Financial Institutions

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  • Q1

    Define central bank.

    Marks:1
    Answer:

    It is an apex bank that regulates the monetary and banking structures of an economy. It manages the currency, money supply and interest rates in the economy, it also regulates the other organised financial institutions and commercial banks in the country.

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  • Q2

    What are development banks?

    Marks:1
    Answer:

    These are those financial institutions that perform twin functions of providing medium term and long term loans to private borrowers and also perform roles that help in economic development. Like Commercial Banks, they do not accept deposits from the public.

    Examples of development Banks are: Industrial Development Bank of India (IDBI), Small Industrial Development Bank of India (SIDBI), etc.

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  • Q3

    State any two constituents of Indian financial infrastructure.

    Marks:1
    Answer:

    The two main constituents are:
    (i) The Reserve Bank of India (RBI)
    (ii) State Bank of India (SBI)

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  • Q4

    What is a bank?

    Marks:1
    Answer:

    Bank is a financial institution that deals with money. It accepts deposits from the people who have surplus of it and advances loans to the people who are in need of money. A bank is a source of credit in the economy.

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  • Q5

    What do you mean by financial infrastructure?

    Marks:1
    Answer:

    Monetary and financial institutions like banks, insurance companies etc. that form part of monetary structure of an economy is known as financial infrastructure.

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