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🇵🇰 I.Com (Intermediate in Commerce) · flashcards
I.Com (Intermediate in Commerce) Banking Flashcards
53 question-and-answer cards covering Banking as it is examined in I.Com (Intermediate in Commerce). 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Banking deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
State the formula for the credit (deposit) multiplier.
Credit multiplier = 1 / r, where r is the required cash reserve ratio (expressed as a fraction).
If the cash reserve ratio is 20%, what is the value of the credit multiplier?
Credit multiplier = 1 / 0.20 = 5.
With a 20% reserve ratio and an initial deposit of Rs. 1,000, what total deposits can the banking system create?
Total deposits = Initial deposit × (1/r) = 1,000 × 5 = Rs. 5,000.
Name two factors that limit the credit-creating power of commercial banks.
The cash reserve ratio, the amount of cash/leakage held by the public outside banks, the availability of creditworthy borrowers, and the central bank's monetary policy.
What is a bank deposit?
A bank deposit is a sum of money placed by a customer with a bank for safekeeping, which the bank is obliged to repay on demand or after an agreed period, and on which it may pay interest/profit.
Name the three main types of bank deposit accounts.
Current account (demand deposit), savings account, and fixed/term deposit account.
What are the key features of a current account?
A current account is a demand deposit allowing unlimited withdrawals and deposits without notice, mainly used by businesses; it normally pays no interest and may offer overdraft facilities.
What are the key features of a savings account?
A savings account is meant to encourage small savings, pays interest/profit, allows deposits and limited withdrawals, and is suited to individuals and small savers.
What are the key features of a fixed (term) deposit account?
A fixed deposit places a lump sum for a fixed period (e.g. 3 months to several years) at a higher rate of interest/profit, with the money not withdrawable before maturity without penalty.
Which type of deposit account generally earns the highest rate of interest, and why?
The fixed/term deposit account, because the money is locked in for a definite period, giving the bank stable funds to lend, so it rewards the depositor with a higher rate.
List three main functions of a central bank.
Issuing currency notes, acting as banker to the government, acting as banker's bank and lender of last resort, controlling credit, and managing foreign exchange reserves.
Why is the central bank called the "lender of last resort"?
Because when commercial banks cannot obtain funds elsewhere during a financial emergency, the central bank lends to them (against eligible securities) to maintain confidence and stability in the banking system.
What is meant by the central bank being the "bank of issue"?
It holds the sole/monopoly right to issue currency notes in the country, ensuring uniformity, control over money supply, and public confidence in the currency.
How does the central bank act as "banker to the government"?
It keeps the government's accounts, receives and makes payments on its behalf, manages public debt, advises on financial matters, and provides short-term loans to the government.
Define monetary policy.
Monetary policy is the central bank's program of controlling the supply of money, the level of credit, and interest rates in order to achieve objectives such as price stability, economic growth, and full employment.
State two main objectives of monetary policy.
Price stability (controlling inflation), economic growth, full employment, exchange-rate stability, and equilibrium in the balance of payments.
Distinguish between expansionary and contractionary (tight) monetary policy.
Expansionary (easy/cheap money) policy increases the money supply and lowers interest rates to stimulate the economy; contractionary (tight/dear money) policy reduces the money supply and raises interest rates to curb inflation.
Name the two broad categories of credit control methods used by a central bank.
Quantitative (general) methods and qualitative (selective) methods.
List the main quantitative methods of credit control.
Bank rate (discount rate) policy, open market operations, variation of the cash reserve ratio, and the statutory liquidity ratio.
What is the "bank rate" and how is it used to control credit?
The bank rate is the rate at which the central bank rediscounts bills or lends to commercial banks; raising it makes borrowing costly and contracts credit, while lowering it cheapens borrowing and expands credit.
What are "open market operations"?
Open market operations are the buying and selling of government securities by the central bank in the open market; selling securities absorbs cash and contracts credit, while buying them injects cash and expands credit.
How does varying the cash reserve ratio (CRR) control credit?
Raising the CRR forces banks to keep more cash in reserve, reducing funds available for lending and contracting credit; lowering it frees funds and expands credit.
List three qualitative (selective) methods of credit control.
Fixing margin requirements, credit rationing, regulation of consumer credit, moral suasion, and direct action/directives.
What is "moral suasion" as a method of credit control?
Moral suasion is the central bank's use of persuasion, advice, and requests (rather than compulsion) to encourage commercial banks to follow its credit policy.
What this deck covers
The Banking deck follows the I.Com (Intermediate in Commerce) Banking syllabus — 8 chapters and 22 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 6.6 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 155 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Banking flashcards FAQ
How many Banking flashcards are in this I.Com (Intermediate in Commerce) deck?
53 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these I.Com (Intermediate in Commerce) flashcards free?
Yes. The preview here is free to read with no signup, and the full 53-card deck is free inside the Examius app.
What do the Banking cards cover?
They follow the I.Com (Intermediate in Commerce) Banking syllabus — 8 chapters and 22 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.