JAIIB · IEIFS

PARA BANKING AND FINANCIAL SERVICES PROVED BY BANKS

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Indian Economy and Indian Financial System — JAIIB.

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What is para banking?

Para banking refers to activities undertaken by banks beyond their core lending and deposit functions, such as insurance, mutual funds, demat services, and merchant banking, to diversify income streams.

What is the maximum number of life insurance companies a bank can tie up with under the open architecture model?

Banks can tie up with multiple life insurers under open architecture.

Which RBI guideline permits banks to undertake para banking activities?

RBI's guidelines on Financial Services offered through Business Correspondents and various Master Directions permit banks to offer para banking services, subject to prescribed norms and board-approved policies.

What is a Depository Participant (DP) in the context of para banking?

A bank acting as intermediary between depositories and investors.

What is bancassurance?

Bancassurance is the distribution of insurance products (life and non-life) by banks acting as corporate agents for insurance companies, leveraging their branch network to cross-sell policies to existing customers.

Which two main depositories operate in India for Demat services?

NSDL and CDSL are the two main depositories in India.

How many insurance companies can a bank tie up with under the corporate agency model?

Under IRDAI norms, a bank acting as a corporate agent can tie up with a maximum of one life insurer, one non-life insurer, and one standalone health insurer.

What is the primary regulator of mutual funds in India?

SEBI (Securities and Exchange Board of India) regulates mutual funds.

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