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Test: Organisation of Indian Financial System - B Com MCQ


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10 Questions MCQ Test - Test: Organisation of Indian Financial System

Test: Organisation of Indian Financial System for B Com 2024 is part of B Com preparation. The Test: Organisation of Indian Financial System questions and answers have been prepared according to the B Com exam syllabus.The Test: Organisation of Indian Financial System MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Organisation of Indian Financial System below.
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Test: Organisation of Indian Financial System - Question 1
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Which of the following is NOT part of the organised sector in the Indian financial system?

Detailed Solution for Test: Organisation of Indian Financial System - Question 1
The organised sector in the Indian financial system includes banks, financial institutions, and the central bank. Moneylenders, on the other hand, belong to the unorganised sector of the financial system. Unlike the organised sector, the unorganised sector is not directly regulated by the Reserve Bank of India (RBI) or the government.
Test: Organisation of Indian Financial System - Question 2
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Which sector of the Indian financial system has a network of cooperative banks and land development banks?

Detailed Solution for Test: Organisation of Indian Financial System - Question 2
The cooperative system is a sector in the Indian financial system that consists of a network of cooperative banks and land development banks. These banks primarily serve the rural areas and provide financial services to farmers and other members of the cooperative societies. They play an important role in supplanting the village moneylenders and promoting the development of Indian agriculture.
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Test: Organisation of Indian Financial System - Question 3
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Which sector of the Indian financial system is not directly regulated by the Reserve Bank of India (RBI)?

Detailed Solution for Test: Organisation of Indian Financial System - Question 3
The money and capital markets in India are part of the organised sector of the financial system, but they are not directly regulated by the Reserve Bank of India (RBI). These markets, which involve the buying and selling of short-term and long-term financial instruments, are influenced by various factors such as demand and supply dynamics, interest rates, and market forces. However, the RBI does play a role in maintaining overall stability and ensuring the smooth functioning of these markets.
Test: Organisation of Indian Financial System - Question 4
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Which sector of the Indian financial system provides short-term funds mainly through commercial and cooperative banks?
Detailed Solution for Test: Organisation of Indian Financial System - Question 4
The money markets in the Indian financial system are responsible for providing short-term funds. These funds are primarily sourced from commercial and cooperative banks, which play a significant role in meeting the short-term financing needs of various entities such as households, businesses, and the government. The money markets facilitate the borrowing and lending of short-term funds through instruments like treasury bills, commercial paper, and certificates of deposit.
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What is the role of the central bank in the Indian financial system?
Detailed Solution for Test: Organisation of Indian Financial System - Question 5
The central bank, which in India is the Reserve Bank of India (RBI), acts as the head of the financial system. It plays a crucial role in formulating and implementing monetary policies, regulating the banking sector, and maintaining financial stability. The central bank is responsible for managing the country's currency, controlling inflation, and ensuring the smooth functioning of the financial system.
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Which sector of the Indian financial system is focused on meeting the long-term credit requirements of farmers?
Detailed Solution for Test: Organisation of Indian Financial System - Question 6
The development banking system in India is primarily focused on meeting the long-term credit requirements of farmers. This system includes institutions such as land development banks, which provide loans for agricultural purposes like purchasing equipment, land development, and repairs. These banks serve as cooperative institutions and offer loans to farmers against the mortgage of their immovable property. The development banking system plays a crucial role in supporting agricultural development and promoting rural growth.
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Which sector of the Indian financial system includes indigenous bankers and moneylenders?
Detailed Solution for Test: Organisation of Indian Financial System - Question 7
The unorganised sector of the Indian financial system includes indigenous bankers, moneylenders, and other informal financial enterprises. Unlike the organised sector, which is regulated by the Reserve Bank of India (RBI) and the government, the unorganised sector operates with relatively less control. Moneylenders in the unorganised sector provide financial services outside the purview of formal banking institutions and are subject to their own rules and regulations.
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What was the role of indigenous bankers in the Indian financial system?
Detailed Solution for Test: Organisation of Indian Financial System - Question 8
Indigenous bankers in the Indian financial system played a crucial role in financing local trade as well as trade between port towns and inland centers of production. They were known for their centuries-old tradition of using financial instruments like hundi, which were similar to commercial bills. Indigenous bankers, belonging to certain castes or communities, combined banking with other activities and often provided endorsements and guarantees for loans. They were an integral part of the financial system before the advent of formal banking institutions.
Test: Organisation of Indian Financial System - Question 9
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What is the main purpose of the rural financial system in India?
Detailed Solution for Test: Organisation of Indian Financial System - Question 9
The main purpose of the rural financial system in India is to supplant the village moneylenders, who have historically been the predominant source of rural finance. The rural financial system, which includes institutions like primary agricultural credit societies and cooperative banks, aims to provide affordable and accessible financial services to farmers and rural communities. By offering better terms and conditions than moneylenders, the rural financial system promotes agricultural development and helps farmers overcome the challenges of high-interest rates and exploitative practices.
Test: Organisation of Indian Financial System - Question 10
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What is the role of the capital market in the Indian financial system?
Detailed Solution for Test: Organisation of Indian Financial System - Question 10
The capital market in the Indian financial system plays a crucial role in meeting the medium-term and long-term financial needs of businesses and other undertakings. It is the market where financial institutions, such as investment banks, merchant banks, and mutual funds, provide medium and long-term resources to borrowers. The capital market facilitates the issuance and trading of securities like shares and bonds, enabling businesses to raise capital for expansion, investment, and other developmental purposes. It is an important source of funding for the growth and development of the Indian economy.
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