Understanding Banking - Indian Financial System

August 28, 2016

  Indian Financial System

Sl No
The structure that is available in an economy to mobilize the capital from various surplus sectors of the economy and allocate and distribute the same to the various needy sectors is known as  ----------
Financial system.
The transformation of savings into investment and consumption is facilitated by the active role played by the financial system. True or false.   
Ans True
Banks, Financial Institution mutual funds etc are examples of Financial Intermediaries. True or False. 
Ans: True.
Financial market include Money Market, Debt Market, Forex Market and  ---- 
Ans Capital Market
Treasury bills are money market instrument True or false.  .
Ans : true
Certificate of Deposit is a money market instrument True or false.
Ans True.
Commercial paper is a money market instrument True or false  .
Ans True
Call money and Notice money are Money market instruments True or false.   
Ans True.
G Securities issued by Central and State Government are instruments in Debt Market. True or false. 
Ans True
Bonds issued by Financial Institution are instruments in Debt market. True or false 
Ans True.
Reserve Bank of India has two distinct roles one is Monetary Control including controlling inflation and other is -----------
Bank supervision
Reserve Bank of India is exercising Monetary Control  through 1) cash  Reserve Ratio, 2) Statutory Liquidity Ratio 3) REPO rate and ---------
Ans Bank rate.
Central Bank (RBI) is lender of the last resort to other Banks True or false.  
Ans: True.
------------ is responsible for ensuring an efficient payment & settlement system. True or false.
Ans: True.
Reserve Bank of India has supervision over 1) Commercial Bank 2) NBFC 3) Primary dealers 4) Financial institution True or false. 
Ans : True
Reserve Bank of India is Banker to Government True or false.
Ans True.
Capital Market Regulator in India is SEBI True or false
Ans True
The standard rate at which RBI is prepared to buy or re discount bills of exchange or other eligible commercial papers from Banks is known as
Bank rate
No Bank can hold shares in a company as pledge or mortgage in excess of the limit of 30% of the paid up capital of that company or 30% of the Bank’s paid up capital and reserve which ever is less. This is covered in
Sec 19(ii) of BR Act
A mutual fund is a form of collective investment that pools money from investors and invests in stocks, debt and other securities. It is a less risky investment opinion for an individual investor.
Mutual funds require the regulators approval to start an asset management Company (the fund) and each scheme has to be approved by regulator before it is launched. Who is the regulator? 
Securities and Exchange Board of India)
Foreign based funds authorized by the Capital Market Regulator to invest ion Indian Equity and debt market through stock exchanges. These are called.
Foreign Institutional Investors.  
Registrars maintain a Register of share and debenture holders and process share and debenture allocation when issues are subscribed. Registers need approval from Regulator. Who is the regulator
Securities and Exchange Board of India)
Depositories hold securities in ---------- form (as opposed to Physical form) maintains accounts of depository participants who in turn maintain sub accounts of their customers. On receiving instructions from Stock exchange clearing house supported by documentation a depository transfers securities from the  sellers account  to buyers account in ------------ form  
Electronic form
A Bank undertakes a number of activities such as undertaking the issue of stocks fund raising and management. They also provide advisory services and counsel on mergers amalgamation etc. They are licensed by capital market regulators. The above Bank is called ----------
Investment Bankers  or
Merchant Bankers.
Brokers perform the job of intermediating between buyers and sellers of securities. They help to build up an order book carry out price discovery and are responsible for broker’s contracts being honoured. These services are subject to ------------- 
Doing Banking business with Industrial and business entities – mostly Corporate and trading houses including multinationals domestic business houses and prime public sector Companies.
Wholesale Banking.
The Credit information Bureau (India) Ltd  (CIBIL) incorporated in 2000, aim at fulfilling the need of credit granting institution for comprehensive credit information by collecting collating and disseminating credit information pertaining to both commercial and ------------------ borrowers.
Consumer (Individual)
------------ refers to the dealing of commercial Banks with individual customers. Both on liabilities and assets side of the balance sheet. Fixed, Current, Savings accounts on the liability side and personal loans housing auto loans and education loans on the asset side are the important product offered by Banks to individuals. The related ancillary service include  Credit card, debit card depository services 
Retail Banking
Today’s retail Banking sector is characterized by three basic features. What are they?
1).Multiple product.
2).Multiple channels of distribution
3).Multiple customer Group.
Multiple product in retail Banking means
Deposit, Credit card, Insurance, Investment and securities.
Multiple channels of distribution in retail Banking means.
Call Centre’s, Branch, Internet and ATM (Kiosk)
Multiple customer Group in retail Banking means
Consumer, Small Business and Corporates.
Zero Balance Account for Salaried class people is a
 Retail Deposit product.
Banks provide pre-shipment finance in the form of export packing credit both in rupee as well as in foreign currencies to assist exporters for manufacturing or packing the goods for export from India.
Export packing credit.
In respect of export bills drawn under LC , if the documents are found to be strictly in terms with LC condition the Bank of the export customer / or the  nominated Bank make payment  of bill  to the exporter and send the bill for realization to the LC issuing Bank or reimbursing Bank. This process is known as ----------- 
Negotiation of export bill under LC.
This facility enables Indian Exporters to extend term credit to importers (overseas) of eligible goods at the post shipment stage. This is known as --------------------
Suppliers Credit.
EEFC  Account stands for
Exchange Earners Foreign Currency Account.
ADR stands for
American Depository Receipt.
ADR are typically traded on US national stock exchanges such as New York Stock exchange or American Stock Exchanges.
GDR stands for
Global Depository Receipts
In --------------- Securities share bond debentures are offered to the public for subscription for the purpose of raising capital or fund.
The primary market
The primary market is classified into public issue market and -----------
Private placement.

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