money supply, banking & financial institutions section 3 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (b)

The main players in Indian capital markets are:

1. Banks, Indigenous and commercial.
2. Insurance companies
3. Development Finance Institutions (DFI), and
4. Non-Banking Finance Companies (NBFCs)
5. Non-Banking Financial Institutions.

Answer: (d)

NIFTY is an Index computed from performance of top stocks from different sectors listed on NSE (National stock exchange). NIFTY consists of 50 companies from 24 different sectors.

Indian Capital Markets are regulated and monitored by the Ministry of Finance, the Securities and Exchange Board of India and the Reserve Bank of India. It does not trade in mutual funds.

Answer: (c)

‘Monetary base’ is the total liability of RBI and it is also called ‘High Powered Money’ or ‘Reserve Money’ or M0.

Answer: (a)

Capital markets provide for the buying and selling of long term debt or equity-backed securities. When they work well, the capital markets channel the wealth of savers to those who can put it to long term productive use, such as companies or governments making long term investments.

Capital Markets allow businesses to raise long-term funds by providing a market for securities, both through debt and equity.

Capital Markets offer a whole range of sometimes complicated products which allow businesses and banks not just to raise capital but also to ‘hedge’ (protect) against risks.

Answer: (a)

As per Banking Regulation Act 1949 (Section 36) (and not by RBI Act 1934), RBI, in the public interest, can supersede the Board of Directors (management) of a banking company.

As per RBI Act 1934 (Section 30), the Central Government can supersede the ‘Central Board’ of RBI, and thereafter the general superintendence shall be entrusted to such agency as the government may decide and can exercise all the powers exercised by ‘Central Board’.