Management of Financial Institutions (VV2)

Management of Financial Institutions (VV2)
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1. Differenciate between Primary and Secondary Markets?
2. “Financial institutions provide the means and mechanism of transferring command over resources from those who have an excess of income over expenditure to those who can make use of the same with view to adding to the volume of productive capital”. Discuss.
3. In the insurance sector a numbers of reforms have been introduced in the recent past. Explain them in brief?
4. How IDFC has emerged as a company supporting infrastructure projects?
5. Profitability, Liquidity, Safety and Social Welfare are the major principles which commercial banks strive to incorporate in their working. Explain.
6. Write a detailed note on the objectives, functions and contribution of IDBI.
7. What is the need for development banks in India? Explain the objects and scope of Development Banks?
8. State the role objectives of financial institutions in India?

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Case Detail :
Case Study # Lendingkart to offer its credit risk analytics software to financial institutions
Lendingkart, an online lender to small and medium enterprises (SMEs), will offer its credit risk analytics software as a service for other financial institutions in 2017, and aim to double its reach in the next six months, a top company executive said.
“We plan to offer our analytics technology to other NBFCs (non-banking financial companies) and financial institutions sometime in 2017,” said Lendingkart’s co-founder Harshvardhan Lunia in a telephonic interview. “We aim to increase our reach across various credit product, geography and customer segments by monetizing our data analytics and credit scoring platform, which other lenders can use to evaluate the credit worthiness of the borrowers…Also, it will help us to disburse more loans without increasing our book size thus, increasing returns of assets for us,” Lunia added in an email response.
Since its inception in 2014, the online NBFC, Lendingkart Finance Ltd has disbursed 7,000 loans to SMEs in over 450 cities. The company expects this number to cross 10,000 covering over 800 cities in next six months. Lendingkart Finance and Lendingkart Technologies Pvt. Ltd are part of the Lendingkart Group. Lendingkart Technologies has built analytics software to evaluate borrowers’ credit worthiness.
Founded by Lunia and Mukul Sachan, Lendingkart underwrites working capital loans online to SMEs, which have an annual turnover of Rs12 lakh to Rs1-1.5 crore. On an average, these SMEs are lent Rs5.5-6 lakh at an annualized interest rate ranging between 16% to 24%, for a duration of six to 12 months. Lendingkart claims to have a loan application approval rate of 22-23%. The credit risk analytics technology analyses the borrower or an SME on the basis of over 2200 variables and data points, which includes industry type, business cash-flows and transactions, income tax return filings of the business, its previous loan and repayment records, among others. This is the technology that Lendingkart plans to share with other financial institutions.
Lunia explains there are two possible ways in which it could monetize this service. “Using our (risk analytics) technology, we could co-lend with other financial institution in cases where SMEs have larger (capital) needs. The other way is that we charge (the financial institutions) for using our technology,” he said. However, Lunia added that it is too soon to forecast how much revenue Lendingkart will earn from its technology.
Lendingkart, which has 350 employees across offices in Ahmedabad, Bengaluru and Mumbai, has raised over $40 million from Betelsmann India Investment, Darrin Capital Management and Mayfield India, among other investors. The fintech company competes with Bengaluru-based Capital Float (Zen Lefin Pvt. Ltd), Instakash Technlogies Pvt. Ltd, Neogrowth Credit Pvt. Ltd, IndiaLends (GC Web Ventures Pvt. Ltd), among others.
In May, Capital Float raised $25 million (Rs170 crore) in an investment round led by US-based Creation Investments. In August, Mumbai-based NeoGrowth raised Rs15 crore from Frontier Investments Group and IndiaLends raised about Rs6.5 crore from DSG Consumer Partners, Siddharth Parekh and other angel investors.

1. What the case is all about? Provide detail in your words?
2. Do you believe such software really help improving financial institutions? If Yes, How?
3. What two different possible ways are suggested by Lunia to monetize the given service?
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1. The advance value of LIC policy is linked with ………….. Value.
Face
Surrender
Paid-up
Age

2. SBI’s new training initiative “Strategic Training Unit” is located at ……….
Hyderabad
Delhi
Mumbai
Kolkatta
3. The portion of total deposits of a commercial bank which it has to keep with RBI in the form of cash reserves in termed as
CRR
SLR
Repo Rate
Bank Rate
4. SBI’s Archieve Center is located at
Hyderabad
Delhi
Mumbai
Kolkatta
5. Chalpathi Rao committee was meant for restructuring of ……………. Banks.
Commercial
Listed
Regional Rural
State
6. Real Time Gross Settlement (RTGS) is managed by
SBI
RBI
IMF
World Bank
7. 1st August of every year is observed as
KYC Filing day
KYC Fraud Prevention Day
Both
Computer Security Day
8. Dalal Street is located in………………. City.
Delhi
Mumbai
Kolkatta
Chennai
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9. CDSL stands for Central …………………… Services Limited of India.
Direction
Depository
Derivative
Delhi
10. On which of the following banks the Reserve Bank of India depends?
Scheduled
Urban
Rural
Commercial
11. A diff swap is also known as a quanto swap.
TRUE
FALSE
Can’t Say
Sometimes
12. NEFT and RTGS are……………….. Systems.
Export- Import
Depository
Banking
Insurance
13……………. Investores are high worth individuals who provide seed capital for start-ups in return for a minority share in business.
FII
Angel
FDI
Capitalists
14. The eurocurrency market is small, relative to national markets.
TRUE
FALSE
Sometimes
Can’t Say
15. A major part of the eurocurrency market is interbank activity true.
TRUE
FALSE
Sometimes
Can’t Say
16. An agreement to exchange fixed interest rate payments on a loan for floating interest rate payments is an …………………rate swap.
National
Soverign
Principal
Interest
16. An agreement to exchange fixed interest rate payments on a loan for floating interest rate payments is an …………………rate swap.
National
Soverign
Principal
Interest
17. A ………………..is a bank deposit held in a country that does not issue that currency in which the deposit is denominated.
Union
Dollor Denominated
Euro-currency
Financial Institution
18. Currency swaps have expanded less rapidly than interest rate swaps because they require …………… capital backing under the Basle rules.
Not less than
Higher
Equal
Lower
19. Very popular form of Investments, called mutual funds fall under which sector of economy?
Money Market
Capital
Infrastructure
Depository
20. ICICI, HDFC, and Yes bank are form of ………………… types of banks
Private
Public
Scheduled
All
21. Treasury biils are used for ……………….. Type of requirments.
Intemediate
Short
Long
All
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22. In term of PMLA, records of cash transaction of Rs 10 lacs and suspicious transaction are required to be maintained for a period of ……… Years.
5
10
15
20
23. DEMAT is an instrument of …………….. Market Sector.
Insurance
Banking
Capital Market
Money Market
24. The New Industrial Policy of India came in which year………….
2001
2010
1991
1997
25. The eurocurrency market is principally concerned with…………….term lending False
Uncertain
Shrot
intermediate
26. Monetary policy of India is launched by………………. In India?
SBI
RBI
PNB
HDFC and ICICI
27. Supporters of the portfolio approach to the eurocurrency argument argue that the growth of the eurocurrency market has not been ………….. because the eurobanks cannot create credit.
Decreased
Increased
inflationary
Progressive
28. A …………………….. is a bond issued outside of the country in the currency of which it is denominated.
Euro-bond
Foreign-bond
Indian-Bond
Saarc-bond
29. Short-termism’ describes a concentration by firms on …………………..-term profits.
Short
Medium
Annual
Long
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30. Problems arose in the 1990s in the newly emerging markets because losses in one market frequently cause ………….. to become temporarily risk averse.
Banks
Investors
Citizens
Governments
31. Safes are less safe for banks than are most other derivatives.
FALSE
TRUE
Sometimes
Can’t Say
32. A ……………….coupon swap is a combination of an interest rate swap and a fixed rate currency swap.
Monetary
Currency
Dollor
Euro
33. Floating rate eurobonds become popular when interest rates are very ……………………
Double
Volatile
Certain
Fixed
34. The default risk on futures is greater than on swaps.
FALSE
Sometimes
Can’t Say
TRUE
35. It is possible to combine a zero coupon bond with an interest rate swap to produce a diff swap.
Sometimes
Can’t Say
FALSE
TRUE
36. ………………. Bill is a bill of exchange without any consideration, or quid pro quo.
Finance
Accomodation
Money
Depository
37. BSE stands for ……………….. Stock exchange.
Banking
Bombay
Bureau
Basil
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38. Comment on the statement: The small implied changes in expected interest rates suggest that the market felt that interest rates had reached a peak.
TRUE
FALSE
Sometimes
Can’t Say
39. ………….. Is the simultaneous purchase and sale transactions in a security or a commodity, undertaken in different markets to profit from price differences.
IRR
NPV
Arbitrage
CAPM
40. Which is not an instrument of money market?
Call Money
MMMFs
CRR
Equity Share
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