In relation to banking. what do you understand by ” Ever-Greening of Loan Account” ? ?->(Show Answer!)

1. In relation to banking. what do you understand by ” Ever-Greening of Loan Account” ?

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MCQ-> Read the following passage carefully and answer the questions given at the end.Passage 4Public sector banks (PSBs) are pulling back on credit disbursement to lower rated companies, as they keep a closer watch on using their own scarce capital and the banking regulator heightens its scrutiny on loans being sanctioned. Bankers say the Reserve Bank of India has started strictly monitoring how banks are utilizing their capital. Any big-ticket loan to lower rated companies is being questioned. Almost all large public sector banks that reported their first quarter results so far have showed a contraction in credit disbursal on a year-to-date basis, as most banks have shifted to a strategy of lending largely to government-owned "Navratna" companies and highly rated private sector companies. On a sequential basis too, banks have grown their loan book at an anaemic rate.To be sure, in the first quarter, loan demand is not quite robust. However, in the first quarter last year, banks had healthier loan growth on a sequential basis than this year. The country's largest lender State Bank of India grew its loan book at only 1.21% quarter-on-quarter. Meanwhile, Bank of Baroda and Punjab National Bank shrank their loan book by 1.97% and 0.66% respectively in the first quarter on a sequential basis.Last year, State Bank of India had seen sequential loan growth of 3.37%, while Bank of Baroda had seen a smaller contraction of 0.22%. Punjab National Bank had seen a growth of 0.46% in loan book between the January-March and April-June quarters last year. On a year-to-date basis, SBI's credit growth fell more than 2%, Bank of Baroda's credit growth contracted 4.71% and Bank of India's credit growth shrank about 3%. SBI chief Arundhati Bhattacharya said the bank's year-to-date credit growth fell as the bank focused on ‘A’ rated customers. About 90% of the loans in the quarter were given to high-rated companies. "Part of this was a conscious decision and part of it is because we actually did not get good fresh proposals in the quarter," Bhattacharya said.According to bankers, while part of the credit contraction is due to the economic slowdown, capital constraints and reluctance to take on excessive risk has also played a role. "Most of the PSU banks are facing pressure on capital adequacy. It is challenging to maintain 9% core capital adequacy. The pressure on monitoring capital adequacy and maintaining capital buffer is so strict that you cannot grow aggressively," said Rupa Rege Nitsure, chief economist at Bank of Baroda.Nitsure said capital conservation pressures will substantially cut down "irrational expansion of loans" in some smaller banks, which used to grow at a rate much higher than the industry average. The companies coming to banks, in turn, will have to make themselves more creditworthy for banks to lend. "The conservation of capital is going to inculcate a lot of discipline in both banks and borrowers," she said.For every loan that a bank disburses, some amount of money is required to be set aside as provision. Lower the credit rating of the company, riskier the loan is perceived to be. Thus, the bank is required to set aside more capital for a lower rated company than what it otherwise would do for a higher rated client. New international accounting norms, known as Basel III norms, require banks to maintain higher capital and higher liquidity. They also require a bank to set aside "buffer" capital to meet contingencies. As per the norms, a bank's total capital adequacy ratio should be 12% at any time, in which tier-I, or the core capital, should be at 9%. Capital adequacy is calculated by dividing total capital by risk-weighted assets. If the loans have been given to lower rated companies, risk weight goes up and capital adequacy falls.According to bankers, all loan decisions are now being assessed on the basis of the capital that needs to be set aside as provision against the loan and as a result, loans to lower rated companies are being avoided. According to a senior banker with a public sector bank, the capital adequacy situation is so precarious in some banks that if the risk weight increases a few basis points, the proposal gets cancelled. The banker did not wish to be named. One basis point is one hundredth of a percentage point. Bankers add that the Reserve Bank of India has also started strictly monitoring how banks are utilising their capital. Any big-ticket loan to lower rated companies is being questioned.In this scenario, banks are looking for safe bets, even if it means that profitability is being compromised. "About 25% of our loans this quarter was given to Navratna companies, who pay at base rate. This resulted in contraction of our net interest margin (NIM)," said Bank of India chairperson V.R. Iyer, while discussing the bank's first quarter results with the media. Bank of India's NIM, or the difference between yields on advances and cost of deposits, a key gauge of profitability, fell in the first quarter to 2.45% from 3.07% a year ago, as the bank focused on lending to highly rated customers.Analysts, however, say the strategy being followed by banks is short-sighted. "A high rated client will take loans at base rate and will not give any fee income to a bank. A bank will never be profitable that way. Besides, there are only so many PSU companies to chase. All banks cannot be chasing them all at a time. Fact is, the banks are badly hit by NPA and are afraid to lend now to big projects. They need capital, true, but they have become risk-averse," said a senior analyst with a local brokerage who did not wish to be named.Various estimates suggest that Indian banks would require more than Rs. 2 trillion of additional capital to have this kind of capital adequacy ratio by 2019. The central government, which owns the majority share of these banks, has been cutting down on its commitment to recapitalize the banks. In 2013-14, the government infused Rs. 14,000 crore in its banks. However, in 2014-15, the government will infuse just Rs. 11,200 crore.Which of the following statements is correct according to the passage?
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MCQ-> Read the following passage carefully and answer the questions given below it. Certain words have been printed in bold to help you locate them while answering some of the questions. Internet banking is the teen used for new age banking system. Internet banking is also called as online banking and it is an outgrowth of PC banking. Internet banking uses the internet as the delivery channel by which to conduct banking activity, for example, transferring funds. paying bills. viewing checking and savings account balances, paying mortgages and purchasing financial instruments and certificates of deposits. Internet banking is a result of explored pus sibility to use internet application in one of the various domains of commerce. It is difficult to infer whether the internet tool has been applied for convenience of hankers or for the customers’ convenience. But ultimately it contributes in increasing the efficiency of the banking operation as well providing more convenience to customers. Withotit even interacting with the hankers, customers transact from one curner of the country to another curner There arc many advantages of online Banking. It is convenient, it isn’t bound by operational timings, there are no geographical barriers and the services can be offered at a minuscule cost. Electronic banking has experienced explosive growth and has transformed traditional practices in banking. Private Banks in India were the first to implement Internet bank ing services in the banking :rictus try. Private Banks, due to late en try into the industry, understood that the establishing network in remote corners of the country is a very difficult task. It was clear to them that the only way to stay connected to the customers at any place and at any time is through Internet applications. They took the inter-net applications as a weapon of cornpetitive advantage to corner the great monoliths like Stale Bank of India, Indian Bank etc. Private Banks are pioneer in India to explore the versatility of internet applications in delivering services to customers. Several studies have attempted to assess the relative importance of B2E1 and B2C business domains.. There is wide difference in estimates of volume of business transacted over Internet and its components under B2C and B2B. However, most studies agree that volume of transactions in B2B domain far exceeds that in B2C. This is expected result. There is also a growing opinion that the future of ebusiness lies in B2B domain, as compared to B2C. This has several reasons, like low penetration of PCs to households, low bandwidth availability etc., in a large part of the world. The success of B2C ventures depends to a large extent on the shopping habits of people in different parts of the world. A survey sponsored jointly by Confederation of Indian Industries and Infrastructure Leasing and Financial Services on e-commerce in India in 2010 the following observations. 62% of PC owners and 75% of PC non-owners but who have ac cess to Internet would not buy through the net, as they were not sure of the product offered. The same study estimated the size of B2B business in India by the year 2011 to be varying, between Rs. 1250 billion to Rs. 1500 billion. In a recent study done by Arthur Anderson, it has been estimated that 84% of total e business revenue is generated from B2B segment and the growth prospects in this segment are substantial. It has estimated the revenues to be anywhere between US $ 8.1 trillion to over US $ 21 trillion within the next three years (2014).Which bank(s) is/are pioneer in India to explore the versatility of Internet banking in serving customers ?
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MCQ-> Read the following passage carefully and answer the questions given.Do you ever feel there’s is a greater being inside of you bursting to get out? It is the voice that encourages you to really make something of your life. When you act congruently with that voice, it’s like your are a whole new person. You are bold and courageous. You are strong. You are unstoppable. But, then reality sets in, and soon those moments are history. It is not hard to put youself temporarily into an emotionally motivated state. Just listen to that motivational song for that matter. However, this motivation does not stay forever. Your great ideas seem impractical. How many times have you been temporarily inspired with a idea like, “I want to start my own business.” And then a week later it’s forgotten? You come up with inspiring ideas when you are motivated. But you fail to maintain that motivation through the action phase.The problem we ask ourselves is, why does this happen? You can listen to hundereds of motivational speakers and experience an emotional yo-yo effect, but it does not fast. The problem is that as we are intellectually guided, we try to find logic in emotional motivation and as we fail to find logic eventually phases out. I used to get frustrated when my emotional motivation fizzled out after a while. Eventually, I realised that being guided by intellect, was not such a bad thing after all. I just had to learn to use my mind as an effective motivational tool. I figured that if I was not feeling motivated to go after a particular goal, may be there was a logical reason for it. I noted that when I had strong intellectual reasons for doing something. I usually did not have trouble taking action.But when my mind thinks a goal is wrong on some level. I usually feel blocked. I eventually realised that this was my mind’s way of telling me the goal was a mistake to begin with. Sometimes a goal seem to make sense on one level but when you look further upstream, it becomes clear that the goal is ill advised. Suppose you work in sales, and you get a goal to increase your income by 20% by becoming a more effective salesperson. That seems like a reasonable and intelligent goal. But may be you are surprised to find yourself encountering all sorts of internal blocks when you try to pursue it. You should feel motivated, but you just don’t. The problem may be that on a deeper level your mind knows you don’t want to be working in sales at all. You really want to be a musician. Matter how hard you push yourself in sales career, it will always be a motivational dead end.Further when you set goals, that are too small and too timid, you suffer a perpetual lack of motivation. You just need to summon the courage to acknowledge your true desires. Then you will have to deal with the self-doubt and fear that’s been making you think too small. Ironically, the real key to motivation is to set the goals that scare you. You are letting fears, excuses and limiting beliefs hold you back. Your subconscious mind knows you are strong, so it won’t provide any motivational fuel until. You step up, face your fears, and acknowledge your hearts desire. Once you finally decide to face your tears and drop the excuses, then you will find your motivation turning on full blast.What does the author want to convey when he says, “When you look further upstream, it becomes clear that the goal is ill advised.”?
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MCQ-> Read the following passage based on an Interview to answer the given questions based on it. Certain words are printed in bold to help you locate them while answering some of the questions.A spate of farmer suicides linked to harassment by recovery agents employed by micro finance institutions (MFLs) in Andhra Pradesh spurned the state government to bring in regulation to protect consumer interests. But, while the Bill has brought into sharp focus the need for consumer protection, it tries to micro-manage MFI operations and in the process it could scuttle some of the crucial bene ts that MFIs bring to farmers, says the author of Micro nance India, State Of The Sec-for Report 2010. In an interview he points out that prudent regulation can ensure the original goal of the MFIs - social uplift of the poor. Do you feel the AP Bill to regulate Mils is well thought out? Does it ensure fairness to the borrowers and the long-term health of the sector? The AP Bill has brought into sharp focus the need for customer protection in four critical areas. First is pricing. Second is lender's liability whether the lender can give too much loan without assessing the customer's ability to pay. Third is the structure of loan repayment - whether you can ask money on a weekly basis from people who don't produce weekly incomes. Fourth is the practices that attend to how you deal with defaults. But the Act should have looked at the positive bene ts that institutions could bring in, and where they need to be regulated in the interests of the customers. It should have brought only those features in. Say, you want the recovery practices to be consistent with what the customers can really manage. If the customer is aggrieved and complains that somebody is harassing him, then those complaints should be investigated by the District Rural Development Authority. Instead what the Bill says is that MF1s cannot go to the customer's premises to ask for recovery and that all transactions will be done in the Panchayat of ce. With great dif culty, MFIs brought services to the door of people. It is such a relief for the customers not to be spending time out going to banks or Panchayat of ces, which could be 10 km away in some cases. A facility which has brought some relief to people is being shut. Moreover, you are practically telling the MFI where it should do business and how it should do it. Social responsibilities were inbuilt when the MIrls were rst conceived. If kills go for profit with loose regulations, how are they different from moneylenders? Even among moneylenders there are very good people who take care of the customer's circumstance, and there are really bad ones. A large number of the MF1s are good and there are some who are coercive because of the kind of prices and processes they have adopted. But Moneylenders never got this organised. They did not have such a large footprint. An MFI brought in organisation, it mobilized the equity, it brought in commercial funding. It invested in systems. It appointed a large number of people. But some of them exacted a much higher price than they should have. They wanted to break even very fast and greed did take over in some cases.Are the for-profit 'Ms the only ones harassing people for recoveries? Some not-for-profit out ts have also adopted the same kind of recovery methods. That may be because you have to show that you are very ef cient in your recovery methods and that your portfolio is of a very high quality if you want to get commercial funding from a bank. In fact, among for-profits there are many who have sensible recovery practices. Some have fortnightly recovery, some have monthly recovery. So we have differing practices. We just describe a few dominant ones and assume every for-profit MFI operates like that. How can you introduce regulations to ensure social upliftment in a sector that is moving towards for-profit models? I am not really concerned whether someone wants to make a profit or not The bottom-line for me is customer protection. The rst area is fair practices. Are you telling your customers how the loan is structured ? Are you being transparent about your performance? There should also be a lender's liability attached to what you do. Suppose you lend excessively to a customer without assessing their ability to service the loan, you have to take the hit. Then there's the question of limiting returns. You can say that an MFI cannot have a return on assets more than X, a return on equity of more than Y. Then suppose there is a privately promoted MFI, there should be a regulation to ensure the MFI cannot access equity markets till a certain amount of time. MFIs went to markets perhaps because of the need to grow too big too fast. The government thought they were making profit off the poor, and that's an indirect reason why they decided to clamp down on MF1s. If you say an MFI won't go to capital market, then it will keep political compulsions under rein.Which of the following best explains "structure of loan repayment" in this context of the rst question asked to the author ?....

MCQ-> Read the following passage carefully and answer the questions given below it. Certain words/phrases have been printed in bold to help you locate them while answering some of the questions. A majority of Indians prefer to use the internet for accessing banking and other financial services than shopping online, shows a new survey. Almost 57 percent of Indian respondents using the Internet prefer to bank online and use other financial services due to hassle-free access and time saving feature of online banking, according to survey. Checking information on products and services online come a close second at 53% while 50% shop for product online. The fourth on the list around 42 percent of respondents in India surfed online to look for jobs, the survey said. Online banking has made things much easier for the people and it saves a lot of time. It has eliminated the problems associated with traditional way of banking where one had to stand in a queue and fill up several forms. Most of the banks in India have introduced cal stor mer – friendly online banking tactility with advanced security lea – tures to protect customers against cvbercrime.The easy registration process for net banking has improved customer’s access to several banking products, increased customer loyalty, facilitated money transfer to any bank across India and has helped banks attract new customers. The Indian results closely track the global trend as well. Conducted among 19216 people from 24 countries, the survey showed that banking and keeping track of finances and searching for jobs are the main tasks of internet users around the globe. Overall 60 percent of people surveyed used the web to check their bank account and other financial assets in the past 90 days, making it most popular use of internet. Globally shopping was not too far behind at 48 percent, the survey showed and 41 percent went online in search of a job. In terms of country preferences, almost 90% of respondents in Sweden use e-banking. Online banking has also caught on in a big way in nations like France, Canada, Australia, Poland, South Africa and Belgium, the survey showed. The Germans and British come on top for using online shopping with 74% of respondents in both countries having bought something online in the past three months. They are followed by 68% of respondents in Sweden, 65%in the US and 62% in South Korea.If the given sentences were to be arranged in the order of their popularity (from most popular to least popular), which one of the following would represent the correct sequence as given in the passage in context of India ? (A) Use of internet to gain information about products and services. (B) Use of internet to Search for jobs. (C) Use of internet for online banking....