Banking System in India
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Questions and Answers

What is the main role of the banking system in promoting economic growth?

  • Channeling savings into investments
  • Improving allocative efficiency of resources (correct)
  • Becoming eligible for membership of a clearing house
  • Providing emergency loans to non-scheduled banks

    • Which institutions are considered as the core of India’s financial sector?

  • Commercial banks and development finance institutions
  • RBI and commercial banks (correct)
  • Cooperative banks and non-scheduled banks
  • Development banks and cooperative banks

    • What is the significance of being included in the second schedule of the Reserve Bank of India Act, 1934 for a bank?

  • Eligibility for loans on bank rate from the RBI (correct)
  • Eligibility to participate in international trade fairs
  • Access to preferential interest rates for customers
  • Automatic membership of a foreign exchange market

    • What distinguishes non-scheduled banks from scheduled banks in India?

    <p>Eligibility for borrowing from RBI for normal banking purposes</p> Signup and view all the answers

    What are the facilities enjoyed by all scheduled banks according to the text?

    <p>Eligibility for debts/loans on bank rate from the RBI</p> Signup and view all the answers

    What is the primary purpose of Commercial Banks?

    <p>To accept deposits from the general public and advance loans for profit</p> Signup and view all the answers

    What distinguishes Public Sector Banks from Private Sector Banks in India?

    <p>Majority stake in Public Sector Banks is held by the government</p> Signup and view all the answers

    What defines a Foreign Bank operating in India?

    <p>It has its headquarters outside the country but operates as a private entity in India</p> Signup and view all the answers

    What is the aim of establishing Regional Rural Banks?

    <p>To ensure sufficient institutional credit for agriculture and other rural sectors</p> Signup and view all the answers

    What characterizes the ownership structure of RRBs in India?

    <p>Owned jointly by the Government of India, the State Government, and Sponsor Banks</p> Signup and view all the answers

    What characterizes the ownership structure of Private Sector Banks in India?

    <p>The equity is owned by private stakeholders or business houses</p> Signup and view all the answers

    What distinguishes Regional Rural Banks (RRBs) from Commercial Banks in India?

    <p>Area of operation is limited to the area notified by the Government</p> Signup and view all the answers

    What defines a Foreign Bank operating in India?

    <p>Has its headquarters outside the country but runs its offices as a private entity at any other location outside the country</p> Signup and view all the answers

    What is the aim of establishing Public Sector Banks in India?

    <p>The majority stake is held by the government</p> Signup and view all the answers

    What is the primary purpose of Commercial Banks?

    <p>To accept deposits from the general public and advance loans</p> Signup and view all the answers

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