1. The term "Bancassurance" implies:
Insurance companies opening their own banks.
RBI providing insurance to bank deposits.
Banks selling insurance products of insurance companies to their customers.
Banks providing insurance against bad loans.
Explanation:
Bancassurance is a partnership between a bank and an insurance company, where the bank uses its distribution channels to sell insurance products.
2. Which of the following is considered a "Para Banking" activity?
Accepting Demand Deposits.
Portfolio Management Services (PMS).
Clearing of Cheques.
Lending for Agriculture.
Explanation:
Para Banking activities are financial services undertaken by banks that are ancillary to their core banking business, such as Mutual Fund distribution, Insurance (Bancassurance), and Portfolio Management Services.
3. Commercial banks in India can undertake the business of "Primary Dealership" (PD) in Government Securities:
Only through a separate subsidiary.
They are prohibited from PD business.
Departmentally within the bank, subject to RBI approval.
Only if they are foreign banks.
Explanation:
RBI permits eligible commercial banks to undertake Primary Dealership business departmentally (without forming a separate subsidiary), provided they meet specific prudential criteria.
4. As per SEBI regulations, the minimum investment required from a client to open a "Portfolio Management Services" (PMS) account is:
?1 Crore
?50 Lakh
?25 Lakh
?5 Lakh
Explanation:
SEBI raised the minimum ticket size for PMS from ?25 Lakh to ?50 Lakh in 2020 to ensure that only high-net-worth individuals with risk-taking capacity enter this segment.
5. White Label ATMs (WLAs) are owned and operated by:
Foreign Banks
Public Sector Banks
RBI directly
Non-Bank entities
Explanation:
WLAs are set up, owned, and operated by non-bank entities incorporated under the Companies Act, authorized by RBI. They do not display any bank's branding.
6. In the "Referral Model" of Bancassurance, the bank:
Settles the claims.
Shares its customer database with the insurer for a fee but does not sell the policy itself.
Issues the policy directly to the customer.
Underwrites the risk.
Explanation:
In the Referral Model, the bank only refers clients (leads) to the insurance company and provides physical infrastructure/data, receiving a referral fee. The actual selling is done by the insurer's staff.
7. Primary Dealers (PDs) are required to meet underwriting commitments in the auctions of:
Shares of Public Sector Banks
Government Securities (Dated Securities and T-Bills)
Corporate Bonds
Commercial Papers
Explanation:
PDs have a mandatory obligation to underwrite the issuances of Government Securities to ensure that the government's borrowing program is successful.
8. Banks distributing Mutual Fund products to their customers act in the capacity of:
Underwriters
Fund Managers
AMFI Agents / Distributors
Principals
Explanation:
Banks act as corporate agents or distributors registered with AMFI (Association of Mutual Funds in India) to sell MF schemes and earn commission.