Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

f and w > c12 > Flashcards

c12 Flashcards

1
Q

Financial Markets in India, which broadly comprise of

A

Money market, Government Securities (G-Sec) market, Foreign Exchange market and Equity market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

While the equity market is broadly regulated by

A

Securities and Exchange Board of India (SEBI),

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

The Reserve Bank regulates

A

the Money market, Government Securities (G-Sec) market, Foreign Exchange market, and related derivatives markets (including credit derivatives)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

The Reserve Bank regulates the Money market, Government Securities (G-Sec) market, Foreign Exchange market, and related derivatives markets (including credit derivatives) under the provisions of

A

Chapter III D of the RBI Act, 1934

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

_______________ issues the regulatory framework for introduction of exchange-traded instruments

A

RBI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

RBI issues the regulatory framework for introduction of exchange-traded with the provisions set out in Section

A

45W of the RBI Act for exchange-traded instruments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

RBI’s reform endeavors have fostered trust, stability and innovation by

A

(i) making capital raising more efficient; (ii) removing segmentation between onshore and offshore markets; (iii) expanding the participation base by easing access to markets; (iv) promoting innovation through a larger suite of products; (v) ensuring the integrity and resilience of markets and market infrastructure; and (vi) ensuring fair conduct by market participants.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Over the years, Reserve Bank has assigned greater responsibilities to the market representative bodies, viz.

A

Fixed Income, Money Market and Derivatives Association of India (FIMMDA), Foreign Exchange Dealers’ Association of India (FEDAI) and the Primary Dealers’ Association of India (PDAI).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

The Bank has also facilitated creation of an independent Benchmark Administrator

A

Financial Benchmarks India Private Limited (FBIL)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Financial Benchmarks India Private Limited (FBIL), which was jointly established by

A

FIMMDA, FEDAI and the Indian Banks’ Association (IBA).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

is responsible for administering key financial benchmarks relating to Money, G-sec, Foreign Exchange markets and associated derivative markets.

A

Financial Benchmarks India Private Limited (FBIL)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

CCIL established in

A

February 2002.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

CCIL was created to provide an institutional mechanism for

A

clearing and settlement of G-Sec, Money Market and Foreign exchange transactions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

services provided by CCIL

A

clearing and settlement of G-Sec, Money Market and Foreign exchange transactions. Central Counter Party (CCP) Services:CCP services to include derivatives products like Interest Rate Futures (IRF), Trade Repository for OTC derivatives, including foreign exchange derivatives, interest rate derivatives, and credit derivatives.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

In order to have a more focused approach towards market development and regulation, a new department called __________________ was set up

A

Financial Markets Regulation Department (FMRD

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

RBI removed interest rate ceilings on inter-bank call/notice money in

A

1989

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

T-Bills

A

Treasury Bills

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

CD),

A

Certificates of Deposit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

CP),

A

Commercial Paper

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Repo)

A

Repurchase Agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

introduced new instruments like Treasury Bills (T-Bills), Certificates of Deposit (CD), Commercial Paper (CP), and Repurchase Agreement (Repo) between

A

1986 and 1992.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Discount and Finance House of India (DFHI) established in

A

1988,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Additionally, the RBI strengthened the connection between the money market and the foreign exchange market, particularly after adopting a market-based exchange rate system in

A

1993

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Some notable committees whose recommendations shaped the development of Financial Markets in India include

A

Chakravarty Committee (1985), Vaghul Committee (1987) and Narasimham Committees (1991 and 1998).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

State-of-the-art electronic trading systems viz.

A

Negotiated Dealing System-Call (NDS-Call), Clearcorp Repo Order Matching System (CROMS), Triparty Repo Dealing System (TREPS), straight-through-processing (STP) of transactions, Real Time Gross Settlement (RTGS),

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

______________ refer to the uncollateralized lending and borrowing of funds among Scheduled Commercial Banks (SCBs), SFBs, Payments Banks, RRBs, Cooperative Banks, and PDs.

A

Call, Notice, and Term Money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Call Money involves lending/borrowing for

A

one day

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Notice Money covers a period of

A

two to fourteen days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Term Money spans from

A

fifteen days to up to one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

NDS-Call, an electronic trading system managed by

A

CCIL.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

who determine the borrowing limits of Call money, Notice and Term Money

A

SCBs (excluding small finance and payment banks) can determine their own limits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Specific prudential limits for outstanding borrowing of Call, Notice and Term Money transactions have been prescribed by ______________ for SFBs, Payments Banks, RRBs, Cooperative Banks, and PDs.

A

RBI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

The Repos undertaken with RBI are categorized as

A

‘Liquidity Adjustment Facility (LAF)-Repo

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

while the Repos undertaken among market participants are known as

A

‘Market Repo

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

eligible securities for Market Repo

A

Currently Government securities issued by the Central Government or a State Government, Treasury Bills, Commercial Papers, Certificates of Deposits, Units of Debt Exchange Traded Funds (Debt ETFs) and listed Corporate bonds and debentures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Permitted participants in market repo

A

SCBs, PDs, NBFCs, Housing Finance Companies (HFCs), All India Financial Institutions (AIFIs), Insurance companies, listed and unlisted companies etc. with certain conditions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Currently, the repo transactions on Government Securities generally take place either on

A

CCIL’s anonymous CROMS, through TREPS or bilaterally through OTC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Call, Notice, and Term Money transactions occur in ____________

A

OTC and on NDS-Call, an electronic trading system managed by the CCIL.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

With a view to develop an active corporate debt securities market, RBI has accorded approval to ——————- to act as a tri-party repo agent and to offer tri-party repo in corporate debt securities.

A

AMC Repo Clearing Limited

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Call/Notice/Term Money, Repo, CP, CD, Non-Convertible Debentures (NCDs) of original or initial maturity up to

A

one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Commercial Paper (CP) is an unsecured money market instrument issued in the form of a

A

promissory note

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

____________ is a secured money market instrument

A

Non-Convertible Debenture (NCD)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

The following entities are allowed to issue CPs and NCDs

A

Companies, NBFCs including HFCs, Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs), AIFIs, Any other body corporate with a minimum net-worth of ₹100 crore, provided that the body corporate is statutorily permitted to incur debt or issue debt instruments in India, Any other entity specifically permitted by the Reserve Bank,Co-operative societies and limited liability partnerships with a minimum net-worth of ₹100 crore, may also issue CPs under these Directions, subject to the condition that all fund-based facilities availed, if any, by the issuer from banks/ AIFIs / NBFCs are classified as Standard at the time of issue.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

The minimum credit rating required for the issuance of CPs and NCDs, as assigned by a Credit Rating Agency (CRA), is

A

‘A3’ according to the rating symbol and definition prescribed by SEBI.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

All primary issuance of CPs and NCDs as well as OTC trades in these instruments must be reported within the specified timeframe after execution of the trades to the

A

Financial Market Trade Reporting and Confirmation Platform (“F-TRAC”) of CCIL.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

CD is a

A

negotiable, unsecured money market instrument issued by a bank/AIFI as a Usance Promissory Note against funds deposited at the bank or the AIFI for a specified time period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

CDs can be issued by

A

(i) scheduled commercial banks, including RRBs and SFBs), and (ii) AIFIs that have been permitted by the RBI to raise short-term resources within the umbrella limit fixed by the RBI.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

The maturity period of CDs issued by banks should not be less than

A

7 days and not more than one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

The maturity period of CDs issued by AIFIs should not be less than

A

1 year and not exceed 3 years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

All primary issuances of a CD and OTC trades in CD are required to be reported within the specified timeframe after execution of the trades to the

A

F-TRAC of CCIL.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

OMOs refers to the

A

buying and selling of government securities in the open market as mentioned above, the G-Sec market is also considered as the foundation of fixed income securities markets, as it provides the benchmark yield curve and enhances liquidity in other financial markets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

The existence of an _________ is seen as an essential precursor for development of the corporate debt market.

A

efficient government securities market

53
Q

Effective monetary policy transmission is fundamentally linked to an efficient_________ market in any market economy.

A

G sec

54
Q

Central Government issues both

A

treasury bills and bonds (or dated securities)

55
Q

State Governments issue only

A

bonds (or dated securities) called as State Government Securities (SGSs).

56
Q

Dated Government securities are long term securities (longer than

A

1 year of original maturity

57
Q

The tenor of dated securities can be very long (currently up to

A

50 years in India).

58
Q

Transparency in supply was enhanced through the introduction of issuance calendars for auctions in G-secs since

A

April 2002.

59
Q

When Issued (WI) trading in the G-Secs was permitted in

A

2006

60
Q

RBI also introduced short selling in Government securities in

A

2006 feb

61
Q

is an anonymous screen-based order matching platform owned by RBI and operated by CCIL.

A

NDS-OM trading platform

62
Q

Even _________ have been given direct access to NDS-OM through this web module

A

Foreign Portfolio Investors (FPIs)

63
Q

a measure of bond market liquidity which shows the extent of trading in the secondary market relative to the amount of bonds outstanding, compares well with many developed countries.

A

Bond Turnover Ratio

64
Q

The sovereign yield curve now spans up to _________ years with some well-developed benchmark points

A

50

65
Q

In _____________, mobile application of Retail Direct was launched to facilitate seamless and convenient access to the retail direct platform for retail investors.

A

May 2024

66
Q

In terms of the MTF, the limit for FPI investment in government securities is linked to the outstanding stock of government securities and the limit has been increased in phases

A

(6 per cent for Central Government Securities and 2 per cent for SGS).

67
Q

The cap on aggregate FPI investments in any central government security was revised upward from 20 per cent to ___________- per cent of the outstanding stock of that security

A

30

68
Q

In pursuance of the Union Budget 2021-22 announcement, FPIs were permitted to invest in debt securities issued by

A

Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs).

69
Q

A separate channel called the Voluntary Retention Route (VRR) was introduced in

A

2019

70
Q

In _____________, a separate channel, called the ‘Fully Accessible Route’ (x) for Investment by non-residents was introduced by RBI to enable non-residents to invest in specified Government of India dated securities.

A

43891

71
Q

All fresh issuances of ______________- issued by the Central Government in FY 2022-23 and 2023-24 are included under ‘Fully Accessible Route’ (x)

A

5-,7- and 10- year securities and sovereign green bonds

72
Q

Eligible investors can invest in specified Government securities without being subject to any macroprudential limits and investment ceilings.

A

‘Fully Accessible Route’ (x)

73
Q

A separate channel called the ______________ was introduced in 2019 with more operational flexibility in terms of both instrument choices as well as exemptions from regulatory limits to encourage FPIs to undertake long-term debt investment in India.

A

Voluntary Retention Route (VRR)

74
Q

(FAR) Bonds

A

Fully Accessible Route

75
Q

refers to a market for trading government securities that have been announced but not yet issued.

A

When Issued (WI) Trading

76
Q

STRIPS):

A

Separate Trading of Registered Interest and Principal of Securities

77
Q

is a type of financial instrument created by separating the interest payments (coupons) and the principal repayment of a G-Sec into individual components, which can then be traded separately.

A

Separate Trading of Registered Interest and Principal of Securities (STRIPS): STRIPS

78
Q

The Reserve Bank introduced STRIPS in Government Securities in

A

April 2010.

79
Q

securities lending and borrowing in G-secs was permitted in

A

2023

80
Q

Introduction of Securities Lending and Borrowing in G-secs: The borrowing/lending tenor ranges from

A

one day to the maximum period prescribed by the RBI to cover short sales in G-Secs.

81
Q

primary regulator of the corporate bond market,

A

SEBI,

82
Q

RBI has also been taking measures to develop the corporate bond market - permitting banks to provide partial credit enhancement (PCE) to incentivise a larger investor base; requiring large borrowers to raise a share _______ of their incremental borrowings through market instruments; encouraging FPI investment by raising investment caps, introduction of Voluntary Retention Route; etc

A

(about 50%)

83
Q

RBI regulates only certain aspects of the Corporate Bond Market, viz

A

participation of banks and other RBI regulated entities in Corporate Bond market, FPI investments in Corporate Bonds, Repo in Corporate Bonds and Credit Derivatives on Corporate Bonds.

84
Q

RBI has permitted banks to issue long-term bonds with minimum maturity of _________- years to fund loans for long term projects in various infrastructure sub-sectors and affordable housing.

A

seven

85
Q

_______________ bonds are exempt from CRR/SLR requirements.

A

RBI has permitted banks to issue long-term bonds with minimum maturity of seven years to fund loans for long term projects in various infrastructure sub-sectors and affordable housing. Additionally, funds raised through these bonds

86
Q

_____________ was introduced for OTC corporate bond trades to eliminate settlement risk

A

Delivery versus Payment (DvP) mode of settlement

87
Q

Delivery versus Payment (DvP) mode of settlement was introduced for OTC corporate bond trades to eliminate settlement risk in ______________

A

2009

88
Q

RBI permitted introduction of Credit Default Swaps (CDS) in

A

December 2011.

89
Q

market makers in CDS

A

The scheduled commercial banks with some exceptions, stand-alone PDs, NBFCs with minimum net owned funds of ₹500 crore and subject to specific approval of the Department of Regulation, Reserve Bank and any other institution specifically permitted by the Reserve Bank, EXIM Bank, NABARD, NHB and SIDBI

90
Q

The limit for FPI investment in corporate debt is linked to

A

15 percent of the outstanding stock under the MTF and revised on half yearly basis.

91
Q

The Interest Rate Swaps (IRS)/ Forward Rate Agreements (FRA) were introduced in

A

July 1999.

92
Q

To help banks manage the risk of interest rates changing, two tools were introduced:

A

Interest Rate Swaps (IRS): Forward Rate Agreements (FRA):

93
Q

To bridge the gap between domestic and international markets and improve how prices are determined, the RBI opened up the offshore Foreign Currency Settled Overnight Indexed Swap (FCS-OIS) market. They allowed:

A

Those with an Authorised Dealer Category-I (AD Cat-I) license under the Foreign Exchange Management Act (FEMA), 1999, and standalone primary dealers to participate.

94
Q

Any floating interest rate, price or index used in IRDs in the OTC market must be a benchmark published by

A

Financial Benchmark Administrator (FBA) or approved by the FIMMDA.

95
Q

The foreign exchange market in India began in _________ when banks were permitted to engage in intra-day trading

A

1978

96
Q

During this period, the RBI determined the Rupee’s exchange rate using a weighted basket of currencies from India’s major trading partners, with daily buying and selling rates announced to

A

Authorized Dealers (ADs).

97
Q

Foreign Exchange Market operated within a

A

0.5% spread between these rates

98
Q

the High-Level Committee on Balance of Payments, chaired by,__________________ recommended a market-determined exchange rate.

A

Dr. C. Rangarajan

99
Q

This led to the introduction of the Liberalised Exchange Rate Management System (LERMS) in

A

March 1992,

100
Q

This led to the introduction of the Liberalised Exchange Rate Management System (LERMS) in March 1992, featuring a dual exchange rate system with

A

60% of proceeds exchanged at market rate and 40% at RBI’s official rate.

101
Q

By March 1993, LERMS transitioned to a unified, market-determined exchange rate regime, paving the way for

A

current account convertibility in August 1994

102
Q

Further development occurred with the establishment of the Expert Group on Foreign Exchange Markets in India, chaired by ________________, which provided recommendations for deepening the market.

A

Shri O.P. Sodhani

103
Q

Consequently, the Indian foreign exchange market has witnessed phenomenal growth in the last two decades with the average daily turnover recording a significant jump from about USD 3 billion in 2001 to ___________ in 2022

A

USD 53 billion

104
Q

The dominant segment of The offshore Indian Rupee (INR) derivative market is the

A

Non-Deliverable Forward (NDF) market

105
Q

The dominant segment of this market is the Non-Deliverable Forward (NDF) market – wherein foreign exchange forward contracts are traded in the OTC market at offshore locations,

A

International Finance Centres (IFCs) like Singapore, Hong Kong, London, Dubai and New York.

106
Q

There are also a few exchange-traded offshore rupee markets dealing in rupee futures and options in

A

Chicago, Singapore and Dubai

107
Q

Noting the offshore interest in Indian rupee, the Reserve Bank set up a Task Force (chaired by Smt. ______________, former Deputy Governor, Reserve Bank of India) in 2019 to examine the issues relating to the offshore Rupee markets in depth and recommend appropriate policy measures.

A

Usha Thorat

108
Q

Foreign Exchange Regulation Act (FERA)

A

1973

109
Q

instruments are available in the Indian forex market

A

Spot, Cash and Tom,• Forwards, • FX swaps, Currency Swaps, FX options (includes Cost Reduction structures and Covered Calls & Puts) and Exchange Traded Currency Futures and Options

110
Q

The CCIL commenced settlement of foreign exchange operations for inter-bank USD-INR spot and forward trades from

A

2002

111
Q

The CCIL commenced settlement of foreign exchange operations for for inter-bank USD-INR cash and tom trades from

A

2004

112
Q

The _____________ undertakes settlement of foreign exchange trades on a multilateral netting basis through a process of novation and all spot, cash, tom (USD-INR) and forwards transactions (USD INR forwards of residual maturity upto thirteen months) are guaranteed for settlement.

A

CCIL

113
Q

To deal with the issue of transparent and fair pricing for retail users (individuals and Micro, Small and Medium Enterprises) in the foreign exchange market, RBI facilitated the rollout of

A

FX-Retail, by the CCIL

114
Q

RBI facilitated the rollout of FX-Retail, by the CCIL in

A

2019

115
Q

RBI has allowed users to undertake currency derivative transactions up to ____________ in OTC market, without the need to evidence underlying exposure.

A

USD 100 million

116
Q

Reserve Bank has permitted___________ to act as trading and clearing members in the currency derivatives market of the recognized stock exchanges, on their own account as well as on behalf of their clients, subject to fulfilling the prudential requirements.

A

AD Category - I banks

117
Q

The position limits for various classes of participants in the currency futures market have been prescribed in the guidelines issued by the SEBI. Reserve Bank has permitted AD Category - I banks to act as trading and clearing members in the currency derivatives market of the recognized stock exchanges, on their own account as well as on behalf of their clients, subject to fulfilling the prudential requirements. The trading in ETCDs is subject to maintaining various margins as specified in the guidelines issued by SEBI from time to time. In February 2018, persons resident in India and FPIs were permitted to take positions (long or short), without having to establish existence of underlying exposure, upto a single limit of _____________ equivalent across all currency pairs involving INR, put together, and combined across all exchanges.

A

USD 100 million

118
Q

Eligible Authorised Persons are permitted to act as market makers in the foreign exchange market. They are licensed by Reserve Bank under

A

Section 10(1) of the FEMA.

119
Q

Based on the recommendations of Task Force on Offshore Rupee Market, RBI in ____________ permitted AD Category-I banks to voluntarily undertake customer (persons resident in India and persons resident outside India) and Inter-Bank transactions beyond onshore market hours.

A

2020

120
Q

In ________________, RBI allowed AD Category I banks in India which are operating IBUs, to offer Non-Deliverable Derivative Contracts (NDDCs) involving the Rupee to non-residents. Banks can undertake such transactions through their branches in India, through their IBUs or through their foreign branches (in case of foreign banks operating in India, through any branch of the parent bank)/overseas wholly owned banking subsidiaries/banking joint ventures.

A

2020

121
Q

Market abuse regulations: This regulation introduced in

A

2019

122
Q

In ___________-, RBI introduced the Authorization of ETP Directions to establish a framework for authorisation of ETPs for financial market instruments regulated by RBI

A

2018

123
Q

LEI is a __________–character unique alpha-numeric code to identify parties to financial transactions worldwide

A

20

124
Q

The LEI system was implemented in

A

June 2017.

125
Q

A phased approach was adopted for implementation of the LEI system and completed in

A

2020

126
Q

were identified as benchmark administrators for the Indian rupee interest rate benchmarks and Foreign exchange benchmarks respectively

A

FIMMDA and FEDAI

127
Q

‘significant benchmarks’:

A

Overnight Mumbai Interbank Outright Rate (MIBOR), USD/INR Reference Rate,Treasury Bill Rates, Valuation of Government Securities, Valuation of State Government Securities and Modified Mumbai Interbank Forward Outright Rate (MMIFOR)

128
Q

A comprehensive risk-based regulatory framework covering administration of all benchmarks related to financial markets regulated by the Reserve Bank was implemented in

A

December 2023.

f and w (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions