Test: Other Banking & Financial Organisations - 2 - Bank Exams MCQ

National Housing Bank promotes housing for all and stabilizes the market for Housing finance to serve the housing needs of all segments with a special focus on affordable housing segments for lower and middle-class people.

• External debt is the portion of a country's debt that is borrowed from foreign lenders, including commercial banks, governments, or international financial institutions. 
• India‘s external debt continues to be sustainable and prudently managed, the COVID-19 pandemic notwithstanding.
  • As of end-March 2021, it stood at US$ 570.0 billion growing by a modest 2.1 per cent over the level a year ago. Hence, statement 2 is incorrect.
• External debt as a ratio to GDP marginally rose to 21.1 per cent from 20.6 per cent as at end-March 2020.
  • ECBs were the largest component of external debt, followed by NRI deposits, trade credit (import financing). Hence, statement 4 is correct.
• Reserves to external debt ratio, however, increased to 101.2 per cent from 85.6 per cent during the same period. Hence, statement 3 is correct. 
  • Thereby consolidating India‘s position as a net creditor to the world.
• The sovereign debt at US$ 107.2 billion rose higher by 6.2 per cent over its level a year ago, mainly because of an increase in external assistance more than compensating the fall in FPI investment in G-Sec.
  • The augmented external assistance reflected larger disbursement of COVID-19 loans from multilateral agencies during 2020-21.
  • The non-sovereign debt, on the other hand, grew 1.2 per cent.
• The long-term debt constituted 82.3 per cent of the total, while the rest of 17.7 per cent was short-term in maturity. Hence, statement 1 is correct

The National Bank for Financing Infrastructure and Development (NaBFID) is set up as the principal development financial institution (DFIs) for infrastructure financing. The National Bank for Financing Infrastructure and Development Bill, 2021 was introduced in Lok Sabha on March 22, 2021.

• Any money that has been borrowed from foreign sources for financing the commercial activities in India are called External Commercial Borrowings.
• The Government of India permits ECBs as a source of finance for Indian Corporates for expansion of existing capacity as well as for fresh investment.
• FCCB is the money being raised by the issuing company is in the form of a foreign currency, and Indian companies are allowed to do this.
• Preference share is to raise money using shares. It is also allowed to raise money. 

The agricultural credit functions of RBI and the refinance functions of the erstwhile Agricultural Refinance and Development Corporation (ARDC) were transferred to NABARD on July 12, 1982, established with an Rs.100 crore starting capital.

• The RBI has liberalised the end-use stipulations for the External Commercial Borrowings both for corporates as well as liquidity starved non-banking lenders.
• The liberalisation will be applicable to ECBs taken for working capital, general corporate purpose loans or repayment of rupee loans.
• The RBI also issued a revised circular for bankers capturing the changes.

Securities and Exchange Board of India (SEBI) is an organization tasked with monitoring and regulating the Indian capital and securities markets, as well as drafting legislation and guidelines to protect investors' interests.

ECB refers to the loans taken from non-resident lenders i.e. the foreign companies to finance commercial activities in India. ECBs cannot be used for investment in stock market or speculation in real estate. At some times, borrowings from external companies can be cheaper than that borrowed within the country. There are two ways in which ECB can be accessed in the country: Automatic Route, under which, the borrower is not to take any permission from RBI or Govt. and Approval Route under which, the borrower has to take approval from RBI or GOI.

IFCI was India's first industrial financing institution, founded shortly after independence. The Industrial Finance Corporation of India Act 1948 established it as a statutory corporation in July 1948. It has now been converted into a joint-stock company under the Companies Act of 1956, with effect from July 1, 1993.

External commercial borrowing (ECBs) are loans in India made by non - resident lenders in foreign currency to Indian borrowers.

• They are used widely in India to facilitate access to foreign money by Indian corporations and PSUs (public sector undertakings).
• They are regulated by RBI.