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Samacheer Kalvi 11th Commerce Solutions Chapter 10 Reserve Bank of India
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Samacheer Kalvi 11th Commerce Reserve Bank of India Textbook Exercise Questions and Answers
I. Choose the Correct Answer
Question 1.
Which bank has the power to issue bank notes?
(a) Central bank
(b) Commercial bank
(c) Co – operative banks
(d) Foreign banks
Answer:
(a) Central bank
Question 2.
The Central bank of India is …………….
(a) PNB
(b) SBI
(c) ICICI
(d) RBI
Answer:
(d) RBI
Question 3.
The Reserve Bank of India commenced its operations from April 1,
(a) 1936
(b) 1935
(c) 1934
(d) 1933
Answer:
(b) 1935
Question 4.
Bankers are not only dealers of money but also leaders in …………….
(a) Economic development
(b) Trade development
(c) Industry development
(d) Service development
Answer:
(a) Economic development
Question 5.
Which of the following is not a function of a central bank?
(a) Guiding and regulating the banking system of a country
(b) Deal with the general public
(c) Acts essentially as Government banker
(d) Maintains deposit accounts of all other banks
Answer:
(b) Deal with the general public
II. Very Short Answer Questions
Question 1.
What are the services included in Service businesses?
Answer:
Educational, Medical, Hospitality and banking are the services included in service businesses. Bank service is the nerve center of industry and commerce in a country.
Question 2.
Write the meaning of ‘Bank’.
Answer:
In simple words, bank is an institution, which deals in money and credit. The Bank, normally refers to Commercial Bank.
Question 3.
Briefly explain about Central Bank.
Answer:
Every nation has one central bank. It is owned by the Government of the country. The control over the entire banking system of a country is vested with this apex bank. Central banks are known by different names in different countries. In India the Reserve Bank of India (RBI) is the central bank.
III. Short Answer Questions
Question 1.
Mention the importance of banking services.
Answer:
Banking service is the nerve center of industry and commerce in a country. It plays a vital role by providing the money required for their regular functioning and development.
Question 2.
Explain the origin of RBI.
Answer:
The Imperial Bank of India carried out the note issue and other functions of the central bank. In 1926 the Hilton-Young Commission or the Royal Commission on Indian Currency and Finance (J. M. Keynes and Sir Ernest Cable were its members) made recommendation to create a central bank. As a result the RBI Act 1934 was passed and RBI launched in operations from April 1,1935. RBI was established with a share capital of Rs. 5 crores divided into shares of Rs. 100 each fully paid up. The Head office of the RBI is situated in Mumbai.
Question 3.
Who are the persons involved in RBI administration?
Answer:
The RBI is governed by the central board of directors. The 21 members board is appointed by the Government of India. It consists of:
- One Governor and four deputy governors appointed for a period of four years.
- Ten Directors from various fields
- Two Government officials
- Four Directors – one each from local boards.
IV. Long Answer Questions
Question 1.
Classify the various functions of Reserve Bank of India.
Answer:
The functions of the RBI can be grouped under three heads:
(i) Leadership and Supervisory Functions, (ii) Traditional Functions and, (iii) Promotional Functions.
(i) Leadership and Supervisory Functions:
- India’s Representative in World Financial Institutions
- Regulator and Supervisor of Indian Banking System
- Monetary Authority
- Closely Monitoring Economic Parameters
- Promptly Responding to New Challenges
(ii) Traditional Functions:
- Banker and Financial Advisor to the Government
- Monopoly of Note Issue
- Banker’s Bank
- Controller of Credit and Liquidity
- Quantitative Methods of Credit Control
- Qualitative Credit Control Measures
- Lender of the Last Resort
- Clearing House Services
- Custodian of Foreign Exchange Reserves
- Maintenance of Foreign Exchange Rate
- Collection and Publication of Authentic Data
(iii) Promotional Functions:
- Nurturing Banking Habits among the Public
- Grievance Settlement Measures
- Agricultural Development
- Promotion of Small Scale Industries
- Facilitates Foreign Trade
- Supports Cooperative Sector
Question 2.
Explain the organizational structure of RBI.
Answer:
The head office of the RBI is situated in Mumbai. This central office has 33 departments in 2017. It has four zonal offices in Mumbai, Delhi, Calcutta, and Chennai functioning under local boards with deputy governors as their heads. It also has 19 regional offices and 11 sub-offices (2017). The RBI is governed by a central board of directors. The 21 member board is appointed by the Government of India. It consists of:
- One Governor and four deputy governors appointed for a period of four years,
- Ten Directors from various fields
- Two Government officials
- Four Directors – one each from local boards.
Samacheer Kalvi 11th Commerce Cooperative Organisation Additional Questions and Answers
I. Choose the Correct Answer:
Question 1.
The …………………. bank is also called as Commercial Bank.
a. World
b. Central
c. Hindustan
d. Domestic
Answer:
a. World
Question 2.
IBRD is otherwise called as …………….
(a) IMF
(b) World Bank
(c) SBI
(d) RBI
Answer:
(b) World Bank
Question 3.
The Presidential Banks were amalgamated into the Imperial Bank of India in the year …………..
a. 1995
b. 1932
c. 1965
d. 1921
Answer:
d. 1921
Question 4.
Banking Regulation Act, …………….
(a) 1947
(b) 1949
(c) 1945
(d) 1946
Answer:
(b) 1949
Question 5.
The head office of RBI is situated in ………………
a. Chennai
b. Delhi
c. Mumbai
d. Haryana
Answer:
c. Mumbai
Question 6.
When did India carry out demonetization?
(a) Nov 8, 1996
(b) Nov 8, 2016
(c) Nov 8, 2006
(d) Nov 8, 2017
Answer:
(b) Nov 8, 2016
Question 7.
…………………. is the monopoly of note issue in India.
a. PNB
b. SBI
c. ICICI
d. RBI
Answer:
d. RBI
II. Very Short Answer Questions
Question 1.
Write a note on ancient Banking service in Tamil Nadu.
Answer:
In ancient days the following concepts were in practice in Tamil Nadu:
Patru-debit, Varavu-credit, Selavu-expenditure, Laabam-profit Nashtam-loss, all collectively known as Tynthogai trial balance. The ledger is called ‘Peredu’.
Question 2.
What is Cash Reserve Ratio (CRR)?
Answer:
It is the ratio of cash reserves with the RBI kept by Scheduled banks in proportion to the total Time and Demand Liabilities with them.
Question 3.
Explain SLR.
Answer:
It is the ratio of money and money equivalents kept within the bank in proportion to the total Time and Demand Liabilities with them.
Question 4.
How did the remonetization carried out in India in the year 2016?
Answer:
The remonetization was carried out by issuing new 2000 and 500 currency notes.
For Future Learning
Question 1.
Know the Central Banks of Some other Countries.
Answer:
The Central Bank of Russia is the Bank of Russia
The Central Bank of Sri Lanka is the Central Bank of Sri Lanka
- The Central Bank of the USA is Federal Reserve tori The Fed
- The Central Bank of Pakistan is The State Bank of Pakistan
Question 2.
Mention the names of Central Banks in three other countries.
Answer:
- Australia – Reserve Bank of Australia
- Algeria – Bank of Algeria
- Canada – Bank of Canada
Case Study
Question 1.
Taka up a recent newspaper clipping about RBI such as the measures taken to reduce NPA. etc.
Answer:
The non-performing asset (NPA) situation has been one of the contentious issues in the country over the last few years. Even though demonstration has been an issue Recently, the issue of NPAs has been at the foremost of the banking fraternity’s concerns in the last year. In the Context of an ordinance issued by the government to provide more independence to the Reserve Bank of India (RBI), it is important to understand what can really be done, considering that RBI has more powers to address this issue. The question for the RBI now is “How will it solve the problem?”. While experts have commented on various measures, it would also be prudent to look across the border to China to see how to deal with this.
- The first was to reduce risks by strengthening banks and spearheading reforms to the state-owned enterprises (SOEs) by reducing their level of debt.
- The second important measure was enacting laws that allowed the creation of assets management companies, equity participation, and most important asset-based securitization.
- The third key measure that China took was to ensure the government had the financial loss of the debt “discounted” and debts equity swaps were allowed in case of growth opportunity.
- The fourth measure they took was producing incentives like tax breaks, exemption from administrative fees, and transparent evaluation norms.
- To conclude, it is important to look after some of the key measures taken by other countries to address the NPA issue.
- India should leam from it, especially in the context of valuations, securitization, and a more targeted NPA redressal mechanism. Sri Ram Balasubramanian is an economist First Published: Wednesday, May 10, 2017.
Question 2.
Arrange for a group discussion on customer grievances and the cases settled by Banking Ombudsman offices.
Answer:
Banking Ombudsman offices:
The Banking Ombudsman scheme-, 1995 was notified by RBI on June 14, 1995, in terms of the power confessed on the Bank by Section 35 A of the Banking Regulations Act 1949 (10 of 1949) to provide for a system of redressal of grievances against banks. The scheme sought to establish a system of expeditions and inexpensive resolutions of customer complaints. The scheme is operation since 1995 and was revised during the year 2002. The scheme is being executed by Banking Ombudsman appointed by RBI at 15 centers covering the entire country.
Question 3.
Visit the RBI website www.rbi.org.in to read and have a discussion on any annual report, etc.
Answer:
Name of the complaints received by the Banking Ombudsman
Awards issued by the Banking Ombudsman
and so on …. till 15 centres.
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