Question

Which of the following is not an asset held by a commercial bank?

• A. Current account deposit
• B. Bill of exchange
• C. Money lent at short notice
• D. Credit balance with the Reserve Bank

Hint:

Remember: Deposits = Liabilities; Loans and investments = Assets for the bank.

Answer 1

The Correct Option is A

Assets of a commercial bank include anything that generates income for the bank or represents money owned by others that is to be received by the bank.
Examples of such assets are loans given to customers, money lent at short notice, bills of exchange held by the bank, and balances maintained with the Reserve Bank.
These items are expected to bring in income or can be easily converted to cash.
However, current account deposits are liabilities for the bank because they represent money owed by the bank to its customers.
Depositors can withdraw this money anytime, so it’s not an asset but a liability that the bank must repay on demand.
Therefore, the correct answer is option (A) Current account deposit, as it does not belong to the asset side of the balance sheet.