Test: Indian Banking and Financial system - Bank Exams MCQ

Cooperative banks are small units that operate in urban and non-urban centres. They finance small debtors in industrial and commercial sectors as well as professional and salary classes. Regulated by the Reserve Bank of India, they are governed by Banking Act, 1949, and Banking Laws (Cooperative Societies) Act, 1965.

Not only cooperative banks, but all the banks have access to Reserve bank of India, as it acts as Banker's bank. So, statement A is not correct.
A cooperative bank is a financial entity that belongs to its members, who are both owners and customers of their bank. Cooperative banks are often created by people belonging to the same local or professional community who share a common interest. So, cooperative banks are not established on Unitary basis. Statement B is thus not correct.
Cooperative banks are regulated by the Reserve Bank of India, Banking Act, 1949, and Banking Laws (Cooperative Societies) Act, 1965. So, statement C is incorrect.

National Housing Bank is an apex body with regard to housing finance. It is a Government of India owned entity. It was set up on 9 July 1988 under the National Housing Bank Act, 1987.

A District Co-operative Central Bank (DCCB) is a cooperative bank operating at the district level in various parts of India. It was established to provide banking to the rural hinterland for the agricultural sector with the branches primarily established in rural and semi-urban areas.
Primary agricultural credit society forms the base in the three-tier cooperative credit structure. It is a village-level institution which directly deals with the rural people. It encourages savings among the agriculturists, accepts deposits from them, gives loans to the needy borrowers and collects repayments.
State cooperative banks are the apex institutions in the three-tier cooperative credit structure, operating at the state level. Every state has a state cooperative bank.

The Reserve Bank of India (RBI) has brought down the minimum eligibility criteria of urban cooperative banks (UCBs) wishing to entry the insurance business.It has halved the minimum net worth of UCBs wanting to undertake insurance business as a corporate agent without any risk participation. It has reduced the required net worth of UCBs from Rs. 100 crore to Rs. 50 crore.

The Local Area Bank Scheme was introduced in August 1996 pursuant to the announcement of the then Finance Minister. In his budget speech, the Finance Minister referred to the setting up of new private local banks with jurisdiction over two or three contiguous districts. He observed that this would enable the mobilization of rural savings by local institutions and make them available for investments in the local areas. The Local Area Banks (LABs) were expected to bridge the gaps in credit availability and strengthen the institutional credit framework in the rural and semi-urban areas.

Eligibility criteria for drawal of refinance from NABARD are reviewed from time to time. The eligibility criteria prescribed for the year 2020-2021 are as under:Net NPAs not exceeding 12% of net loans and advances outstanding. Further the NPA position will be reckoned for the bank as a whole.

In terms of Section 42(1-A) of RBI Act, 1934, the Scheduled Commercial Banks are required to maintain reserve requirements such as SLR/CRR. The Regional Rural Banks come under this section.

In syndication, there is a lead bank or underwriting bank, which gives finance to the organisation. Two or more banks can be an underwriting bank, but leading bank will be only one. But, this is not in the case of consortium, where the borrower has to arrange the finance from different banks.

Fiscal policy is the means by which a government adjusts its spending levels and tax rates in order to monitor and influence a nation's economy. It is that policy which works with monetary policy and sets the tax rates in the country. It is very much important for the economic growth of the country. Hence, fiscal policy of a country brings a crucial impact on the economic growth of the nation.

Insider trading is the trading of securities of a company by an insider using company's non-public, price-sensitive information while causing losses to the company or profit to oneself. It is a malpractice wherein trade of a company's securities is undertaken by people who by virtue of their work have access to the otherwise non-public information which can be crucial for making investment decisions.