Banking System, NPA & IBC — Set 6
Economy Advanced · बैंकिंग प्रणाली, NPA और IBC · Questions 51–60 of 160
The Securitization process converts illiquid assets into tradeable securities. Which type of assets are commonly securitized in India?
Correct Answer: A. Mortgages and auto loans
Mortgages and auto loans are commonly securitized in India. This process allows banks to improve liquidity and free up capital for new lending.
The Retail Lending includes auto loans, personal loans, and credit cards. What is the main advantage of retail lending for banks?
Correct Answer: A. Lower risk and higher margins
Retail lending offers lower risk and higher interest margins due to diversification across many borrowers. It generates steady income for banks.
The Investment Banks in India advise on mergers and acquisitions. Which Indian investment bank is known for M&A advisory?
Correct Answer: B. Kotak Mahindra Bank
Kotak Mahindra Bank has a strong investment banking division specializing in M&A advisory and corporate finance for large enterprises.
The Government of India issues bonds to fund its fiscal deficit. What is the primary mechanism for selling these bonds?
Correct Answer: A. Auction conducted by RBI
Government securities are sold through auctions conducted by RBI. These auctions determine market-driven interest rates for government debt.
The Gilt Market in India deals with trading of government securities. What does 'Gilt' refer to?
Correct Answer: B. Government securities
Gilt refers to government securities issued by the Government of India. They are called 'gilt-edged' due to their safety and credit quality.
The Private Sector Banks in India compete with Public Sector Banks. Which private bank is the oldest in India?
Correct Answer: D. Federal Bank
Federal Bank, established in 1931, is the oldest private sector bank in India. It has maintained its presence throughout India's banking evolution.
The Public Sector Banks (PSBs) are majority owned by the Government of India. How many PSBs operate in India after the recent consolidation?
Correct Answer: B. 10
As of 2023, India has 10 major PSBs after consolidations including SBI, BOB, PNB, Union Bank, and Central Bank among others.
The Small Finance Banks (SFBs) are designed to serve unbanked and underbanked populations. What is the minimum capital requirement for SFBs?
Correct Answer: B. Rs. 100 crore
SFBs require minimum capital of Rs. 100 crore. They focus on lending to micro and small enterprises and individuals in underserved areas.
The Payments Banks are a new category of banks focused on payment services. What is the minimum capital requirement for Payments Banks?
Correct Answer: A. Rs. 50 crore
Payments Banks require minimum capital of Rs. 50 crore. They provide payment and remittance services and savings accounts but cannot give loans.
The Repo Rate is the key policy rate of RBI. What changes occur when RBI increases the Repo Rate?
Correct Answer: A. Banks borrow more, lending decreases
When RBI increases the Repo Rate, banks find borrowing expensive and reduce their lending, tightening monetary conditions to control inflation.