MA0037 – BANKING RELATED LAWS AND PRACTICE

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ASSIGNMENT

 

 

 

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

 

 

Q.1 Explain CRR, SLR, interest rate,  Repo rate and Reverse repo rate in banking terms.

 

Ans: CRR :

 

Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If the central bank decides to increase the CRR, the available amount with the banks comes down. The RBI uses the CRR to drain out excessive money from the system. Scheduled banks are required to maintain with the RBI an average cash balance, the amount of which shall not be less than 4% of the total of the Net Demand and Time Liabilities (NDTL), on a fortnightly basis. The amount specified as the CRR is held in cash and cash equivalents, is stored in bank vaults or parked with the Reserve Bank of India.

 

 

 

Q.2 Discuss whether banks are authorised to deal in foreign exchange can issue guarantee on behalf of person resident outside India for foreign direct investment transactions in India.

 

Ans : Explain Guarantee  :

 

A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it. A bank guarantee enables the customer (debtor) to acquire goods, buy equipment, or draw down loans, and thereby expand business activity. types of guarantees:

 

A payment guarantee is used to guarantee the

 

 

 

Q.3 Compare and contrast lien and set-off.

 

Ans : Lien : A lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid, provided that there is no contract express or implied, to the contrary. It is a right to retain possession of specific goods or securities or other movables of which the ownership vests in some other person and the possession can be retained till the owner discharges the debt or obligation to the possessor.

 

It is a legal claim by one person on the property of another as security for payment of a debt. A legal claim or attachment against property as security (

 

 

 

Q. 4  Can proceedings before DRT be compared to the proceedings before Civil Court? Discuss.

 

Ans : The proceedings before DRT can not be compared to the proceedings before Civil Court and adjudication process before the DRT is simple and can be fast. However, it is also true that DRT requires time to look into the facts and read the documents apart from hearing the oral submissions from the Bank. Additional DRTs and DRATs can be constituted if required rather allowing the borrower to suffer and feel that the remedy before

 

 

 

Q.5 What do you mean by arbitration under Banking Ombudsman scheme? Explain the procedure for arbitration and conciliation as detailed under Banking Ombudsman scheme?

 

Ans : Arbitration :

 

Arbitration, a form of alternative dispute resolution (ADR), is a technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the “arbitrators”, “arbiters” or “arbitral tribunal”), by whose decision (the “award”) they agree to be bound. It is a resolution technique in which a

 

Q.6 Is Securitisation Act applicable to Cooperative banks? If not, discuss the reasons.

 

Ans : Securitisation Act :

 

Preliminary

 

1. Short title, extent and commencement.-

(1) This Act may be called the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

(2) It extends to the whole of India.

 

(3) It shall be deemed to have come into force on

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