Monday, January 7, 2013


01. Narasimhan Committee 1991 has given the following recommendations namely – reduction in SLR and CRR; phasing out directed credit program; the determination of the interest rate should be on the grounds of market forces such as the demand for and the supply of fund; the actual numbers of public sector banks need to be reduced
02. According to narrow banking concept, weak banks will be allowed to place their funds only in short term and risk free assets
03. The following are the recommendations of Narasimhan Committee report 1998 – reduction in CRR and SLR; deregulation of interest rate, fixing prudential norms and capital adequacy norms
04. Basel I which was issued during 1988 focuses on the capital adequacy of financial institutions
05. Capital to risk assets ratio CRAR of all the scheduled commercial banks under Basel I framework improved to 13.6 percent by the end of March, 2010
06. In 1991, the statutory liquidity ratio was as high as 38.5%
07. Narasimhan committee recommended to reduce SLR and CRR to 25 % and 3.5% respectively
08. The following guidelines were issued by RBI in January 1993 for the entry of private sector banks in the wake of Narasimhan Committee recommendations – The new bank upon being granted licence under the banking regulation act by RBI shall be registered as a public limited company under the companies act, 1956; Its inclusion in the second schedule to the RBI act, 1934 shall be subject to RBI’s decision; Preference would be given to those banks the headquarters of which are proposed to be located in the center which does not have the headquarters of any other bank
09. The RBI has prescribed that new private sector bank – shall be subject to prudential norms in regard to income recognition, asset classification and provisioning, capital adequacy ratio etc; shall have to observe priority sector lending targets as applicable to other domestic banks and will be required to open rural and semi urban branches also as may be laid down by RBI
10. To create a strong and competitive banking system, reform measures were initiated in early 1990s and the thrust of these reforms was on – increasing the operation efficiency; developing technological supervision over banks and developing technological and institutional infrastructure
11. Financial inclusion makes people to access financial markets
12. The following steps are taken for financial inclusion in the country – the expansion of network of cooperative banks to provide credit to agriculture and saving facilities in rural areas; nationalization of banks in 1969 and expansion of branches; creation of an elaborate framework of priority sector lending with mandated targets as part of a strategy to meet the savings and credit needs of large sections of the Indian population who had no access to institutional finance
13. The following sections of people are covered under financial inclusion – marginal farmers, landless labourers, self employed and unorganized sector enterprises and urban dwellers
14. Mangalam village situated in the Union territory of Puducherry became the first village in India where all households were provided with banking facilities
15. The objectives of forming self help group is – to build mutual trust and confidence between the bankers and the rural people; to encourage banking activities, both on the thrift as well as credit sides, in a segment of the population that the formal financial institutions usually find difficult to cover and to meet the needs of the poor by combining the flexibility, sensitivity and responsiveness of the informal credit system with the strength of technical and administrative capabilities and financial resources of the formal credit institutions
16. The best alternative banking service to branch banking to be the part of financial inclusion – establishment of small branches; setting up of automated teller machines; issuing of ATM cards, giving credit cards and mobile banking
17. National credit fund for women is the most prominent national level micro finance apex organization providing micro credit services for women in the country
18. Banks provide the lowest lending in the North-eastern part of India
19. No frills accounts are certainly an effort in the direction of financial inclusion
20. The financial assistance or loans of Rs. 10000 by  a bank to a small borrower will be called as micro finance
21. The Rashtriya Mahila Kosh is working exclusively for poor women
22. SHG bank linkage programme was initially launched by NABARD
23. The recent initiatives for financial inclusion in India include – no frill account for retail purpose; simplified KYC (Know your customer); credit counseling centre facilities and extension of smart cards
24. Strong competition between numerous microcredit programs to reduce interest rates is not innovation likely to explain the high repayment rates of microcredit programs
25. Group lending using social sanctions instead of collateral foreclosure is not a potential limit of group lending
26. Collaterals is not a mechanism that contributes to the success of micro credits
27. The index of financial inclusion has been launched for the first time in 2008 by ICRIER
28. Regional Rural banks were established in the country on the recommendations of Narasimhan committee
29. Regional Rural banks were set up during  1975
30. The total authorized capital of Regional Rural Banks was originally fixed at Rs. 1 crore which has since been raised to Rs. 5 crore
31. At present, the formula for subscription to Regional Rural Banks capital has been fixed at – central government 60%; state government 20% and sponsor bank 20%
32. Central Government’s contribution towards the capital of Regional Rural Bank is made through NABARD
33. The sponsor bank helps and aids the Regional Rural Bank sponsored by it by – subscribing to its share capital; training its personnel; providing managerial and financial assistance during the first five years or extended period
34. The sponsor banks are empowered to – monitor the progress of Regional Rural Banks; to conduct inspection and internal audit; to suggest corrective measures
35. As on March, 2011, the total number of Regional Rural Banks in the country are – 82
36. Each of the Regional Rural Banks covers districts ranging from 3 to 25
37. The main resources of Regional Rural Banks are – share capital, deposits from the public, borrowing from sponsor banks, refinance from NABARD
38. Regional Rural Banks are refinanced at 2 percent below the bank rate
39. Regional Rural Banks are owned by central government, state government, sponsor bank and jointly by all of the above
40. With a view to improve the performance of the Regional Rural Banks and giving more powers and flexibility to their boards in decision making RBI had constituted task force on empowering the RRB boards for operational efficiency. The task force was headed by – K.G. Karmakar.
41. The number of directors on the boards of Regional Rural Banks has been raised to 15
42. Regional rural banks are classified under scheduled commercial banks
43. The paid up share capital of Regional Rural Bank is contributed by state government only
44. Regional Rural Banks are empowered to transact the business of banking as defined under Banking Regulation act, 1949
45. Regional Rural Banks are managed by the board of directors
46. The deposits with Regional Rural Banks are insured by DICGC
47. DICGC – Deposit Insurance and Credit Guarantee Corporation
48. For the purpose of Income tax act, 1961, the Regional Rural Banks are treated as – cooperative banks
49. On the current account balances maintained by the Regional Rural Banks with them, the commercial banks may pay interest as applicable to savings accounts
50. By virtue of the amendment carried out by the Regional Rural Bank (Amendment) act, 1987, the chairman of a Regional Rural Bank is to be appointed by sponsor bank in consultation with NABARD

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