Mathematics 2015-2016

Class-X

CHAPTER WITH EXPLAINATION

BANKING
Bank - A financial institution where money is deposited by the public for future use. Bank also
accepts money from public.
The types of deposites are :
i. Saving Bank account
ii. Current Bank Account
iii. Fixed deposits
iv. Recurring deposits
We shall deal with saving bank account and recurring deposits.
Saving Bank Account
This account is opened in a bank with minimum amount of Rs.500 or Rs.1000 (for cheque
facility).
Calculation of interest in a saving bank account:-
i. Minimum balance between 10th and last day of each month is written.
ii. Minimum balance is converted as a multiple of Rs.10. For example balance between
Rs.510 to 515 is rounded to Rs.510 and Rs.15.01 to Rs.520 to Rs.320
iii. All the minimum balance is added.
iv. The simple interest for one month is calculated on the given rate of interest.
v. No interest is paid for the month if minimum balance is Rs.5 or less.
vi. The interest of B less than rupee 1 (one) is neglected.
vii. No interest is paid for the month in which account is closed.

Example - 1. Mr. Ashok has account in the Central Bank of India. The following entries
are from his pass book:-

Withdrawal Rs.
Date Particular Deposite Rs. P Balance Rs. P
P
01 - 01 - 05 B/F     1200.00
07 - 01 - 05 By cash   500.00 1700.00
17 - 01 - 05 To cheque 400.00   1300.00
10 - 02 - 05 By cash   800.00 2100.00
25 - 02 - 05 To cheque 500.00   1600.00
20 - 09 - 05 By cash   700.00 2300.00
21 – 11 - 05 To cheque 600.00   1700.00
05 - 12 - 05 By cash   300.00 2000.00

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Sudheer Gupta . Page 1
 Mathematics 2015-2016
Class-X

viii. If Mr. Ashok gets Rs.83.75 as interest at the end of the year where the interest is
compounded annually, calculate the rate of interest paid by the bank in his saving bank
account on 31st December, 2005.
ix. Solution :

Balance During Minimum Qualifying

Month Balance on 10th
the month Balance Balance
Jan 1700, 1300 1700 1300 1300
Feb 2100, 1600 2100 1600 1600
March 1600 1600 1600 1600
April 1600 1600 1600 1600
May 1600 1600 1600 1600
June 1600 1600 1600 1600
July 1600 1600 1600 1600
August 1600 1600 1600 1600
September 1600, 2300 1600 1600 1600
Oct 2300 2300 2300 2300
Nov 2300, 1700 1700 1700 1700
Dec 2000 2000 2000 2000
      Total 20100

x. Let rate of interest be r

xi. P = 20100, T = 1 month = 1/12 years
xii. I = 83.75

xiii.
xiv.
xv.

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Sudheer Gupta . Page 2
 Mathematics 2015-2016
Class-X

xvi. Example – 2. Given below the entries in a saving bank account pass book

Date Particular Withdrawal Deposite Balance

Feb 8 B/F     Rs. 8,500.00
Feb 18 To self Rs. 4,000.00    
April 12 By cash   Rs. 2,238,00  
June 15 To self Rs. 5,000,00    
July 8 By cash   Rs. 6,000.00  

xvii. Calculate the interest for the six months February to July, at p.a. on minimum
balance on or after the 10th day of each month.
xviii. Solution :

Balance During Minimum Qualifying

Month Balance on 10th
the month Balance Balance
Feb 8500, 4500 8500 4500 4500
March 4500 4500 4500 4500
April 4500, 6738 4500 4500 4500
May 6738 6738 6738 6740
June 6738, 1738 6738 1738 1740
July 7738 7738 7738 7740
      Total 29729

xix.

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 Mathematics 2015-2016
Class-X

RECURRING DEPOSITS
To save a certain sum of money an individual is allowed to open an account of recurring
deposited in any bank. The amount is deposited monthly in a multiple of 10 for a period of 3
months to 10 years. The depositer has to deposit the monthly instalment on or before due date to
get maximum benefit of the interest.
At the expiry of the period i.e. the maturity period, the depositer is paid the total amount
deposited by him and the interest. These two types of amount is called maturity value. The rate
of interest is fixed by Reserve bank and is revised from time to time.
Example - 1. Mohan deposits Rs.80 per mouth in a cumulative deposite account for six years.
Find the amount payable to him on maturity, if the rate of interest is 6% per annum.
Solution : The bank keeps first instalment for 72 months
The bank keeps 2nd instalment for 71months
The bank keeps 3rd instalment for 70 months
--------------------------------------
--------------------------------------

Total amount deposited in 6 years = 6 X 12 X Rs. 80

= Rs. 5760
Total amount received after maturity = Rs. 5760 + Rs. 1051.20
= Rs. 6811.20

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 Mathematics 2015-2016
Class-X

Example - 2. Mr. Kumar deposits Rs.600 per month in a recurring deposite account for 12
months. Find the amount he will receive at the lime of maturity at the rate of 6% per annum.
Solution : In this account the amount Rs.600 deposited in 1st month will remain in the bank for
12 month and it will earn interest for 12 months. The amount Rs.600 deposited in the 2nd month
will earn interest for 11 months and so on.
Hence
Rs.600 for 12 months = Rs.7200 for 1 month
Rs.600 for 11 months = Rs.6600 for 1 month
Rs.600 for 10 months = Rs.6000 for 1 month
Rs.600 for 9 months = Rs.5400 for 1 month
Rs.600 for 8 months = Rs.4800 for 1 month
Rs.600 for 7 months = Rs.4200 for 1 month
Rs.600 for 6 months = Rs.3600 for 1 month
Rs.600 for 5 months = Rs.3000 for 1 month
Rs.600 for 4 months = Rs.2400 for 1 month
Rs.600 for 3 months = Rs.1800 for 1 month
Rs.600 for 2 months = Rs.1200 for 1 month
Rs.600 for 1 months = Rs.600 for 1 month

Total principal for = 7200 + 6600 + 6000 + 5400 + 4800 + 4200 + 3600 + 3000 + 2400 + 1800
1 month + 1200 + 600
= (7200 + 600) + (6600 + 1200) + (6000 + 1800) + (5400 + 2400) + (4800 +
 
3000) + (4200 + 3600)
  = 6 X 7800
  = Rs.46800

Interest of Rs.46800 for 1 month at 6% p.a.

= Rs.46800 X 1/12 X 6/100

= Rs.234
Total amount on maturity
= Rs. (600 X 12) + Rs.234
= Rs.7200 + Rs.234
= Rs.7434

Example – 3. Jaya wants to receive Rs.41490 at the end of 5 years by depositing a certain sum
of money on a monthly basis in a bank paying 6% simple interest p.a. what is the monthly
instalment?
Solution : Let the monthly instalment be P
Here, t = 5 years = 60 months r = 6%
Total deposited money in the bank = 60 P

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 Mathematics 2015-2016
Class-X

The amount due = 60 P + 9.15 P = 69.15 P

69.15 P = 41490
P = (41490) / (69.15)
= 600

Example - 4. Mr. Kalara invests Rs.500 every month for 24 months in a bank and collects
Rs.12750 at the end of the term. Find the rate of simple interest paid by the bank on this
recurring deposit.
Solution : Let rate of interest be r %
P = Rs.500, n = 24 months

Amount deposited with the bank = Rs.500 X 24

= Rs.12000

12000 + 125 r = 12750

Or, 125 r = 750
r = 750/125
=6

Example - 5. Which is the better investment Rs. 20000 in a saving deposit with a bank for 3
years the interest being compounded half – yearly at the rate of 6% or Rs. 600 per month in a
recurring deposit with a bank paying simple interest at 6% p.a. for 3 years?
Solution : For saving deposit, p = 20,000
t = 3 years, n = 6 half years
r = 6% p.a. = 3% per half year

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 Mathematics 2015-2016
Class-X

log A = log 20000 + 6 log (1.03)

= 4.3010 + 6 (0.0128)
= 4.3010 + 0.0768
= 4.3778
A = antilog (4.3778)
= 23870
Maturity value = Rs. 23,870
For recurring deposit,
P = 600, t = 3 years, n = 36 months

r = 6%
Amount deposited in the bank = 36 X 600
= 21,600

Maturity value = 21600 + 1998

= Rs.23598
The former is better.

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Sudheer Gupta . Page 7