Banking Awareness Study Material – Financial Institutions In India

Banking Awareness Study Material – Financial Institutions In India

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Finance
It is the procurement (to get, obtain) of funds and effective utilisation of funds. It is the science that describes the management, creation and study of money, banking, credit, investments, assets and liabilities. Finance consists of financial system which include the public, private and government spaces and the study of finance and financial instruments, which can relate to countless assets and liabilities.

Categorisation of Finance
Finance can be categorised into three types according to their objectivity

• Short Term Finance: It is often referred to as bridging finance, which usually refers to loans mostly offered on terms of up to 15 months.
• Mid Term Finance: This type of finance is given for longer period. It is for period saying from 15 months to 5 yr. Prominently it is given for machines, land separation, etc.
• Long Term Finance: These are given for term extending more than 5 yr. It is given for creating permanent structures.

Financial Institutions
Financial institutions of Indian money market are

Organised Sector: Organised sector of Indian money market is that sector whose parts and activities are systematically coordinated by the monetary authority.
It comprises of the following institutions

• Reserve Bank of India: At the apex of India, money market is the Reserve Bank of India. It is the Central Bank of the country.
• Commercial Banks: The Commercial Banks dominate the organised sector. It includes Public Sector Banks (State Bank of India + its Associate Banks + Nationalised Banks + Regional Rural Banks) and Private Sector Banks (Scheduled Banks + Non-Scheduled Banks + Foreign Banks).
• Co-operative Banks: They are a part of co-operative credit institutions that have a three-tier structure. At the top, there are State Co-operative Banks. At the district level, there are Central Co-operative Banks. At local level, there are Rural Primary Co-operative Banks and Urban Co-operative Banks.

Unorganised Sector: The unorganised market is that market whose activites are not systematically coordinated by the monetary authority. It is largely made up of indigenous bankers, moneylenders, Chit funds, Nidhis, etc.

Sources of Finances
There are two types of sources

• Institutional Sources: The organisation and institutes which are established to provide loan are called institutional sources of finance. The main purpose of these institution are to .arrange the finance.Insurance companies, banks, co-operative societies, UTI are some of the examples of financial institutions.
• Non-Institutional Sources: Loan taken from friends, relatives, money lenders, mahajans are called non-institutional sources of finance.

Financial Instruments
Financial instruments provides short term credit.These include Bills, Treasury Bills, Promissory Notes, Hundis, Certificates of Deposits (CD) and Commercial Papers.

Financial Institutions for Agriculture
For the purpose of giving loan to agricultural sector, many financial institutions have been created jointly by government of India and RBI. Few of these institutions are co-operative bank like RRBs, NABARD, etc.

• Commercial Bank: From 1st Feb, 1969, the government imposed social control on banks by introducing certain provisions in the Banking Regulation Act, 1949. These were intended to ensure that the bank advances were not confined to large scale industries and big business houses, but were also directed, in due proportion to other important sectors like agriculture, small scale industries and exports.
• Co-operative Credit Societies: In India, Co-operative Banks are registered under the Co-operative Societies Act, 1912. They generally give credit facilities to small farmers, salaried employees, small scale industries, etc. Co-operative Banks are in rural as well as in urban areas. The functions of these banks are just similar to that of Commercial Banks.
• Land Development Bank: Special type of credit societies called Land Development Bank have been formed to meet the long term credit requirement of farmers. These banks are now called state co-operative Agricultural and Rural Development Bank (DB). These banks were first established in the Jhang area of undivided Punjab and were called land mortgage bank. But its real start corresponds to the years 1929, when one central land development bank was opened in Madras. The banks seizes long term loan against mortgage of land.
• Regional Rural Bank (RRB): In 1976, the Parlia’ment enacted the Regional Rural Banks Act, 1976 to provide for the incorporation, regulation and winding up of Regional Rural Banks. The Act had been made effective from the 26th Sep, 1975 and the development process of RRBs started on 2 October, 1975.Regional Rural Banks are available almost in every State and UTs. The states and UTs, where there is no presence of RRBs are Goa, Sikkim, Delhi, Chandigarh, Andaman and Nicobar Islands,Lakshadweep, Dadra and Nagar Haweli, Daman and Diu. The equity of the RRBs is contributed by the Central Government, concerned State Government and the sponsor bank in the proportion of 50:15:35.

First Five RRBs

1. Moradabad (UP)
2. Bhiwani (Haryana)
3. Malde (Paschimbanga)
4. Gorakhpur (UP)
5. Jaipur (Rajasthan)

Regional Rural Banks (Amendment) Bill, 2014
Parliament has passed Regional Rural Banks (Amendment) Bill, 2014. Key facts about Regional Rural Banks (Amendment) Bill, 2014 are

• This amendment bill increases the authorised capital of each Regional Rural Bank (RRB)from ₹ 5 crore to ₹ 2000 crore divided into ₹ 200 crore of fully paid share of ₹ 10 each.
• It also provides that the authorised capital issued by any RRB’s shall not be reduced below ₹ 1 crore. The Bill allows RRBs to raise capital from sources other than the central and state governments, and sponsor banks.

The Bill adds provision that any person who is a director of an RRB is not eligible to be on the Board of Directors of another RRB.

Important Committees of Regional Rural Bank

• Committee on Rural Banks (Dantwala Committee, 1978) This committee suggested that the Commercial Banks functioning in the area of operation of RRBs should progressively entrust the credit business of their rural branches to RRBs keeping in view the capacity of RRBs to shoulder the added responsibility.
• Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD, 1981) This committee underlined the importance of RRBs in strengthening of rural credit. According to it, the role of RRBs should be mannered as a multipurpose agencies in rural area.
• Khusro Committee (1989) This committee gave the importance to the methodology of RRBs and has also done a remarkable work by providing the banking services to rural areas.
• Advisory Committee on Flow of Credit to Agriculture and Related Activities (Dr Vyas Committee, 2004) All RRBs in the North Eastern states should be merged into a Zonal bank on stand alone basis, the equity of which is to be provided by NABARD, SBI and UBI in the ratio of 26:37:37 through a holding company.
• Kelkar Committee (2004) This committee re-reviewed the objectives of RRB and also recommended to increase the capital base of each RRB.
• Chakvarti Committee (2010) This committee was formed in 2010 to review the financial status of RRB. It recommended the recapitalisation of 40 RRBs.

Lead Bank Scheme
Lead Bank scheme was introduced in 1969, based onthe recommendation of the Gadgil study Group, The lead bank role is to act as a consortium leader for co-ordinating the efforts of all credit institutions in each of the allotted districts for expansion of branch banking facilities and for meeting the credit needs of the rural economy. For the preparation of District Credit Plans and monitoring their implementation a Lead Bank Officer (LBO) now designated as Lead District Manager was appointed in 1979.

National Bank for Agricultural and Rural Development (NABARD)
It is one of the subsidiaries where the majority stake is held by the Reserve Bank. NABARD is an apex development bank with a mandate for facilitating credit flow for promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas.

RIDF (Rural Infrastructure Development Fund)
Deficient, Rural infrastructure hinders both social and economic development. Economists have explicitly emphasised on the direct correlation between the index of infrastructure development and rural development. Rural roads and bridges under RIDF have improved market access to farmers. Check dams and irrigation structures have augmented their water resources.

Priority Sector Lending Policy (PSLP)
RBI introduced the system of priority sector lending to ensure that banks increase their involvement in the financing of priority sectors like agriculture, small industries, etc. Presently, all domestic Commercial Banks and Foreign Banks with more than 20 branches are to lend 40% of their adjusted Net Bank Credit to priority sector. Beyiks who fail to achieve priority sector targets have to contribute funds to financial institutions like SIDBI/RIDF etc., as specified by RBI.

Kisan Credit Card Yojana
It was started by RBI and NABARD in August, 1998 to help the farmers across with credit timely and I adequately. Since, 1998 about 10.78 crore KCCS has been issued upto 2011.

Financial Institutions for Industries

Public Issues
Capital market constitutes primary (new issue market) and secondary (stock) market. The primary market helps the public and private sector companies in raising finance mainly for their new projects, expansion, modernisation and acquisitions. Secondary market provides liquidity for the financial instrument (equity, preference share, debenture/land) through adequate market ability and price continuity.

Public Deposits
Public deposits are an important source of financing the medium term and long term requirement of company. It implies any money received by a company through deposit or loan collected from public. The public includes the general public, employee and shareholders of company, but excludes the money received in the form of shares and debentures.

Commercial Banks
Banks are the dominant financial intermediaries in developing countries like India. It is an important source of industrial finance. The dependence on bank for finance could vary according to the size of the companies. The small scale industrial units have increased their dependence on banks for loans because they have virtually no access to capital market.

Industrial Bank
It is a financial institution with a limited scope of services. Industrial banks sell certificates that are labeled as investment shares and also accept customer deposits. They then invest the proceeds in instalment loans for consumers and small businesses. These banks are also known as Morris banks or industrial loan companies. The loans offered by industrial banks are often secured by a third party who acts as guarantor for the loan.

Financial Institutions for Specific Areas

Export-Import Bank of India (EXIM)
Exim Bank of India established on 1st January, 1982 under the Export-Import Bank pf India Act, 1981 is the premier export finance institution in India.
Function: Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. Exim Bank of India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the small and medium enterprises.

Unit Trust of India (UTI): Unit Trust of India is a financial organisation in India, which was created by the UTI Act passed by the Parliament in 30th Dec, 1963 and UTI established in 1963. UTI Bank changed its name to AXIS Bank with effect from 1st Aug, 2007.
Function: It offers financial services to customer segments covering large and mid-corporates, MSME, agriculture and retail businesses.

Indian Industrial Development Bank of India (IDBI)
It was established in July, 1964 by an Act of Parliament.
Function: To provide credit and other facilities for the development of the fledgling Indian industry. IDBI Bank is at par with nationalised banks and the SBI Group as far as government ownership is concerned.

Industrial Credit and Investment Corporation of India (ICICI): ICICI Bank an Indian financial institution, was established by the Industrial Credit and Investment Corporation of India, as a wholly owned subsidiary in 1955. In 2002, ICICI managed with ICICI Bank.
Function: It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking, life, non-life insurance, venture capital and asset management.

National Housing Bank (NHB): It was setup on 9th July, 1988 under the National Housing Bank Act, 1987 as a wholly-owned subsidiary of the Reserve Bank to act as an apex level institution for housing.
NHB has been established to achieve, among other things, the following objectives

• To provide a sound, healthy, viable and cost effective housing finance system to all segments of the population and to integrate the housing finance system with the overall financial system.
• To make housing credit more affordable.
• To regulate the activities of housing finance companies based on regulatory and supervisory authority derived under the Act.

Small Industries Development Bank of India (SIDBI):
Small Industries Development Bank of India (SIDBI), setup on 2nd April, 1990 under an Act of Indian Parliament, acts as the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Coordination of the functions of the institutions engaged in similar activities. Currently the ownership is held by Government of India owned controlled institutions.
SIDBI has founded Credit Guarantee Fund Trust for Micro and Small Enterprises, SIDBI Venture Capital Ltd. SME Rating Agency of India Ltd. (SMERA). Another entity founded by SIDBI is ISARC- India SME Asset Reconstruction Company in 2009, as specialised entities for NPA resolution for SME

Change in the definition of Industrial Units The definition of industrial units has been expended as per the SIDBI Amendment Act, 2012 and from now tourism related services, road development, entertainment, construction and floriculture etc have been termed as industrial units. Due to this the units limited investment will get direct Loan from S SIDBI. New initiative of SIDBI On 18th Aug, 2015 Finance Minister Arun’Jaitley  launched two funds the India Aspiration Fund (IAF) and SIDBI. Make in India Loan for Enterprises (SMILE) under Small Industries Development Bank of India (SIDBI) are in line to carter funding for startups and to aid small enterprises in India. The Union Cabinet has approved setting up of Fund of Funds for Startups (FFS) under SIDBI for extending support to Startups Yojana.

India Infrastructure Finance Company Ltd (IIFCL):
IIFCL is a wholly-owned Government of India company setup in 2006 to provide long term finance to viable infrastructure projects through the Scheme for Financing Viable Infrastructure Projects through a Special Purpose Vehicle called India Infrastructure Finance Company Ltd (IIFCL, broadly referred to as SIFTI. IIFCL has been registered as a Non-Banking Financial Companies- non-deposit- Infrastructure Finance Companies (NBFC-ND-IFC ) with RBI since September, 2013. IIFCL raises funds through long term resources from both domestic as well as global markets.

Industrial Finance Corporation of India (IFCI):
IFCI Ltd. a Statutory Corporation was set up on 1 July, 1948 through ‘ The Industrial Finance Corporation of India Act, 1948’ of Parliament to provide medium and long term finance to industry. IFCI is also a Systemically Important Non-Deposit taking Non-Banking Finance Company (NBFC-ND-Sll) registered with the Reserve Bank of India. IFCI became a Government controlled company subsequent to enhancement of equity shareholding to 55.53% by Government of India on 21st Dec, 2012.

Irrigation and Water Resources Finance Corporation (IWRFC):
In the Budget speech of 2008-09, the Finance Minister announced that massive investments were required to be made in Irrigation Project and hence IWRFC was established with an initial capital of ₹ 100 crores. The Company commenced its operations in the financial year 2012-13.Further the Government accorded its approval on 13th Dec, 2013 for making IWRFC a 100% subsidiary of India. Infrastructure Finance Company Limited (IIFCL) is a specialised NBFC-IFC Company wholly owned by Government of India.

Industrial Investment Bank of India (IIBI)
The Industrial Investment Bank of India is a 100% government of India-owned financial investment institution. It was established in 1971. The bank was headquartered at Kolkata. IIBI was initially setup as Industrial Reconstruction Corporation Limited (IRCL) during 1971 when it was renamed Industrial Reconstruction bank of India with effect from 20th Mar, 1985 under RBI Act, 1984.
IIBI offered a wide range of products and services, including term loan assistance for project finance, short duration non-project asset-backed financing, working capital/other short term loans to companies, equity subscription, asset credit, equipment finance and investments in capital market and money market instruments.

Important Financial Institution of India

Regional Rural Bank (RRB)	2nd Oct, 1975
Risk Capital and Technology Finance Corporation Ltd. (RCTFC)	March, 1975
Housing Development Finance Corporation Ltd. (HDFC)	1977
NABARD	12th July, 1982
Industrial Reconstruction Bank of India (IRBI)	20th Mar, 1985
Infrastructure Leasing and Financial Services Ltd. (ILFS)	1988

Financial Stability and Developpient Council (FSDC)
Financial Stability and Development Council is apex-level body constituted by government of India. The idea to create such a super regulatory body was first mooted by Raghuram Rajan Committee in 2008. FSDC deals with macro prudential and financial regularities in the entire financial sector of India.

Tit – Bits

• NHB launched RESIDEX for tracking prices of residential properties in India in 2007.
• Focus area of IWRFC is micro irrigation, contract farming, waste water, management and sanitation etc.
• 28 state finance corporation are operating along with 28 state Industrial Development Corp (SIDC) (as on 2015).

Non-Banking Financial Company (NBFC)
It is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/ debentures/ securities issued by government or local authority or other marketable securities of like nature, leasing, hire-purchase, insurance business, chit business. NBFCs provide range of financial services to their clients. Types of services under non-banking finance services include the following

• Hire purchase services
• Leasing services
• Housing finance services
• Asset management services
• Venture capital services
• Mutual benefit finance services (Nidhi) banks.

Since, they perform the basic twin functions of attracting deposit from the public and are making loans. NBFCs are essentially banks, however, unlike Commercial Banks, they are not incorporated as a bank and are not governed by the provision of the Banking Regulation Act, 1949.

RBI directions for NBFC’s functioning

• With the enactment of RBI (Amendment) Act, 1997, the RBI now controls the functioning of NBFCs.
• NBFCs as a whole account for 11.2% of assets of the total financial system.
• Two broad categories of NBFCs are
  1. Deposit taking NBFCs (NBFCs-D)
  2. Non-deposit taking NBFCs (NBFCs-ND).

• Capital to Risk-weighted Assets Ratio (CRAR) norms were made applicable to NBFCs-D in 1998. The CRAR norm for NBFC-D is 12% (15% in case of unrated NBFCs-D).
• NBFCs-ND-SI are Non-Deposit taking systemically important NBFCs as they have asset size of 100 crore and above.
• Mutual Funds are the most important among the newer capital market institutions. MFs function is to mobilise the savings of the general public and invest them in stock market securities.
• Venture Capital Funds: (VCFs) essentially give commercial support to new ideas for the introduction and adaptation of new technologies.
• Government launched the National Venture Fund for Software and IT Industry (NVFSIT) to provide technology development especially for small and medium enterprises. NVFSIT is managed by SIDBI.

Difference between Bank and NBFCs

• NBFC cannot accept demand deposits;
• NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;
• Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

Financial Inclusion
It refers to the delivery of banking service at an affordable cost to the vast sections of disadvantaged and low income groups of the population. The purpose of financial inclusion is to provide access to banking, access to affordable credit and access to free information on money matters. This concept has become a part of public policy so as to make available banking and payment services to the entire population without discrimination. The primary aim is to avoid the pitfalls of financial exclusion in the form of social tension arising from lack of empowerment of the low income strata of the population.

Steps taken for Financial Inclusion

• RBI opened No Frills accounts for poor people. It is later renamed as Basic Savings Bank Deposit Account (BSBDA).
• RBI has ordered the banks to open at least 25% of their new branches in unbanked rural centres.
• Government’s introduced Direct Benefit Transfer (DBT) initiative. Money will be directly sent to beneficiary’s bank account.
• PMJDY, Payments Bank and small finance bank were started under the financial inclusion.
• RBI relaxed Know Your Customer (KYC) norms for small value accounts. RBI allows customer accounts to be opened without any documentary proof of identity or current address if the amounts involved are less than ₹ 50000.
• RBI permitted the use of Aadhaar card as a proof, for opening bank account. General purpose Credit Card (GCC) and Kisan Credit Card (KCC) help people to get loans easily.
• Post office has tied up with LIC, offering variety of insurance schemes, particularly targeting rural junta e.g. Gram Surakha, Suvidha Sumangal, etc.

Co-operative Marketing
It is a term used in the world of business advertisements to mean marketing initiative that involves more than one institution. Market value means the probable price of a product or service in the market.

Co-operative Marketing Mechanism

• NAFED: (National Agricultural Cooperative Marketing Federation India Limited) It was established on 2nd Oct, 1958. It is registered under the Multistate Co-operative Societies Act. NAFED was setup with objective to promote co-operative marketing of agricultural produce to benefit farmers. It organises, promotes and develops marketing, processing and storage of agricultural, horticultural and forest produce.
• TRIFED: (Tribal Co-operative Marketing Development Federation of India Limited) It came into existence on 6th Aug, 1987 and got registered under the multistate co-operative societies Act, 1984. The main objective of TRIFED is to serve the interest of its member in more than one state for the social and economic betterment of its member by conducting its affair in professional, democratic and autonomous maimer through self help and mutual co-operation for undertaking marketing development of the tribal products.

Question Bank

1. The land development banks play a crucial role in

1. the provision of investment credit for agriculture
2. providing crop loans to the farmers
3. expanding social forestry
4. developing allied activities in rural sector
5. None of the above

2. Which programme of credit was instituted to help the farmers across timely and adequently?

1. Kisan Credit Card Yojana
2. MNREGA
3. RSBY
4. Aam admi Bima Yojana
5. All of the above

3. Which financial institution was established by IBRD-American Mission, in 1955?

1. IDBI
2. ICICI
3. SBI
4. RRB
5. PNB

4. AXIS Bank is the changed name of

1. IDBI
2. ICICI
3. UTI
4. UTO
5. RBI

5. Which one of the following dominates the organised sector?

1. RBI
2. Commercial Bank
3. Co-operative Bank
4. RRBs
5. SBI

6. ‘Sensitive sector’ as defined by RBI include(s)

1. capital market
2. real estate
3. commodities
4. All of these
5. None of these

7. National Saving Scheme (NSS-92) has been closed by the government since

1. 1st Nov, 1999
2. 1st Nov, 2000
3. 1st Nov, 2001
4. 1st Nov, 2002
5. 1st Nov, 2003

8. As per the new guidelines issued by SEBI, companies are required to list shares within how many days of the closure of the Initial Public Offers (IPOs)?

1. 12 days
2. 15 days
3. 21 days
4. 30 days
5. 25 days

9. Financial Instruments provides short term credit. These includes

1. T-Bill
2. CD
3. Promissory notes
4. All of these
5. None of these

10. Rural Infrastructure Development fund was setup in

1. 1970-71
2. 1982-83
3. 1995-96
4. 2000-01
5. 2002-03

11. Which one of the public sector bank has completed 100 yr of its establishment on 21st Dec, 2011?

1. Central Bank of India
2. State Bank of India
3. Punjab National Bank
4. Bank of Baroda
5. Allahabad Bank

12. Which institution provides long run finance to industries?

1. UTI
2. LIC
3. GIC
4. IDBI
5. All of these

13. Open Added Money Market Scheme was firstly introduced by

1. UTI
2. IDBI
3. ICICI
4. LIC
5. None of these

14. Bank of Rajasthan was merged with

1. HDFC Bank
2. ICICI Bank
3. AXIS Bank
4. Citi Bank
5. None of the above

15. National Housing Bank (NHB), is a wholly owned subsidiary of

1. SIDBI
2. IDBI
3. RBI
4. SBI
5. SEBI

16. The majority stake of subsidiaries of NABARD is held by

1. SBI
2. RRB
3. RBI
4. Co-operative Bank
5. PNB

17. Which committee firstly mooted to create a super regulatory body for financial stability and Development Council?

1. Raghuram Raj an Committee
2. Vijay Kelkar Committee
3. V Patel Committee
4. Parikh Committee
5. None of the above

18. When was NAFED (National Agricultural Co-operative Marketing Federation India Limited) established?

1. 3rd Oct, 1958
2. 1st Oct, 1958
3. 2nd Oct, 1958
4. 15th Aug, 1959
5. 1st Dec, 1959

19. NVFSIT (National Venture Fund for Software and IT Industry) is managed by SIDBI to

1. provide technology development especially for small and medium enterprises
2. mean marketing initiative
3. promote co-operative marketing of agricultural produce to benefit formers
4. None of the above
5. All of the above

20. Commercial paper is issued by

1. company to a bank
2. banks to companies
3. bank to banks
4. company to its suppliers
5. None of the above

21. Regional Rural Banks were setup vide

1. Reserve Bank of India Act
2. Regional Rural Banks Act, 1976
3. NABARD Act
4. HDFC Bank Act
5. None of the above

22. Regional Rural Banks carry on normal banking business as defined in

1. Reserve Bank of India Act
2. Banking Regulation Act, 1949
3. Regional Rural Bank Act, 1949
4. Companies Act, 1956
5. None of the above

23. Regional Rural Banks are classified under

1. Land Developments Banks
2. Co-operative Banks
3. Commercial Banks
4. Public Sector Banks
5. None of the above

24. The Export Import Bank of India was setup in

1. July, 1969
2. April, 1970
3. January, 1982
4. April, 1982
5. None of the above

25. Exim Bank also provides

1. refinance facilities
2. consultancy and technology services
3. services of finding foreign markets for exporters
4. All of the above
5. None of the above

26. Exim Bank concentrates on

1. medium term financing
2. short term financing
3. short and medium term financing
4. short and long term financing
5. None of the above

27. Exim Bank extends facility of

1. rediscounting of foreign bills of commercial banks
2. advisory services to the exporters
3. research and market surveys
4. All of the above
5. None of the above

28. ICICI provides financial assistance to

1. small scale industries
2. medium scale industries
3. large scale industries
4. All of the above
5. None of the above

29. ICICI provides assistance by way of

1. long and medium term loans and equity participation
2. guaranteeing rupee and foreign currency loans raised from other sources
3. underwriting issues of shares and debentures
4. All of the above
5. None of the above

30. The most significant feature of ICICI’s operations is

1. the foreign currency loans sanctioned by it
2. to channelise World Bank Funds to industry in India and to build capital market in India
3. fhe refinance facilities extended by it
4. Both 1 and 2
5. None of the above

31. NABARD provides refinance to

1. scheduled commercial banks
2. co-operative banks
3. regional rural banks
4. All of the above
5. None of the above

32. NABARD provides refinance assistance for

1. promotion of agriculture
2. promotion of small scale industries
3. cottage and village industries .
4. All of the above
5. None of the above

33. The central co-operative banks are in direct touch with

1. farmers
2. state co-operative banks
3. land development banks
4. Central Government
5. None of the above

34. A scheduled bank is one

1. which conforms to the requirements of Schedule III of the Banking Regulation Act, 1949
2. which has been declared as a scheduled bank by the Government of India
3. which has deposits exceeding ₹ 10 crore
4. which has its name added to the second schedule of the Reserve Bank of India Act, 1934
5. None of the above

35. A non-banking financial company which carries on the business of acquisition of shares and securities and satisfies certain conditions, is called

1. investment company
2. financial company
3. non-bank finance company
4. core investment company
5. None of the above

36. When failure of the financial system affects other systems such as insurance market or forex market, such risk is

1. liquidity risk
2. settlement risk
3. systemic risk
4. clearing process risk
5. None of the above

37. In the State of India, the State Financial Corporation have given assistance mainly to develop

1. agricultural farms
2. cottage industry
3. large scale industries
4. medium and small scale industries
5. None of the above

38. RRBs are owned by

1. Central Government
2. State Government
3. Sponsor Bank
4. All of the above
5. None of the above

39. Deposits with Regional Rural Banks (RRBs) are insured by

1. Life Insurance Corporation of India
2. General Insurance Corporation
3. Deposit Insurance and Credit Guarantee Corporation
4. None of the above
5. All of the above

40. In January, 1998, the Reserve Bank of India introduced new regulatory framework for safeguarding the interest of depositors. The guidelines comprises

1. NBFCs falling short of the stipulated minimum Net Owned Funds (NOF) were precluded from accepting public deposits
2. An NBFC not having minimum credit rating as prescribed by RBI is not eligible to accept fresh deposits
3. Ceiling on the quantum public deposits was related to the level of credit rating given by the approved credit rating agencies
4. All of the above
5. None of the above

41. Regional Rural Banks (RRBs) are classified as

1. scheduled commercial banks
2. subsidiaries of the sponsor banks
3. subsidiaries of NABARD
4. All of the above
5. None of the above

42. NABARD is a

1. Board
2. Bureau
3. Bank
4. Department
5. None of these

43. Loan against commodities

1. are not allowed by banks except with the prior approval of RBI
2. are not popular in India
3. have been one of the earliest forms of bank advances
4. are allowed only to approved parties
5. None of the above

44. Which of the following is the name of the organisation created specifically to develop small scale industrial sector in our country?

1. NABARD
2. SEBI
3. SIDBI
4. AMFI
5. None of these

45. Which of the following organisation/agencies is specifically setup to boost overall rural development in India?

1. RBI
2. SIDBI
3. NABARD
4. SEBI
5. None of these

46. The objectives and functions of IDBI include

1. to provide technical and administrative assistance for promotion or expansion of industry
2. to undertake market arid investment research and survey technical and economic studies in connection with development of industry
3. to acts as lender of last result and to finance projects that are in conformity with national priorities
4. All of the above
5. None of the above

47. Central Co-operative Banks

1. serve as the connecting links between State Co-operative Banks and Primary Credit Societies
2. finance the Primary Credit Societies balance the excess and deficiency in their resources but do little commercial banking
3. are closer to the Primary Societies than an Apex Bank
4. All of the above
5. None of the above

48. The primary function of a Central Co-operative Bank is

1. to mobilise the resources in the district for financing its members
2. to channelise the flow of funds from the State Co-operative Banks
3. to mobilise deposit from state government
4. Both 1 and 2
5. None of the above

49. The basic aim of Lead Bank Scheme is that

1. big banks should try to open offices in each district
2. there should be stiff competition among the various nationalised banks
3. individual banks should adopt particular districts for intensive development
4. all the banks should make intensive efforts to mobilise deposits
5. None of the above

50. The number of directors on the Boards of RRBs has been raised to

1. 14
2. 15
3.  16
4. 17
5. 18

51. NABARD extends refinance to

1. State Land Development Banks, State Cooperative Banks
2. Regional Rural Banks –
3. Commercial Banks and other financial institutions approved, by RBI
4. All of the above
5. None of the above

52. Which agency is exclusive concerned the credit needs of all types of agrir and rural development?

1. State Bank of India
2. Industrial Development Bar
3. Reserve Bank of India
4. NABARD
5. None of the above

53. The lead bank Scheme for public sector banks does not cover

1. metropolitan cities
2. all states and union territories
3. backward districts
4. rural areas
5. 2 and 3

54. Which of the following agencies/ organisations in India maintains the Micro Finance Development and Equity Fund which was in news recently?

1. Confederation of Industries in India (CII)
2. Indian Bank’s Association (IBA)
3. Small Industries Development Bank of India (SIDBI)
4. Reserve Bank of India (RBI)
5. National Bank for Agriculture and Rural Development (NABARD)

55. Which of the following statements about Regional Rural Banks (RRBs) are correct?

1. Sponsor banks travellers cheques can be issued by RRBs
2. RRBs can enter into arrangements with the sponsor banks for providing remittance facilities to its customers
3. Where RRBs can afford the investment, they can install lockers also
4. Both 1 and 2
5. All of the above

56. Which of the following is a kind of non-banking financial institutions?

1. Equipment Leasing Company
2. Hire Purchase Company
3. Loan Company
4. Investment Company
5. All of the above

57. The working and operations of NBFCs are regulated by

1. SEBI
2. RBI
3. Finance Ministry, Gol
4. IRDA
5. None of the above

58. Services under non-banking finance services include the following.
I. Hire purchase services
II. Leasing services
III. Assets management
IV. Venture Capital Service
Which is/are correct?

1. I and II
2. IIand III
3. I, II and III
4. II, III and IV
5. All of these

59. Choose the correct statement regarding IDBI.
I. IDBI was established in 1990.
II. It provides credit and other facilities for the development of the fledgling Indian industry.
III. IDBI Bank is at a par with rationalised banks.
Codes

1. I and II
2. II and HI
3. I and HI
4. Only II
5. I, II and HI

60. Consider the following statements regarding IFCI Ltd.
I. IFCI Ltd. was setup in 1948.
II. FCI is a systematically important non-deposit taking NBFC registered with the RBI.
III. IFCI become a government controlled company on 2nd Dec, 2000.
Which is/are correct?

1. Only I
2. Only III
3. Only II
4. I and II
5. All of these

61. Choose the correct statements.
I. NAFED was established on 2nd Oct, 1955.
II. NAFED was setup with objective to promote co-operative marketing of agricultural product to benefit farmers.
III. NAFED is registered under the multistate co-operative societies Act.
Codes

1. Only I
2. I anti n
3. I and III
4. II and lit
5. I, II and III

62. Consider the statements given below
I. SIDBI was setup on 2nd April, 1970.
II. SMILE under SIDBI is developed to carter funding for startups and to aid small enterprise in India.
III. The union cabinet has approved setting up of FFS under SIDBI.
Which is/are correct?

1. I and II
2. I and III
3. I, II and III
4. II and m
5. Only I

63. Which one of the following whose activities are not systematically coordinated by the monetary authority?
I. Organised sector
II. Unorganised sector
III. Co-operative sector
Select the correct answer using the codes given below

1. Only II
2. I and III
3. Only I
4. II and III
5. Only III

64. Which of the following is one of the major activities of the National Bank for Agriculture and Rural Development (NABARD)? [RBI Assistant 2012]

1. Onsite inspection of co-operative Banks and Regional Rural Bank (RRBs)
2. Helping Government of India in preparing Union Budget and presenting it in the cabinet meeting
3. Acting as custodian of the foreign exchange reserves of the country
4. Deciding rate of interest on Saving Bank Accounts in Public Sector Banks
5. Representing India in World Bank and other such agencies

65. NABARD is responsible for regulating and supervising the function of [IBPS PO 2013]

1. Investment and Industrial Finance Banks
2. Co-operative Banks and Regional Rural Banks
3. Corporate Finance and Overseas Banking Units
4. Private Sector and Multinational Banks
5. Reserve Bank of India

66. The government of India has announced a ‘funding for lending’ scheme. Who are the beneficiaries for this scheme? [IBPS PO 2013]

1. Commercial Banks
2. Regional Rural Banks
3. Micro finance Institutions
4. Finance Departments of the State Government
5. None of the above

67. Indian Financial Network [INFINET] is the [RBI Assistant 2013]

1. communication backbone for the Indian Banking and Financial Sector
2. association of the employers of the banking and financial sector
3. closed user group network of SBI and its subsidiaries
4. All of the above
5. None of the above

68. Which of the following are eligible to become members of the INFINET? [RBI Assistant 2013]

1. Public Sector and Private Sector Banks
2. Co-operative Banks
3. Premier Financial Institutions
4. All of the above
5. None of the above

69. In which of the following States there is no Regional Rural Bank? [SBI Clerk 2014]

1. Karnataka
2. Goa
3. Uttarakhand
4. Himachal Pradesh
5. Punjab

70. Regional Rural Banks are empowered to transact business of banking as defined under     [IBPS Clerk 2015]

1. Regional Rural Banks Act, 1976
2. Negotiable Instruments Act, 1881
3. Banking Regulation Act, 1949
4. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
5. None of the above

71. For opening a new branch, a Regional Rural Bank requires   [IBPS Clerk 2015]

1. permission of NABARD
2. permission of Director, Institutional Finance
3. approval of DRDA
4. RBI license
5. All of the above

72. Paid-up share capital of Regional Rural Bank is contributed by [IBPS Clerk 2015]

1. Central government only
2. State government only
3. Central government, State government and the sponsor commercial bank in the ratio of 50 :15 :35 respectively
4. NABARD, the concerned State Government and the sponsor commercial bank in the ratio of60:20 :20 respectively
5. All of the above

73. Which of the following bodies regulates the Regional Rural Banks? [IBPS PO 2015]

1. The RBI
2. NABARD
3. Department of Rural Development
4. State government
5. SIDBI

74. Principle function of SIDBI, is [IBPS Clerk 2015]

1. promotion of SSI
2. finance of SSI
3. development of SSI
4. All of these
5. None of these

75. According to the Regional Rural Banks (Amendment) Act 2015, the cap on authorised capital of RRBs has now been raised from ₹ 5 crore to [RBI Grade B 2015]

1. ₹ 2000 crore
2. ₹ 500 crore
3. ₹ 2500 crore
4. ₹ 1500 crore
5. ₹ 1000 crore

76.Which of the following is not the part of the structure of the financial system in India? [RBI Grade B 2016]

1. Industrial Finance
2. Agricultural Finance
3. Government Finance
4. Personal Finance
5. All of the above are part of it

77. What is the full form of BSBDA? [IBPS PO 2016]

1. Basic Saving Bank Deposit Account.
2. Basic Saving Bank D-mat Account.
3. Bank Saving Balance Deposit Account.
4. Bank Saving Basic Deposit Account-
5. Base Service Bank Deposit Account.

Answer Key