23.16 ndian onom
24. Consider the following statements about AnsWer key With exPlAnAtions
the idea of ‘micro-finance’ in India. 1. (b) This is one of the provisions of the Basel
1. Micro-finance is a small-scale financial III norms of prudential regulation of the
intermediation, inclusive of savings, banking sector.
credit, insurance, business services 2. (b) Rupee is fully convertible in the cases—
and technical support provided to the interest payment, remittances, grants
needy borrower. and indirect foreign investment (though,
2. The thrust of the micro finance it belongs to the capital account).
initiative is to channelize production 3. (d) All are the objectives of the new
and consumption credit in multiple methodology. The MCLR will be a tenor
doses based on the absorption capacity
linked internal benchmark and actual
of the prospective borrower.
lending rates will be determined by
3. It has evolved through following adding the components of spread to the
different models at different times—a MCLR. Banks will review and publish
‘charity based model’ to a ‘thrift-based their MCLR of different maturities every
model’ and finally to the ‘trust and month on a pre-announced date. The
creditworthiness model’. periodicity of reset shall be one year or
4. It was in Australia where the link lower. Banks will continue to review and
between microfinance institutions publish Base Rate as hitherto.
and the formal financial institutions As per the RBI (April 2016), ‘for
evolved. monetary transmission to occur, lending
Select the correct statements using the code rates have to be sensitive to the policy
below. rate’. But this was not occurring by now.
(a) 1, 2 and 3 Banks, by now, have been using either of
(b) 2, 3 and 4 the following three methods to compute
their Base Rate—(i) average cost of
(c) 1, 3 and 4
funds, (ii) marginal cost of funds, or (iii)
(d) 1, 2, 3 and 4 blended cost of funds (liabilities).
25. Crypto-currencies have been in news 4. (c) RBI announced this route in 2011–12
recently—select the correct statement(s) as a ‘penal’ route for banks to borrow
about it in case of India, by using the code once they have exhausted all borrowing
given below: option, i.e., the repo route. MSF rate is
1. Government of India does not consider regulated by the RBI above the current
crypto-currencies a legal tender. repo rate. This route can be used by
2. Government proposes to eliminate use banks for only overnight borrowings and
of such currencies. is linked to their net demand and time
5. (b) Only those foreign banks which have 20
(a) Only 1
or more branches in the country have
(b) Only 2 been brought at par with domestic banks
(c) Both 1 and 2 regarding PSL (in a phased manner over
(d) Neither 1 nor 2 a maximum period of 5 years starting