![Indian Financial System Solved Question Paper 2022 [Gauhati University BCom Solved Paper]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1oy-9vy72-qfNWKaOQuXCx_4pxtY3_olvY7Faw962E6ESLAHleyIblqRgHnHD7q1e9zLfrw1MYghLzh6YZFZPjQJjmNJF1a2Rf9k5k1mToYi0h0ATpDmggE78T-qK7hAC9OfMCROyoYRTZ5xfDKrJfD4zUpN-mOy4PTeUHaEF2LUheETu_XzYBS6cHpNO/s2240/Gauhati%20University%20BCom%20Indian%20Financial%20System%20Solved%20Paper%202022.webp "Indian Financial System Solved Question Paper 2022 [Gauhati University BCom Solved Paper]")
Are you looking for Gauhati University's B.com Indian Financial System Solved Question Paper 2022 If you want to know about Gauhati University B.com First Semester Indian Financial System Solved question paper 2022, then In this post we have discussed Complete Solution of Gauhati University B.com Indian Financial System Question Paper 2022.
Gauhati University B.com First Semester Indian Financial System 2022 previous year question paper.
2022
COMMERCE
(Honours Elective)
Paper: COM-HE-5066
(Indian Financial System)
Full Marks: 80
Time: Three hours
The figures in the margin indicate full marks for the questions.
1. Answer any ten questions from the following as per direction: 1x10=10
a) Money market in India is regulated by the RBI.
(Write True or False)
b) "Financial system is basically involved with the transfer of funds from the surplus sector to the deficit sector of the economy."
(Whether the statement is True or false)
c) National Stock Exchange (NSE) was established in the year
(i) 1995
(ii) 1992
(iii) 1997
(iv) 1990
(Choose the correct option)
d) When the bank accepts deposits of money from the public it occupies the position of
(i) Creditor
(ii) Debtor
(iii) Both (a) and (b) above
(iv) None of the above
(Choose the correct option)
e) Indian banking sector is divided into two parts; one is organized sector and the other is known as unorganized sectors. (Fill in the blank)
f) New issue market is also known as primary market.
(Write Yes or No)
g) IRDAI regulates
(i) insurance sector
(ii) banking sector
(iii) both banking and insurance sectors
(iv) None of the above
(Choose the correct option)
h) Fourteen commercial banks were nationalized in the year.
(i) 1949
(ii) 1969
(iii) 1980
(iv) 1976
(Choose the correct option)
i) NBFI is not regulated by RBI.
(Write Yes or No)
j) Capital market is dealing with the long term/short term fund.
(Choose the right answer)
k) Write The Full Form of CRISIL.
ANS:- Credit Rating Information Services of India Limited.
l) Name the oldest stock exchange of our country.
ANS:- BSE (Bombay stock exchange).
m) In hire purchase, ownership remains with the until the last installment is paid to Saller.(Fill in the blank)
n) The proportion of share capital of central government in RRB is
(i) 50%
(ii) 35%
(iii) 15%
(iv) None of the above
(Choose the correct option)
o) Which of the following is not a nationalised commercial bank?
(i) PNB
(ii) UBI
(iii) Bank of Baroda
(iv) Federal Bank
(Choose the right option)
p) Credit rating is
(i) fee-based service
(ii) fund-based service
(iii) Both (a) and (b) above
(iv) None of the above
(Choose the right answer)
g) Name the first development bank of India.
ANS:- IFCI (industrial financial corporation of india) .
h)Commercial banks have been playing an important role in smooth functioning of the money market.
(Write Yes or No)
2. Answer any five questions from the following: (Answer 'should be in about 50 words) 2x5=10
a) What is the financial system?
ANSWER: The financial system refers to the network of institutions, markets, and mechanisms involved in the transfer of funds between savers and borrowers, facilitating the allocation of resources within an economy.
b)Give the meaning of pension fund with examples.
ANSWER: A pension fund is a pool of money set aside to provide individuals with retirement income. Examples include the California Public Employees' Retirement System (CalPERS) and the Ontario Teachers' Pension Plan.
c) Q. Mention two distinguishing features of capital market.
ANSWER: Capital markets deal with long-term securities, like stocks and bonds, and they facilitate the transfer of capital from investors to businesses. Two distinguishing features are liquidity and long-term investment opportunities.
d) What is primary market?
ANSWER: The primary market is where new securities are issued and sold for the first time, allowing companies to raise capital directly from investors.
e). Name two important laws/legislations directly related with the banking sector in India.
ANSWER: The two significant legislations related to the banking sector in India are the Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1934.
f) Give the meaning of financial service.
ANSWER: Financial services are activities provided by financial institutions or intermediaries that deal with managing money, such as banking, investment, insurance, and wealth management.
g) . What is leasing?
ANSWER: Leasing is a financial arrangement where one party (lessor) allows another party (lessee) to use an asset for a specified period in exchange for periodic payments, without transferring ownership.
h) Define hire purchase.
ANSWER: Hire purchase is a financial arrangement where a buyer pays for a product in installments while using it. Ownership is transferred to the buyer after the final installment, combining rental and purchase elements.
i) What is insider trading?
ANSWER: Insider trading involves the buying or selling of stocks by individuals who have access to non-public, material information about a company. It's illegal and unethical because it gives those insiders an unfair advantage in the market.
j) State two objectives of IRDAI.
ANSWER: The Insurance Regulatory and Development Authority of India (IRDAI) aims to promote and regulate the insurance industry, ensuring fair treatment of policyholders and fostering the development of a stable and efficient insurance market in India.
3. Answer any four of the following questions in about 200 words each: 5×4=20
a) Give an account of new developments in the Indian financial system.
ANSWER
b) Write the significance of factoring.
ANSWER
c) Explain the classification of the capital market.
ANSWER
d) Discuss the role of financial services in the development of the financial system.
ANSWER
e) What are the sub-markets of the Indian money market? Explain.
ANSWER
f) Explain the regulatory role of PFRDA.
ANSWER
g) State the benefits of venture capital.
ANSWER
h) Mention the objectives of SEBI.
ANSWER
4. Answer any four questions from the following: 10×4=40
a) "A well-developed financial system contributes significantly in the economic development of a country." Explain.
ANSWER:- A robust financial system is pivotal in propelling a country's economic development through various channels. Firstly, it facilitates efficient capital allocation by channeling savings into productive investments. Banks, stock markets, and other financial institutions serve as intermediaries that connect savers with borrowers, allowing capital to flow where it's most needed for business expansions, infrastructure, and innovation.
Moreover, a well-functioning financial system promotes stability and confidence. It offers mechanisms like insurance and risk management tools that mitigate uncertainties, encouraging long-term investments and entrepreneurship. This stability attracts foreign investors and fosters domestic growth.
Financial systems also enable liquidity and easy access to credit, empowering individuals and businesses to invest, expand, and consume, thereby driving economic activity. Additionally, innovations in financial technology (FinTech) further enhance accessibility, efficiency, and inclusivity in the financial landscape, reaching underserved populations.
By providing essential services like payment systems, savings opportunities, and investment avenues, a developed financial system cultivates a conducive environment for economic growth, stimulating employment, innovation, and overall prosperity. It acts as a cornerstone in fostering a country's economic resilience and progress.
b) What are the primary objectives of financial system? Discuss the structure of Indian financial system. 3+7=10
ANSWER:- The primary objectives of a financial system are multifaceted, encompassing key goals that drive economic growth, stability, and inclusivity. These objectives typically include facilitating efficient allocation of resources, ensuring price stability, promoting economic growth, encouraging savings and investments, fostering financial stability, and enhancing financial inclusion.
Shifting focus to the structure of the Indian financial system, it comprises various components working together to facilitate financial intermediation and cater to diverse needs. India's financial system is multifaceted and consists of several key elements:
1. Banking Sector: Dominated by both public and private sector banks, including the Reserve Bank of India (RBI) as the central bank regulating monetary policy and overseeing the banking system.
2. Capital Markets: Comprising the Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and other exchanges facilitating trading in stocks, bonds, and other securities.
3. Insurance Sector: Involving various public and private insurance companies providing life, health, and general insurance coverage.
4. Non-Banking Financial Institutions (NBFIs): Such as mutual funds, pension funds, housing finance companies, and other entities providing financial services outside traditional banking.
5. Microfinance Institutions (MFIs): Offering small-scale financial services to low-income individuals and small businesses.
6. Regulatory Authorities: Oversight provided by entities like the Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), and Pension Fund Regulatory and Development Authority (PFRDA), among others, ensuring compliance and safeguarding the interests of stakeholders.
This diverse structure collectively supports the financial needs of individuals, businesses, and the overall economy, contributing to India's economic development and growth.
c) Discuss the constituents of money market and their role in economic development of a country.
ANSWER:- The money market consists of various instruments and institutions facilitating short-term borrowing, lending, buying, and selling of financial assets. Constituents of the money market include:
1. Treasury Bills (T-bills): Short-term government securities used to finance immediate needs. They serve as a benchmark for short-term interest rates.
2. Commercial Papers (CPs): Unsecured, short-term debt instruments issued by corporations to raise funds for a short duration.
3. Certificates of Deposit (CDs): Time deposits offered by banks, having a fixed maturity date and typically paying higher interest rates than regular savings accounts.
4. Call Money Market: Facilitates overnight borrowing and lending between banks to manage short-term liquidity needs.
5. Money Market Mutual Funds: Investment funds that invest in short-term, high-quality debt securities, providing investors with a safe and liquid investment option.
The money market plays a crucial role in economic development by ensuring liquidity, facilitating efficient fund allocation, and stabilizing short-term interest rates. It provides a mechanism for governments, corporations, and financial institutions to manage short-term financing needs, allowing for smoother cash flow operations.
By offering a platform for short-term borrowing and lending, the money market enables businesses to fund working capital requirements, supports government financing needs, and assists financial institutions in maintaining liquidity. Stable and efficient money markets contribute to economic stability, fostering confidence among investors and businesses. This stability and accessibility in short-term financing avenues bolster economic growth by supporting various sectors and sustaining overall financial stability.
d) What are the imperfections of Indian money market? Explain.
ANSWER:- The Indian money market, while crucial for financial stability, faces several imperfections. Firstly, it's characterized by a dominance of a few large players, limiting competition and potentially leading to market manipulation. Secondly, the market lacks diversity in financial instruments, primarily focusing on short-term funds, which restricts the range of investment options available. Additionally, the absence of a robust secondary market for many money market instruments reduces liquidity and makes it challenging for investors to exit positions swiftly.
Furthermore, regulatory inefficiencies and the absence of a unified regulatory body can contribute to inconsistencies in oversight, potentially exposing the market to higher risks. The lack of depth and integration between the money market and other financial sectors, like the capital market, also limits its ability to efficiently mobilize funds for long-term investment needs.
Moreover, the Indian money market's vulnerability to external shocks, such as global economic fluctuations or geopolitical events, can disrupt its stability. These imperfections collectively hinder the market's efficiency, liquidity, and ability to cater to diverse investor needs, necessitating continual reforms and regulatory enhancements to address these shortcomings.
e) Discuss the primary and secondary functions of commercial banks.
ANSWER:- Other functions of the SBI as General Banks act
A) Primary functions:
a) Acceptance of deposits: It is the most important function of a bank. Under this function, bank accepts deposits from individuals and organizations and finances the temporary needs of firms.
b) Making loans and advances: The second important function of banks is advancing loan. The commercial bank earns interest by lending money.
c) Investments of Funds: Besides loans and advances, banks also invest a part of its funds in securities to earn extra income.
d) Credit Creations: The Bank creates credit by opening an account in the name of the borrower while making advances. The borrower is allowed to withdraw money by cheque whenever he needs.
B) Secondary functions of a bank: This function is divided into two parts
1) Agency functions: These functions are performed by the banker for its own customer. For these bank changes certain commission from its customers. These functions are:
a) Remittance of Funds: Banks help their customers in transferring funds from one place to another through cheques, drafts etc.
b) Collection and payment of Credit Instruments: Banks collects and pays various credit instruments like cheques, bill of exchange, promissory notes etc.
c) Purchasing and Sale of securities: Banks undertake purchase and sale of various securities like shares, stocks, bonds, debentures etc. on behalf of their customers.
d) Income Tax Consultancy: Sometimes bankers also employ income tax experts not only to prepare income tax returns for their customer but to help them to get refund of income tax in appropriate cases.
e) Dealings in Gold/Silver: The buying and selling of gold and silver.
2) General Utility functions: These are certain utility functions performed by the modern commercial bank which are:
1. Locker facility: Banks provides locker facility to their customers where they can their valuables.
2. Traveler’s cheques: Bank issue travelers cheques to help their customers to travel without the fear of theft or loss of money.
3. Gift cheque: Some banks issue gift cheques of various denominations to be used on auspicious occasions.
4. Letter of Credit: Letter of credit is issued by the banks to their customers certifying their credit worthiness. Letter of credit is very useful in foreign trade.
5. Foreign Exchange Business: Banks also deal in the business of foreign currencies.
f) Define bank. Also point out the difference between banking and non- banking financial institutions. 2+8=10
ANSWER:- A bank is a financial institution that provides various financial services to individuals, businesses, and governments. Its primary functions include accepting deposits from customers, granting loans, and facilitating payments. Banks also offer services like savings accounts, checking accounts, investment products, and wealth management services.
The key difference between banking and non-banking financial institutions (NBFIs) lies in the range of services they provide and their regulatory oversight. Banks are regulated by central banks and have specific legal requirements they must adhere to, such as maintaining reserves and meeting capital adequacy ratios. They can also create money through the lending process.
On the other hand, non-banking financial institutions encompass a broader spectrum of financial entities that operate without a banking license. NBFIs include entities like insurance companies, mutual funds, pension funds, leasing companies, and brokerage firms. They offer financial services similar to banks but are not allowed to accept traditional demand deposits. NBFIs are usually regulated by different authorities depending on the specific type of financial services they offer and the country's regulatory framework.
While both banking and non-banking financial institutions play crucial roles in the economy by providing financial services, banks typically have a more extensive range of services and operate under more stringent regulatory oversight due to their pivotal role in the financial system.
g) Write the features of financial services. Explain the different fund-based financial services. 4+6=10
ANSWER:- Financial services encompass a broad array of offerings crucial for managing money, investments, and risk. Some key features of financial services include:
1. Investment Management: Services that involve managing and advising on investments, portfolios, and assets to optimize returns.
2. Banking Services: These cover traditional services like savings accounts, loans, credit cards, and mortgages.
3. Insurance Services: Providing coverage and protection against various risks, such as life insurance, health insurance, property insurance, etc.
4. Financial Planning: Services involving strategizing and planning for future financial goals, including retirement planning, estate planning, etc.
5. Asset-Based Financing: Services utilizing assets (like inventory, equipment) as collateral for loans or credit facilities.
As for fund-based financial services, they revolve around the provision and management of funds. Key types include:
1. Loans: These involve lending money for various purposes, such as personal loans, business loans, or mortgages, typically with interest and repayment terms.
2. Credit Facilities: Lines of credit, overdraft facilities, and other forms of credit offered by financial institutions to individuals or businesses.
3. Leasing Services: Providing assets on lease, allowing businesses or individuals to use them without owning them outright.
4. Trade Financing: Services facilitating international trade transactions by providing working capital or financing the trade cycle.
5. Factoring Services: A service where a business sells its accounts receivable to a third party at a discount for immediate cash.
Each of these fund-based financial services serves different needs, ranging from short-term financing to long-term investment requirements, contributing significantly to economic growth and stability.
h) Difference between: 5+5=10
(i) Fund-based and fee-based financial services .
ANSWER:-
(ii) Open ended and close ended mutual fund Open ended and close ended.
ANSWER:-
(iii) Discuss the role of RBI as regulator and supervisor in financial system of our country.
ANSWER:- The Reserve Bank of India (RBI) serves as the primary regulator and supervisor in India's financial system. Its role is pivotal in ensuring stability, development, and resilience within the financial landscape. As a regulator, the RBI formulates and implements monetary policies, regulates and oversees banks, financial institutions, and non-banking finance companies (NBFCs). It sets guidelines and rules to maintain financial stability, ensuring prudent operations, risk management, and compliance with statutory norms.
As a supervisor, the RBI conducts regular inspections and assessments to ensure institutions operate within the prescribed regulatory framework. It monitors liquidity, solvency, and governance structures to mitigate risks and prevent financial crises. Through various mechanisms like open market operations, reserve requirements, and policy rates, the RBI manages money supply, inflation, and interest rates to foster economic growth while maintaining price stability.
Additionally, the RBI plays a crucial role in supervising payment systems, fostering financial inclusion, and promoting the adoption of innovative technologies in the financial sector. Its interventions during economic downturns or crises provide stability and support to the financial system.
Overall, the RBI's role as a regulator and supervisor is vital in maintaining the integrity, stability, and efficiency of India's financial system, contributing significantly to the country's economic growth and development.
(iv) Discuss in detail the functions of SEBI.
ANSWER:- The Securities and Exchange Board of India (SEBI) is the regulatory authority governing the securities and capital markets in India. Its functions are multifaceted, aimed at fostering a fair, transparent, and efficient market while safeguarding investor interests. Here's an in-depth look at SEBI's functions:
1. Regulatory Oversight: SEBI regulates stock exchanges, ensuring their compliance with regulations, transparency, and fair trading practices. It formulates rules and guidelines to maintain market integrity.
2. Protecting Investor Interests: One of SEBI's primary functions is safeguarding investors by enforcing rules that promote transparency, fairness, and disclosure. It monitors and regulates fraudulent activities, ensuring investor protection.
3. Monitoring and Supervision: SEBI monitors and supervises various market participants, including brokers, merchant bankers, mutual funds, and other intermediaries to ensure compliance with regulations and ethical practices.
4. Regulation of Capital Markets: SEBI regulates the capital market by overseeing public issues, ensuring companies adhere to disclosure norms, and maintaining fair practices in securities trading.
5. Policy Formulation: It formulates policies and guidelines concerning various aspects of the securities market, constantly updating and adapting regulations to keep pace with market dynamics.
6. Development of Market: SEBI works towards developing the securities market by introducing new financial instruments, encouraging innovations, and fostering healthy competition among market participants.
7. Educating Investors: It educates investors by conducting investor awareness programs, disseminating information, and promoting financial literacy to empower investors with knowledge about market dynamics and risks.
8. Resolving Disputes: SEBI provides a platform for resolving disputes between market participants through mechanisms such as arbitration and adjudication.
-00000-
Also Read;