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Questions and Answers
Who controls credit in India?
Who controls credit in India?
What is the primary role of RBI in granting loans for agricultural purposes?
What is the primary role of RBI in granting loans for agricultural purposes?
Which institution serves as the apex in agricultural finance?
Which institution serves as the apex in agricultural finance?
What is the main function of development banks?
What is the main function of development banks?
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When was LIC (Life Insurance Corporation) set up?
When was LIC (Life Insurance Corporation) set up?
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Under which section are negotiable instruments defined?
Under which section are negotiable instruments defined?
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What is the term for the banking that attracts deposits and lending for only short periods?
What is the term for the banking that attracts deposits and lending for only short periods?
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Deposit banking is also known as which of the following?
Deposit banking is also known as which of the following?
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In India, every scheduled bank has to maintain a cash balance equivalent to all deposit liabilities with RBI, known as _______.
In India, every scheduled bank has to maintain a cash balance equivalent to all deposit liabilities with RBI, known as _______.
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How many banks were nationalized in 1969 in India?
How many banks were nationalized in 1969 in India?
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Which committee recommended the establishment of private sector banks in India?
Which committee recommended the establishment of private sector banks in India?
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Where did the bill market first develop?
Where did the bill market first develop?
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In the context of banking, which deposit is most suitable for the trading community?
In the context of banking, which deposit is most suitable for the trading community?
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When a pledge is made, it can be related to which of the following assets?
When a pledge is made, it can be related to which of the following assets?
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A collecting banker receives statutory protection when he acts as ___.
A collecting banker receives statutory protection when he acts as ___.
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When does the law of limitation apply to a savings deposit account?
When does the law of limitation apply to a savings deposit account?
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Among the listed assets, which one is considered the most liquid?
Among the listed assets, which one is considered the most liquid?
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According to IBA, what is the maximum period for obtaining fixed deposits?
According to IBA, what is the maximum period for obtaining fixed deposits?
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Who has the authority to cancel the crossing on a cheque?
Who has the authority to cancel the crossing on a cheque?
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What is not possible for the payee of a cheque?
What is not possible for the payee of a cheque?
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Under what condition should a banker not refuse payment of a cheque?
Under what condition should a banker not refuse payment of a cheque?
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What does the acceptor for honour do?
What does the acceptor for honour do?
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What is the primary cause of dishonour of a cheque?
What is the primary cause of dishonour of a cheque?
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What does REPO facility mean?
What does REPO facility mean?
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What type of instrument is a negotiable instrument not drawn or made in India called?
What type of instrument is a negotiable instrument not drawn or made in India called?
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According to section 19(b) of the banking regulation act, what is the maximum percentage of shares a bank can hold in a company?
According to section 19(b) of the banking regulation act, what is the maximum percentage of shares a bank can hold in a company?
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What relationship exists between the hirer of a locker and a banker?
What relationship exists between the hirer of a locker and a banker?
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When does a debit card holder typically make payments for purchases?
When does a debit card holder typically make payments for purchases?
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What type of information does a credit information report contain?
What type of information does a credit information report contain?
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How can credit information furnished by a credit information company to a bank be used?
How can credit information furnished by a credit information company to a bank be used?
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Study Notes
Banking and Finance
- A banking company whose license is cancelled may appeal to the Central Government.
- The RBI (Reserve Bank of India) controls credit in India.
- RBI grants short, medium, and long-term finance for agricultural purposes.
- The apex institution in agricultural finance is NABARD (National Bank for Agriculture and Rural Development).
- Development banks are institutions that provide term finance to industries.
- IFCI (Industrial Finance Corporation of India) was established in 1948 and has its registered office in New Delhi.
- National Industrial Development Corporation Ltd was established in 1954.
- LIC (Life Insurance Corporation) was set up in 1956.
- ICICI (Industrial Credit and Investment Corporation of India) was incorporated in 1955.
Negotiable Instruments
- Negotiable instruments are defined under Section 13 of the Negotiable Instruments Act, 1881.
- The maker is primarily liable on a promissory note.
- A cheque is always payable on demand.
- The banking which attracts deposits and lending for only short periods is known as commercial banking.
- Deposit banking is also called commercial banking.
RBI and Banking
- Every scheduled bank has to maintain with RBI a cash balance equivalent of all the deposit liabilities called the cash reserve ratio.
- In 1969, 14 banks were nationalized.
- In 1980, 6 banks were nationalized.
- The SBI (State Bank of India) acts as an agent of the RBI.
- The Nayak Committee recommended the establishment of private sector banks in India.
- RBI was set up in 1935 and has been constituted as a corporate body having perpetual succession and a common seal.
- The Indian money market is the market in which short-term funds are borrowed and lent.
Banking Operations
- The bill market first developed in London.
- The obligation of a banker to honour his customer's cheque is extinguished on receipt of an order of the court, known as a garnishee order.
- The drawer can cancel the crossing on a cheque.
- A banker should not refuse payment of a cheque if the cheque contains an apparent material alteration which is not properly authenticated by the drawer.
- The acceptor for honour bears the liability similar to the person for whose honour he accepts the bill.
- The cause of dishonour of a cheque must be insufficiency of funds in the account.
- REPO facility means borrowing against securities on repurchase basis.
- Aggregate capital market exposure for banks is prescribed as 40% of net worth.
- The best-suited deposit for the trading community is a current deposit.
Pledge and Security
- A pledge can be made in respect of shares.
- A collecting banker is given the statutory protection only when he acts as a holder in due course.
- The law of limitation applies to a savings deposit account from the date of demanding it.
- The most liquid asset is cash.
Other Banking Concepts
- Discounting of bills of exchange is a clean advance.
- Expansion of SWIFT is Society for Worldwide Interbank Financial Telecommunication.
- Expansion of NEFT is National Electronic Fund Transfer.
- Expansion of SBI is State Bank of India.
- A negotiable instrument not drawn or made in India is called a foreign instrument.
- A term loan is not secured by a pledge of goods.
- According to Section 19(b) of the Banking Regulation Act, a bank can hold shares in a company not exceeding 30%.
- For issuing a duplicate demand draft, the purchaser is required to submit an indemnity bond.
- The relationship between the hirer of a locker and banker is that of lessee and lessor.
- A debit card holder makes payment for purchases immediately through his account.
- Credit information furnished by a credit information company to a bank can be used by it for taking credit decisions.
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Description
Test your knowledge on banking licensing, credit control in India, RBI grants for agricultural purposes, and apex institutions in agricultural finance. Choose the correct options for each question.
