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Banking and Financial Institutions With MCQs State Finance Corporations MCQs By Navdeep Kaur
State Finance Corporations The State Finance Corporations (SFCs) are the integral part of institutional finance structure in the country. SEC promotes small and medium industries of the states. Besides, SFCs are helpful in ensuring balanced regional development, higher investment, more employment generation and broad ownership of industries. states. Besides, SFcs At present there are 18 state finance corporations (out of which 17 SFCs were established under SFC Act 1951). Tamil Nadu Industrial Investment Corporation Ltd. established under Company Act, 1949, is also working as state finance corporation.
Functions: Organisation and Management: The State Finance Corporations management is vested in a Board of ten directors. The State Government appoints the managing director generally in consultation with the Reserve Bank and nominates three other directors. (i) The SFCs grant loans mainly for acquisition of fixed assets like land, building, plant and machinery (ii) The SFCs provide financial assistance to industrial units whose paid-up capital and reserves do not exceed Rs. 3 crore (or such higher limit up to Rs. 30 crore as may be specified by the central government) The insurance companies, scheduled banks, investment trusts, co-operative banks and other financial institutions elect three directors. Thus the majority of the directors are nominated by the government and quasi-government institutions. (iii) The SFCs underwrite new stocks, shares, debentures etc., of industrial concerns. (iv) The SFCs provide guarantee loans raised in the capital market by scheduled banks, industrial concerns, and state co-operative banks to be repayable within 20 years
Working of SFCs: The government of India passed the State Financial Corporation Act in 1951 and made it applicable to all the States. The authorised Capital of a State Financial Corporation is fixed by the State government within the minimum and maximum limits of Rs. 50 lakh and Rs. 5 crore and is divided into shares of equal value which were taken by the respective State Governments, the Reserve Bank of India, scheduled banks, co-operative banks, other financial institutions such as insurance companies, investment trusts and private parties. The shares are guaranteed by the State Government. The SFCs can augment its fund through issue and sale of bonds and debentures, which should not exceed five times the capital and reserves at Rs. 10 Lakh
institution for IDBI serves as the term finance to industries. A. APEX B. CAT C. IIT D. None of these The primary objective of IDBl is toRegulate and Supervise the working of other financial institutions like IFCI, SFCs, UTI. A. Co-ordinate B. Control C. Planning D. None of these Option: A Main objective of CRR and SLR is to ensure (i) Liquidity position of Bank (ii) Financial position of Bank (iii) Profit pOSition of Bank A. Only (i) is correct B. Only (ii) is correct C. Only (iii) is correct D. All are correct Option: A
State-level financial institutions are The IDBI underwrites and the shares and debentures of industrial concerns. A. imposses on B. subscribes to C. targets D. none of these A. State Financial Corporations (SFCs) B. State Industrial Development Corporations (SIDC) C. State Industrial Investment Corporations (SIIC) D. All of the above Option: E Option: D
The financial institute IFCI established in The ICICI has been established to achieve the objectives A. to assist in the formation, expansion and modernisation of industrial units in the private sector. B. to stimulate and promote the participation of private capital (both Indian and foreign) in such industrial units C. Both (a) and (b) D. None of these A. 1947 B. 1948 C. 1949 D. 1950 Option: B
The functions of SFCs include The main objective of IDBI is to A. Grant of loans and advances to or subscribe to debentures of industrial concerns repayable within a period not exceeding 20 years, with option of conversion into shares or stock of industrial institution and thereby widening the scope of their concern. B. Guaranteeing loans raised by industrialC. Planning, promotion and development of key concerns which are repayable within a period not exceeding 20 years. C. Both (a) and (b) D. None of these A. Co-ordination, regulation and supervision of the working of other financial institutions such as IFCI, ICICI, UTI, LIC, Commercial Banks and SFCs. B. Supplementing the sources of other financial assistance industries and diversifications of industrial growth. D. All of the above Option: D Option: C
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Banking and Financial Institutions With MCQs RBI Important Act By Navdeep Kaur
Establishment The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934 The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned, since n owned by the Government of India. Preamble The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as: n in 1949, the Reserve Bank is fully "to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth."
Local Boards One each for the four regions of the country in Mumbai, Calcutta, Chennai and New Delhi Membership: consist of five members each appointed by the Central Government for a term of four years Functions: To advise the Central Board on local matters and to represent territorial and economic interests of local cooperative and indigenous banks; to perform such other functions as delegated by Central Board from time to time.
Functions Some of the initiatives taken by BFS include: 1. restructuring of the system of bank inspections 2. introduction of off-site surveillance, 3. strengthening of the role of statutory auditors and 4. strengthening of the internal defences of supervised institutions. The Audit Sub-committee of BFS has reviewed the current system of concurrent audit, norms of empanelment and appointment of statutory auditors, the quality and coverage of statutory audit reports, and the important issue of greater transparency and disclosure in the published accounts of supervised institutions Current Focus supervision of financial institutions consolidated accounting . legal issues in bank frauds divergence in assessments of non-performing assets and supervisory rating model for banks.
Legal Framework l. Acts administered by Reserve Bank of India Reserve Bank of India Act, 1934 Public Debt Act, 1944/Government Securities Act, 2006 Government Securities Regulations, 2007 Banking Regulation Act, 1949 Foreign Exchange Management Act, 1999 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Chapter lI) Credit Information Companies(Regulation) Act, 2005 Payment and Settlement Systems Act, 2007 . o Payment and Settlement Systems Regulations, 2008 and Amended up to 2011 and BPSS Regulations, 2008 o The Payment and Settlement Systems (Amendment) Act, 2015 No. 18 of 2015 Factoring Regulation Act, 2011
II. Other relevant Acts Negotiable Instruments Act, 1881 Bankers' Books Evidence Act, 1891 State Bank of India Act, 1955 . Companies Act, 1956/ Companies Act, 2013 Securities Contract (Regulation) Act, 1956 State Bank of India Subsidiary Banks) Act, 1959 Deposit Insurance and Credit Guarantee Corporation Act, 1961 Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 Regional Rural Banks Act, 1976 Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 National Bank for Agriculture and Rural Development Act, 1981 National Housing Bank Act, 1987 . Recovery of Debts Due to Banks and Financial Institutions Act, 1993 . Competition Act, 2002 Indian Coinage Act, 2011 : Governs currency and coins Banking Secrecy Act The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 The Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993
Main Functions Monetary Authority: . Formulates, implements and monitors the monetary policy Objective: maintaining price stability while keeping in mind the objective of growth Regulator and supervisor of the financial system: banking and fimandia operations banking and financial system functions. Objective: maintain public confidence in the system, protect depositors' interest Prescribes broad parameters of banking operations within which the country's and provide cost-effective banking services to the public. Manager of Foreign Exchange Manages the Foreign Exchange Management Act, 1999. Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.