introduction to indian economy section 9 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (a)

A universal bank participates in many kinds of banking activities and is both a commercial bank and an investment bank. Universal banks may offer credit, loans, deposits, asset management, investment advisory, payment processing, securities transactions, underwriting and financial analysis.

Fiscal 2002 marked a turning point in the history of the ICICI group, as it witnessed the culmination of the ICICI group’s strategy of becoming an integrated financial services provider – the merger of ICICI Limited (ICICI) with ICICI Bank. The merger was a path-breaking initiative, which created India’s first “universal bank” and the second-largest bank in the country.

As part of the reorganization, two of ICICI’s wholly-owned retail finance subsidiaries viz. ICICI Personal Financial Services Limited (ICICI PFS) and ICICI Capital Services Limited (ICICI Capital), were also merged with ICICI Bank, in order to integrate and consolidate the retail business.

Answer: (d)

Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in the form of gold or government approved securities before providing credit to the customers.

Hereby approved securities we mean, bonds and shares of different companies. The statutory Liquidity Ratio is determined and maintained by the Reserve Bank of India in order to control the expansion of bank credit.

Statutory liquidity ratio is the number of liquid assets such as precious metals (Gold) or other approved securities, that a financial institution must maintain as reserves other than the cash.

In a growing economy, banks would like to invest in the stock market, not in Government Securities or Gold as the latter would yield fewer returns. One more reason is long term Government Securities (or any bond) are sensitive to interest rate changes. But in an emerging economy interest rate change is a common activity.

Answer: (a)

Under Section 22 of the Reserve Bank of India Act, the Bank has the sole right to issue banknotes of all denominations. The distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as an agent of the Government.

The one rupee note is issued by the Ministry of Finance and bears the signature of the secretary. The responsibility for coinage vests with the Government of India on the basis of the Coinage Act, 1906 as amended from time to time.

The designing and minting of coins in various denominations are also attended to by the Government of India.

Answer: (c)

According to the Reserve Bank of India, cooperative marketing is a cooperative association of cultivators formed primarily for the purpose of helping the members to market their products more profitably than is possible through private trade. Under the system of co-operative marketing whole responsibility of marketing is taken up by the farmers themselves, organized on a co-operative basis.

The area of operation of marketing society is usually fixed with reference to local conditions - area based or commodity-based. The commodity-based societies related to grapes, oranges, bananas, pomegranates, etc. have wider jurisdiction covering the major areas growing each crop.

There are societies at the producer’s level and they federate at the state or national level to deal with bigger markets including foreign markets for the export of their produce.

Answer: (d)

Indian Economy grew by 8.6% and 9.3% in 2009-10 and 2010-11 before it plunged again into slow growth.

CPI has a high weightage for food. In India, during the mentioned period food grain production actually had gone up.

GAAR is kept in abeyance as of now.