Economy : Banking System

Q 9 / 30

UPSC CSE Prelims 2019

Which of the following is not included in the assets of a commercial bank in India?

EXPLANATION

Correct Option

Deposits represent funds placed by customers with the bank. From the bank's perspective, these are obligations that must be repaid on demand or after a specified period. Therefore, deposits constitute a liability for a commercial bank, not an asset.

Incorrect Options

  • Advances: These are loans and credit facilities extended by the bank to its customers. They generate interest income for the bank and are thus classified as assets.
  • Investments: Banks invest in various instruments such as government securities, bonds, and shares. These investments yield returns and are held by the bank, making them assets.
  • Money at call and short notice: This refers to short-term loans given by a bank to other banks or financial institutions, repayable on demand or with very short notice. These are assets as they represent funds due to the lending bank.
SOURCEIndian Economy by Ramesh Singh, Chapter 10: Banking and Financial Markets