IMPORTANT BANKING INTERVIEW - QUESTION & ANSWERS - PART - III

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41. What is the Banking Ombudsman Scheme?

=> The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank
customers for resolution of complaints relating to certain services rendered by banks. The Banking
Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI
with effect from 1995.

42. Which are the banks covered under the Banking Ombudsman Scheme, 2006?

=> All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative
Banks are covered under the Scheme.

43. What is Inflation?

=> Inflation is as an increase in the price of bunch of Goods and services that projects the Indian
economy. An increase in inflation figures occurs when there is an increase in the average level of
prices in Goods and services. Inflation happens when there are fewer Goods and more buyers; this
will result in increase in the price of Goods, since there is more demand and less supply of the goods.

44. What is Deflation?

=> Deflation is the continuous decrease in prices of goods and services. Deflation occurs when the
inflation rate becomes negative (below zero) and stays there for a longer period.

45. What is FII?

=> FII (Foreign Institutional Investor) used to denote an investor, mostly in the form of an institution.
An institution established outside India, which proposes to invest in Indian market, in other words
buying Indian stocks. FII's generally buy in large volumes which has an impact on the stock markets.
Institutional Investors includes pension funds, mutual funds, Insurance Companies, Banks, etc.

46. What is FDI?

=> FDI (Foreign Direct Investment) occurs with the purchase of the “physical assets or a significant
amount of ownership (stock) of a company in another country in order to gain a measure of
management control” (Or) A foreign company having a stake in a Indian Company.

47. What is IPO?

=> IPO is Initial Public Offering. This is the first offering of shares to the general public from a
company wishes to list on the stock exchanges.

48. What is GDP?

=> The Gross Domestic Product or GDP is a measure of all of the services and goods produced in a
country over a specific period; classically a year.

49. What is GNP?

=> Gross National Product is measured as GDP plus income of residents from investments made
abroad minus income earned by foreigners in domestic market.

50. What is Revenue deficit?

=> It defines that, where the net amount received (by taxes & other forms) fails to meet the predicted
net amount to be received by the government.

51. What is Disinvestment?

=> The Selling of the government stake in public sector undertakings.

52. What is Fiscal Deficit?

=> It is the difference between the government’s total receipts (excluding borrowings) and total
expenditure.

53. What is National Income?

=> National Income is the money value of all goods and services produced in a Country during the
year.

54. What is bank and its features and types?

=> A bank is a financial organization where people deposit their money to keep it safe.Banks play an
important role in the financial system and the economy. As a key component of the financial system,
banks allocate funds from savers to borrowers in an efficient manner.

55. What are Mutual funds?

=> Mutual funds are investment companies that pool money from investors at large and offer to sell
and buy back its shares on a continuous basis and use the capital thus raised to invest in securities of
different companies. The mutual fund will have a fund manager that trades the pooled money on a
regular basis. The net proceeds or losses are then typically distributed to the investors annually. A
company that invests its clients' pooled fund into securities that match its declared financial
objectives. Asset management companies provide investors with more diversificationand investing
options than they would have by themselves. Mutual funds, hedge funds and pension plans are all run
by asset management companies. These companies earn income by charging service fees to their
clients.

56. What is Cheque?

=> Cheque is a negotiable instrument instructing a Bank to pay a specific amount from a specified
account held in the maker/depositor's name with that Bank.A bill of exchange drawn on a specified
banker and payable on demand.“Writtenorder directing a bank to pay money”.

57. What is demand Draft?

=> A demand draft is an instrument used for effecting transfer of money. It is a Negotiable
Instrument. Cheque and Demand-Draft both are used for Transfer of money. You can 100% trust a
DD. It is a banker's check. A check may be dishonored for lack of funds a DD can not. Cheque is
written by an individual and Demand draft is issued by a bank. People believe banks more than
individuals.

58. What is NABARD?

=> NABARD was established by an act of Parliament on 12 July 1982 to implement the National
Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit
Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and
Agricultural Refinance and Development Corporation (ARDC). It is one of the premiere agency to
provide credit in rural areas. NABARD is set up as an apex Development Bank with a mandate for
facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage
and village industries, handicrafts and other rural crafts.

59. What is SENSEX and NIFTY?

=> SENSEX is the short term for the words "Sensitive Index" and is associated with the Bombay
(Mumbai) Stock Exchange (BSE). The SENSEX was first formed on 1-1-1986 and used the market
capitalization of the 30 most traded stocks of BSE. Where as NSE has 50 most traded stocks of
NSE.SENSEX IS THE INDEX OF BSE. AND NIFTY IS THE INDEX OF NSE.BOTH WILL
SHOW DAILY TRADING MARKS. Sensex and Nifty both are an "index”. An index is basically an
indicator it indicates whether most of the stocks have gone up or most of the stocks have gone down.

60. What is SEBI?

=> SEBI is the regulator for the Securities Market in India. Originally set up by the Government of
India in 1988, it acquired statutory form in 1992 with SEBI Act 1992 being passed by the Indian
Parliament. Chaired by C B Bhave.