Class 12 Finance Important Chapter 7 Indian Money Market

Class 12 Finance Important Chapter 7 Indian Money Market Solutions English Medium As Per The New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 12 Finance Important Solutions in English and select need one. AHSEC Class 12 Finance Additional Notes Download PDF. HS 2nd Year Banking Additional Solutions.

Class 12 Finance Important Chapter 7 Indian Money Market

Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 12 Banking Additional Question Answer are part of All Subject Solutions. Here we have given HS 2nd Year Finance Important Solutions English Medium for All Chapters, You can practice these here.

Indian Money Market

Chapter: 7

IMPORTANT QUESTION AND ANSWER

Short Questions and Answers: 

1. What is the Reserve Bank of India’s role in the Indian Money Market?

Ans: The Reserve Bank of India (RBI) is the leader and regulator of the Indian Money Market. It controls and supervises various money market institutions, ensures liquidity, and formulates policies for maintaining economic stability.

2. What are scheduled banks in India?

Ans: Scheduled banks are those listed in the 2nd Schedule of the Reserve Bank of India Act, 1934. They must maintain reserves with the RBI and are subject to regulatory oversight, ensuring safe and sound banking practices.

3. What is the purpose of Treasury Bills?

Ans: Treasury Bills are short-term debt instruments issued by the government to meet its temporary fiscal deficits. They are issued by the RBI on behalf of the government and are highly liquid, with maturities ranging from 91 days to 364 days.

4. What is a Certificate of Deposit?

Ans: A Certificate of Deposit is a short-term, negotiable deposit instrument issued by scheduled commercial banks. It is issued at a discount to face value and is used to raise funds for a specified term, with a fixed interest rate.

5. What is call money in the money market?

Ans: Call money refers to short-term loans with a maturity of one day to 14 days. It is borrowed and lent in the interbank market, typically used by banks for overnight liquidity needs. The call money market is highly liquid and volatile.

6. What role do commercial banks play in the Indian Money Market?

Ans: Commercial banks are the primary suppliers of funds in the Indian Money Market. They lend money, provide short-term loans, and accept deposits, helping to regulate liquidity in the economy while being regulated by the RBI.

7. What is the difference between scheduled and non-scheduled banks?

Ans: Scheduled banks are those listed in the 2nd Schedule of the RBI Act, 1934, and maintain specific reserves with the RBI. Non-scheduled banks, not listed in this schedule, are not bound by these reserve requirements and operate with less regulatory oversight.

8. What is a commercial paper?

Ans: A commercial paper is an unsecured, short-term promissory note issued by companies to raise funds for working capital needs. It is typically issued at a discount to face value and has a maturity period ranging from a few days to a year.

9. What are indigenous bankers?

Ans: Indigenous bankers are private individuals or firms that provide banking services in India. They offer loans, accept deposits, and manage transactions, particularly in rural areas, using informal systems like Hundis for money lending and transferring funds.

10. What is the main defect in the Indian Money Market?

Ans: A significant defect in the Indian Money Market is the division between the organized and unorganized sectors. This lack of coordination and oversight makes regulation difficult, leading to inefficiency and challenges in maintaining a uniform monetary policy.

Fill in the Blanks:

1. The Reserve Bank of India (RBI) is the __________ of the Indian Money Market.

Ans: Leader.

2. Scheduled banks in India are required to maintain certain reserves with the __________.

Ans: Reserve Bank of India (RBI).

3. Treasury Bills are short-term instruments issued by the RBI on behalf of the __________.

Ans: Central Government.

4. The unorganized sector of the Indian Money Market consists mainly of __________ and money lenders.

Ans: Indigenous bankers.

5. The maturity period of an ordinary Treasury Bill does not exceed __________ year(s).

Ans: One.