Chapter 28 - Reforms and Developments in the Banking Sector (JAIIB - MODULE C)
1. What is the primary objective of setting up a 'Bad Bank' in India?
A. To provide cheaper loans to priority sector
B. To recapitalize weak banks
C. To promote digital banking
D. To take over and resolve stressed assets of banks
A Bad Bank is set up to acquire and resolve Non-Performing Assets (NPAs) from commercial banks, allowing them to focus on fresh lending.
2. Which of the following institutions was announced as the 'Bad Bank' for India in 2021?
A. National Asset Reconstruction Company Ltd. (NARCL)
B. National Infrastructure Investment Fund (NIIF)
C. India Infrastructure Finance Company Ltd. (IIFCL)
D. Small Industries Development Bank of India (SIDBI)
NARCL was set up in 2021 as India's Bad Bank to acquire stressed loans from banks and help in faster resolution of NPAs.
3. A Public Sector Bank has an NPA of ₹500 crore. Instead of making heavy provisions, it sells the asset to NARCL. What benefit does the bank immediately get?
A. Increase in CRR requirement
B. Direct capital infusion from RBI
C. Cleaning of balance sheet and release of capital for fresh lending
D. Tax exemption on profits
Selling NPAs to NARCL removes bad loans from the bank’s books, improving balance sheet quality and freeing up capital for new business.
4. Which of the following is the main role of India Infrastructure Finance Company Ltd. (IIFCL)?
A. Provide agricultural crop loans
B. Provide long-term finance for infrastructure projects
C. Promote MSME financing
D. Operate as India’s Bad Bank
IIFCL was established in 2006 to provide long-term debt for financing infrastructure projects such as roads, ports, airports, and power.
5. Which of the following is NOT considered an infrastructure sector for financing by banks as per RBI guidelines?
A. Roads and highways
B. Power generation and distribution
C. Ports and airports
D. Retail shopping malls
RBI defines infrastructure broadly (transport, power, telecom, water, sanitation, etc.). Retail shopping malls are not classified as infrastructure for priority financing.
6. Which scheme launched by Government of India focuses on financing infrastructure projects through a collaborative fund with global and domestic investors?
A. National Investment and Infrastructure Fund (NIIF)
B. SARFAESI Act
C. NARCL
D. Mudra Yojana
NIIF is a collaborative investment platform that pools funds from domestic and international investors for financing infrastructure and related projects.
7. The National Bank for Financing Infrastructure and Development (NaBFID) was set up under which Act?
A. Companies Act, 2013
B. SARFAESI Act, 2002
C. NaBFID Act, 2021
D. Banking Regulation Act, 1949
NaBFID was established through the NaBFID Act, 2021 as a Development Finance Institution (DFI) to fund infrastructure projects.
8. Which of the following is NOT a key function of NaBFID?
A. Financing long-term infrastructure projects
B. Developing a bond and derivatives market
C. Providing short-term crop loans to farmers
D. Attracting private capital into infrastructure
NaBFID’s focus is infrastructure finance and market development. Crop loans are not part of its mandate; they fall under priority sector lending by banks.
9. NaBFID has been established as which type of financial institution?
A. Small Finance Bank
B. Non-Banking Finance Company (NBFC)
C. Universal Commercial Bank
D. Development Finance Institution (DFI)
NaBFID is set up as a Development Finance Institution (DFI) to provide long-term funding for infrastructure, which commercial banks typically avoid due to asset-liability mismatch.
10. Which of the following statements about NaBFID is correct?
A. It is regulated by SEBI
B. It is regulated and supervised by RBI
C. It is regulated by Ministry of Finance only
D. It functions as a cooperative bank
NaBFID, though set up by an Act of Parliament, functions as a regulated financial institution under the oversight of RBI, similar to other development banks.
11. Which of the following is one of the developmental roles of NaBFID apart from financing?
A. Managing foreign exchange reserves
B. Issuing treasury bills
C. Developing bond markets for infrastructure financing
D. Running credit guarantee schemes for MSMEs
NaBFID has a dual mandate: (i) financing infrastructure and (ii) developing the market for long-term bonds and derivatives to channel resources into infrastructure.
12. In its initial years, the Government of India provided how much capital support to NaBFID?
A. ₹20,000 crore
B. ₹5,000 crore
C. ₹50,000 crore
D. ₹1,00,000 crore
The Government initially infused ₹20,000 crore as equity support to operationalize NaBFID and enable it to leverage funds for large-scale infrastructure financing.
13. The EASE reforms for Public Sector Banks were first launched in which year?
A. 2015
B. 2018
C. 2020
D. 2022
The EASE (Enhanced Access & Service Excellence) reforms agenda was launched in 2018 by the Ministry of Finance and IBA to improve governance and customer service in PSBs.
14. Which institution publishes the EASE Reforms Index for Public Sector Banks?
A. Reserve Bank of India
B. Ministry of Corporate Affairs
C. SEBI
D. Indian Banks’ Association (IBA)
The Indian Banks’ Association (IBA) releases the annual EASE Reforms Index, ranking PSBs on performance under various reform themes.
15. Which of the following is NOT a theme of the EASE reforms?
A. Smart Lending and Effective NPA Management
B. Tech-enabled Banking
C. Expansion of Foreign Exchange Reserves
D. Governance and Human Resource Reforms
EASE focuses on customer responsiveness, responsible banking, NPA management, and technology-driven improvements. Expanding forex reserves is an RBI function, not part of EASE.
16. A Public Sector Bank improves its ranking in the EASE Index by adopting AI-driven loan monitoring and faster turnaround in MSME loans. This falls under which EASE theme?
A. Smart Lending and Effective NPA Management
B. Governance Reforms
C. Financial Inclusion
D. Responsible Banking
AI-driven loan monitoring and faster MSME lending are part of the EASE theme "Smart Lending and NPA Management," which aims to improve credit quality and reduce stress assets.
17. Which government body oversees the implementation of EASE reforms in PSBs?
A. SEBI
B. Department of Financial Services, Ministry of Finance
C. NITI Aayog
D. RBI
The Department of Financial Services (DFS) under the Ministry of Finance monitors and drives EASE reforms for improving the performance of Public Sector Banks.
18. EASE 5.0 (2022-23) reforms agenda emphasized:
A. Only digital banking channels
B. Reducing CRR and SLR requirements
C. Mergers of PSBs
D. Tech-enabled, simplified, and collaborative banking for customer ease
