Central Banking: Indian Specific Issues
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Central Banking (Elective) — CAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the 'twin balance sheet problem' in the Indian context?
It refers to the simultaneous stress on both bank balance sheets (due to large non-performing assets) and corporate balance sheets (due to heavy indebtedness), which weakened both sectors together.
What fundamental shift did FEMA bring compared to FERA in handling foreign exchange?
Shift from conservation and control to facilitation and management.
Which two sectors are central to India's twin balance sheet problem?
The banking sector and the corporate sector — banks accumulated large NPAs while corporates became heavily over-leveraged, stressing both their balance sheets simultaneously.
Under FEMA, who bears the burden of proving guilt in a contravention case?
The prosecution must prove the guilt of the accused person.
What does NPA stand for in the context of Indian banking?
NPA stands for Non-Performing Asset, which refers to loans on which borrowers have stopped making interest or principal repayments, weakening bank balance sheets.
Is a person accused of FEMA contravention treated as a criminal offender?
No, FEMA follows civil procedure and does not treat accused as criminal.
Why is the twin balance sheet problem considered a key Indian challenge in central banking?
Because stressed bank and corporate balance sheets together impair credit flow and investment, creating a mutually reinforcing cycle that hampers economic growth and monetary policy effectiveness.
Which three schemes were integrated under the Integrated Ombudsman Scheme (IOS) 2021?
Banking Ombudsman 2006, NBFC Ombudsman 2018, and Digital Transactions Ombudsman 2019.
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