Consider the following statements 1 Time liabilities of a bank include ndash Demand d...........

Economic Affairs Types of Banks and Banking

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Consider the following statements:

1. Time liabilities of a bank include – Demand drafts, unclaimed deposits

2. Demand liabilities of a bank include – Gold deposits, Cash certificates

Choose the incorrect statements using the code given below:

Only 1

Only 2

Both 1 and 2

Neither 1 nor 2

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Explanation:

Both options are incorrect.

Time liabilities are those liabilities of a bank which are payable otherwise on demand. These include fixed deposits, cash certificates, staff security deposits, time liabilities portion of saving deposits account, margin held against the letter of credit (if not payable on demand), gold deposits, etc.
Demand Liabilities: The demand liabilities include all those liabilities of a bank which are payable on demand. Such as current deposits, cash certificates and cumulative/recurring deposits, outstanding telegraphic transfers, Demand drafts, margins against the letter of credit/guarantees, credit balance in cash credit account, etc., all are paid on demand.