Consider the following items in the balance sheet of a commercial bank:
(A) Reserves kept with the RBI
(B) Loans given to the public
(C) Buildings and furniture of the bank
(D) Deposits of the public
(E) Net worth
How many of the items given above are assets of the bank?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Three
Assets are what a bank owns or can claim from others. Liabilities are what it owes to others.
(A) Reserves kept with the RBI — Asset. Reserves are like the deposits we keep with a bank. The bank can draw on them.
(B) Loans given to the public — Asset. A loan is the bank’s claim on the borrower.
(C) Buildings and furniture of the bank — Asset. The bank owns them.
(D) Deposits of the public — Not an asset. The bank owes this money to depositors. Deposits are its main liability.
(E) Net worth — Not an asset. Net worth is the excess of assets over liabilities. It is recorded on the right hand side, with the liabilities, so that both sides balance.
NCERT (2026-27): “3.3 MONEY CREATION BY BANKING SYSTEM … Assets are things a firm owns or what a firm can claim from others. In case of a bank, apart from buildings, furniture, etc., its assets are loans given to public. When the bank gives out loan of Rs 100 to a person, this is the bank’s claim on that person for Rs 100. Another asset that a bank has is reserves. Reserves are deposits which commercial banks keep with the Central bank, Reserve Bank of India (RBI) and its cash. … Liabilities for any firm are its debts or what it owes to others. For a bank, the main liability is the deposits which people keep with it. Liabilities = Deposits The accounting rule states that both sides of the account must balance. Hence if assets are greater than liabilities, they are recorded on the right hand side as Net Worth.” |