CTFC 03 – Cooperative Credit and Banking

Unit 1: Fundamentals of Banking

1. BR Act 1949 says ‘Banking means ……

(Accepting deposits from public for lending / investment)
2. Banks earn …………..as a reward for their risk taking in intermediation i.e., mediating
b/w depositors and borrowers. (Interest spread)
3. Banks follow the principle of liquidity to avoid…….(Defaulting on its obligations)
4. ……………. is the main source of profit for a bank
(Interest spread b/w lending rate and its deposit rate)
5. ………….. means the long term financial soundness of the bank (Solvency)
6. Solvency is achieved by …….. (1. Adhering prudent policies in lending, 2.
Adequate profit, 3. Retained profit for future growth, 4. Sound policies
in Day to day operations, 5. Financial performance of 3 to 5 years – ratio
analysis)
7. Scheduled banks are those listed in the …….. schedule of RBI Act 1934 and have paid
up capital & reserves not less than Rs…… … (Second, Rs. 5 Lakhs)
8. Scheduled banks are required to maintain CRR & SLR with RBI against which they
enjoy .. ………and ……… at concessional rate from RBI
(Financial accommodation, Remittance facilities)
9. ………… and ………….. Cooperative Banks are classified as scheduled banks
(State, Urban)
10. ………… are scheduled banks but ……… are not scheduled banks (RRBs, DCCBs)
11. Those banks not included in the second schedule are…… (Non-scheduled banks)
12. There are …………..Public sector banks account for …………… % of total deposits and
about …. % of total advances of all commercial banks (27, 80 %, &0 %)
13. The capital of RRBs is jointly provided by ……. (GoI, State Govt, Sponsoring
PSU Bank)
14. The banks incorporated in India and shares held by business houses and public are
called …… (Private Sector Banks)
15. ……….. banks are incorporated abroad and they are granted license by ……..
(Foreign, RBI)
16. The short term cooperative credit structure (STCCS) consists of …………at primary
level, …………at intermediate level and ……...at the state level (PACS, DCCBs, SCBs)
17. The …………is the foundation of the STCCS (PACS)
18. The Cooperative Societies Act 1912 enabled the establishment of ……….. (DCCBs)
19. At present there is ….. DCCB for each district (One)
20. DCCBs lend to PACS on the basis of the ……. and …… (Security, Repaying
Capacity)
21. DCCBs also ………. from and ……. to general public who are non-members.
(Mobilize Savings, Lend)
22. As of 31 March 2021, there are ……. DCCBs in India –NAFCOB. (351)
23. As of 31 March 2021, there are ……. SCBs in India. (33)
24. Which is true? (All are true)
 SCBs act as an intermediary between RBI, DCCBs and money market
 SCBs formulate credit policies for cooperative movement in the state
 SCBs supervise, inspect and guide the functioning of DCCBs
 SCBs act as a nodal agency for channelizing funds from RBI, NABARD, DCCBS
25. The long term cooperative credit structure (LTCCS) consists of …………at primary
level … at the state level (PCARDBs, SCARDBs)
26. Some of the Urban Cooperative Banks extends to more than one state – these
institutions are registered under the …… (Multistate Cooperative Societies Act,
2002)
27. Payment Banks were introduced in the country in November ………… and they do not
undertake any …..related activities (2014, Credit)
28. Difference between Cooperative and Commercial Banks?
Cooperative Banks Commercial Banks
 Registration Under State Coop. Societies Act   Companies Act 1956 (or) 2013
 Main Regulator Registrar of Coop Societies (Adm)   RBI
 Banking Matter  Governed by BR Act (AACS)  Banking Regulation Act
 Management Mutuality, Cooperative Principles   Formal and Professional
 Asset/ Liab. Size Much Smaller   Comparatively Larger
29. In India, foreign exchange transactions are done only by Banks Designated as
………………. By the RBI (Authorized Dealers- AD)
30. Match the following;
Cross Border Banking – Banking b/w individuals or business entities of 2
different countries involving conversion of at least 2 foreign currencies.
Merchant Banking – Dealing with securities on fee basis, involves no financial
intermediation, helps savers to invest directly in the shares of company
Bancassurance – Banks with insurance company, sales commission, sales culture
within bank
31. Many Indian banks failed before independence due to……. (1. Two world wars 2.
Low capital base 3. Fraudulent manipulation by directors 4. Inter
connected lending 5. Combined trading with banking)
32. RBI was set up in …..(1935)
33. Banks before independence faced the problems such as……. (1. Rising failures 2.
Concentration of resources in a few hands 3. Agriculture was neglected)
34. The Banking Companies Act 1949 was renamed as Banking Regulation Act in …..
(1966)
35. Important events in Indian Banking History – Phase wise
1947-67: Amalgamation of banks, deposit insurance to increase depositors trust
1967-92: Improve the credit flow to agriculture, nationalization of major banks,
priority sector lending, rapid branch expansion caused average population per bank
from 65000 (1969) to 14000 (1990), Credit to agriculture rose from 2.2 % to 15.8 %.
After 1991-92: Private Banks allowed infusing competition, risk aversion,
prudential norms, NPA brought down sharply, corporate governance, credit to agri
and SME, 13 million ‘no frills’ accounts within 2 years
36. The Indian Cooperative movement was initiated and encouraged by the…….. (Govt)
37. The first Cooperative Society Act was made in …… (1904 and 1912)
38. Cooperation became a provincial / state subject in ……….. (1919)
39. Frederic Nicholson’s report gave its recommendation as…….. (Find Raiffissen)
40. ……………Committee reiterated cooperative legislation and the need for state to
actively promote cooperatives (Edward Law Committee)
41. …………… Committee advocated that there should be one cooperative for every village
(Maclagan Committee 1915)
42. ……………. Committee suggested rural credit, state patronize to cooperative sector
(Royal Commission on Agriculture 1928)
43. Specific provisions were made in the RBI Act 1934 for the establishment of ………….
For extending refinance facilities to the cooperative credit system (Agricultural
Credit Department – ACD)
44. Since…………….. the RBI also started extending credit facilities to provincial
cooperative banks for a seasonal agricultural operations and marketing of crops
(1942)
45. During the…………….. the government policy was not to act as pro-active on
cooperatives as before (Second phase 1930-1950)
46. The Agricultural Finance Sub-Committee and the Cooperative Planning Committee
was set up in ………… (1945)
47. The …………………… recommended that the frozen assets of the members of such
cooperatives may be liquidated, by adjusting the claims of the society to the repaying
capacity of the members, this was the beginning of the state interference in
cooperatives (Sub-Committee 1945)
48.
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