Financial Regulatroy Framework (305)

SEBI, the Securities and Exchange Board of India, is responsible for regulating the share market in India. Its working includes all of the mentioned tasks, which are to regulate the dealings of share market, to check foul dealings in the share market, and to control inside trading of shares. This means that SEBI is involved in overseeing and ensuring fair and transparent practices in the share market, protecting the interests of investors, and maintaining the integrity of the market.

The RBI regulates the interest rates on savings deposits. This is because savings deposits are a common form of deposit for individuals and households, and the RBI wants to ensure that banks offer fair and competitive rates to encourage savings. By regulating these rates, the RBI can also influence the overall liquidity in the banking system and control inflationary pressures.

Urban cooperative banks have not fully implemented core banking solution yet. This means that these banks have not fully integrated their banking operations and services into a centralized system. Unlike other types of banks such as regional rural banks, scheduled commercial banks, and infrastructure finance companies, urban cooperative banks still rely on manual processes and have not fully adopted technology-driven solutions for their banking operations. This may result in limitations in terms of efficiency, accessibility, and convenience for customers and may also pose challenges in terms of data management and security.

Both A and B are examples of NBFCs. Infrastructure Finance Companies and Infrastructure Debt Funds are both types of NBFCs. NBFC stands for Non-Banking Financial Company, which is a company that provides financial services similar to traditional banks, but does not hold a banking license. Both A and B fall under this category as they provide financial services in the infrastructure sector.

NHB, or the National Housing Bank, is the correct answer because it is the institution that refinances loans given to the poor and weaker sections for the purpose of constructing or buying houses. NHB plays a crucial role in providing financial assistance to individuals who may not have access to traditional banking services, thereby promoting affordable housing and social inclusion.

Bancassurance is a composite financial service that combines both banking and insurance products. This means that customers can access both banking services, such as deposits and loans, as well as insurance products, such as life insurance or property insurance, through a single institution. This integrated approach allows customers to conveniently manage their financial needs in one place, while also providing the institution with an opportunity to cross-sell and offer a wider range of products to their customers.

The correct answer is "Opening Savings Accounts for general public". This is not a function of the RBI because the opening of savings accounts for the general public is typically done by commercial banks and not the central bank. The RBI's main functions include deciding bank rates, managing currency, and prescribing capital adequacy ratios to ensure the stability and regulation of the banking system.

CRR, or Cash Reserve Ratio, is a monetary policy instrument used by the RBI (Reserve Bank of India). It refers to the portion of a bank's total deposits that must be maintained with the central bank in the form of reserves. By adjusting the CRR, the RBI can control the liquidity in the banking system, impacting the lending capacity of banks and influencing overall economic conditions. Therefore, CRR is an important tool for the RBI to regulate and manage monetary policy in the country.

The correct answer is PFRDA, a statutory body, is responsible for implementation of NPS. The Pension Fund Regulatory and Development Authority (PFRDA) is the regulatory body that oversees and regulates the National Pension System (NPS) in India. It was established by the government to promote and develop pension schemes, including NPS, for the citizens of India. PFRDA is responsible for formulating policies, regulating pension funds, appointing intermediaries, and ensuring the smooth implementation and functioning of NPS.

Kotak Mahindra is the correct answer because it is the only option given that has converted itself from a non-banking financial company (NBFC) into a commercial bank. Birla Mutual, Reliance Capital Trust, and Tata Finance have not undergone such a conversion.

Purchase of Securities in the Open Markets cannot be called an anti-inflationary measure because it involves the central bank buying securities from the open market, which increases the money supply in the economy. This increase in money supply can potentially lead to inflation rather than controlling it. Therefore, it is not an effective measure to combat inflation.

SEBI is a statutory body because it is created by an Act of Parliament, the Securities and Exchange Board of India Act, 1992. As a statutory body, SEBI has the power to regulate and oversee the securities market in India. It is responsible for protecting the interests of investors, promoting fair and transparent trading practices, and ensuring the development and regulation of the securities market. SEBI has the authority to make rules and regulations, conduct investigations, and impose penalties for non-compliance. Being a statutory body gives SEBI the legal framework and authority to carry out its functions effectively.

Regional Rural Banks (RRBs) are classified as scheduled commercial banks because they are included in the Second Schedule of the Reserve Bank of India Act, 1934. This classification allows RRBs to access various banking facilities and services provided by the RBI, such as borrowing from the RBI's liquidity support and participating in the clearing system. RRBs are established with the aim of providing credit and other banking services to the rural population, and their classification as scheduled commercial banks ensures their regulatory oversight and integration into the banking system.

The purpose of introducing 'Know Your Customer' norms by the bank is to ensure that money deposited in the banks has come from genuine sources. This is done to prevent money laundering and other illegal activities by verifying the identity and financial transactions of customers. By implementing these norms, banks can maintain the integrity of the financial system and protect against fraudulent activities.

The Reserve Bank of India was nationalized on 1 January, 1949. This means that the control and ownership of the central bank of India was transferred to the government. Nationalization of the Reserve Bank of India was a significant step taken by the Indian government to ensure better regulation and control over the country's monetary policy and financial system. This move aimed to strengthen the government's influence and decision-making power in the banking sector, ultimately leading to more effective economic management.

Mutual funds in India are regulated by SEBI, the Securities and Exchange Board of India. SEBI is the regulatory authority for the securities market in India and is responsible for protecting the interests of investors and ensuring the smooth functioning of the market. It formulates regulations, monitors the activities of mutual funds, and enforces compliance with the necessary rules and regulations. RBI (Reserve Bank of India) is the central banking institution in India and is not directly involved in regulating mutual funds. Stock exchanges facilitate the trading of securities but do not regulate mutual funds.

The correct answer is the variety of different national regulatory systems. This is because the global financial crisis was partially caused by poor regulation of the world financial system, and one of the major problems with regulation was the lack of consistency and coordination among different countries' regulatory systems. This allowed for regulatory arbitrage, where financial institutions could exploit loopholes and differences in regulations across different jurisdictions to engage in risky behavior. This lack of harmonization and coordination among regulatory systems made it difficult to effectively monitor and regulate financial institutions on a global scale.

Multilateral development banks are outside the regulatory control of RBI because they are international financial institutions that operate independently and are governed by their own regulations and policies. These banks provide financial assistance and support for development projects in various countries, and their operations are overseen by a board of directors representing member countries. As such, they are not subject to the regulatory authority of the Reserve Bank of India.

NABARD (National Bank for Agriculture and Rural Development) is the body that authorizes the credit limit to the National Co-operative Marketing Federation. NABARD is responsible for providing credit facilities and promoting agricultural and rural development in India. It plays a crucial role in the agricultural sector by providing financial support to various institutions and organizations involved in agricultural activities, including co-operative marketing federations. Hence, NABARD is the correct authority to authorize the credit limit to the National Co-operative Marketing Federation.

Waves of over lending and over borrowing are likely to lead to international financial crises because they create a situation where there is excessive debt in the economy. When lenders provide too much credit and borrowers take on more debt than they can handle, it creates a bubble that eventually bursts, leading to financial instability. This can result in defaults, bankruptcies, and a collapse of the financial system, causing a ripple effect across countries and leading to a global financial crisis.