Bank Theory

Indian Financial System – MCQs 1. What does a financial system primarily facilitate? A) Political stability B) Religious practices C) Transfer and allocation of funds D) Social integration Correct Answer: C) Transfer and allocation of funds 2. Which institution was established in 1935? A) State Bank of India B) Reserve Bank of India C) NABARD D) ICICI Bank Correct Answer: B) Reserve Bank of India 3. When was the Reserve Bank of India nationalized? A) 1935 B) 1949 C) 1969 D) 1991 Correct Answer: B) 1949 4. What was a major outcome of the Narasimham Committee Report (1991)? A) Abolition of all private banks B) Increased CRR and SLR C) Restructuring weak banks and capital norms D) Complete priva...

Indian Financial System - Regulators & Their Roles The Indian Financial System comprises institutions, markets, instruments, and services that facilitate the flow of funds in the economy. Financial sector regulators ensure transparency, trust, and efficiency in the system. Role of Financial Sector Regulators in an Economy Financial regulators maintain the integrity of the financial system by setting rules, monitoring compliance, and intervening when necessary to maintain market stability and protect consumers. 1. Reserve Bank of India (RBI) Acts as the central bank and regulator of monetary policy. Issues currency and manages foreign exchange reserves. Regulates and supervises commercial banks, NBFCs, and cooperative banks. Maintains financial stability through liquidity management and inflation targeting. 2. Securities and Exchange Board of India (SEBI) Regulates the securities market (stocks, bonds, mu...

MODULE C: INDIAN FINANCIAL ARCHITECTURE Indian Financial System – An Overview What is a Financial System? The financial system is a network of institutions, markets, instruments, and services that facilitate the transfer and allocation of funds. It enables savings mobilization, investment, and economic growth by linking lenders and borrowers efficiently. Phase I: Pre-1951 Organisation This period saw the dominance of informal financial systems with minimal regulation. The Reserve Bank of India (RBI) was established in 1935, but the banking system remained fragmented, with a few large private banks and cooperative institutions. Phase II: 1951 to Mid-Eighties Organisation This era focused on planned economic development. Key developments included nationalization of the RBI (1949), the State Bank of India Act (1955), and the nationalization of 14 major banks in 1969. The financial system was characterized by...