid feature.+0.5
   3. (a) Second feature, a different one from the same list.+0.5
   4. (b)(i) Purpose: a savings account encourages individuals to save and meets day-to-day needs, whereas a fixed deposit invests surplus money for a fixed period to earn a higher return.+1
   5. (b)(ii) Rate of interest: a savings account earns a relatively low rate of interest, whereas a fixed deposit earns a higher rate of interest.+1

   Answer: (a) Current Account; any two of: meant for businesses with frequent transactions, unlimited deposits and withdrawals, no interest paid, overdraft facility, cheque facility. (b)(i) A savings account is for saving and day-to-day needs; a fixed deposit invests surplus money for a fixed period. (ii) A savings account earns a lower rate of interest than a fixed deposit.

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