DCM3103 MONEY AND BANKING AUG – SEP 2025

Description

SESSION	JULY-AUG 2025
PROGRAM	BACHELOR OF COMMERCE (B COM)
SEMESTER	V
COURSE CODE & NAME	DCM3103  MONEY AND BANKING

 

 

Set – 1

 

 

Q1. Explain the meaning of the statement ‘Money is what money does’ and describe the primary functions of money. 4+6    

Ans 1.

Meaning of the Statement “Money is What Money Does” and Primary Functions of Money

Money is the lifeblood of every economy. It serves as a universally accepted medium of exchange, enabling trade, investment, and growth. The statement “Money is what money does” reflects the functional definition of money, emphasizing that money’s essence lies not in its physical form but in the economic roles it performs. Whether coins, currency notes, or digital transactions, anything that fulfills the essential functions of money can be considered

 

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Q2. Discuss in detail the structure of Indian banking sector. 10  

Ans 2.

Structure of the Indian Banking Sector

The Indian banking system plays a crucial role in financial intermediation and economic development. It mobilizes savings, provides credit, and supports government monetary policies. The structure of the Indian banking sector is multi-layered, comprising institutions that differ in ownership, regulation, and function. It is primarily governed by the Reserve Bank of India (RBI) under the Banking Regulation Act, 1949.

1. Central Bank – Reserve Bank of India (RBI)

 

Q3. Describe the Key Functions and Objectives of Banking Codes and Standard Board of India (BSCSBI). 5+5     

Ans 3.

Key Functions and Objectives of the Banking Codes and Standards Board of India (BCSBI)

The Banking Codes and Standards Board of India (BCSBI) was established in 2006 as an independent and autonomous body promoted by the Reserve Bank of India (RBI). Its main purpose is to enhance transparency, fairness, and accountability in the banking sector by setting standards of customer service and monitoring compliance among member banks.

Key Functions of BCSBI

1. Formulation of Codes and Standards: BCSBI drafts and updates the Code of Bank’s

 

Set – 2

 

Q4. Discuss the quantitative and qualitative instruments of monetary policy. 5+5        

Ans 4.

Quantitative and Qualitative Instruments of Monetary Policy

Monetary policy refers to the measures adopted by a country’s central bank—such as the Reserve Bank of India (RBI)—to control the supply of money, availability of credit, and interest rates in order to achieve macroeconomic objectives like price stability, economic growth, and employment generation. The RBI uses a combination of quantitative (general)

 

Q5. Elaborate on the role of the Narasimhan Committee II in banking system. 10       

Ans 5.

Role of the Narasimham Committee II in the Banking System

The Narasimham Committee II, constituted in 1998 under the chairmanship of M. Narasimham, was established to review the progress of banking sector reforms initiated in 1991 and to propose further measures for strengthening the financial system. Its recommendations formed the foundation for modernizing the Indian banking system, improving efficiency, and ensuring global competitiveness.

Objectives of the Committee

The main objectives were to assess the performance of the financial reforms initiated by the

 

 

Q6. Define Non-Performing Assets (NPAs) and outline the classification of non-performing assets.   4+6     

Ans 6.

Definition and Classification of Non-Performing Assets (NPAs)

Definition of NPAs

A Non-Performing Asset (NPA) is a loan or advance where the borrower fails to make scheduled payments of principal or interest for a specified period, typically 90 days or more, as defined by the Reserve Bank of India (RBI). In other words, when an asset ceases to generate income for the bank, it is classified as non-performing. NPAs indicate poor credit