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Commerci
al Banking System & Role of RBI

1. One of the important mandate of RBI is prudent management of monetary policy, curbing inflation and checking unemployment in economy. Explain how RBI achieves these diverse parameters by use of different tools available with it. (10 Marks)

2. Credit appraisal is a critical analytical tool of bank. Largely the profitability of bank hinges on this tool. Any weakness on this front is reflected on the profitability of banks and it also results in accumulation of stressed assets. BASEL-II has given strong recommendations to check this menace. Elaborate in details the important recommendations of this committee. (10 Marks)

3. Risk mitigation is one of the main function/concern of bank in volatile economy. In course of business banks face different types of risks which may vary from one bank to another.

a. Which are the major risks banks are exposed to and how they mitigate it? (5 Marks)

b. Suppose the regulator asks one of the losses making Bank XYZ to close a few branches to reduce cost thereby make the bank more sustainable/profitable. But XYZ Bank refuses to close its few branches, citing some risk/s involved in the process. What are the risks XYZ Bank perceives if it closes a few branches? (5 Marks)

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