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Banking and Financial Institutions With MCQs Banking Concepts Nationalisation Liberalisation * Adoption of banking technology By Navdeep Kaur
A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets. . Due to their importance in the financial stability of a country, banks are highly regulated in most countries. .
Banking in India, in the modern sense, originated in the last decades of the 18th century. Among the first banks were the Bank of Hindustan, which was established in 1770 and liquidated in 1829-32; and the General Bank of India, established in 1786 but failed in 1791 The largest bank, and the oldest still in existence, is the State Bank of India (S.B.l). It originated as the Bank of Calcutta in June 1806. In 1809, it was renamed as the Bank of Bengal This was one of the three banks funded by a presidency government, the other two were the Bank of Bombay in 1840 and the Bank of Madras in 1843. The three banks were merged in 1921 to form the Imperial Bank of India, which upon India's independence, became the State Bank of India in 1955. For many years the presidency banks had acted as quasi-central banks, as did their successors, until the Reserve Bank of India was established in 1935, under the Reserve Bank of India Act, 1934
The Indian banking sector is broadly classified into scheduled and non-scheduled banks. The scheduled banks are those included under the 2nd Schedule of the Reserve Bank of India Act, 1934. The scheduled banks are further classified into: nationalised banks; State Bank of India and its associates; Regional Rural Banks (RRBs); foreign banks; and other Indian private sector banks. The term commercial banks refers to both scheduled and non-scheduled commercial banks regulated under the Banking Regulation Act, 1949
Nationalisation in the 1960s The Government of India issued an ordinance (Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969') and nationalised the 14 largest commercial banks with effect from the midnight of 19 July 1969. These banks contained 85 percent of bank deposits in the country. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969.
A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second dose of nationalisation, the Government of India controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalised banks and resulted in the reduction of the number of nationalised banks from 20 to 19. Unil the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.
Liberalisation in the 1990s In the early 1990s, the then government embarked on a policy of liberalisation, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed Axis Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalised the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been set up, with proposed relaxation of norms for foreign direct investment. All foreign investors in banks may be given voting rights that could exceed the present cap of 10% at present. It has gone up to 74% with some restrictions.
Adoption of banking technology The IT revolution has had a great impact on the Indian banking system. The use of computers has led to the introduction of online banking in India. The use of computers in the banking sector in India has increased many fold after the economic liberalisation of 1991 as the country's banking sector has been exposed to the world's market. Indian banks were finding it difficult to compete with the international banks in terms of customer service, without the use of information technology. The RBl set up a number of committees to define and co-ordinate banking technology. These have included: In 1984 was formed the Committee on Mechanisation in the Banking Industry (1984) whose chairman was Dr. C Rangarajan, Deputy Governor, Reserve Bank of India. The major recommendations of this committee were introducing MICR technology in all the banks in the metropolises in India. This provided for the use of standardised cheque forms and encoders.
In 1988, the RBI set up the Committee on Computerisation in Banks (1988) headed by Dr. C Rangarajan. It emphasised that settlement operation must be computerised in the clearing houses of RBl in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram. It further stated that there should be National Clearing of inter-city cheques at Kolkata, Mumbai, Delhi, Chennai and MICR should be made operational. It also focused on computerisation of branches and increasing connectivity among branches through computers. It also suggested modalities for implementing on-line banking. The committee submitted its reports in 1989 and computerisation began from 1993 with the settlement between IBA (Indian Banks' Association) and bank employees' associations. . . In 1994, the Committee on Technology Issues relating to Payment systems, Cheque Clearing and Securities Settlement in the Banking Industry (1994) was set up under Chairman W S Saraf. It emphasised Electronic Funds Transfer (EFT) system, with the BANKNET communications network as its carrier. It also said that MICR clearing should be set up in all branches of all those banks with more than 100 branches. In 1995, the Committee for proposing Legislation on Electronic Funds Transfer and other Electronic Payments (1995) again emphasised EFT system. . In July 2016, Deputy Governor Rama Gandhi of the Central Bank of India "urged banks to work to develop applications for digital currencies and distributed ledgers." .
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Banking and Financial Institutions With MCQs Importance of Banking MCQs By Navdeep Kaur
Importance of Banks Collections of Savings and Advancing Loans Acceptance of deposit and advancing the loans is the basic function of commercial banks. On this function, all other functions depend accordingly. Bank operates different types of accounts for their customers. Money Transfer Banks have facilitated the making of payments from one place or persons to another by means of cheques, bill of exchange and drafts, instead of cash. Payment though cheques, draft is more safe and convenient, especially in case of huge payments, this facility is a great help for traders and businessmen. It really enhances the importance of banks for business community Encourages Savings Banks perform an invaluable service by encouraging savings among the people. They induce them to save for profitable investment for themselves and for national interest. These savings help in capital formation.
Act as an Agent The bank act as a agent and help their customers in the purchase and sales of shares, provision of lockers payment of monthly and dividends on stock Issue of Traveler's Cheques For the convenience and security of money for travelers and tourists, bank provides the facility of traveler's cheques. These cheques enable the travelers and tourists to meet their expenses during their journey, as these are accepted by issuing bankers, restaurants, and other businessmen both at home and abroad. No doubt, this is also one of the great functions of banks and shows the importance of banks for us in more precise ways. General Utility Services Existence of commercial banks is essential for contribution to general prosperity Banks are the main factors in raising the level of economic development of the world. In addition to above-cited advantages, banks also provide many services of general utilities to the customers and the general public.
Real-time gross settlement systems (RTGS) is a funds transfer system where money transfer takes place from one bank to another on a "real time" basis and "gross" basis. Settlement in the "real time" means that the transaction happens almost immediately. National Electronic Funds Transfer (NEFT) is a nation-wide payment system. Under this Scheme, individuals can electronically transfer funds from any bank branch to any individual having an account with any other bank branch in the country participating in the Scheme NEFT transactions are settled in batches. Which of the following is used for International Monetary Tra A. RTGS nsfer? B. NEFT C. SWIFT D. None of these SWIFT is the fastest and most secured mode of transmission of financial messages between Banks and Institutions. Bank of India provides the service to its customers for transmission of foreign currency funds to anywhere in the world for all eligible outward remittances and also channelize all eligible foreign currency inward remittance to customers account in shortest possible time. This is also the cheapest mode of fund transfer
Target Bank Acquirer Bank Indian Bank Bank Of India Central Bank Of India Punjab National Bank Bank Of India State Bank Of India Oriental Bank Of Comm Oriental Bank Of Commer Union Bank Of India HDFC Bank Ltd. ICICI Bank Of Baroda Punjab National Bank ICICI Bank Oriental Bank Of Commerce Centurion Bank Year 1990 1990 1990 1993 1993 1996 1997 1997 1999 2000 2001 2002 2003 2004 2004 2005 2005 2005 2006 2006 2006 2006 2007 2007 2008 Bank of Thanjavur Ltd Central Bank Ltd Purbanchal Bank Ltd. New Bank Of India Bank Of Karad Ltd. Kashi Nath Seth Bank Punjab C Bari Doab Bank Ltd. Sikkam Bank Ltd Times Bank India ICICI Bank Benaras State Bank Ltd Nedungadi Bank Ltd Bank Of Madura Global Trust Bank Ltd Bank Of Punjab (BOP) The merger of and was the first M Bank Ltod and A activity after liberalization. erce A. Times Bank and HDFC Bank B. New Bank of India and Punjab National Bank C. ICICI and ICICI Bank D. GTB and Oriental Bank of Commerce ration Bank Chikmagalur kod IDBI Nainital Bank Ganesh bank of Kurundwad agu Grameena Bank IDBI Bank Bank of Baroda Federal Bank Centurion Bank Of Puniab Ltd Lord Krishna Bank Itd United Western Bank Sangli Bank harat Overseas Bank Centurian Bank of Punjab IDBI ICICI Bank Indian Overseas Bank HDFC Bank
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Banking and Financial Institutions With MCQs Types of Banks Commercial Banks By Navdeep Kaur
Types of BANKS There are various types of banks which operate in our country to meet the financial requirements of different categories of people. 1. Central Bank (RBI, in India) 2. Development Banlk 3. Commercial Bank 4. Co-operative Bank 5. Specialized Banks(NABARD) 6. Foreign Banks(EXIM Bank) RESBRVE BANK OR INDIA Pure Banking Nothing eise. EXIMBANIK State Bank of India NABARD COMMITTED TO RURAL PROSPERITY
Scheduled banks are allowed Non-Scheduled banks are not allowed to to borrow money from RBl for borrow money from RBl for regular regular banking purposes.banking purposes. Borrowing Returns To be submitted periodically. No such provision of submitting periodic returns. Members of clearing It can become a member of It cannot become member of clearing house clearing house. house.
COMMERCIAL BANKS Scheduled Commercial Banks Non-Scheduled Commercial Banks Private Public Foreign Sector Banks Sector Banks Sector Banks Other SBl and ItsNationalized Subsidiaries Banks
Banking in India has its origin. as early as__ period A. Vedidc B. Moughal C. British D. None of these
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Banking and Financial Institutions With MCQs Functions of commercial Banks By Navdeep Kaur
Full Forms for Banking Related Terms ADB: Asian Development Bank ADR: American Depositary Receipt AIDWA: All India Democratic Woman's Association AITUC: All India Trade Union Congress AMFI: Association of Mutual Funds in India APEC: Asia-Pacific Economic Cooperation APL: Above Poverty Line APM: Administered Pricing Mechanism ARC: Asset Reconstruction Company ARDR: Agricultural and Rural Debt Relief ASBA: Application Supported by Block Amount ASEAN: Association of South-East Asian Nations ASEM: Asia-Europe Meeting ASSOCHAM: Associated Chambers of Commerce and Industry ATM: Automatic Teller Machine
DA: Dearness Allowance; Daily Allowance DMIC: Delhi-Mumbai Industrial Corridor DPEP: District Primary Education Program ECA: Essential Commodity Act ECB: External Commercial Borrowings ECS: Electronic clearing system EDUSAT: Education Satellite EEE: Exempt Exempt Exempt EET: Exempt Exempt Taxation EFA: Education for All EFT: Electronic fund transfer EEFC Accounts: Exchange Earners Foreign Currency Account EGOM: Empowered Group of Ministers EMI: Equated Monthly Installment EMS: European Monetary System ERNET: Educational and Research Network ESA: European Space Agency ESCAP: Economic and Social Commission for Asia and Pacify ESMA: Essential Services Maintenance Act ESOP: Employee Stock Option Program EU: European Union
FAO: Food and Agriculture Organization FCCB: Foreign Currency Convertible Bond FCNR: Foreign Currency (Non-Resident) Accounts Scheme EPF: Employees Provident Fund EPFO: Employees Provident Fund Organization FDI: Foreign Direct Investment FEMA: Foreign Exchange Management Act FERA: Foreign Exchange Regulations Act FICCI: Federation of Indian Chambers Of Commerce and Industry Fll: Foreign Institutional Investors FIPB: Foreign Investment Promotion Board (Of India) FMCG: Fast Moving Consumer Goods FPO: Follow on Public Offer FRBM: Fiscal Responsibility And Budget Management FSSA: Food Safety And Standards Authority (Of India) FTA: Free Trade Area
GATT: General Agreement On Tariffs And Trade GCC: Gulf Cooperation Council GDP: Gross Domestic Product GDR: Global Depositary Receipt GEF: Global Environment Fund GIC: General Insurance Corporation GNP: Gross National Product GST: Goods and Service Tax HDFC: Housing Development Finance Corporation Limited HDI: Human Development Index HSBC: Hong Kong and Shanghai Banking Corporation Limited HUDCO: Housing And Urban Development Corporation
MGNREGA: National Rural Employment Guarantee Act NSE: National Stock Exchange NSDL: National Securities Depository Limited NSE: National Stock Exchange NSSO: National Sample Survey Organization NTPC: National Thermal Power Corporation ODA: Official Development Assistance OECD: Organization of Economic Co-Operation and Development OGL: Open General License OIC: Organization of Islamic Countries OIL: Oil India Limited OMCS: Oil Marketing Companies ONGC: Oil And Natural Gas Commission OPEC: Organization Of Petroleum Exporting Countries OSCE: Organization For Security And Cooperation In Europe PAC: Public Accounts Committee PAN: Permanent Account Number (Of Income-Tax) PATA: Pacific-Asia Travel Association PCI: Per capita income PDS: Public Distribution System PIL: Public Interest Litigation PIO: Persons Of Indian Origirn PN: Participatory Note POP: Point Of Purchase
An IBU can become a PCM of the exchange in the IFSC for clearing and settlements in any derivatives segments. What does P stands for in PCM? A) Permanent B) Primary C) Public D) Professional Option D Explanation: Professional Clearing Member The securities offered for substitution by the market participants shall be of similar market value based on the latest prices published by the FIMMDA. What does D stand:s for in FIMMDA? A) Derivatives B) Dividend C) Differential D) Dynamic Option A Explanation: Fixed Income Money Market and Derivatives Association of India
What does P stands for in IAP with respect to UPI? A) Processing B) Payment C) Progress D) Primary Option B Explanation: In-App Payments (IAP). This term is also used with android apps What does B stands for in APBS? A) Biometric B) Basic C) Bundled D) Bridge Option D Explanation: Aadhaar Payment Bridge (APB) System