AHSEC| CLASS 12| FINANCE| SOLVED PAPER - 2020| H.S. 2ND YEAR
2020
FINANCE
Times: 3 hours
Full marks: 100
1. (a) Bank of Bombay was established in the year 1809/1843/1840.
(b) How many
local boards assist the Central Board of RBI. 1
Ans: Four.
(c) Write the
full form if IFCI.
Ans: The Industrial Finance Corporation of India
(d) What is
meant by Non-Banking Financial Institution? 1
Ans: Non-Banking
Financial Institutions (NBFIs) form a significant segment of financial
institutions. NBFIs are a heterogeneous group of financial institutions engaged
in a variety of financial activities.
(e) Asian
Development Bank gives foreign currency loans. (State True or False).
Ans: True.
(f) In case
of Bull of Exchange, the order must be conditional. (State True or False)
Ans: False.
(g) What is
the main difference between 'Scheduled Bank & Non-Scheduled, Bank?
Ans: The
differences between Scheduled and non-Scheduled banks are: -
Banks whose
names are included in the Second Schedule to the Reserve Bank of India Act 1934
are called Scheduled Banks. On the other hand, the banks whose names are not
included in the second schedule of the Reserve Bank of India Act 1934 are
called non-scheduled banks.
(h) What is
the meaning of marking of a cheque?
Ans: The
marking is written on the check by the payee banker that it will be honored
when duly presented for payment.
2. How does commercial bank help in execution of Monetary
Policy?
Ans: If the Central Bank raises the discount rate, commercial
banks will reduce their borrowing of reserves from the Fed, and instead call on
banks to replace those reserves. Since fewer banks are available, the money
supply falls and market interest rates rise.
3. Give the meaning of Endorsement.
Ans: The term "endorsement" of a negotiable
instrument means the writing of a person's name on the back of the instrument
for the purpose of negotiation.
4. What is meant by Cash Credit?
Ans: Cash credit is an arrangement through which a
banker allows a customer with his current account to borrow money up to a
specified limit against an arrangement backed by bonds of credit against
securities.
5. Write a note on RBI's role in Bank Inspection. 2
Ans: - Section 35 of the Banking Regulation Act 1949
has been included to check malpractice in banking companies. Section 35 of the
said Act gives powers to the Reserve Bank of India (RBI) to inspect banks.
Inspection is carried out by the Department of Banking Operations and
Development of the Reserve Bank of India (RBI).
The
department conducts inspection in two ways -
1) Financial
2) Annual
Assessment
In financial
inspection, the Reserve Bank of India inspects the assets and liabilities of
the banking company and the manner of operations.
6. What is meant by SENSEX? How many stocks are included
in SENSEX? 1+1=2
Ans: - The term Sensex refers to the benchmark index
of the BSE in India. The Sensex comprises the 30 largest and most actively
traded stocks on the BSE and provides a gauge of India's economy. It is
float-adjusted and market capitalization-weighted.
The 30 constituent
companies, which are some of the largest and most actively traded stocks,
represent various industrial sectors of the Indian economy.
7. Write three objectives of nationalization of banks in
India. 2
Ans: The basic objectives behind the nationalization of
banks can be discussed as follows:
(i) Removal of
control over commercial banks by certain industrial houses.
(ii)
Diversification of the bank's flow towards priority sectors like agriculture,
small scale industries and exports, weaker sections and backward areas.
(iii) To promote
new classes of entrepreneurs so that economic growth can be sustained and
accelerated.
8. What are meant by cash balance and statutory liquidity
Ratio? 3
Ans: The most liquid asset of a bank is the cash it
has with itself or in current accounts with RBI, SBI or other banks. These cash
reserves are also called the first line of defense; Cash balances with itself
or balances that are under its immediate control to indicate their important
role in safeguarding the solvency, reputation and goodwill of the bank.
In addition to
the Cash Reserve Ratio, banks in India are required to maintain statutory
liquidity ratios under Section 24 of the Banking Regulation Act 1949.
Accordingly, every scheduled commercial bank has to maintain in India at least
25% of its time and demand liabilities in cash or gold.
9. Write about three types of Non-Banking Financial
Institutions. 3
Ans: - Examples of non-bank financial institutions
include insurance firms, venture capitalists, currency exchanges, some
microcredit organizations, and pawnshops. These non-bank financial institutions
provide services that are not necessarily compatible with banks, serve as
competition for banks, and specialize in sectors or groups.
10. What are the rights of holder in due course? 3
Ans: The rights of the holder in due course are: -
(i) Rights in
case of forged bills: Where both the drawer and the payee of the bill are
fictitious persons, the acceptor is liable to the holder on the bill at the
time due, if the bill can show that the signature of the said drawer and the
first endorser are one are in hand, for the bill to be payable to the order of
the drawer the notional drawer must endorse the bill before the bill can be
negotiated.
(ii) Right of
holder in due course in case of insufficient instrument: If the negotiable
instrument was originally an incomplete (imperfect) instrument and the
subsequent transferor perfected the instrument for an amount greater than the
intention of the maker, then the right of the instrument A holder is not at all
affected in due time for recovery of money.
(iii) In case
of lien the instrument is obtained illegally or for illegal consideration:
a person liable on a negotiable instrument cannot depose himself against a
holder on the ground that the instrument was lost or received by him the
offense or fraud or an illegal consideration was committed.
11. Write the difference between promissory note and
cheque. 3
Ans:
|
Basis |
Promissory Note |
Cheque |
|
1. Nature |
It is an
unconditional promise by the manufacturer to pay the money |
It is an
unconditional order to the bank to pay a certain amount |
|
2. Days of
Grace |
A grace
period of three days is given for payment until it becomes due |
No grace day
is allowed for payment at sight or on demand. |
|
3. Crossing |
A promissory
note cannot be crossed. |
A check can
be crossed. |
Or
Write the difference
between Private Sector Banks and Public Sector Banks. 3
Ans: -
Differences between public sector and private sector banks:
|
Public Sector |
Private Sector Banks |
|
|
1. |
Public sector
banks are owned, managed and controlled by the government. |
On the other
hand, private sector banks are owned, managed and controlled by private
individuals or common citizens. |
|
2. |
In public
sector banks more than 50% capital or full capital is supplied by the
government. |
But, in
private sector banks, all the total capital is supplied by the shareholder of
the banking company i.e., private individuals. |
|
3. |
The profit
earned by public sector banks goes to the government. |
But in case
of private sector banks, it goes to the shareholders of the bank. |
***
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