Financial Institutions and Markets Review

A comprehensive set of 60 practice flashcards covering the Indian financial system, capital markets, money markets, and insurance regulation.

What type of funds does the capital market deal with?

Long-term funds

SEBI ($Securities and Exchange Board of India$)

Which organization is responsible for regulating the capital market in India?

Primary Market

What is the name of the market where new securities are issued for the first time?

Initial Public Offering

In the context of securities, what does the acronym IPO stand for?

BSE ($Bombay Stock Exchange$)

Which is recognized as the oldest stock exchange in India?

BSE

The stock market index known as Sensex is associated with which exchange?

$50$ stocks

How many stocks are represented in the Nifty 50 index?

Both companies and governments

Which entities are authorized to issue bonds in the financial market?

Debt instrument

A debenture is classified as what type of financial instrument?

Zero-coupon bond

What is the term for a bond that does not make periodic interest payments?

$$1992$$

In what year was the Securities and Exchange Board of India (SEBI) established?

Underlying assets

From what do derivative instruments derive their primary value?

Short-term borrowing and lending

What is the primary function of the money market?

Less than $1\,\text{year}$

Money market instruments typically have a maturity period of how long?

RBI ($Reserve Bank of India$)

Which institution regulates the Indian money market?

Government of India

Which entity is responsible for issuing Treasury bills in India?

Short-term funds repayable on demand

What does the term 'call money' refer to in the financial market?

Corporates

Which specific entities typically issue commercial paper?

RBI

Which institution acts as the 'lender of last resort' in the Indian financial system?

The interest rate on short-term loans provided by the RBI to banks

What is the Repo rate?

To borrow money from banks

For what purpose does the RBI use the reverse repo rate?

Indigenous bankers

Which specific group of participants is part of the unorganized money market?

Monetary policy

Through which type of policy does the Reserve Bank of India control the money supply?

Banks only

Who are the primary participants in the call money market?

Facilitating the trading of securities

What is the core role of a stock exchange in the financial system?

Acting as intermediaries between buyers and sellers

What function do brokers perform in the stock market?

National Stock Exchange

What is the full name of the NSE?

Registering securities on a stock exchange

What is meant by the 'listing of securities'?

The final transfer of securities and funds

In stock market operations, what does 'settlement' involve?

Trading conducted in electronic form without physical certificates

What is the definition of scripless trading?

Electronic securities

What type of assets do depositories hold?

Holding securities electronically

What is the purpose of opening a Demat account?

$$T+1$$

What is the standard settlement cycle currently followed in India?

The total value of a company's shares

What does 'market capitalization' represent?

$$1992$$

In what year was the National Stock Exchange (NSE) established?

Demand and supply forces

Which market forces help determine price discovery in the stock market?

Brokerage

What is the term for the fee charged by brokers for their services?

National Securities Depository Limited

What does NSDL stand for?

To reduce settlement risk

What is the primary objective of clearing corporations?

Financial institutions, markets, instruments, and services

The Indian Financial System is composed of four main components. What are they?

Facilitating the transfer of funds between savers and investors

What is the primary function of a financial system?

Bonds

Based on the study guide, name an example of a financial asset.

NABARD

Which institution is dedicated to supporting agriculture and rural development in India?

The indirect transfer of funds through financial institutions

What does 'financial intermediation' mean?

Entities that save more than they spend

In a financial system, how are 'surplus units' defined?

Investors who need funds

In a financial system, how are 'deficit units' defined?

Up to $364\,\text{days}$

What is the typical maximum maturity period of a Treasury Bill?

To promote industrial and economic development

What is the primary objective of a development bank?

SIDBI

Which development bank was established to finance small-scale industries?

$$1964$$

In which year was the Industrial Development Bank of India (IDBI) established?

Cash Reserve Ratio

What does the acronym CRR stand for in banking?

Investors

From whom do mutual funds pool money to make investments?

RBI

Which organization regulates Non-Banking Financial Companies (NBFCs) in India?

Demand deposits

What type of deposits are NBFCs prohibited from accepting?

Financial and advisory services

What primary services do merchant banks provide to clients?

Guaranteeing the subscription of securities

In the context of new security issues, what does underwriting involve?

IRDAI

Which organization is responsible for regulating the insurance sector in India?

$$1956$$

In what year was the Life Insurance Corporation of India (LIC) established?

Insurance purchased by insurance companies to spread and reduce risk

What is the definition of reinsurance?

To provide speedy and efficient grievance redressal for policyholders

What is the primary goal of the Insurance Ombudsman Scheme?