Banking & Financial Awareness Quiz: Loans, Advances and Interest Rates

The Kisan Credit Card scheme was introduced in 1998 on the recommendation of the R V Gupta Committee and is worked by commercial banks, regional rural banks and cooperative banks.

The South Asia Poverty Alleviation Programme model is called the international model of self help group formation because it was taken up with the support of the United Nations Development Programme and followed the same design across South Asian countries, beginning in India in the districts of Andhra Pradesh.

The Reserve Bank introduced the MCLR from that date so that the price of a loan would follow the marginal, that is the latest, cost of raising funds rather than the average cost of old deposits.

Under the BPLR system a bank announced a prime rate for its best customers and then lent to many borrowers below it, so the announced rate told a customer very little and the lending book was not transparent.

In hypothecation a charge is created on movable property, such as a financed vehicle or the stock in a trader's shop, while the borrower keeps and uses the goods.

Section 58 of that Act defines a mortgage as the transfer of an interest in specific immovable property to secure a loan, and it names six kinds: simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, mortgage by deposit of title deeds, which is also called an equitable mortgage…

Under the Reserve Bank's income recognition and asset classification norms, a term loan becomes a non-performing asset when interest or an instalment of principal stays overdue beyond ninety days, and a cash credit or overdraft account becomes one when it remains out of order for the same period.

The marginal standing facility lets a bank borrow overnight from the Reserve Bank by dipping into the government securities it holds for the statutory liquidity ratio, up to a prescribed share of its net demand and time liabilities.

The real rate of interest is the nominal rate less the rate of inflation, so seven per cent minus six per cent leaves roughly one per cent.

A domestic scheduled commercial bank must lend forty per cent of its adjusted net bank credit, or of the credit equivalent of its off balance sheet exposure if that is higher, to the priority sector.

The Pradhan Mantri MUDRA Yojana was launched in April 2015 to refinance small business loans given by banks, non-banking finance companies and micro finance institutions to non-farm income generating activities.

In a non-fund based facility the bank does not part with money at the time the facility is granted; it only undertakes to pay if the customer fails to, and it charges a commission for that undertaking.