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Examination Paper_principles And Practices Of Banking & Financial Services

What strategy should Mr. Tanmoy Deb develop and implement for improving the present system?

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  Examination Paper: Banking and Financial Services Management 1  IIBM Institute of Business Management a. 11  b. 7 c. 5 d. 15 IIBM Institute of Business Management   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.  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 „C ryptography ‟  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 Curs e‟ . 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 T-Bill 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 „ Forfeitin g‟ , 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