1.
According to you what are the most important functions of Reserve Bank of
India?
Ans:
a.
b.
c.
d.
e.
2.
f.
g.
a.
b.
At present Treasury Bills are issued for periods of 91 days and 364 days.
The Treasury Bills are issued for meeting the Short Term requirements where as the
Long Term Bonds are issued for various periods for meeting long term investments.
3.
4.
M1 = Currency is circulation + Bankers Deposit with RBI + other deposits with RBI.
M3 =M1 + Certificate of Deposit issued by Banks + Term Deposit (excluding FCNR
(B) with maturity upto one year + Term Deposti excluding FCNR (B) of more than
one year + call borrowing by Banks from Non Depository Financial Corporate.
6.
7.
a.
b.
c.
d.
Bank Rate
Reserve Requirement
Open Market Operation
Interest Rate Policy
b.
c.
The Required Amount under CRR is to be kept with RBI in their Current Account in
the case of Schedulesd Banks
a.
b.
c.
d.
e.
f.
a.
b.
The Supervision will be both "on site" and "off site Supervision".
c.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Order of Court
As per sec 4S of Bankers Books Evidence Act 1891
As per Income Tax ACt 1961 Sec 131 and Sec 133.
As per Criminal Procedure Code
As per Directions from Police Department, CBI etc.,
FEMA and Money Laundering Act
As per Companies Act 1956 as per Sec 251
As per Sec 45 ( C ) of RBI Act, where credit information has to be disclosed
Disclosure to another bank
Disclosure in Public Interest
19. What is the procedure to be followed when Garnishee Order Is received. Also
explain what is Garnishee Order
a.
b.
c.
d.
e.
f.
a.
b.
Garnishee order does not attach account of Insolvent and Deceased customers
account
c.
Only balance in account at the time of receipt attached. Income tax attachment order
on the other hand attaches,
d.
e.
f.
a.
b.
c.
d.
b. Power of Attorney is a general document used to convey powers for many other
purposes besides the operation in the account.
Mandate is given in Plain Paper
Power of Attorney is given on a stamp paper
Power of Attorney has to be executed in presence of a Notary Public.
Power of Attorney can be Registered or Unregistered.
22. What are the salient features of Capital Gains Tax Account 1988.
Ans:
a.
For persons, firms and others, who have capital gain and wish to invest the same in
house property etc., within a period of 3 years the mount of gain can be kept in an
account known as Capital Tax Account.
b.
c.
1.
Where ever Banks hold nominations in respect of deposit account holders, settlement
should be done as per nominations.
2.
3.
a.
b.
c.
d.
e.
f.
g.
Where the settlement is sought as per Legal representation the same can be settled
as per Court decisions.
In other cases where Bank wish to settle without legal representations, Bank can call
for
Death Certificate
Consent Letter
Affidavit
Enquiry forms
Legal Heir Certificate
Stamped Receipt
Indemnity
26. What are the important section of Negotiable Instrument which has relevance
to day to day banking transactions.
Ans:
a.
Section 4,5,6 which define Promissory Note, Bill of Exchange and Cheque.
b.
c.
d.
e.
f.
g.
Sec 131 gives protection to a banker collection a crossed cheque for a customer.
h.
a.
The Amendment includes, imprisonment for 2 years and penalty twice amount of
cheque.
b.
Time for initiating criminal action 30 days from the date of intimation of dishonour of
cheque by the payee.
28. What are the salient features of latest decided cases in respect of Dishonour
of cheques under Section 138 - 142 of NI Act.
Ans:
The section is applicable to return of cheques
a) By repeated presentations at the request of drawer
29. Which are committees constituted for improving Customer Services in Banks
a.
b.
Talwar Committee
Goiporia Committee
c.
Tarapore Committee
30. What do you know of COPRA - 1986.
Ans:
1.
Consumer Protection Act 1986, provide the Consumer, a simple speedy and
inexpensive way of redressal of grievance in case of any deficiency/defect in goods
and services bought/used by him for a consideration.
2.
a.
District Level Consumer Disputes redressal forum which can handle disputes upto
Rs.20 lacs.
State Consumer Disputes redressal commission which can handle disputes greater
than20 lacs to Rs.100 lacs
National Consumer Disputes Redressal Commission which can handle disputes
exceeding RS.1 Crores
The complaint has to be lodged within 2 years from the date of cause of action.
No stamp duty is payable
b.
c.
d.
e.
31. What is meant by credit clearing under Electronic Clearing Service (ECS)
Ans:
a.
b.
Under EFT, funds can be transferred between branches of a bank and also between
banks (via) electronic media
c.
RBI has recently developed a new EFT Special Electronic Funds transfer for transfer
of Large Value Transaction.
34. Elaborate on the back-stop facility declared in the Monetary Policy 2003-04.
Ans:
a.
b.
c.
Back stop interest rate will be at the reverse repo cut off rate at which funds were
injected earlier.
Where no reverse repo bid is accepted as per repo auction, the back stop interest will
be 2% points over rep cut off rate of Pre-day under LAF.
On days when no bids for repo or reverse repo auctions are received/accepted the
back stop interest rate will be decidd by RBI on an ad-hoc basis.
35. What is the purpose of the Information Technology Bill 2000
a.
b.
c.
Ans:
The Bill provide the legal frame work necessary for electronic commerce.
Facilitate electronic filing of documents with Government agencies and
Amend the Indian Penal Code, The Evidence Act, The Banker's Book of Evidence Act
and The Reserve Bank of India Act.
36. What all areas are covered by Information Technology Bill 2000
a.
b.
c.
The Act recognises an electronic record which has been signed with a digital
signature.
d.
It lays down the broad authority structure for implementing Public Key Infrastructure.
37. What is RBS?
Ans:
a.
b.
per
Basle
Committee
39. Under Standadised approach what is the risk weight that is to be allowed for
various Asset
Ans:
a.
b.
c.
Sovereign Asset
Banks
Others (Corporates)
0% to 150%
20% to 150%
20% to 150%
Corporates
Banks
Sovereign
Retail
Project Finance
Equity
41. What is the Fiscal Deficit
Fiscal Deficit = Revenue Deficit + Capital Expenditure Disinvestment receipts and loan Recoveries
42. What is meant by Primary Fiscal Deficit
Ans:
3.
4.
c.
Accounts with outstandings of Rs.10 Crores and above to Banks and Financial
Institutions.
d.
The outstanding exposure may be fund based and non fund based
e.
Provides Restructuring to Standard and Substandard category and also for Doubtful
category accounts including suitfiled and BIFR accounts
f.
g.
Atleast 75% of the lenders by value should agree for CDR package
45. What are the structural Tiers of CDR
a.
1.
2.
3.
Credit Risk
Market Risk
Operational Risk
47. What are the important factors of Credit Risk
Ans:
Credit Risk is a combination of Portfolio Risk + Transaction Risk
48. What is Migration Risk ( a form of Credit Risk)
Ans:
The Risk associated with Migration of an Asset from Standard to Substandard.
49. What are the tools available for Mitigating Credit Risk
Ans:
a.
b.
c.
d.
e.
a.
b.
c.
Liquidity Risk
Interest Rate Risk
Exchange Rate Risk
51. What are the hedging tools that are available for hedging Interest Rate Risk
Ans:
a.
b.
a.
b.
c.
d.
Swaps
Option
Forward Rate Contract
Futures
a.
b.
c.
d.
50%
Ans:
For NPA accounts with outstanding of Rs 5 crores and above once in a year in Dec.
For new borrowal accounts of funds based working capital for 5 crores to 10 crores
once in a year in Dec .
For new borrowal accounts with working capital facilities of rs 10 crores and above
two times a year in June and December .
For existing borrowal accounts enjoing facilities of Rs 5 crores and above for a
period exeeding Two yearsonce in a year in Dec
56. What is the credit limit for SSI units which no collateral security should be
insisted
Ans:
For facilities under SSI upto Rs.5 lacs no Security to be insisted.
For advances for SSI upto Rs.25 lacs. We need not insisted provided the party has
got a good track record.
Advance to MSE sector up to Rs1.00 Crore covered under CGTMSE
List out few credit derivatives
Ans:
a.
b.
c.
d.
a.
b.
c.
Ensuring compliance with regulatory requirement and also for becoming responsive
to the expectation of stake holders.
Transparency of the system
Audit and control of transaction in the organisation
58. Into how many Liquidity buckets Assets and Liability are
classified
Ans: Into 8 liquidity buckets with additional grouping of the first bucket into 1 day
bucket, 2-7 days bucket and 8- 14 days bucket.
59. Into which liquidity bucket the doubtful assets are grouped
Ans:
In the greater 5 year Asset Bucket
A: This is exact opposite of Repo rate. Reverse Repo rate is the rate at which
Reserve Bank of India (RBI) borrows money from banks. RBI uses this tool when it
feels there is too much money floating in the banking system. Banks are always
happy to lend money to RBI since their money is in safe hands with a good interest.
An increase in Reverse repo rate can cause the banks to transfer more funds to RBI
due to this attractive interest rates.
3. What is CRR ?
A: Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep in
Current Account with RBI. If RBI decides to increase the percent of this, the available
amount with the banks comes down. RBI is using this method (increase of CRR
rate), to drain out the excessive money from the banks. Present CRR is 6%
(CRR for Scheduled Banks is As per section 42 of RBI Act )
4. What is SLR Rate?
A: SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to
maintain in the form of cash, or gold or govt. approved securities (Bonds) before
providing credit to its customers.
SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order
to control the expansion of bank credit. SLR is determined as the percentage of total
demand and percentage of time liabilities. Time Liabilities are the liabilities a
commercial bank liable to pay to the customers on their anytime demand. SLR is
used to control inflation and propel growth. Through SLR rate tuning the money
supply in the system can be controlled efficiently. Present SLR is 24% for Scheduled
Commercial Banks. For Scheduled Co Operative Banks SLR is 25%
(SLR for Scheduled Banks and also Non Scheduled Banks is as per Section 24 of
Banking Regulation Act)
5. What is Bank Rate?
A: Bank rate, also referred to as the discount rate, is the rate of interest which a
central bank charges on the loans and advances that it extends to commercial banks
and other financial intermediaries. Changes in the bank rate are often used by
central banks to control the money supply. .Present Bank rate is 6%
Functions of RBI?
The Reserve Bank of India is the central bank of India, was established on April 1,
1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The
Reserve Bank of India was set up on the recommendations of the Hilton Young
Commission. The commission submitted its report in the year 1926, though the bank
was not set up for nine years. To regulate the issue of Bank Notes and keeping of
reserves with a view to securing monetary stability in India and generally to operate
the currency and credit system of the country to its advantage. Banker to the
Government: performs merchant banking function for the central and the state
governments; also acts as their banker. Banker to banks: maintains banking
accounts of all scheduled banks. Supervises and controls Banks and Financial
Institution. Regulates transactions in Foreign Exchange.
Components
M0
M1
Narrow Money.
M1 = Currency with Public + Demand Deposits with Banks +
other deposits with RBI. Demand deposits with Banking system
includes Current Deposits and only demand liability portion of
Savings Bank,.
M2
M3
Broad Money.
M3 = M2 + Term Deposit (Excluding FCNR (B) deposits) more
than 1 year + call borrowing by Banking system from non
depository financial corporation.
Liquidity
Aggregates.
L1
L2
L3
This is the rate at which the Central Bank of the country makes advances against
approved securities. Purchases or rediscounts eligible Bills of Exchange and other
commercial paper to provide financial accommodation to Banks or other specified
group of Institutions. Sec 49 of RBI act defines Bank rate as the standard rate at
which it is prepared to buy or discount bills of exchange or other commercial paper
eligible for purchase under this act. Bank rate affect both cost and the availability of
credit. The effectiveness of Bank rate as a credit control measure is very limited in
India, as Banks are now allowed to a great extent. Freedom to change rate of
interest as per their discretion.
Open Market operation.
The buying and selling of securities or other assets like Foreign Exchange, gold by
Central Bank with an objective
Selective Credit control.
While general Credit control is used to regulate the cost and total volume of Credit,
the selective Credit control also known as quantitative control is used to regulate
cost and quantum of credit in selective sectors. RBI is empowered to exercise
selective Credit control by virtue of section 21 and 35A of Banking Regulation Act.
Selective Credit control is exercised by stipulating 1) Minimum margin, for lending
against selected commodities. 2) Ceiling on the level of credit 3) Minimum interest to
be charged on advances against particular commodities.
What is NABARD?
NABARD was established by an act of Parliament on 12 July 1982 to implement the
National Bank for Agriculture and Rural Development Act 1981. It replaced the
Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of
Reserve Bank of India, and Agricultural Refinance and Development Corporation
(ARDC). It is one of the premiere agency to provide credit in rural areas. NABARD is
set up as 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.
What are non-performing assets?
Non-performing assets, also called non-performing loans, are loans, made by a bank
or finance company, on which repayments or interest payments are not being made
on time. A debt obligation where the borrower has not paid any previously agreed
upon interest and principal repayments to the designated lender for an extended
period of time. The nonperforming asset is therefore not yielding any income to the
lender in the form of principal and interest payments.