Thursday, September 15, 2016

Bank Preparation 256

Directions (Q. 101 - 109) Read the following passage carefully and answer the questions given
below it.
Banking sector reforms in India were introduced in order to improve efficiency in the process
of financial intermediation. It was expected that banks would take advantage of the changing
operational environment and improve their performance. Towards this end, the Reserve Bank of India
initiated a host of measures for the creation of a competitive environment. Deregulation of interest
rates on both deposit and lending sides imparted freedom to banks to appropriate price their products
and services. To compete effectively with non-banking entities, banks were permitted to undertake
newer activities like investment banking, securities trading and insurance business. This was
facilitated through amendments in the relevant acts which permitted PSBs to raise equity from the
market up to threshold limit and also enabling the entry of new private and foreign banks. This
changing face of banking led to an erosion of margins on traditional banking business, promoting
banks to search for newer activities to augment their free incomes. At the same time, banks also
needed to devote focused attention to operational efficiency in order to contain their transaction costs.
Simultaneously with the deregulation measures prudential norms were instituted to strengthen the
safety and soundness of the banking system. Recent internal empirical research found that over the
period 1992-2003, there has been a discernible improvement in the efficiency of Indian banks. The
increasing trend in efficiency has been fairly uniform, irrespective of the ownership pattern. The rate
of such improvement has, however, not been sufficiently high. The analysis also reveals that PSBs
and private sector banks in India did not differe significantly in terms of their efficiency measures.
Foreign banks, on the other hand, recorded higher efficiency as compared with their Indian
counterparts.

101. Prudential norms were initiated in the banking sector with a view to
a) Increase operational efficiency
b) Contain the non-performing assets
c) Strengthen the soundness of banking system
d) Improve the custome service
e) None of these

102. Banking sector reforms in India were introduced for the purpose of
a) Giving more and more employment opportunities to the educated unemployed
b) Taking care of the downtrodden masses
c) Increasing efficiency in the banking activities
d) Giving better return to the Central Government
e) None of these

103. Banks can control their transaction costs by
a) Restricting their lending activities
b) Undertaking more and more non-banking activities
c) Encouraging the customers to bank with other banks
d) Devoting more attention to operational efficiency
e) None of these

104. The recent internal empirical research conducted by the RBI found that
a) There is cut-throat competition in banking industry
b) The rate of return is not commensurate with the operational cost
c) The rate of improvement has not been high
d) Nationalised banks and private sector banks did differ in the efficiency measures
e) None of these

105. Which of the following statements recognising improvement in efficiency is true in
the context of the passage?
a) There is no discremible difference in efficiency parameters
b) The foreign banks recorded higher efficiency
c) The efficiency of foreign banks is not comparable with Indian banks
d) The rate of such improvement in efficiency was very high
e) None of these

Directions (Q. 106 - 107) Choose the word which is most nearly the same in meaning as the word
printed in bold as used in the passage.
106. Relevant
a) Recorded b) Opposite c) Appropriate d) Stringent e) Germane

107. Augment
a) Make b) Become c) Enlarge d) Increase e) Envelop

Directions (Q. 108 - 109) Choose the word that is most opposite of the word printed in bold as used
in the passage.
108. Improve
a) Retard b) Disprove c) Prove d) Accelerate e) Degenerate

109. Reveal
a) Show b) Conceal c) Secretive d) Exhibit e) None of these