MB FM– 202 – Financial Institution & Services – JNU solved assignments

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Master of Business Administration

Paper Code: MB FM– 202

Paper Title: Financial Institution & Services

Q. 1. Short answer type questions: Limit 100 – 150

(i) Differentiate between capital and money market.

Answer: Difference between Money Market and Capital Market

A financial market is a place where buyers and seller come together to trade in financial assets such as bonds, stocks, derivatives, currencies and commodities. The main objective of a financial market is to fix prices for global trade, increase

(ii) Define Cash Reserve Ratio (CRR).

Answer: The Reserve Bank of India or RBI mandates that banks store a proportion of their deposits in the form of cash so that the same can be given to the bank’s customers if the need arises. The percentage of cash required to be kept in reserves, vis-a-vis a bank’s total deposits, is called the Cash Reserve Ratio. The cash reserve is

(iii) Any two advantages of Mutual Funds.

Answer: Advanced Portfolio Management

When you buy a mutual fund, you pay a management fee as part of your expense ratio, which is used to hire a professional portfolio manager who buys and sells stocks, bonds, etc.1 This is a relatively small price to

(iv) State any two advantages of credit card.

Answer: Shopping experience: Credit cards have redefined the shopping experience for cardholders. The cards make shopping easier. One can make big purchases for home needs and appliances using a credit card without having to take a hit on their monthly budget. Credit cards let consumers buy products on low-cost EMIs. Credit cards operate on the ‘buy now, pay later’ principle which works well for salaried individuals with

(v) What are the types of NBFCs?

Answer: The NBFCs can be categorised under two broad heads:

On the nature of their activity
On the basis of deposits

The different

(vi) What are the types of Mutual Funds?

Answer: Equity Funds

The largest category is that of equity or stock funds. As the name implies, this sort of fund invests principally in stocks. Within this group are various subcategories. Some equity funds are named for the size of the companies they invest in: small-, mid-, or large-cap. Others are named by their investment

(vii) Differentiate between public sector and private sector banks.

Answer: • Shareholders

a) In a public sector bank more than fifty percentage of the stake is held by the Government.

b) In a private sector majority of the stake owned to private shareholders, including corporations and individuals.

• Interest Rate

Deposit interest rates offered by public sector banks are almost the same when compared to private sector banks. However new

(viii) Write down the important functions of SEBI.

Answer:

To protect the interests of investors in securities market
To promote the development of securities market
To regulate the business in stock exchanges and any other securities markets
To register and regulate the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters,

(ix) Name any four financial instruments.

Answer: Financial instruments are certain contracts or any document that acts as financial assets such as debentures and bonds, receivables, cash deposits, bank balances, swaps, cap, futures, shares, bills of exchange, forwards, FRA or forward rate agreement, etc to one organization and as a liability to another organization and these solely taken into use for trading purposes.

Types of the Financial Instrument

Money Market Instruments: Money market instruments include call or notice money, caps and collars,

(x) Who regulates the insurance services in India?

Answer: IRDA (Insurance Regulatory and Development Authority) is the regulatory body in India that governs both Life insurance and General insurance companies. India is a vast country that offers great opportunities to varied segments one of which is the insurance sector.

How IRDA works:

(Word limits 500)

Q. 2. Explain the challenges and issues faced by banking industry in current scenario.

Answer: The banking industry is undergoing a radical shift, one driven by new competition from FinTechs, changing business models, mounting regulation and compliance pressures, and disruptive technologies.

The emergence of FinTech/non-bank startups is changing the competitive landscape in financial services, forcing traditional institutions to rethink the way they do business. As data breaches become prevalent and privacy concerns

Q. 3. Define the role of NABARD in rural development.

Answer: Role of NABARD:

1. It is an apex institution which has power to deal with all matters concerning policy, planning as well as operations in giving credit for agriculture and other economic activities in the rural areas.

2. It is a refinancing agency for those institutions that provide investment and production credit for

Q. 4. Discuss the different schemes provided by Insurance Companies.

Answer: 1. Life Insurance

Life Insurance refers to a policy or cover whereby the policyholder can ensure financial freedom for his/her family members after death. Suppose you are the sole earning member in your family, supporting your spouse and children.

In such an event, your death would financially devastate the whole family. Life insurance policies ensure that such a thing does not happen by providing

Q. 5. Describe the functions performed by Reserve Bank of India as a central bank.

Answer: 1. Monetary Management:

The Reserve Bank controls and regulates the flow of credit in the economy. It uses quantitative controlling weapons, such as bank rate policy, open mar <et operations, and the reserve ratio requirement. Since 1956, it has increasingly relied on and resorted to selective credit controls for accelerating the rate of growth and for checking inflationary spurts.

2. Issue of Bank Notes:

The Reserve Bank has the sole right to issue currency notes, except one rupee notes — which are issued by the Ministry of Finance. The

Q. 6. Write a note on National Housing Bank or State Housing Finance Societies.

Answer: The National Housing Bank (NHB) is an apex level financial institution catering to the housing sector in the country.

It was established on July 9, 1988.

It is a wholly owned subsidiary of Reserve Bank of India (RBI), was set up by an Act of Parliament in 1987.

NHB has been established with an objective to