Introduction to Indian Financial System
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Questions and Answers

What is the primary function of the Indian financial system?

  • Facilitating expansion of stock exchanges and insurance companies
  • Ensuring smooth working of banks and financial institutions
  • Promoting production levels in the economy
  • Directing funds from investors to the people who need money (correct)

    • How does economic development relate to the Indian financial system?

  • The financial system is dependent on economic development for its smooth working
  • Economic development leads to better banking and credit facilities
  • The system drives the economy by promoting production levels
  • The funds from investors are used for economic development (correct)

    • What role do various entities like banks, NBFCs, stock exchanges, and insurance companies play in the Indian financial system?

  • Facilitating the flow of funds between savers and investors
  • Ensuring smooth working of credit facilities
  • Promoting personal financial expenses
  • Driving the growth of the financial system (correct)

    • How does a stable financial system benefit businesses?

    <p>It offers better banking and credit facilities (C)</p> Signup and view all the answers

    What is the Indian financial system composed of?

    <p>Financial institutions, markets, instruments, and services (D)</p> Signup and view all the answers

    What is the ultimate result of the funds flowing through the Indian financial system?

    <p>Increased demand in the economy and better financial services (A)</p> Signup and view all the answers

    What are the four constituents of a financial system?

    <p>Financial institutions, financial markets, financial instruments, financial services (C)</p> Signup and view all the answers

    Who regulates the formal financial institutions such as banks and insurance companies in India?

    <p>Reserve Bank of India (RBI) (A)</p> Signup and view all the answers

    What is the main function of a financial system?

    <p>Moving money between savers and borrowers (D)</p> Signup and view all the answers

    Which classification pertains to the types of financial institutions?

    <p>Banking institutions and Non-banking institutions (A)</p> Signup and view all the answers

    What is the role of an efficient financial system in generating savings?

    <p>Through banks and NBFCs (B)</p> Signup and view all the answers

    Which entities are included in the organized sector of the Indian financial system?

    <p>Banks, insurance companies, NBFCs, mutual funds, stock exchanges, pension funds (B)</p> Signup and view all the answers

    What does the Indian financial system maintain since 1969 to support the structure of commercial banks?

    <p>'Profit-making public sector undertaking' (D)</p> Signup and view all the answers

    What does the financial system link together?

    <p>Savers and borrowers (C)</p> Signup and view all the answers

    What type of institutions are regulated by the Reserve Bank of India (RBI)?

    <p>Formal financial institutions such as banks, insurance companies, NBFCs (B)</p> Signup and view all the answers

    What is the primary function of the Indian financial system?

    <p>Directing funds from savers to investors (D)</p> Signup and view all the answers

    How does economic development relate to the Indian financial system?

    <p>It drives the economy by utilizing funds from investors (B)</p> Signup and view all the answers

    What are the constituents of the Indian financial system?

    <p>Banks, NBFCs, stock exchanges, insurance companies (A)</p> Signup and view all the answers

    What is the role of an efficient financial system in generating savings?

    <p>It provides better banking and credit facilities, encouraging savings (B)</p> Signup and view all the answers

    How do various entities like banks, NBFCs, stock exchanges, and insurance companies contribute to the Indian financial system?

    <p>They drive the growth and stability of the financial system (D)</p> Signup and view all the answers

    What is the main purpose of the financial system?

    <p>Managing the flow of money between savers and borrowers (A)</p> Signup and view all the answers

    Which classification pertains to the types of financial institutions?

    <p>Banking institutions and Non-banking institutions (C)</p> Signup and view all the answers

    What does the organized sector of the Indian financial system include?

    <p>Formal financial institutions like banks and insurance companies (D)</p> Signup and view all the answers

    What is the function of financial markets in the financial system?

    <p>Facilitating the transfer and allocation of funds (C)</p> Signup and view all the answers

    What is the role of the Reserve Bank of India (RBI) in the Indian financial system?

    <p>Supervising the formal financial institutions (D)</p> Signup and view all the answers

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