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NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Commercial Banking System & Role of RBI
Assignment Marks: 30
Instructions:
- All Questions carry equal marks.
- All Questions are compulsory
- All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3 in not more than 500 words for each subsection. Use relevant examples, illustrations as far aspossible.
- All answers to be written individually. Discussion and group work is not advisable.
- Students are free to refer to any books/reference material/website/internet for attempting theirassignments, but are not allowed to copy the matter as it is from the source of reference.
- Students should write the assignment in their own words. Copying of assignments from otherstudents is not allowed.
- Students should follow the following parameter for answering the assignment questions.
| For Theoretical Answer | For Numerical Answer | |||
| Assessment Parameter | Weightage | Assessment Parameter | Weightage | |
| Introduction | 20% | Understanding and usage of the formula | 20% | |
| Concepts and Application related to the question | 60% | Procedure / Steps | 50% | |
| Conclusion | 20% | Correct Answer & Interpretation | 30% |
Question 1. Indian Banking has witnessed major changes starting from nationalization in 1969 of 14 private sector banks again to privatization of banks in 1990s. Year 2014 resulted in setting of small Payment Banks in different nooks & corners of the country to a diametrically opposite step of mergers and consolidation of many weak public sector banks with a few large banks in 2018/19. What has been the economic & financial compulsions/reasons for such changes in five decades? (10 Marks)
Ans 1.
Introduction
Banking sector of India plays a vital role for the economic development of the country and banking sector is also much related to the financial sector. Bank provides the way to convert the savings into investment, and investment leads to provide higher returns to the growth of the country. But it is witnessed that there are major changes from the nationalization in 1969 of 14 private sectors gets change to
Question 2) Independence of RBI has been a major subject of debate in India of late. A few Governors resigned on this issue, as there was too much interference from the government in deciding the policies of RBI. Do you agree/disagree on the question of RBI deciding its own course of action while formulating macroeconomic policy of country or should it listen to its political masters? (10 Marks)
Ans 2.
Introduction
As the RBI is the regulatory body of all banking sectors, RBI has authority and has full independence by taking the decision regarding all the issues and policies in the banking sector. But the Central government interferes with the decisions of RBI, and not allowing decisions and consultation of RBI. As Reserve Bank of India, created the India’s Central bank, so all the steps regarding the policies of banks have to
Question 3a). Non-Performing Assets (NPAs) in the Indian Banking sector has become the subject of much discussion and scrutiny. Bank’s lending capacity has been severely eroded by mounting NPAs, net worth of many banks have declined and a number of banks have reported huge losses. In recent year’s plethora of rules and regulations have come from RBI, Government, IMF, BASEL recommendations, etc to keep a tab on stressed assets and timely resolution. In light of above statements:
a. Write the major reasons for increase on NPAs since last 10 years (5 Marks)
Ans 3a.
Introduction
A Non – Performing Assets is a asset which is not working currently, as it stops making income for the bank. For example, when loan term period is more than 90 days, it becomes a non – performing assets for the bank. As when the borrower i snot being able to repaid the term loan, that loan is considered as non – performing assets.
Concepts and Analysis
Question 3 b) According to you what would be the mitigating factors/solutions for NPA management. (5 Marks)
Ans 3b.
Introduction
The major reason to increase the role of Non -Performing assets is to manage the lending process or poor lending decision, it means to investigate the company before providing the loan. That the credit performance of the company is on the good rating or not.
Concept and Analysis
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