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Master of Business Administration
Paper Code: MB FM– 202
Paper Title: Financial Institution & Services
Q. 1. Short answer type questions: Limit 100 - 150
(i) Differentiate
between capital and money market.
Answer: Difference
between Money Market and Capital Market
A financial market is a
place where buyers and seller come together to trade in financial assets such
as bonds, stocks, derivatives, currencies and commodities. The main objective
of a financial market is to fix prices for global trade, increase
(ii) Define Cash
Reserve Ratio (CRR).
Answer: The Reserve
Bank of India or RBI mandates that banks store a proportion of their deposits
in the form of cash so that the same can be given to the bank’s customers if
the need arises. The percentage of cash required to be kept in reserves,
vis-a-vis a bank’s total deposits, is called the Cash Reserve Ratio. The cash
reserve is
(iii) Any two
advantages of Mutual Funds.
Answer: Advanced Portfolio Management
When you buy a mutual
fund, you pay a management fee as part of your expense ratio, which is used to
hire a professional portfolio manager who buys and sells stocks, bonds, etc.1
This is a relatively small price to
(iv) State any two advantages of credit card.
Answer: Shopping experience: Credit cards have
redefined the shopping experience for cardholders. The cards make shopping
easier. One can make big purchases for home needs and appliances using a credit
card without having to take a hit on their monthly budget. Credit cards let
consumers buy products on low-cost EMIs. Credit cards operate on the ‘buy now,
pay later’ principle which works well for salaried individuals with
(v) What are the types of NBFCs?
Answer: The NBFCs can be categorised under two broad heads:
1.
On the nature of their activity
2.
On the basis of deposits
The
different
(vi) What are the types of Mutual Funds?
Answer:
Equity Funds
The largest category is that of equity or stock funds. As the name
implies, this sort of fund invests principally in stocks. Within this group are
various subcategories. Some equity funds are named for the size of the
companies they invest in: small-, mid-, or large-cap. Others are named by their
investment
(vii) Differentiate between public sector and
private sector banks.
Answer: • Shareholders
a) In a public sector
bank more than fifty percentage of the stake is held by the Government.
b) In a private sector
majority of the stake owned to private shareholders, including corporations and
individuals.
• Interest Rate
Deposit interest rates
offered by public sector banks are almost the same when compared to private
sector banks. However new
(viii) Write down the important functions of
SEBI.
Answer:
·
To protect
the interests of investors
in securities market
·
To promote
the development of securities market
·
To regulate the business in stock exchanges and
any other securities markets
·
To register and
regulate the working
of stock brokers,
sub-brokers, share transfer agents, bankers
to an issue,
trustees of trust
deeds, registrars to
an issue, merchant bankers, underwriters,
(ix) Name any four financial instruments.
Answer: Financial
instruments are certain contracts or any document that acts as financial assets
such as debentures and bonds, receivables, cash deposits, bank balances, swaps,
cap, futures, shares, bills of exchange, forwards, FRA or forward rate
agreement, etc to one organization and as a liability to another organization
and these solely taken into use for trading purposes.
Types of the Financial Instrument
- Money
Market Instruments: Money market instruments include
call or notice money, caps and collars,
(x) Who regulates the insurance services in
India?
Answer: IRDA (Insurance Regulatory and Development
Authority) is the regulatory body in India that governs both Life insurance
and General insurance companies. India is a vast country that offers great
opportunities to varied segments one of which is the insurance sector.
How IRDA works:
(Word limits 500)
Q. 2. Explain the challenges and issues faced by
banking industry in current scenario.
Answer: The banking industry is
undergoing a radical shift, one driven by new competition from FinTechs,
changing business models, mounting regulation and compliance pressures, and
disruptive technologies.
The emergence of FinTech/non-bank
startups is changing the competitive landscape in financial services, forcing
traditional institutions to rethink the way they do business. As data breaches
become prevalent and privacy concerns
Q. 3. Define the role of NABARD in rural
development.
Answer: Role of NABARD:
1. It is an apex institution which has power to deal with
all matters concerning policy, planning as well as operations in giving credit
for agriculture and other economic activities in the rural areas.
2. It is a refinancing agency for those institutions that
provide investment and production credit for
Q. 4. Discuss the different schemes provided by
Insurance Companies.
Answer: 1. Life Insurance
Life Insurance refers to a policy or cover whereby the
policyholder can ensure financial freedom for his/her family members after
death. Suppose you are the sole earning member in your family, supporting your
spouse and children.
In such an event, your death would financially devastate the whole
family. Life insurance policies ensure that such a thing does not happen by
providing
Q. 5. Describe the
functions performed by Reserve Bank of India as a central bank.
Answer: 1. Monetary Management:
The Reserve Bank controls and
regulates the flow of credit in the economy. It uses quantitative controlling
weapons, such as bank rate policy, open mar <et operations, and the reserve
ratio requirement. Since 1956, it has increasingly relied on and resorted to selective
credit controls for accelerating the rate of growth and for checking
inflationary spurts.
2. Issue of Bank Notes:
The Reserve Bank has the sole
right to issue currency notes, except one rupee notes — which are issued by the
Ministry of Finance. The
Q. 6. Write a note on
National Housing Bank or State Housing Finance Societies.
Answer: The National
Housing Bank (NHB) is an apex level financial institution catering to the
housing sector in the country.
It was established on
July 9, 1988.
It is a wholly owned
subsidiary of Reserve Bank of India (RBI), was set up by an Act of Parliament
in 1987.
NHB has been
established with an objective to
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students get fully solved assignments
Send
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