Question 2: Describe all the types of bank capital:

- Common Stock: allows shareholders to have voting rights. Shareholders may also receive
dividends, but they are not guaranteed and can vary.
- Preferred Stock: Type of stock with fixed dividends, prioritized over common stock.
- Surplus: Accumulated profits not distributed as dividends.
- Undivided Profits: Earnings not yet paid out as dividends.
- Equity Reserves: Funds set aside from earnings for future needs, contributing to equity.
- Subordinated Debenture: Bond with lower priority in asset claims during liquidation.
- Minority Interest in Consolidated Subsidiaries: Equity share in subsidiaries not owned by the
parent company.
- Equity Commitment Notes: Instruments securing committed equity capital for specific purposes.

Question 3: Describe the major types of endorsements the cheque?

- Blank endorsement: A blank endorsement is the signature of the payee written exactly as his
or her name appears on the front of the check.
- Special endorsement: A special endorsement, or an endorsement in full, is an endorsement
that transfers the right to cash the check to someone else.
- Restrictive endorsement: A restrictive endorsement restricts or limits the use of a check.

Question 4 : List and describe consumer loan products that you know?
- Installment loan: This is a type of loan that allows you to borrow a fixed amount of money and
repay it in regular installments over a period of time, usually months or years.
- Secured loan: This is a type of loan that requires you to put up collateral, such as property, vehicles,
or cash, to borrow money.
- Unsecured loan: This is a type of loan that doesn’t require any type of collateral, such as property
or other assets, to borrow money.
- Open-end loan: This is a type of loan that allows you to borrow money repeatedly up to a certain
pre-approved limit, and that has no fixed end date for full repayment.

The five C's of credit method of evaluating

Character: Work experience, experience in customer's industry and the borrowers reputation and
reputation obtained from previous repayment of loans are all character traits banks will consider.
Capacity: Capacity for the borrower to obtain the loan. Capacity measures a borrower's ability to repay
a loan by comparing income against recurring debts
Capital: Money repaid at the beginning of a loan to decrease risk of repayment, eg deposit on a house.
Lenders also consider any capital the borrower puts toward a potential investment. A large contribution
by the borrower decreases the chance of default.
Collateral: Additional assets that borrower mat have that reduce the risk of repayment of the loan.
Conditions: The state of the economy, trends in customer's industry and pending legislation relative to
customer's business are all economic conditions that are considered by banks, such as changes in
interest rates that may affect the customer's ability to repay the loan.
Question 5: Describe some products of commercial Bank that you know. Name the ways you
interact with a commercial bank nowadays
Some the most common products offered by commerical banks include:
- Checking and savings accounts: these are basic banking products that allow you to deposit
and withdraw money, earn interest on your deposits
- Loans and mortgages: Commercial banks offer various types of loans such as personal loans,
home loans, car loans, and business loans.
- Credit cards: Commercial banks offer credit cards that allow you to make purchases and pay
them off over time.
- Investment services: Commercial banks offer investment services such as mutual funds,
stocks, and bonds.
- Online banking: Commercial banks offer online banking services that allow you to manage
your accounts, pay bills, transfer money, and more from your computer or mobile device.
- Mobile banking: Commercial banks offer mobile banking apps that allow you to manage
your accounts, deposit checks, and transfer money from your smartphone or tablet.
- ATMs: Commercial banks have ATMs that allow you to withdraw cash, deposit checks, and
check your account balance.
- Customer service : Commercial banks offer customer service through phone, email, or chat.
Some of the most common ways include:
- Online banking: You can use your computer or mobile device to access your accounts, pay
bills, transfer money, and more.
- Mobile banking : You can use your smartphone or tablet to manage your accounts, deposit
checks, and transfer money.
- ATMs: You can use ATMs to withdraw cash, deposit checks, and check your account balance.

Question 10: What is Discount duration of negotiable instruments or other valuable papers

The time limit for discount of negotiable instruments and other valuable papers is duration calculated
as from the next day after credit institutions or foreign banks’ branches receive discount of negotiable
instruments or other valuable papers till day when the customers must implement obligations of
commitment on re-purchase or the due day for payment of all amounts written on negotiable
instruments, or other valuable papers, including the off days and holidays.
Question 7: What are Types of negotiable instruments and other valuable papers permitted
for discount?
1. Negotiable instruments: Bills of exchange, Promissory notes, Checks, Other negotiable,
instruments permitted for discount in accountancy with law
2. Other valuable paper including:
a. The State Bank’s bills
b. The Government bonds
c. Government T-Guaranteed bonds
d. Local administration bonds
e. Term bills, bills, deposit certificates issued by other institution and discounted under current
regulations

Question 8: What is Factoring the purchasing party?

Factoring the purchasing party is that the factoring until has rights to resource payables of customers
being purchasing party through advancing an amount of money to the selling party and customer shall
refund the advance amounts, interests and fees as agreed.

Question 9: What is difference between payment guarantee and performance

guarantee?
payment guarantee: performance guarantee:
+ ensures the debtor will pay the creditor + ensures the contactor or supllier completes
+ focuses on financial obiligations their obligations
+ Incase the buyer fails to pay + cover non- financial obligations
+ protects the seller/ creditor + incase the supplier fails to meet agreed
performance
+ proctecta the client/ emloyer

Commercial bank and central bank:

- Central bank does not work for profits thought it might secure profits. While commercial
bank aim at securing maximum profit for their shareholders, The central bank aims at
controlling the banking system and supporting the economic policy of the government.

- Central bank is generally an organization of the government and forms part of the government.
Commercial bank may be owned by the government or are privately owned.

- The Organization and Management of the central bank is fully controlled by the government.
Question 6: List and describe international payment methods
Cash deposit Open Account Collection of Documentary
Advance payment Credit
• Buyer needs to • Goods and Services • Seller entrusts the • Most commonly used
deposit at Seller’s bank are delivered before collection of a payment method
before delivery of Payment is made to the remitting bank • L/C is a guaranteed,
Goods & Services (Seller’s), which sends given by the buyer’s
• There is no interfere
documents to the a
• Buyer bears Costs of third party bank, that will pay for
collecting bank
and Risks • Seller bears Costs and the goods exported,
(Buyer’s)
Risks on behalf of buyer
• Time of payment is
• More Transparency given in the contract. • Risk is bear by
Buyer’s bank

Question 9 : What is the difference between Factoring and Discounting?

Bill discounting Factoring
• Bill is separately examined and discounted. • Pre-payment made against all unpaid and
• Financial Institution does not have not due invoices purchased by Factor.
responsibility for Sales Ledger Administration • Factor has responsibility of Sales Ledger
and collection of Debts. Administration and collection of Debts.
• No notice of assignment provided to customers • Notice of assignment is provided to
of the Client. customers of the Client
• Bills discounting is usually done with • Factoring can be done without or without
recourse. recourse to client. In India, it is done with
• Financial Institution can get the bills re- recourse.
discounted before they mature for payment. • Factor cannot re-discount the receivable
purchased under advanced factoring
arrangement.

Question 1: What is the difference between Non-term deposit and Term Deposit?

Demand Deposits Time Deposits

• For safety & convenience in payment • For safety & profitability purpose
transactions purpose • Withdrawal at maturity
• Customers can deposit or withdraw on • Pay higher interest
demand • Interest is not always added to the principal
• Pay lower or no interest
• Add the interest to the principal
• Banks usually charge fee on relevant
services