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Commercial Banking System & Role
of RBI
April 2023 Examination
Q1. Both liquidity and profitability
are important for bank to survive, but there is a tug of war between these two
concepts. How is that if one increases the other decreases, explain the tradeoff
position between above two variables?
(10 Marks)
Ans 1.
Introduction
The
banking business is a tricky business, and it involves a lot of federal
government treatments. The central bank of the nation manages all business
banks. The Reserve bank of India manages India's business banks. The Reserve
bank of India is India's reserve bank and has all the control of the commercial
Q2. RBI rates the performance
of banks on different parameters of acronym CAMELS. Explain the parameters on
which banks are rated on scale of 1 to 5, 1 being the best performing bank and
5 being unsatisfactory/poorly performing bank, also explain the objectives of
this rating. (10 Marks)
Ans 2.
Introduction
Situated
in Maharashtra, RBI serves the market in different means. The bank sets the
overnight prime rate for business banks. The Mumbai interbank offer rate for
Commerical banks acts as the standard for interest rate-ranked economic
instruments in the country.
The
primary purpose of the central bank is to carry out the guidance of the
financial industry in the country, which includes business banks, monetary and
non-banking establishments, introducing off-website security of financial
institutions and banks, and strengthening the role of
Q3. Non-Performing
Assets (NPAs) in the Indian Banking sector has become the subject matter of
concern and debate. High NPAs not only block the capital and business turnover
but adversely affects the profitability of the bank. In recent years many new
laws like SARFAESI Act 2002 & 2016, Insolvency and Bankruptcy Code 2016,
BASEL 1, 2 & 3 regulations and regulatory bodies like DRT 1993, NCLT 2016
have been established to monitor and control NPA.
In light of above
statements:
a. Spell out the major
reasons for increase in NPAs since past years (5 Marks)
Ans 3a.
Introduction
A
nonperforming asset can be defined as a category for developments or funding in
arrears or finances. Financing is an arrear when passion payments or principal
are missed out on or late. Finance remains in default when the debtor cannot
satisfy his commitments, and Lendor considers the funding arrangement
b. Explain how SARFAESI
Act helps the bank in recovery (5
Marks)
Ans 3b.
Introduction
The
SARFAESI act represents the "Securitization and Restoration of Financial
Properties and Enforcement of Safety Interest Act". The SARFAESI act helps
banks and banks public auction industrial or residential, or commercial
properties to recover a car loan when a customer fails to pay the financing
Dear students, get
fully solved assignments by professionals
Do
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or
call us at :08263069601
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