Page 91 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes 4.15 Keywords

Capital-Assets Ratio: Ratio of capital employed to assets.
Credit Risk: Risk of non-recovery of loans.

Insolvency Risk: The risk of insolvency of debtor.
Narasimham Committee: A Special committee appointed by RBI to suggest banking sector
reforms.

Shareholder Wealth: Owners' wealth i.e. capital, profits and reserves.
Social Banking: Banking done for social development and advancement of the masses.
Speculation in Shares: Buying and selling of shares in anticipation (rise/fall) in their prices.

4.16 Review Questions

1. Explain the rationale of banking sector reforms.
2. Critically appraise the important banking sector reforms that have been implemented till
date.
3. Give a summary of the recommendations of the 2nd Narasimham Committee.
4. Classify NPAs according to their quality. Critically examine the measures taken to reduce
such assets.
5. Explain briefly recent trends in the Indian banking system.
6. Explain the main features of Innovative banking in India.

7. What are the principal defects in the Indian banking system? Give suggestions to remove
them.

Answers: Self Assessment

1. Securities 2. Probability

3. Ministry of Finance 4. Manipulate
5. Commercial bank 6. False
7. False 8. True
9. True 10. 200/300

11. Geographical 12. Section II
13. Credit risk 14. compensated

4.17 Further Readings

Books Brunner, Allan D.; Decressin, Jörg; Hardy, Daniel C. L.; Kudela, Beata (2004-
06-21). Germany's Three-Pillar Banking System: Cross-Country Perspectives in
Europe. International Monetary Fund. ISBN 1-58906-348-1. ISSN 0251-6365. Abstract

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