![AHSEC CLASS 12 FINANCE SOLVED QUESTION PAPER 2023 [H.S 2ND YEAR FINANCE SOLVED PAPER 2023]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1zWzLVbeUulPAwEvx9U_4Eyuf96bFwhyphenhyphenRa0wku__Rug2f_qjGv-DGHCiTSn_ar4N5_dxdw8rKikXsgFWiFD34j58glbzxX1xYS8eyilH-VvuFA-uwpN3QZyuvKUgNiklJUdk8woTKfTkTWbxYMrjMpeOYgmXmyXC5I6ZLvMuVy7t__xGdjI-vePyT0fWw/w320-h180-rw/AHSEC%20CLASS%2012%20FINANCE%20SOLVED%20QUESTION%20PAPER2023.webp "AHSEC CLASS 12 FINANCE SOLVED QUESTION PAPER 2023 [H.S 2ND YEAR FINANCE SOLVED PAPER 2023]")
Are you a student preparing for the AHSEC Class 12 Finance Studies exam? Searching for the AHSEC Class 12 Finance Solved Question Paper 2023? Look no further! In this article, we will provide you with a comprehensive overview of the AHSEC H.S 2nd Year Finance Studies Solved Question Paper 2023. The Assam Higher Secondary Education Council (AHSEC) conducted this examination, making this solved question paper an invaluable resource for your exam preparation.
[HS 2nd Year Finance Solved Question Paper 2023]
2023
FINANCE
Full marks: 100
Pass marks: 30
The figures in the margin indicate full marks for the questions
1. (a) What was the previous name of State Bank of India? 1
Ans:- Imperial Bank of India.
(b) Money market deals in short term funds. (Fill in the blank) 1
(c) In which year IMF was established? 1
Ans:- In July 1944.
(d) A cheque is defined under which section of the Negotiable Instrument Act? 1
Ans:- According to Section 6 of the Negotiable Instruments Act, 1881, the term check is defined as “a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.”
(e) Give an example of material alteration of cheque. 1
Ans:- Change in cheque date or Change in Time of Payment.
Material Alteration: Any change in the original condition of the check such as changing the date, amount, name of the payee, the word 'ORDER' after the name of the payee or the word 'ORDER' in the endorsement is called material alteration.
(f) What is liquidity ratio? 1
Ans:- It shows the relationship between liquid assets and current liabilities. It is also known as the acid test ratio or quick ratio.
(g) In which year was Regional Rural Bank established? 1
Ans:- On 26 September 1975.
(h) What is meant by discount rate in case of Bill Market? 1
Ans:- Bill discounting is a simple process of selling a bill of exchange to a bank or financial institution at a price below its face value before its maturity.
The bank discount rate is the interest rate for short-term money market instruments such as commercial paper and treasury bills.
2. What is Scheduled Commercial Bank? 2
Ans:- Scheduled commercial banks in India are those banks listed under the Second Schedule to the Reserve Bank of India Act, 1934. These banks are regulated by the Reserve Bank of India (RBI) and are authorized to conduct banking activities in India.
3. Write two features of Mutual Fund. 2
Ans:- Features of Mutual Fund:-
(i) Convenience: With online investing in mutual funds becoming bypopular, you do not need to physically visit a fund house. You can invest in any fund of your choice using your phone or computer. To make a purchase you simply need to visit the AMC portal or app and log in here.
(ii) Flexibility of investment: This is one of the attractive features offered by mutual funds. You can choose between SIP or lump sum to invest your money in mutual funds.
4. Write two objectives of GICI. 2
Ans:- The Government Insurance Corporation of India plays a vital role in the development, regulation and stability of the Indian insurance industry. Its objectives are to provide reinsurance services, support market development, ensure financial security and maintain regulatory compliance.
5. Give the meaning of holder-in-due course. 2
Ans:- “holder in due course” means any person who has become the owner of a promissory note, bill of exchange or check for consideration, if payable to bearer, or to the drawee or endorser thereof, if payable to order, So he has to become its owner before the amount mentioned therein becomes due. , and without sufficient reason to believe that any defect existed in the title of the person from whom he derived his title.
6. Write the significance 'Account Payee' crossing on cheque. 2
Ans:- The importance of crossing a check is that it can be collected only from the drawee bank into the bank account and cannot be encased by the holder. (Negotiable Instruments Act, Sections 123 and 126) As a result, the check issuer enjoys security and protection from crossing of the cheque.
7. What is Hypothecation? Write two features of hypothecation. 3
Ans:- Hypothecation means offering an asset to the lender as collateral security. Ownership remains with the lender, and the borrower receives possession. In case of default by the borrower, the lender can exercise its ownership rights to seize the asset.
Hypothecation occurs when an asset is pledged as collateral to secure a loan. The owner of the property does not give up ownership, possession, or ownership rights, such as the income generated by the property. However, if the terms of the agreement are not met the lender can seize the property.
Or
What is Cash Credit? Give its advantages. 3
Ans:- Cash credit is a facility to withdraw money from a current bank account without credit balance, but it is limited to the extent of credit limit which is decided by the commercial bank. Interest on this facility is charged on the current balance and not on the credit limit given by the bank.
Cash loan offers the following benefits:
(i) Helps in meeting working capital requirements.
(ii) Interest will be payable only on the amount utilized.
(iii) Flexibility.
(iv) Loan arrangement is comparatively easy.
8. What is Cash Reserve Ratio? What are its significance? 3
Ans:- Cash reserve ratio is a specific minimum amount of total customer deposits that a commercial bank is required to reserve in the form of cash or deposits with the RBI. The CRR rate will be decided as per the guidelines of the Central Bank.
Importance of Cash Reserve Ratio:
The cash reserve ratio maintained by banks holds importance for both banks as well as depositors.
In the case of depositors, when banks honestly maintain the required CRR rate, depositors do not have to worry about their deposits as a portion of their money remains safe with the RBI in the form of reserves.
9. Give a note on Imperial Bank. 3
Ans:- Imperial Bank was established in 1921 by merging the Presidency Banks, Bank of Bombay, Bank of Bengal and Bank of Madras. The Imperial Bank was given the right to run a clearing house and manage government funds. The job of issuing currency notes remained with the government. Imperial Bank of India Act.
10. Write three differences between Scheduled Bank and Non-Scheduled Bank. 3
Ans:- Three differences between scheduled banks and non-scheduled banks:-
11. What is Foreign Exchange Market? Write two features of Foreign Exchange Market. 3
Ans:- The Foreign Exchange Market (Forex or FX Market) refers to the global marketplace where currencies are traded. It is the largest and most liquid financial market in the world, where participants exchange one currency for another at an agreed-upon exchange rate. Here are two key features of the Foreign Exchange Market:
a. Decentralization : Unlike traditional stock markets, the Forex market is decentralized, meaning it doesn't have a physical location or central exchange. Instead, it operates electronically and consists of a network of banks, financial institutions, corporations, governments, and individual traders who engage in currency trading 24 hours a day across different time zones.
b. High Liquidity : The Forex market is highly liquid due to its vast trading volume. This liquidity means that traders can buy and sell currencies quickly without significantly affecting exchange rates. High liquidity also leads to narrow spreads (the difference between the bid and ask prices), making it cost-effective for traders to enter and exit positions.
12. Discuss the features of Non-bank Financial Institutions. 5
Ans:- Non-bank Financial Institutions (NBFIs) are financial intermediaries that provide various financial services but do not have a banking license. They play a crucial role in the broader financial system. Here are five key features of Non-bank Financial Institutions:
a. Diverse Financial Services : NBFIs offer a wide range of financial services, including insurance, asset management, investment banking, mutual funds, pension funds, leasing, factoring, and more. This diversity allows them to cater to different financial needs and risk profiles.
b. Specialization: NBFIs often specialize in specific financial activities. For example, insurance companies primarily focus on providing insurance coverage, while mutual funds specialize in asset management and investment products. This specialization allows NBFIs to develop expertise in their respective fields.
c. Regulation: While NBFIs are not banks, they are typically subject to financial regulations and oversight by government authorities. The specific regulatory framework varies by country, but it aims to ensure the stability and integrity of the financial system and protect consumers.
d. Risk Management : NBFIs often engage in risk management activities to mitigate various financial risks. For example, insurance companies use underwriting and reinsurance to manage insurance risks, while asset management firms employ diverse investment strategies to optimize returns while managing risk.
e.Market Intermediaries: NBFIs serve as intermediaries between investors and the capital markets. They pool funds from investors and deploy them into various financial instruments, contributing to capital formation and economic growth. Additionally, they provide alternative investment options beyond traditional banking products.
Or
What are the objectives of World Bank? Discuss. 5
Ans:- Objectives of the World Bank:
1. Poverty Reduction: The primary objective of the World Bank is to alleviate poverty in developing countries. It aims to reduce poverty by providing financial and technical assistance to projects and programs that promote economic development and improve living conditions for people in these countries.
2. Infrastructure Development: The World Bank focuses on building essential infrastructure such as roads, bridges, schools, and healthcare facilities. This infrastructure is crucial for economic growth and improving the quality of life in developing nations.
3. Promoting Economic Growth: Another key objective is to foster economic growth in developing countries. The World Bank provides funding and expertise to support projects that stimulate economic activity, create jobs, and enhance productivity.
4. Environmental Sustainability: The World Bank is committed to sustainable development. It seeks to ensure that its projects and programs are environmentally responsible and do not harm the natural resources or ecosystems of recipient countries.
5. Capacity Building: In addition to providing financial resources, the World Bank aims to strengthen the capacity of governments and institutions in developing countries. This includes improving governance, enhancing public administration, and promoting policies that are conducive to economic development and poverty reduction.
AHSEC Class 12 Finance (Banking) Solved Question Paper 2023
13. Write the five essential elements of valid endorsement. 5
Ans:- Five Essential Elements of Valid Endorsement:
Endorsement is a vital concept in negotiable instruments like promissory notes and bills of exchange. For an endorsement to be considered valid, it must typically contain the following five essential elements:
1. Signature of the Endorser: The endorsement must be signed by the person or entity transferring the instrument. This signature can be in any form that demonstrates the endorser's intention to transfer the instrument, such as a written signature, stamp, or even a digital signature.
2. Clear Intention to Transfer: The endorsement must clearly indicate the endorser's intention to transfer the ownership of the instrument to another party. This intention should be unambiguous and not subject to interpretation.
3. Identification of the Endorsee: The endorsement should specify the person or entity to whom the instrument is being transferred. This can be a specific individual or an entity (e.g., "to the order of ABC Corporation" or "pay to John Doe").
4. Unconditional Language: An endorsement should be unconditional, meaning it should not contain any conditions, limitations, or qualifications. It should be a straightforward transfer of the instrument without any strings attached.
5. Date: It's common practice to include the date when making an endorsement. While this is not always mandatory, it helps establish the order of endorsements in case multiple endorsements are made on the same instrument.
These elements ensure that the endorsement is legally valid and can be enforced in accordance with the laws governing negotiable instruments. Failure to meet these requirements can result in the endorsement being considered invalid, which may affect the negotiability and transferability of the instrument.
Or
State the differences between Bills of Exchange and Cheque. 5
(AHSEC: 2012, 2014, 2017,2023)
Ans: Difference between cheque and bill of exchange :
14. What is Bearer Cheque? Discuss its advantages and disadvantages. 5
Ans:- Bearer Cheque: A bearer cheque is a type of cheque where the payment is made to the person who holds or "bears" the cheque. Unlike a "order cheque," which is payable to a specific person or entity, a bearer cheque is payable to the bearer and does not require the endorsement of the payee.
Advantages of Bearer Cheques:
1. Convenience: Bearer cheques are convenient for quick and easy payments, as they do not require endorsement, making them readily usable by anyone who holds them.
2. Anonymity: Bearer cheques can be used anonymously, as they do not specify a payee. This can be advantageous for privacy reasons.
3. Simplified Transactions: They simplify financial transactions, especially in situations where multiple individuals need to share a single payment.
Disadvantages of Bearer Cheques:
1. Security Risks: Bearer cheques are susceptible to theft and fraud, as they can be encashed by anyone who possesses them. If lost or stolen, they can be easily misused.
2. Limited Control: The drawer has limited control over who ultimately receives the payment, which can be a disadvantage in situations where specific payees need to be identified.
3. Bank Procedures: Some banks may be cautious when dealing with bearer cheques, leading to delays or additional scrutiny during the encashment process.
4. Risk of Loss: If a bearer cheque is lost, the person who finds it can potentially cash it, leading to financial loss for the drawer.
Due to the security risks associated with bearer cheques, they are less commonly used today, and many financial institutions may offer alternative payment methods that provide more security and control over payments.
Or
State the conditions under which banker should refuse payment of cheque. 5
Ans:- 1. Insufficient Funds: If the drawer's account does not have enough funds to cover the amount mentioned on the cheque, the banker should refuse payment.
2. Irregular Signature: If the signature on the cheque does not match the specimen signature provided by the account holder or if it appears to be forged, the banker should refuse payment.
3. Post-Dated Cheque: A post-dated cheque, one with a date in the future, should not be honored until the specified date arrives.
4. Stale Cheque: If the cheque is presented for payment after it has become stale, usually after six months from the date of issue, the banker should refuse payment.
5. Crossed Cheque: If a cheque is crossed and not presented through a bank, the banker should refuse payment. Crossed cheques are intended for banking transactions and are not meant to be cashed directly.
AHSEC HS 2nd Year Finance (Banking) Solved Question Paper 2023
15. Write five advantages and disadvantages of Branch Banking System. 5
Ans:-
Advantages of Branch Banking System:
1. Wide Geographic Coverage: Branch banking allows banks to establish a network of branches in different locations, providing convenient access to banking services for customers across a wide geographic area.
2. Diversification of Services: Branches can specialize in offering specific services, such as loans, investments, or wealth management, allowing customers to access a variety of financial products under one roof.
3. Risk Mitigation: Diversification across branches and regions can help banks mitigate risks associated with local economic fluctuations or disasters in one area, as the impact may be limited to a subset of branches.
4. Economies of Scale: Branch banking can benefit from economies of scale in terms of administrative and operational efficiency, as certain centralized functions can be shared among multiple branches.
5. Customer Convenience: Customers can easily access banking services and get assistance from nearby branches, making it more convenient for them to conduct transactions and seek financial advice.
Disadvantages of Branch Banking System:
1. High Overhead Costs: Operating multiple branches incurs significant overhead costs, including rent, staffing, and maintenance, which can reduce a bank's profitability.
2. Coordination Challenges: Managing a network of branches spread across different locations can be challenging, leading to difficulties in ensuring consistent service quality and adherence to policies.
3. Limited Personalization: In larger branch networks, customers may experience less personalized service compared to smaller, community-focused banks.
4. Risk Concentration: If a bank has a significant number of branches in an area affected by a regional economic downturn, it can lead to a concentration of risk and financial losses.
5. Competitive Pressure: Branch banking faces competition from online and digital banking, which may offer more cost-effective and convenient services, putting pressure on traditional branch-based models to adapt and innovate.
16. Discuss about the institutions participating in the Indian Money Market.
Ans:- The Indian Money Market is a crucial component of the overall financial system in India. It consists of various institutions and instruments that facilitate the borrowing and lending of short-term funds. Here are some of the key institutions participating in the Indian Money Market:
1. Reserve Bank of India (RBI): The RBI is the central bank of India and plays a pivotal role in the Indian Money Market. It formulates and implements monetary policy, issues government securities, and regulates the money market to ensure stability and liquidity.
2. Commercial Banks: Commercial banks are the primary participants in the money market. They accept deposits from the public and provide short-term loans and advances to individuals, businesses, and government agencies. They also invest in money market instruments to manage their liquidity.
3. Non-Banking Financial Companies (NBFCs): NBFCs play a complementary role in the money market by providing short-term and long-term financial services. They may raise funds from the money market by issuing debentures, commercial paper, or participating in repo transactions.
4. Financial Institutions: Government-owned financial institutions like the Industrial Development Bank of India (IDBI), Export-Import Bank (EXIM Bank), and National Bank for Agriculture and Rural Development (NABARD) are active participants in the money market, primarily to cater to specific sectors of the economy.
5. Discount and Finance House of India (DFHI): DFHI acts as an intermediary in the money market. It deals in various money market instruments, including treasury bills and commercial paper, and provides liquidity to the market.
Or
Write five features of Indian Money Market. 5
Ans:-
1. Diversified Instruments: The Indian Money Market offers a wide range of short-term and highly liquid financial instruments, such as treasury bills, commercial paper, certificates of deposit, call money, and repo transactions. This diversity allows participants to choose instruments that suit their risk appetite and liquidity requirements.
2. Regulation and Supervision: The money market in India is subject to rigorous regulation and supervision by the Reserve Bank of India (RBI). This ensures that market participants adhere to established norms and maintain transparency in their operations, promoting market integrity and stability.
3. Dual Segment: The Indian Money Market is divided into two segments: the unorganized or informal sector and the organized or formal sector. The organized sector consists of regulated institutions like banks, while the unorganized sector comprises indigenous moneylenders and informal credit providers.
4. Short-Term Nature: The primary characteristic of the Indian Money Market is its short-term orientation. Most instruments in this market have maturities ranging from one day to one year, making it well-suited for meeting short-term funding needs of various stakeholders.
5. Role in Monetary Policy: The money market plays a pivotal role in the implementation of monetary policy in India. Through open market operations (OMOs), the RBI uses money market instruments to control the money supply, manage inflation, and influence interest rates to achieve its monetary policy objectives.
In conclusion, the Indian Money Market is a vital component of India's financial system, comprising various institutions and instruments that facilitate the efficient allocation of short-term funds and contribute to the overall stability of the economy.
AHSEC HS 2nd Year Finance (Banking) Solved Question Paper 2023
17. Narrate the methods of Qualitative or Selective Credit Control. 5
Ans:- Methods of Qualitative or Selective Credit Control:
Qualitative or selective credit control refers to the use of non-price measures by central banks or financial authorities to regulate the flow of credit and money in the economy. These methods are designed to influence the allocation of credit rather than the overall money supply. Here are five common methods of qualitative or selective credit control:
a. Credit Rationing: In this method, the central bank sets limits on the amount of credit that banks can extend to borrowers or particular sectors of the economy. By imposing credit ceilings, the central bank can control excessive lending to speculative or risky ventures.
b. Margin Requirements: Central banks can regulate the amount of funds investors must put down as collateral when purchasing assets like stocks or real estate. By adjusting margin requirements, they can discourage or encourage speculative activities.
c. Selective Rediscounting: Central banks can offer rediscount facilities to commercial banks, but they may attach conditions to this service. For example, they might offer favorable rediscount rates for loans extended to priority sectors such as agriculture or small businesses.
d. Direct Credit Controls: Authorities can issue directives or guidelines to banks and financial institutions regarding the types of loans they should or should not provide. This can include restrictions on lending for speculative purposes or to particular industries.
e. Moral Suasion: Central banks can use moral persuasion or informal communication to influence the behavior of financial institutions. By expressing their policy intentions or concerns, they can encourage banks to comply with desired credit control measures voluntarily.
18. Discuss the principles of sound lending and investments. 5
Ans:- Principles of Sound Lending and Investments:
Sound lending and investment practices are essential for financial institutions to ensure the safety and stability of their operations. Here are five key principles of sound lending and investments:
a. Creditworthiness Assessment: Financial institutions should thoroughly evaluate the creditworthiness of borrowers before extending loans. This includes assessing their ability to repay, credit history, and financial stability.
b. Diversification: A fundamental principle in investment is diversification. By spreading investments across various asset classes and sectors, institutions can reduce the risk associated with a concentrated portfolio.
c. Risk Management: Financial institutions must have robust risk management practices in place. This includes identifying, assessing, and mitigating risks associated with loans and investments. Effective risk management helps prevent unexpected losses.
d. Liquidity Management: It's crucial to maintain an appropriate level of liquidity to meet short-term financial obligations. Institutions should have a balance between long-term investments and readily accessible funds.
e. Regulatory Compliance: Financial institutions must adhere to regulatory guidelines and capital adequacy requirements. Compliance ensures they have the necessary buffers to absorb losses and maintain stability.
These principles are essential for banks, investment firms, and other financial institutions to make prudent lending decisions and secure their financial positions while contributing to the overall stability of the financial system.
Or
What is Overdraft? What are the differences between overdraft and cash credit? Discuss. 5
Ans: Overdraft is a financial arrangement that allows an individual or business to withdraw more money from a bank account than is available, up to an agreed-upon limit.
The differences between overdraft and cash credit:
19. Discuss the functions of modern commercial bank. 8
Ans:- Eight Functions of Modern Commercial Banks:
1. Accepting Deposits: Commercial banks provide a safe place for individuals, businesses, and other entities to deposit their money. These deposits can be in the form of savings accounts, current accounts, fixed deposits, and recurring deposits.
2. Providing Loans and Advances: Banks lend money to individuals and businesses for various purposes, such as buying homes, vehicles, starting or expanding businesses, and meeting short-term financial needs. This function helps stimulate economic growth.
3. Credit Creation: Commercial banks have the unique ability to create credit. When they lend money, they do not need to have an equivalent amount of deposits on hand. This process of creating credit plays a crucial role in expanding the money supply in the economy.
4. Facilitating Payments: Banks offer various payment services, including check clearing, electronic fund transfers, and payment cards like debit and credit cards. This enables customers to make transactions conveniently and securely.
5. Foreign Exchange Services: Commercial banks facilitate international trade and finance by providing foreign exchange services. They assist in currency conversion, offer trade finance, and help customers engage in cross-border transactions.
6. Safekeeping of Valuables: Banks offer safe deposit lockers where customers can securely store valuable items like jewelry, documents, and important files.
7. Investment Banking: Some commercial banks also engage in investment banking activities, such as underwriting securities, helping companies raise capital through initial public offerings (IPOs), and providing advisory services for mergers and acquisitions.
8. Financial Advisory Services: Banks provide financial advisory services to individuals and businesses. This includes wealth management, investment advice, and retirement planning.
Or
Narrate the growth of banking in India Post-Independence. 8
Ans:- Growth of Banking in India Post-Independence:
The growth of banking in India after gaining independence in 1947 has been significant. Here's a brief overview:
1. Nationalization of Banks: In 1969 and 1980, the government of India nationalized several major banks to promote financial inclusion and expand banking services to rural areas. This move helped in increasing the branch network and extending banking facilities to previously underserved regions.
2. Expansion of Branch Network: The banking sector in India expanded its branch network extensively, reaching even remote and rural areas. This expansion was driven by the government's emphasis on financial inclusion and the opening of branches in unbanked villages.
3. Introduction of Technology: The adoption of technology in banking transformed the sector. The introduction of ATMs, online banking, and mobile banking made banking services more accessible and convenient for customers.
4. Liberalization and Private Sector Banks: In the 1990s, India embarked on economic liberalization, which included reforms in the banking sector. Private sector banks were allowed to enter the market, bringing competition and innovation. Foreign banks were also permitted to operate in India.
5. Microfinance and Small Finance Banks: The emergence of microfinance institutions and small finance banks has played a crucial role in catering to the financial needs of small and marginalized borrowers, promoting financial inclusion.
6. Regulatory Reforms: The Reserve Bank of India (RBI) has introduced various reforms and regulations to strengthen the banking sector's stability and efficiency. Basel III norms were adopted to ensure banks maintain adequate capital and liquidity buffers.
7. Digital Payment Revolution: India has witnessed a digital payment revolution with the launch of initiatives like UPI (Unified Payments Interface). These innovations have made cashless transactions more prevalent and convenient.
8. Merger and Consolidation: The government has undertaken the merger and consolidation of several public sector banks to create larger and more resilient entities.
20. Discuss the role of NABARD in the development of Agricultural economy of India. 8
Ans:- Role of NABARD in the Development of Agricultural Economy in India:
NABARD (National Bank for Agriculture and Rural Development) plays a crucial role in the development of the agricultural economy in India. Established in 1982, NABARD functions as a specialized development financial institution primarily focused on the agricultural and rural sectors. Here are some key roles and functions of NABARD in the development of India's agricultural economy:
1. Credit Support: NABARD provides credit and financial support to various institutions involved in agriculture and rural development, such as farmers, cooperatives, and rural banks. It refinances financial institutions and cooperatives to ensure adequate credit flow to the agriculture sector.
2. Rural Infrastructure Development: NABARD finances and supports the development of rural infrastructure like irrigation projects, roads, bridges, and warehouses. This infrastructure is critical for improving agricultural productivity and marketing of agricultural produce.
3. Promotion of Agriculture and Allied Sectors: NABARD promotes activities related to agriculture and its allied sectors such as dairy farming, poultry, fisheries, and agro-processing. It provides financial assistance and technical support for the diversification of rural income sources.
4. Rural Development Programs: NABARD supports various rural development programs and initiatives that aim to alleviate poverty, improve livelihoods, and enhance the overall quality of life in rural areas.
5. Research and Development: NABARD conducts research and development activities to enhance the productivity of agriculture and rural sectors. It also supports research institutions and projects aimed at technology transfer to farmers.
6. Microfinance and Self-Help Groups (SHGs): NABARD promotes microfinance institutions and SHGs to ensure that rural communities, especially women, have access to financial services and credit for small-scale enterprises.
7. Policy Formulation: NABARD plays an advisory role in policy formulation related to agriculture and rural development. It provides valuable inputs to the government in shaping policies and programs.
8. Regional Development: NABARD operates through regional offices across India, catering to the specific needs and challenges of different regions, ensuring a more balanced and equitable development of agriculture and rural areas.
21. Define Negotiable Instrument. Explain the different types of Bills of Exchange. 8
Ans:- Negotiable Instrument and Different Types of Bills of Exchange:
Negotiable Instrument:
A negotiable instrument is a written document that represents a promise to pay a specific sum of money to a person or entity, either on-demand or at a future date. These instruments facilitate trade and commerce by serving as a secure and easily transferable form of payment. They are legally recognized and transferable by delivery or endorsement.
The key characteristics of negotiable instruments include:
- Negotiability: The instrument can be transferred from one party to another, often without affecting the underlying obligation.
- Holder in Due Course: A holder who acquires the instrument in good faith and for value, without notice of any defects, has special rights.
- Payment Promise: The instrument contains an unconditional promise to pay a specific amount of money.
Different Types of Bills of Exchange:
A bill of exchange is a specific type of negotiable instrument used in commercial transactions. There are three main types of bills of exchange:
1. Promissory Note: A promissory note is a written promise by one party (the maker) to pay a specific sum of money to another party (the payee) on demand or at a future date. It is a two-party instrument, unlike other bills of exchange.
2. Bill of Exchange (Draft): A bill of exchange, also known as a draft, involves three parties: the drawer, the drawee, and the payee. The drawer orders the drawee to pay a certain sum of money to the payee. It is often used in international trade transactions.
3. Cheque: A cheque is a specific type of bill of exchange drawn on a bank. It allows the drawer to make a payment from their bank account to the payee. Cheques are widely used for various financial transactions.
Each of these types of bills of exchange serves different purposes and is governed by specific rules and regulations. They are essential tools in financial and commercial transactions, providing a legal framework for payment commitments.
Or
Discuss the precautions a banker should take before paying a cheque. 8
Ans:- A banker must exercise caution and follow a series of precautions before paying a cheque to ensure the transaction is legitimate and secure. Here are eight important precautions that a banker should take:
1. Verify the Signature: The banker should carefully compare the signature on the cheque with the specimen signature available on record. Any significant discrepancies should raise suspicion.
2. Check for Date Validity: Ensure that the date on the cheque is current and falls within the validity period. Stale-dated or post-dated cheques should not be honored without the account holder's consent.
3. Inspect the Amount in Words and Figures: Verify that the amount written in words and figures matches and that there are no alterations or discrepancies. If there are any doubts, clarify with the account holder.
4. Crossing and Endorsements: Check if the cheque is crossed or marked as "account payee only." Ensure that any endorsements are genuine and in accordance with bank regulations.
5. Account Balance: Verify that the account holder has sufficient funds to cover the cheque. This involves checking the account balance and considering any overdraft facilities or arrangements in place.
6. Stop Payment Orders: Ensure that there are no stop payment orders issued by the account holder. Such orders might indicate a dispute or fraudulent activity.
7. Identity Verification: Confirm the identity of the person presenting the cheque. Ask for identification if necessary, and compare it with the information on the cheque or account.
8. Use UV Light and Other Security Features: Some cheques have security features like UV ink, watermarks, or holograms. Using UV light or other detection methods can help identify counterfeit cheques.
Additionally, bankers should be aware of common fraud schemes and stay updated on industry best practices to prevent accepting fraudulent cheques. Regular training and awareness programs for bank staff can also help in this regard.
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