Commercial Banking System & Role of RBI - NMIMS solved assignments

 

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Commercial Banking System & Role of RBI

September 2021 Examination

 

1. One of the important mandates of RBI is prudent management of monetary policy, curbing inflation, and checking unemployment in the economy. Explain how RBI achieves these diverse parameters by the use of different tools available with it. (10 Marks)

Ans 1.

Introduction

The Reserve Bank of India has a legal obligation to keep the rate of inflation under control. In this scenario, the Reserve Bank of India (RBI) implements several policies that can aid in the containment of inflation. The solution to the assignment will include a brief explanation of the steps taken by the RBI. However, to comprehend the measures, it is necessary first to understand inflation, followed by an understanding

 

2. Credit appraisal is a critical analytical tool of the bank. Largely the profitability of banks hinges on this tool. Any weakness on this front is reflected in the profitability of banks and it also results in the accumulation of stressed assets. BASEL-II has given strong recommendations to check this menace. Elaborate in detail on the important recommendations of this committee. (10 Marks)

Ans 2.

Introduction

Because of the length and depth of the financial markets crisis, many monetary supervisory authorities and banks question whether stress testing practices were adequate before the onset of the problem and whether they have the necessary teeth to combat the rapidly changing circumstances in which they find themselves. In many ways, the crisis is significantly more severe than suggested by the findings of the banks' stress tests; nonetheless, it was most likely

 

3. A. Risk mitigation is one of the main functions/concerns of the bank in a volatile economy. In course of business banks face different types of risks which may vary from one bank to another. a. Which are the major risks banks are exposed to and how they mitigate them? (5 Marks)

Ans 3a.

Introduction

The first and most important responsibility of a bank to manage its significant risks will be to monitor the risks in their entirety. The operational risk monitoring system's primary focus area includes, among other things, functional performance measurements such as settlement facts, volume, turnover, delays, and errors, as well as other risk factors. Keeping a close eye on

have been put in place or have been advised from time to time, they need further renovation.

 

 

3 b. Suppose the regulator asks for one of the losses making Bank XYZ close a few branches to reduce cost thereby make the bank more sustainable/profitable. But XYZ Bank refuses to close its few branches, citing some risk/s involved in the process. What are the risks XYZ Bank perceives if it closes a few branches? (5 Marks)

Ans 3b.

Introduction

If XYZ Bank cuts a few branches, it must be aware of some of the horrendous risks that it is taking. It is for this reason that the bank is not yet ready to close its branches nationwide. It is critical to understand the fundamentals of the perceived hazards before engaging in a discussion of the subject. Perceived risks refer to the level of uncertainty a consumer perceives when

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