MA0036 & FINANCIAL SYSTEM & COMMERCIAL BANKING

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ASSIGNMENT

DRIVE	WINTER 2014
PROGRAM	MBADS (SEM 3/SEM 5)MBAFLEX/ MBA (SEM 3)PGDBMN (SEM 1)
SUBJECT CODE & NAME	MA0036 & FINANCIAL SYSTEM & COMMERCIAL BANKING
BK ID	B1770
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q. 1. Financial system is a set of inter-related economic activities working together to achieve economic development. Explain the significance, characteristics, need and importance of financial system.

Answer:Significance of financial system:In finance, the financial system is the system that allows the transfer of money between savers (and investors) and borrowers. A financial system can operate on a global, regional or firm specific level. Gurusamy, writing in Financial Services and Systems has described it as comprising "a set of complex and closely interconnected financial institutions, markets, instruments, services, practices, and transactions."

Characteristics of financial system:The financial industry makes a considerable contribution to employment and economic output in Australia. However, the Inquiry believes the focus of financial system policy should be primarily on the degree

Q. 2. Money market is one of the type of financial market. Explain the features of money market and write the constituents of money market.

Answer:The money market is not one market but is “a collective name given to the various form and institutions that deal with the various grades of near ­money.”

Features of money market:

Q. 3. Write short notes on :

a) Commercial Banks:A commercial bank is a type of bank that provides services such as accepting deposits, making business loans, and offering basic investment products.  Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to individual members of the public (retail banking).  In the United States the term "commercial bank" was often used to distinguish it from an investment bank due to differences in bank

b) Co-operative Banks:Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world.  Cooperative banking, as discussed here, includes retail banking carried out by credit unions, mutual savings banks, building societies and cooperatives, as well as commercial banking services provided by mutual organizations (such as cooperative federations) to cooperative businesses.

c) Post office:A post office is a customer service facility forming part of a national postal system. Post offices offer mail-related services such as acceptance of letters and parcels; provision of post office boxes; and sale of

Q. 4. The business of commercial banks deals with Liability products and asset products. Explain the important features of liability products.

Answer:Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause. Although the word "product" has broad connotations, product liability as an area of law is traditionally limited to products in the form of tangible personal property.

Q. 5. Explain the Chore committee recommendations and also write about the challenges and issues of financial reforms.

Answer:Chore committee recommendations: The quality of lending improved considerably but the cash credit system continued to pose few difficulties. Bifurcation of working capital limit in two parts as demand loan and a fluctuating cash credit component, as suggested by Tandon Group, was not done by many banks. It was, therefore, considered necessary by Reserve Bank to review the system of cash credit in all its aspects and for this purpose a 'Working Group' headed by Sh. K. B. Chore was appointed in 1979.

Q. 6. Explain the perspectives in retail banking and perspectives in Regulation.

Answer:Explanation of perspectives in retail banking:A plodding recovery, weak macroeconomic conditions, and dim growth prospects continue to challenge the world’s leading retail banks. In response, these banks are taking action to improve their operational effectiveness and productivity.

The most efficient and profitable among them are going a step further. While continuing to achieve gains in efficiency, they are also becoming more

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