Page 56 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 3: Indian Banking System

Every commercial bank has to keep a margin whenever it extends loans against the Notes
security.

Regulation of Consumer credit is used by government or central bank to implement
certain regulations on goods sold on credit.

3.7 Keywords

ATMs: Automatic Teller Machines

Bank Rate: The interest rate at which a nation’s central bank lends money to domestic banks.
Democratization: The action of making something democratic.
Economy: The wealth and resources of a country or region, esp. in terms of the production and
consumption of goods and services.
Governance: Governance is the act of governing. It relates to decisions that define expectations,
grant power, or verify performance.

Insolvency: When an individual or organization can no longer meet its financial obligations
with its lender or lenders as debts become due.
Interim: An interval of time between one event, process, or period and another.

Liquidity: The ability to convert an asset to cash quickly. Also known as “marketability.”
Ownership: The relation of an owner to the thing possessed; possession with the right to transfer
possession to others.

Resilience: The physical property of a material that can return to its original shape or position
after deformation that does not exceed its elastic limit.
Rural Area: An area outside of cities and towns.

3.8 Review Questions

1. Write a brief note on evolution of banks.
2. What are the different types of banks operating in India?
3. Discuss the role of RBI in Indian banking sector.
4. What are the supervisory functions of RBI?
5. Explain how CRR and SLR help in regulating the cash and fund flows in the hands of
people, banks and government?
6. What are the qualitative methods of selective credit control? Discuss in detail.
7. Name different quantitative methods of credit control and explain bank rate policy in
detail.
8. Discuss the current scenario of banking system in India.
9. What do you understand by promotional functions of RBI?

10. Who acts as the controller of credit and how?
11. Write notes on (a) Repo Rate, and (b) Reverse Repo Rate.
12. What are the various techniques of credit control?

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