Indian Financial System jaiib important questions and answers

Sl
No
Question Answer
1 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.
2 The transformation of savings into investment and consiumption is
facilitated by the active role played by the financial system. True or
false.
Ans True
3 Banks, Financial Institution mutual funds etc are examples of Financial
Intermediaries. True or False.
Ans: True.

4 Financial market include Money Market, Debt Market, Forex Market and ---
-
Ans Capital
Market
5 Treasury bills are money market instrument True or false. . Ans : true
6 Certificate of Deposit is a money market instrument True or false. Ans True.

7 Commercial paper is a money market instrument True or false . Ans True
8 Call money and Notice money are Money market instruments True or
false.
Ans True.

9 G Securities issued by Central and State Government are instruments in
Debt Market. True or false.
Ans True
10 Bonds issued by Financial Institution are instruments in Debt market. True
or false
Ans True.
11 Reserve Bank of India has two distinct roles one is Monetary Control
including controlling inflation and other is -----------
Ans:
Bank
supervision
12 Reserve Bank of India is exercising Monetary Control through 1)
cash Reserve Ratio, 2) Statutory Liquidity Ratio 3) REPO rate and ---------
Ans Bank
rate.
13 Central Bank (RBI) is lender of the last resort to other Banks True or false. Ans : True.
14 ------------ is responsible for ensuring an efficient payment & settlement
system. True or false.
Ans : True.
15 Reserve Bank of India has supervision over 1) Commercial Bank 2) NBFC
3) Primary dealers 4) Financial institution True or false.
Ans : True
16 Reserve Bank of India is Banker to Government True or false. Ans True.
17 Capital Market Regulator in India is SEBI True or false Ans True
18 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
19 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 Banks paid up capital and reserve which ever is less.
This is covered in
Sec 19(ii) of BR
Act
20 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
Securities and
Exchange Board
of India)
management Company (the fund) and each scheme has to be
approved by regulator before it is launched. Who is the regulator.

SEBI
21 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.
22 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)

SEBI
23 Depository hold securities in ---------- form (as opposed to Physical
form) maintains accounts of depository participants who in turn
maintains 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
(Demat)
24 A Bank undertake 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.
25 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 brokers contracts being
honoured. These services are subject to -------------
Brokerage.
26 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.
27 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)
28 ------------ 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

29 Todays retail Banking sector is characterized by three basic
features. What are they.
1).Multiple product.
2).Multiple
channels of
distribution
3).Multiple
customer Group.
30 Multiple product in retail Banking means Deposit, Credit
card, Insurance ,
Investment and
securities.
31 Multiple channels of distribution in retail Banking means. Call Centres,
Branch, Internet
and ATM (Kiosk)
32 Multiple customer Group in retail Banking means Consumer, Small
Business and
Corporates.
33 Zero Balance Account for Salaried class people is a Retail Deposit
product.
34 Banks provide preshipment 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.
35 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.
36 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.
37 EEFC Account stands for Exchange Earners
Foreign Currency
Account.
38 ADR stands for American
Depository Receipt.
39 ADR are typically traded on US national stock exchanges such
as New York Stock exchange or American Stock Exchanges.
True
40 GDR stands for Global Depository
Receipts
41 In --------------- Securities share bond debentures are offered to
the public for subscription for the purpose of raising capital or
fund.
The primary market
42 The primary market is classified into public issue market and --
---------
Private placement.
43