Banking Reforms, Financial Markets - One Line Questions

1. What does the 'Credit Default Swap' (CDS) primarily represent in financial markets? — An insurance policy against the default of a specific debt instrument
2. What is a 'bond'? — A loan made by an investor to a borrower (typically corporate or governmental) which offers a fixed rate of interest and matures at a specified date
3. The concept of 'Core Banking Solutions' (CBS) in Indian banking refers to: — A network that allows banks to offer services from any branch, anytime, anywhere
4. What does the term 'Universal Banking' refer to in the Indian context? — Banks offering a wide range of financial services, including commercial banking, investment banking, and insurance
5. Treasury Bills (T-Bills) are instruments of the: — Money Market
6. Which of the following is a debt instrument traded in the capital market? — Bonds
7. The 'Financial Sector Development Council' (FSDC) in India is chaired by the: — Minister of Finance
8. The 'Indradhanush' framework was launched by the government to: — Improve the financial health and governance of Public Sector Banks
9. The introduction of Negotiated Dealing System (NDS) by RBI aimed to: — Improve transparency and efficiency in the government securities market
10. Which of the following is a key reform aimed at improving the governance of Public Sector Banks in India? — The P. J. Nayak Committee recommendations on board composition and ownership
11. Which of the following was a key recommendation of the Narasimham Committee II (1998)? — Introduction of Universal Banking
12. What does the term 'Asset Reconstruction Company' (ARC) do? — It buys non-performing assets (NPAs) from banks and financial institutions to clean up their balance sheets
13. Which committee recommended the establishment of the Narasimham Committee on Banking Sector Reforms? — Chakravarty Committee
14. The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) primarily operate in the: — Capital Market (Secondary Market)
15. Which committee was instrumental in recommending the establishment of a separate debt management office in India? — S. V. S. Nathan Committee
16. Which committee's report led to the introduction of the 'Prompt Corrective Action' (PCA) framework for banks in India? — Working Group on Resolution of Stressed Assets
17. Which committee's recommendations led to the introduction of Liquidity Adjustment Facility (LAF) by the RBI? — Vaghul Committee
18. Which banking reform aimed to reduce the government's direct control over Public Sector Banks? — Appointment of professional directors on bank boards and allowing PSBs to raise equity
19. Which financial reform measure aimed to improve the efficiency of public sector banks by allowing them to raise capital from the market? — Partial disinvestment/IPOs of PSBs
20. The liberalization of the Indian economy in 1991 led to significant reforms in: — The banking and financial sectors
21. Which of the following is a key component of the Indian financial market? — Money Market, Capital Market, and Foreign Exchange Market
22. What is the primary difference between the primary market and the secondary market? — Primary market is where securities are issued for the first time, secondary market is where they are traded subsequently.
23. The 'Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002' was enacted to: — Facilitate the recovery of non-performing assets (NPAs) by banks and financial institutions
24. The introduction of 'Payment Banks' in India is a reform focused on: — Offering deposit and remittance services to low-income households, unbanked, and underbanked sections
25. Which of the following is NOT a function of the money market? — Issuing long-term bonds
26. Which of the following is a function of the money market? — Facilitating the trading of short-term debt instruments
27. The 'Financial Sector Assessment Program' (FSAP) is a joint initiative of the: — IMF and World Bank
28. The 'reverse repo rate' is the rate at which: — RBI borrows money from commercial banks
29. The introduction of the 'priority sector lending' concept in India was largely influenced by: — The Banking Regulation Act, 1949
30. Basel III aims to strengthen the regulation, supervision, and risk management of banks. What is a major focus of Basel III compared to Basel II? — Increasing liquidity requirements and capital buffers
31. The 'Indian Financial Code' (IFC) was a proposed comprehensive law intended to: — Consolidate and streamline financial sector regulation in India
32. The primary function of SEBI is to: — Protect the interests of investors in securities and promote the development of the securities market
33. What is the primary role of the Reserve Bank of India (RBI)? — Issuing currency, managing monetary policy, and regulating the banking system
34. Which regulatory body is responsible for overseeing the capital markets in India? — Securities and Exchange Board of India (SEBI)
35. The Narasimham Committee I (1991) focused primarily on: — Banking Sector Reforms
36. When a company issues new shares to the public for the first time, it is an activity in the: — Primary Market
37. Which institution is the primary issuer of Treasury Bills in India? — Reserve Bank of India (RBI)
38. The establishment of 'Small Finance Banks' (SFBs) in India is a reform aimed at: — Deepening financial inclusion by providing savings, lending, and payment services to underserved sections
39. Which of the following is a characteristic of the 'capital market'? — Facilitates long-term investment and capital formation
40. The capital market deals with: — Long-term financial instruments like stocks and bonds
41. The term 'disintermediation' in financial markets refers to: — The reduction or elimination of intermediaries (like banks) in the flow of funds between savers and borrowers
42. What is the purpose of the 'repo rate' in monetary policy? — The rate at which RBI lends short-term funds to commercial banks against government securities
43. What is the primary objective of Basel Accords in banking? — To ensure banks have adequate capital to absorb unexpected losses
44. What is the primary objective of the 'Financial Inclusion' initiative in India's banking reforms? — To provide access to formal financial services to all sections of society, especially the unbanked and underbanked
45. What is the role of a 'market maker' in the financial markets? — To provide liquidity by quoting buy and sell prices for a security on a continuous basis
46. What is the main function of a stock exchange? — To provide a platform for the buying and selling of existing securities
47. What is the primary purpose of the 'Capital Adequacy Ratio' (CAR)? — To ensure banks have sufficient capital to cover potential losses and protect depositors
48. What is the primary role of the 'Deposits Insurance and Credit Guarantee Corporation' (DICGC) in India? — To provide insurance cover for bank deposits and guarantee credit facilities
49. What is the primary objective of the 'Bharatiya Reserve Bank Note Mudran Private Limited' (BRBNMPL)? — To print currency notes and coins for the Reserve Bank of India
50. The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. India is a member of the FSB. — True
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