Insights Static Quiz -299, 2019–Economy

Solution: d)

Banking Correspondents (BCs) are individuals/entities engaged by a bank in India (commercial banks, Regional Rural Banks (RRBs) and Local Area Banks (LABs)) for providing banking services in unbanked / under-banked geographical territories. A banking correspondent works as an agent of the bank and substitutes for the brick and mortar branch of the bank.

BCs engage in

• identification of borrowers;
• collection and preliminary processing of loan applications including verification of primary information/data;
• creating awareness about savings and other products and education and advice on managing money and debt counselling;
• processing and submission of applications to banks;
• promoting, nurturing and monitoring of Self Help Groups/ Joint Liability Groups/Credit Groups/others;
• post-sanction monitoring;
• follow-up for recovery,
• disbursal of small value credit,
• recovery of principal / collection of interest
• collection of small value deposits
• sale of micro insurance/ mutual fund products/ pension products/ other third party products and
• receipt and delivery of small value remittances/ other payment instruments.

Source

Solution: d)

Annual Financial Statement is a document presented to the Parliament every year under Article 112 of the Constitution of India, showing estimated receipts and expenditures of the Government of India for the coming year in relation to revised estimates for the previous year as also the actual amounts for the year prior to it.

The receipts and disbursements are shown under three parts in which Government Accounts are to be kept viz.,(i) Consolidated Fund, (ii) Contingency Fund and (iii) Public Account.

Under the Constitution, Annual Financial Statement has to distinguish expenditure on revenue account from other expenditure. Government Budget, therefore, comprises of Revenue Budget and Capital Budget.

The estimates of receipts and expenditure included in the Annual Financial Statement are for the expenditure net of refunds and recoveries, as will be reflected in the accounts.

Source

Solution: c)

Bank rate is the rate at which central bank lends money to the commercial banks by buying their eligible rated securities – bills of exchange or commercial paper.

Bank Rate once used to be the policy rate (the key interest rate based on which all other short term interest rates move) in India. A rise in bank rate raises the deposit as well as lending rates in the economy while a lowering of the bank rate reduces these rates. It is the central banker’s tool for controlling liquidity and inflation.

Bank Rate is now aligned to Marginal Standing Facility (MSF) rate, the penal rate at which banks can borrow money from the central bank over and above what is available to them through the LAF window. In other words, MSF assumed the role of bank rate, once the latter became operational in 2011.

Unlike other policy rates, the bank rate is purely a signalling rate and most interest rates are de-linked from the bank rate.

Source

Solution: d)

Rupee deprecation badly affects importers or those who wish to visit foreign countries for holidays as they need more local currency to get the same service or product.

When rupee depreciates exporters from India are benefited. (Eg: Software companies, seafood exporters etc.)

Depreciation of rupee benefit the overseas Indians as those who are working abroad will gain more on remitting money to their homeland.

Solution: d)

The banks in India may engage the following individuals/entities as BCs.

• Individuals like retired bank employees, retired teachers, retired government employees and ex-servicemen, individual owners of kirana (small shops) / medical /Fair Price shops, individual Public Call Office (PCO) operators, agents of Small Savings schemes of Government of India/Insurance Companies, individuals who own petrol pumps, authorized functionaries of well-run Self Help Groups (SHGs) which are linked to banks, any other individual including those operating Common Service Centres (CSCs);
• NGOs/ Micro Finance Institutions set up under Societies/ Trust Acts or as Section 25 Companies ;
• Cooperative Societies registered under Mutually Aided Cooperative Societies Acts/ Cooperative Societies Acts of States/Multi State Cooperative Societies Act;
• Post Offices;
• Companies registered under the Indian Companies Act, 2013 with large and widespread retail outlets
• Non-banking Finance Companies (NBFCs) were not allowed to be appointed as Business Correspondents (BCs) by banks. However, since June 2014 banks have been permitted to engage non-deposit taking NBFCs (NBFCs-ND) as BCs, subject to certain conditions

Source