[Solutions]
Q.1)Consider the following statements:
1.White label ATMs are owned by non banking entities
2.In White Label ATM(WLA) scenario, logo displayed on ATM machine and in ATM premises pertain to WLA Operator instead of a bank
Which of the statement/s given above is/are correct?
a)1 only
b)2 only
c)Both 1 and 2
d)Neither 1 nor 2
Ans-[C]
Explanation-ATMs set up, owned and operated by non-banks are called White Label ATMs. Non-bank ATM operators are authorized under Payment & Settlement Systems Act, 2007 by the Reserve Bank of India. In White Label ATM scenario, logo displayed on ATM machine and in ATM premises pertain to WLA Operator instead of a bank. However, for a customer, using WLA is just like using the ATM of other bank (bank other than card issuing bank). ii) Acceptance of cash deposits at the WLAs is not permitted at present.
Q.2)Consider the following statements:
1.FDI is permissible in Lottery Business
2.Foreign investment is reckoned as FDI only if the investment is made in equity shares
Which of the statement/s given above is/are correct?
a)1 only
b)2 only
c)Both 1 and 2
d)Neither 1 nor 2
Ans-[D]
Explanation- Foreign investment is reckoned as FDI only if the investment is made in equity shares, fully and mandatorily convertible preference shares and fully and mandatorily convertible debentures. FDI is not permitted under Lottery business.
Q.3)Which of the following statement is wrong with respect to FRBM act?
a)Cap on level of liabilities and guarantees of the govt.
b)Government can never breach targets whatsoever
c)Annual targets of reduction of deficits
d)All are correct statements
Ans-[B]
Explanation- Govt can breach targets specified in FRBm act under exceptional circumstances.
Q.4)Effective revenue deficits is defined as:
a)Fiscal deficit+grants for capital assets
b)Revenue deficit+grants for capital assets
c)Revenue deficit-grants for capital assets
d)Fiscal deficit-grants for capital assets
Ans-[C]
Explanation- Effective revenue deficit has been prescribed by an amendment to the FRBM act by the FInance act 2012. Option C is definition of it.
Q.5)Giffen goods are those whose:
a)demand goes down when price increases
b)demand goes up when price decreases
c)demand goes up when price increases
d)demand renains constnat when price decreases
Ans-[C]
Explanation-In economics and consumer theory, a Giffen good is a product that people consume more of as the price rises and vice versa—violating the law of demand. A Giffen good is typically an inferior product that does not have easily available substitutes, as a result of which the income effect dominates the substitution effect. Giffen goods are quite rare, to the extent that there is some debate about their actual existence.
Q.6)Identify the incorrect statement/s:
1. NBFC can issue cheques to its customers.
2. Depositor insurance facility is not available for NBFC depositor.
Choose the correct answer from the codes given below
a) Only 1
b) Only 2
c) Both 1 and 2
d) None of them
Ans-[A]
Explanation– As per RBI, a Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property. A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in instalments by way of contributions or in any other manner, is also a non-banking financial company.
NBFCs lend and make investments and hence their activities are similar to that of banks; however there are a few differences as given below:
- NBFC cannot accept demand deposits;
- NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;
iii.Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.
Q.7)Chairperson of Financial stability and development council is:
a)RBI Governor
b)Union minister of finance
c)Finance secretary
d)Chief economic advisor
Ans-[B]
Explanation- Financial Stability and Development Council is an apex-level body constituted by the government of India. The idea to create such a super regulatory body was first mooted by the Raghuram Rajan Committee in 2008. Finally in 2010, the then Finance Minister of India, Pranab Mukherjee, decided to set up such an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India. The recent global economic meltdown has put pressure on governments and institutions across the globe to regulate their economic assets. This council is seen as India’s initiative to be better conditioned to prevent such incidents in future. The new body envisages to strengthen and institutionalise the mechanism of maintaining financial stability, financial sector development, inter-regulatory coordination along with monitoring macro-prudential regulation of economy.
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