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Examination Paper MM.100
Principles and Practices of Banking
Section A: Objective Type (30 marks)
•This section consists of Multiple Choice questions & Short Answer type questions.
•Answer all the questions.
•Part One questions carries 1 mark each & Part Two questions carries 4 marks each.
Part One:
Multiple Choices:
1. Frequency of First Tranche Returns is:
a. Weekly
b. Monthly
c. Monthly/quarterly
d. Monthly/quarterly/half-yearly
2. An order for winding up a banking company can be issued by:
a. The High Court
b. The RBI
c. The Central Government
d. The Supreme court
3. Who shall be natural guardian in case of married minor girl?
a. Father
b. Brother in law
c. Father-in-law
d. Husband
4. X a partner in the firm XYZ Co. wants to open a Bank account in the firm‟s name. It will
require
signatures of:
a. All partners
b. Any one of the partner
c. Managing partner only
d. Sleeping partner not required
5. Public limited companies should have minimum shareholders, before Opening Bank
account.
a. 11
b. 7
c. 5
d. 15
Examination Paper: Banking and Financial Services Management
2
IIBM Institute of Business Management
6. If the beneficiary is government then the Expiry of guarantee is governed by the „law of
limitation‟ ranging from 3 years to:
a. 15 years
b. 30 years
c. 20 years
d. 10 years
7. Charge created on LIC Policy is:
a. Lien
b. Hypothecation
c. Pledge
d. Assignment
8. The device that combines the parallel input data into single serial output data is known
as:
a. Switcher
b. Multiplexer
c. Encoder
d. Front end processor
9. In market skimming pricing strategy:
a. Initially price is lower and then it is increased
b. Initial price is high and is maintained high
c. Initial price is low and is maintained low
d. Initially price is higher and then it is reduced
10. The marketing personnel need information ………… intervals.
a. At yearly
b. At quarterly
c. At monthly
d. On a continuous basis and regular
Part Two:
1. Explain „Cryptography‟ and the need of keys. Convince.
2. Define the term „obscenity‟ used in E-commerce.
3. What do you understand by Real time accessement?
4. What „Marketing mix‟ conveys in modern marketing theory? Explain in short.
5. Write a note on „Labeling‟ in product development.
END OF SECTION A
Examination Paper: Banking and Financial Services Management
3
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
There is a lacuna in the present T-Bill auction system of RBI. The dealers (investors) are
subject to
what is called the „Winners Curse‟. The value of a T-Bill to a dealer is the price it can fetch in
the
secondary market. This is an unobserved random value, which is likely to be common to all
dealers.
It is quite unlike the works of art which the Sotheby‟s would place at an auction. The price of
Mona
Lisa, say, to an avid collector of Da Vinci‟s paintings, would be more than what a Picasso
collector
would value it. In sharp contrast, market participants are likely to agree on the price of a TBill
in the
secondary
market.
Now
winning
an auction
in a
discriminatory
price
method
may
not
be
profitable.
For,
it
would
mean
that
the
winner
has
overestimated
the
T-Bill
value.
Questions:
1.
How
does
the
winner
in such
an
auction
become
the
loser
due
to the
„winner
curse‟?
2.
Explain
the
role
of primary
dealers
in the
money
market.
Caselet
2
In
a bid
to familiarize
banks,
exporters
and
other
financial
bodies
with „Forfeiting‟,
the
State
Bank
of
India
(SBI) will
soon
be
setting
up
a
three-man
cell
at
its
international
division
in Mumbai
for
advisory
purposes.
According
to Mr.
D. Ian
Guild,
Senior
Advisor,
Forfeiting
&
Syndications
Group,
Standard
Bank,
the
cell
was
being
set
up
after
a
series
of meetings
with the
bank,
and
is
essentially
aimed
at
spreading
the
message
of Forfeiting
as
an
effective
trade
financing
mechanism
to
increase
exports.
Suggesting
that
forfeiting
was
the
ideal
springboard
for
effecting
a
quantum
jump
in exports
in the
medium-term,
Mr.
Guild
said
he
was
confident
of aggregating
forfeiting
business
of $100 millions
in
1998
and
$250
millions
in 1999
in the
country.
Since
its
introduction
in
1992,
Exim
Bank
had
facilitated
69
forfeiting
transactions
valued
at
around
$75
millions,
with
credit
periods
ranging
between
90 days
and
seven
years,
and
covering
the export
of goods
ranging
from
textiles
to plant
and
machinery.
The
RBI
has
now
permitted
all
commercial
banks
to act
as
facilitators
for
forfeiting
transactions.
Mr.
Guild
pointed
out
that
forfeiting
has
not
really
taken
off
in
India
because
exporters
and
commercial
banks
lacked
the
knowledge
of
the
mechanics
of
the
scheme.
In
India,
the
real
challenge
would
be
to motivate
small
and
medium
exporters
to
use
the
forfeiting
route
for
exports
to countries
which
may
not
be
able
to buy
on
cash
terms.
Mr.
S.
Bhattacharya,
deputy
general
manager,
Exim
Bank,
Calcutta,
said:
“Payment
defaults
by
overseas
buyers
were
an
integral
part
of cross-border
business
and
export
credit
insurance
has
not
been
a
comprehensive
answer
to
this
problem”.
Forfeiting
offered
an
alternative
solution,
especially
to
exporters
wishing
to penetrate
difficult
markets
for
the
first
time,
he
pointed
out.
Some
of
the
top
international
forfeiters
in
the
world
have
stopped
accepting
forfeiting
documents
involving
Pakistan
and
Russia,
according
to Mr.
Amitabh
Mehta,
Trader
and
Originator,
Forfeiting
and
Syndications
Examination Paper: Banking and Financial Services Management
4
IIBM Institute of Business Management
group, Standard Bank London Ltd. (SBLL). According to Mr. Mehta, forfeiting transactions
involving Pakistan could not be carried out due to poor performance of the banks there. In
addition,
the financial status of Pakistan following the nuclear blasts has made it impossible to carry
out the
transactions. Similarly, transactions with Russia are being totally rejected by forfeiting due
to the
current economic turmoil. Joining the list with Pakistan and Russia are Iraq, Sudan and
Nigeria, he
added. Commenting on the Indian situation, Mr. Mehta said, “With its sound banking
system, the
country is well placed in the international scene. In fact, there is tremendous potential for
forfeiting
in the years to come,” he said. According to him, even after the nuclear tests conducted by
India, the
top forfeiters were not worried and continued to accept forfeiting papers to be transacted
with India.
Questions:
1. Discuss the mechanism of forfeiting and the role played by banks in forfeiting
transactions.
2. How does forfeiting differ from factoring?
END OF SECTION B
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Government securities are referred to as „gift-edged securities‟, as they are absolutely
secured.
RBI, being the banker to the Government, issues different types of paper on behalf of the
latter, to
cater various requirements. Discuss the various types of Government securities that are
issued by
the RBI.
2. A sound regularly framework in regulating capital markets is expected to provide
transparency,
maintain market integrity, fairness and ensure investor protection. However, lack of
adequate
regulations can lead to manipulations which endanger the integrity of the market and
damage the
confidence of investors and market participants in India?
END OF SECTION C
ISBM / IIBMS / IIBM / ISMS / KSBM / NIPM
SMU / SYMBIOSIS / XAVIER / NIRM / PSBM
ISM / IGNOU / IICT / ISBS / LPU / ISM&RC
MBA - EMBA - BMS - GDM - MIS - MIB
DMS - DBM - PGDM - DBM - DBA
www.mbacasestudyanswers.com
ARAVIND 09901366442 -
09902787224
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