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RBI Assistant Exam Study Material for Banking Knowledge Section

Important Questions:
Q1. Which of the following is a correct statement?
(a) Normally no interest is paid on current deposit accounts
(b) Interest is paid on current accounts at the same rate as term deposit accounts
(c) The rate of interest on current account and savings account are the same
(d) No interest is paid on any deposit by the bank,
(e) Savings deposits are the same as current deposits

Q2. What do you understand by the term ‘Mortgage’?
(a) Sale of moveable security in the event of default by the borrower
(b) Registration of charge with the Registrar of Companies
(c) Making the security of immovable property available as a cover for a home loan by the borrower
(d) Registration of charge with the Regional Transport Authority
(e) Returning of the security to borrower by the bank of receipt of full payment

Q3. Which of the following is NOT a source of funds of a commercial bank?
(a) Capital
(b) Borrowings from RBI
(c) Call money
(d) Deposits
(e) Cash reserves with RBI

Q4. The Banking Ombudsman is-
(a) is in charge of bank loan for buses
(b) fixes the rates of interest for loans
(c) resolves complaints of customers
(d) issues licences for new bank branches
(e) is the head of all nationalised banks

Q5. “Scheduled bank” means a bank
(a) incorporated under the Companies Act, 1956,
(b) authorised to the Banking business,
(c) Governed by the Banking Regulation Act, 1949,
(d) Included in the Second schedule to the Reserve Bank of India Act 1934
(e) None of the above

Q6. Which of the following acts is useful in controlling HAWALA transactions?
(a) FEMA Act
(b) RBI Act
(c) DICGC Act
(d) Banking Regulation Act
(e) None of the above

Q7. What does the term SME stand for?
(a) Small and Micro Enterprises
(b) Small and Medium Enterprises
(c) State and Medium Economy
(d) Small and Medium Economy
(e) None of the above

Q8. CAMELS’ is a type of Bank Rating System. In CAMELS, what does ‘C’ stand for?
(a) Currency
(b) Compensation
(c) Capital Adequacy
(d) Capitalisation
(e) None of the above

Q9. In banking parlance, ‘NPA’ stands for?
(a) Non-Performing Asset
(b) Net Producing Asset
(c) Net Performing Asset
(d) Not Promoting Asset
(e) None of the above

Q10. LAF is an indirect instrument of monetary policy, which is used by RBI to regulate the liquidity in banking system. ‘LAF’ stands for-
(a) Liquidity Adjustment Facility
(b) Liquidity Account Facility
(c) Liquidity Allotment Facility
(d) Long Adjustment Feature
(e) None of the above

Q11. Often, we read in the newspapers that several Indian companies are taking the FCCB route to raise capital. What does the term FCCB stand for?
(a) Foreign Currency Convertible Bond
(b) Foreign Convertible Credit Bond
(c) Financial Consortium and Credit Bureau
(d) Future Credit and Currency Bureau
(e) None of the above

Q12. _____________ are NOT a part of the Scheduled Banking structure in India.
(a) Money lenders
(b) Public sector banks
(c) Private sector banks
(d) Regional rural banks
(e) None of the above

Q13. ‘MAT’ is an acronym which stands for-
(a) Maximum Alternate Tax
(b) Minimum Alternate Tax
(c) Minimum Affordable Tax
(d) Maximum Affordable Tax
(e) None of the above

Q14. DEPB (Duty Entitled Passbook) scheme which ended in September 2011 was related to-
(a) Foreign direct investment
(b) Foreign institutional investment
(c) Export promotion
(d) Import substitution
(e) None of the above

Q15. ‘KYC’ (Know Your Customer) norms were implemented in the Indian banking system in 2002 as per the directive of?
(a) SEBI
(b) RBI
(c) IBA
(d) IRDA
(e) None of the above

RBI Assistant Exam Banking Knowledge Section Notes

The Securities and Exchange Board of India
The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India
"Its Basic function is to protect the interests of investors in securities and to promote the development, and to regulate the securities market and for matters connected there with or incidental there to"
The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
SEBI has to be responsive to the needs of three groups, which constitute the market:
The issuers of securities
The investors
The market intermediaries.

Headquarters
Its headquarters at the business district of Bandra Kurla Complex in Mumbai (Maharashtra), and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively. It has opened local offices at Jaipur and Bangalore.

Management of the Board.
The Board shall consist of the following members, namely: -
(a) A Chairman;
(b) Two members from amongst the officials of the [Ministry] of the Central Government dealing with Finance
(c) One member from amongst the officials of [the Reserve Bank];
(d) Five other members of whom at least three shall be the whole-time members to be appointed by the central Government.

Chairman- Upendra Kumar Sinha

Powers
For the discharge of its functions efficiently, SEBI has been vested with the following powers:
- To approve by−laws of stock exchanges.
- To require the stock exchange to amend their by−laws.
- Inspect the books of accounts and call for periodical returns from recognized stock exchanges.
- Inspect the books of accounts of financial intermediaries.
- Compel certain companies to list their shares in one or more stock exchanges.

What is MUDRA Bank?
Micro Units Development and Refinance Agency Bank (MUDRA Bank), is a new institution setup by the Government of India for development of micro units and refinance of MFIs to encourage entrepreneurship in India & provide the funding to the non-corporate small business sector.

MUDRA Bank will need two type of product like refinance for the micro units having loan requirement from Rs 50 thousands to 10 lakhs and support to Micro Finance Institutions (MFI) for landing. MUDRA will refinance to micro business under the scheme of Pradhan Mantri MUDRA Yojana.

Types of Loan provided by MUDRA Bank

MUDRA SHISHU Yojana

Under Mudra Shishu Yojana banks are providing loan upto 50,000/-. It is basic scheme and banks are charging very nominal interest rate which is around 10% to 12%.


MUDRA KISHOR Yojana

Under Mudra Kishor Yojana bank are providing loan between 50,001 to 5,00, 000/- rupee.
It is middle scheme & comes in category of unsecured loan & its Interest rate is high from14% to 17% depends on bank to bank.

MUDRA TARUN Yojana

Mudra Tarun Yojana is the last scheme of government of India. Under MUDRA Tarun Scheme applicant can apply loan between 5,00,001 to 10,00,000/-. It is also an unsecured Loan and its rate of interest rate is high and starts from 16% and very bank to bank.

It would be ensured that more focus is given to Shishu Category Units and then Kishor and Tarun Categories.

Recently Central Government decides to provide an additional fund of ₹ One Lakh crore to the market and it will be allocate according to below list.
40,000 Crore Rupee for Mudra Bank Shishu Loan Scheme.
35, 000 Crore Rupee for Mudra Bank Kishor Loan Scheme.
25, 000 Crore Rupee for Mudra Bank Tarun Loan Scheme.


The funding support from MUDRA are of four types :
Micro Credit Scheme (MCS) for loans upto 1 lakh finance through MFIs.
Refinance Scheme for Commercial Banks / Regional Rural Banks (RRBs) / Scheduled Co-operative Banks
Women Enterprise programme
Securitization of loan portfolio

Purpose of MUDRA loan
Mudra loan is extended for a variety of purposes which provide income generation and employment creation. The loans are extended mainly for:
(i) Business loan for Vendors, Traders, Shopkeepers and other Service Sector activities.
(ii) Working capital loan through MUDRA Cards.
(iii) Equipment Finance for Micro Units.
(iv) Transport Vehicle loans.

Following is an illustrative list of the activities that can be covered under MUDRA loans:

1 Transport Vehicle
Purchase of transport vehicles for goods and personal transport such as auto rickshaw, small goods transport vehicle, 3 wheelers, e-rickshaw, passenger cars, taxis, etc.

2 Community, Social & Personal Service Activities
Saloons, beauty parlours, gymnasium, boutiques, tailoring shops, dry cleaning, cycle and motorcycle repair shop, DTP and Photocopying Facilities, Medicine Shops, Courier Agents, etc.

3 Food Products Sector
Activities such as papad making, achaar making, jam / jelly making, agricultural produce preservation at rural level, sweet shops, small service food stalls and day to day catering / canteen services, cold chain vehicles, cold storages, ice making units, ice cream making units, biscuit, bread and bun making, etc.

4 Textile Products Sector / Activity
Handloom, powerloom, khadi activity, chikan work, zari and zardozi work, traditional embroidery and hand work, traditional dyeing and printing, apparel design, knitting, cotton ginning, computerized embroidery, stitching and other textile non garment products such as bags, vehicle accessories, furnishing accessories, etc.

5 Business loans for Traders and Shopkeepers
Financial support for on lending to individuals for running their shops / trading & business activities / service enterprises and non-farm income generating activities with beneficiary loan size of upto 10 lakh per enterprise / borrower.

6 Equipment Finance Scheme for Micro Units
Setting up micro enterprises by purchasing necessary machinery / equipments with per beneficiary loan size of upto 10 lakh.

MUDRA Card
MUDRA Card is a debit card issued against the MUDRA loan account, for working capital portion of the loan. The borrower can make use of MUDRA Card in multiple withdrawal and credit, so as to manage the working capital limit in a most efficient manner and keep the interest burden minimum. MUDRA Card will also help in digitalization of MUDRA transactions and creating credit history for the borrower.

Formation of New Development Bank (NDB)
The idea for creation of the New Development Bank was first mooted in the Fourth BRICS Summit at New Delhi on March 29, 2012 to meet the development funding requirements of the five founding countries namely Brazil, Russia, India, China & South Africa (BRICS) and other emerging economies and developing countries as well.

On July 15, 2014 at the sixth summit in Fortaleza, Brazil the member countries signed the Articles for the New Development Bank with an Authorized Capital of USD 100 billion. The founders established the Bank with a purpose of mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development.To fulfill its purpose, the Bank was envisaged to support public or private projects through loans, guarantees, equity participation and other financial instruments. It shall also cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the Bank.
The first Board of Governors meeting of the Bank was held in Moscow, Russia on July 7, 2015 where the Bank formally came into existence as a legal entity. Mr. K.V. Kamath was elected the first President of the Bank and the Vice-Presidents were appointed by the Governors.

Sustainable Development of NDB:
The 21st century has brought with it tremendous development. However, this progress has been skewed, insufficient & often harmful to our environment. We are committed to be a partner in bringing about sustainable development. We are looking forward to partner with initiatives that drive growth and employment while ensuring environmental protection.

Infrastructure of NDB:
Infrastructure development is the key driver of economic and social growth. In the context of developing nations, infrastructural deficiencies are a matter of concern. We, at NDB, strive to identify the gaps between ‘needs’ and ‘funding’. Our mission is to bridge these gaps and be a partner in bringing about truly holistic development.

Changing the course of development
The New Development Bank is instituted with a vision to support and foster infrastructure and sustainable development initiatives in emerging economies. The Bank will also complement the efforts of other existing financial institutions to realize the common goal of global growth. To accomplish our holistic objectives we work with an attitude to ‘listen, learn, collaborate, innovate’.

Difference
The New Development Bank comes with a very open mindset. Like the economies we look forward to partner with, we too are on the development curve. We understand the challenges and needs of borrowing partners. This gives us the ability to structure our offerings and processes accordingly. We aim at addressing the needs of developing economies in today’s context and partner with them.