DCM3103 MONEY AND BANKING

Description

SESSION	JAN 2026
PROGRAM	BACHELOR OF COMMERCE (B.COM)
SEMESTER	V
COURSE CODE & NAME	DCM3103 MONEY AND BANKING

 

Set – 1

 

 

Q.1. Discuss why general acceptability is an essential characteristic of money. How does it influence the utility of money? (4+6 = 10 Marks)

Ans 1.

General Acceptability as an Essential Characteristic of Money

General acceptability is the most essential and distinctive characteristic of money. This distinguishes it from all other physical items and financial instruments. To allow any object or item to function as money the item must be acknowledged by all the participants in the economic system as an appropriate medium for trade for goods, services, and settlement of debts with no hesitation. If it is not universally accepted, the primary function of the currency of exchange ceases completely and

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Q.2. Deposits are created by loans and loans are created by deposits. Explain this statement. Discuss the limitations of credit creations. (5+5 = 10 Marks)

Ans 2.

Deposits Created by Loans and Loans Created by Deposits

The assertion that deposits make loans, and loans generate deposits illustrates the basic mechanism behind credit creation within a contemporary banks that operate on fractional reserve. This reciprocal relationship lies at the core of how commercial banks expand the money supply far beyond the quantity of physical currency available, and a thorough understanding of it is crucial in understanding monetary

Q.3. Describe the Key Functions and Objectives of Banking Codes and Standard Board of India (BCSBI). (5+5 = 10 Marks)

Ans 3.

Banking Codes and Standards Board of India (BCSBI)

The Banking Codes and Standards Board of India (BCSBI) was created in February of 2006 to be an independent, autonomous banking industry watchdog that was registered as a society in the Societies Registration Act, 1860. It was created by the Reserve Bank of India conceptualized BCSBI in response to the recommendations by the Committee on Procedures and Performance Audit of Public Services (CPPAPS) which was headed by S.S. Tarapore, recognizing the need for an independent body dedicated specifically to ensure that banks adhere to their steadfast standards for customer service regularly and with a sense of humour. BCSBI serves as the custodian of two

 

Set – 2

 

Q.4. Describe the qualitative instruments of monetary policy. How do these tools influence the money supply and interest rates. (4+6 = 10 Marks)

Ans 4.

Qualitative Instruments of Monetary Policy

Quantitative instruments of monetary policies often referred to as selective credit controls, are instruments used to control the Reserve Bank of India to manage the nature, scope and the conditions of commercial banks, rather than directly controlling the overall quantity of cash in the market. In contrast to instruments that are quantitative, such as repo rates or the Cash Reserve Ratio

 

Q.5. Write a note on ‘New Bank Licensing Policy 2013’. (10 Marks)

Ans 5.

New Bank Licensing Policy 2013

The New Bank Licensing Policy of 2013 was a landmark regulation initiative of the Reserve Bank of India that allowed for the fresh banking from the private sector in India following a gap of around ten years between the previous round of bank licenses in 2003-04. The RBI published the official guidelines to license new banks from the private sector on February 13, 2013 and invited applications from industrial houses, non-banking financial companies, and other eligible entities seeking to establish full-

 

Q.6. Define the Non-performing Assets (NPA). Explain the classification of NPA. (5+5 = 10 Marks)

Ans 6.

Definition of Non-Performing Assets (NPA)

A Non-Performing Asset (NPA) is a loan or advance in the books of a bank on which the borrower has stopped making scheduled interest payments or principal repayments for a specified period, making the asset non-income-generating for the lending bank. In India there is a Reserve Bank of India defines an asset as non-performing when an amount of interest, or principal payments remain in arrears for more than 90 days in respect of the term of loans. For agricultural loans, the