Insights Static Quiz -263, 2019–Economy

Solution: b)

Regional Rural Banks (RRBs) are financial institutions which ensure adequate credit for agriculture and other rural sectors. Regional Rural Banks were set up on the basis of the recommendations of the Narasimham Working Group (1975), and after the legislations of the Regional Rural Banks Act, 1976. The first Regional Rural Bank “Prathama Grameen Bank” was set up on October 2, 1975.

The equity of a regional rural bank is held by the Central Government, concerned State Government and the Sponsor Bank in the proportion of 50:15:35.

The RRB’s have also been brought under the ambit of priority sector lending on par with the commercial banks.

Solution: c)

India Brand Equity Foundation (IBEF) is a Trust established by the Department of Commerce, Ministry of Commerce and Industry, Government of India as an Investment Promotion Agency for creating the “brand India”.

Set up in 1996, IBEF is fully funded, owned and controlled by Union Government, unlike Invest India which is a private company.

IBEF’s primary objective is to promote and create international awareness about the Made in India label in overseas markets and to facilitate dissemination of knowledge of Indian products and services.

IBEF works with a network of stakeholders – domestic and international – to promote Brand India.

IBEF is registered as the Investment Promotion Agency of India with the World Association of Investment Promotion Agencies (WAIPA).

However, IBEF functions more like a trade promotion body as it is more focused on the trade side rather than on the investment side.

Solution: c)

Angel funds refers to a money pool created by high net worth individuals or companies (generally called as angel investors), for investing in business start-ups.

Angel fund is defined as a sub-category of Venture Capital Fund under Category I- Alternative Investment Fund (AIF) that raises funds from angel investors and invests in accordance with the rules specified in SEBI (Alternative Investment Funds) (Amendment) Regulations, 2013.

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.

Solution: c)

Marginal Standing Facility (MSF) was announced by the Reserve Bank of India (RBI) in its Monetary Policy (2011-12) and refers to 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.

MSF, being a penal rate, is always fixed above the repo rate. The MSF would be the last resort for banks once they exhaust all borrowing options including the liquidity adjustment facility by pledging government securities, where the rates are lower in comparison with the MSF. The MSF would be a penal rate for banks and the banks can borrow funds by pledging government securities within the limits of the statutory liquidity ratio. The scheme has been introduced by RBI with the main aim of reducing volatility in the overnight lending rates in the inter-bank market and to enable smooth monetary transmission in the financial system.

MSF represents the upper band of the interest corridor with repo rate at the middle and reverse repo as the lower band.