M.B.A. DEGREE EXAMINATION, APRIL 2017
Second Semester
MONETARY MANAGEMENT
(2013 onwards)
Time 3 Hours Maximum 75 Marks
Section A x 3 15)
Answer all the questions.
All questions carry equal marks.
1. Outline the characterististics of a developed money
market.
2. Explain the role of RBI as a banker to the Government.
3. What is a clearing house?
4. How is licensing of banks done in India?
5. Examine the role of RBI in the recent demonetisation
drive of Government of India.
Section B x 10 50)
Answer all the questions, choosing either or
All questions carry equal marks.
6. What are the instruments of a developed money
market?
Or
Explain the meaning of NBFCs. Distinguish
between commercial bank and NBFCs.
Sub. Code
632204
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7. Distinguish between central bank and commercial
banks.
Or
What are the methods of notes issue? Discuss their
merits and demerits.
8. "From the standpoint of credit control, open market
operations are complementary to bank rate policy"
Elucidate.
Or
"A central bank is the lender of last resort"
Discuss.
9. Outline the steps taken by RBI in promoting
banking habits of citizens.
Or
What is a credit information burian? Examine its
role in monetary management.
10. Why is exchange rate stability important for
balance of payments? How does it affect the
monetary policy of a country?
Or
What are the advantages of concentration of notes
issue with the RBI in India? How does it differ with
other countries?
Section C x 10 10)
(Compulsory)
11. CASE :::Demonetization and RBI
The Reserve Bank of India has clarified that it is taking
all steps to expeditiously complete the computing of the
deposits received after the demonetisation of Rs. 500 and
Rs. 1,000 notes from 9 November and will release the
numbers at the earliest. The periodical deposit figures
released earlier were based on aggregation of accounting
entries done at the currency chests all over the country,
the RBI said in release posted on its website.
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"Now that the Scheme has come to an end on December
30, 2016, these figures would need to be reconciled with
the physical cash balances to eliminate accounting errors/
possible double counts etc. RBI has already initiated this
process and till this is completed any estimate may not
indicate the actual numbers of the SBNs that have been
returned." the clarification said.
The clarification comes in the wake of reports that the
banks have received deposits close to Rs. 15 lakh crore, of
estimated Rs. 15.4 lakh crore worth junked currency
notes that were in circulation, from the 50-day
demonetisatton exercise.
A PTI report citing sources said between Rs. 14.5 lakh
crore and Rs. 15 lakh crore may have come back into the
banking system and RBI is still doing reconciliation and
cross-checking.
Both the government and the RBI have not come out with
the official statement on how much have been deposited
in various banks at the end December 30, the last date
for depositing and exchange of junked Rs. 500/1000 notes.
The last official number on this was only till December
10 when RBI said that the old notes of Rs. 500 and
Rs. 1,000 which have been returned to the central bank
and the currency chest amounted to Rs. 12.44 lakh crore.
On the last day of demonetisation. RBI had asked all
banks including cooperatives to report details of deposits
of old Rs. 500/1,000 notes to it after the close of banking
hours.
Finance Ministry had said that there were lot of areas
where double counting could have happened. So the
Finance Ministry had identified those areas and had
requested RBI and banks to again double check. There
could be slight addition in the deposit of junked notes as
extended exchange facility is available to certain specified
category.
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According to terms and conditions of RBI for availing this
benefit, NRIs and Indians returning from abroad will
have to physically show the junked 500 and 1,000 rupee
notes to customs officials at the airport and get a
declaration form stamped before they can deposit the
demonetized currency in RBI during the grace period.
Indians who were abroad during November 9 to
December 30 have been given a three-month grace period
till March 31 to deposit the junked notes, while for the
NRIs. it is six months till June 30. While there is no limit
on deposit of defunct notes by an Indian national who
was abroad when the 50-day window was in operation,
NRIs can deposit only Rs. 25,000 as per FEMA law
restrictions.
Questions:
How do you think will RBI estimate the old notes
and assess the black money with NRls still
returning the same?
Draft an implementable monetary policy post
demonetization for India.
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