Foreign Banks and Regional Rural Banks Quiz

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Questions and Answers

Which entity regulates and supervises the Regional Rural Banks (RRBs) in India?

RBI

NABARD (correct)

IRDAI

SEBI

What is the main objective of Regional Rural Banks (RRBs) in India?

To provide services only to urban areas

To exclusively cater to foreign investors

To focus on large corporations and businesses

To promote financial inclusion in rural areas (correct)

How many entities collectively own the Regional Rural Banks (RRBs) in India?

3 (correct)

Which bank was the first Regional Rural Bank established in India?

Prathama Grameen Bank Signup and view all the answers

What are the criteria for an RRB to become eligible to open a new branch in India?

No default in SLR and CRR management, operational profits, net worth improvements, and NPA ratio not exceeding 8% Signup and view all the answers

How many foreign banks are currently operating in India?

46 Signup and view all the answers

What is the primary regulatory body for the foreign exchange market in India?

Reserve Bank of India Signup and view all the answers

Which of the following is NOT a major cause of inflation in India as mentioned in the text?

Decline in government expenditure Signup and view all the answers

Which type of commercial bank has private individuals and businesses owning a majority of the share capital?

Private bank Signup and view all the answers

Which bank is an example of a nationalized bank in India?

State Bank of India (SBI) Signup and view all the answers

What distinguishes Foreign Banks from other types of commercial banks?

They have branches in other countries Signup and view all the answers

In which type of commercial bank does the government hold a significant stake?

Public bank Signup and view all the answers

What is the main reason the central government minimizes its shares in PSU banks?

To reduce government shareholding in public sector banks Signup and view all the answers

Which type of banks are controlled and managed by private promoters in India?

Private Sector Banks Signup and view all the answers

When did banking in India start to be dominated by public sector banks?

1969 Signup and view all the answers

Which banks got permission to operate as new-age private sector banks after the 1990s liberalization in India?

Axis Bank, ICICI Bank Signup and view all the answers

How much share of the total banking sector in India is covered by public sector banks?

72.9% Signup and view all the answers

Why do most foreign banks open branches in other countries?

To cater to the needs of multinational corporate clients Signup and view all the answers

Study Notes

Regulation and Supervision of RRBs

The Reserve Bank of India (RBI) regulates and supervises Regional Rural Banks (RRBs) in India.

Objectives of RRBs

The main objective of RRBs is to provide credit and other facilities to small and marginal farmers, agricultural laborers, and rural artisans.

Ownership of RRBs

RRBs are owned collectively by the Central Government, State Governments, and Sponsor Banks.

First RRB Established

The first Regional Rural Bank established in India was Prathama Bank, sponsored by Syndicate Bank.

Eligibility Criteria for New Branches

An RRB can open a new branch in India if it has a minimum net worth of ₹10 crores, has been profitable for the previous three years, and has a minimum capital adequacy ratio of 9%.

Foreign Banks in India

There are 46 foreign banks currently operating in India.

Foreign Exchange Market Regulation

The Reserve Bank of India (RBI) is the primary regulatory body for the foreign exchange market in India.

Causes of Inflation

Factors such as excess money supply, increase in food prices, and rise in global fuel prices can cause inflation in India.

Types of Commercial Banks

Private sector banks have private individuals and businesses owning a majority of the share capital.
Nationalized banks have the government holding a significant stake, e.g., State Bank of India.
Foreign Banks are characterized by their headquarters being located in a foreign country.
Public Sector Banks have the government holding a significant stake, e.g., State Bank of India.
Private Sector Banks are controlled and managed by private promoters.

History of Banking in India

Banking in India started to be dominated by public sector banks after nationalization in 1969.
Banks like ICICI Bank, HDFC Bank, and Axis Bank got permission to operate as new-age private sector banks after the 1990s liberalization.

Public Sector Banks cover around 70% of the total banking sector in India.

Central Government's Role in PSU Banks

The central government minimizes its shares in PSU banks to encourage their autonomy and efficiency.

Foreign Banks' Operations

Most foreign banks open branches in other countries to expand their business and cater to international clients.

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Description

Test your knowledge about foreign banks operating in India, their transformation into financial firms, and the establishment of Regional Rural Banks (RRBs) as recommended by the Narasimham Committee. Learn about major foreign banks like HSBC, Barclays, Citi Bank, Deutsche Bank, and the purpose of RRBs in the Indian financial system.