Description
1) Independence of Central Bank is very crucial for impartial functioning and fair play in the economy. Any closeness of Central Bank to Ministry of Finance will not be fair and it will be viewed as baby of the government and will be looked with suspicion. Do you agree or disagree with the above statement and what is your stand?
2) RBI has different parameters for evaluating the performance of bank. These criteria emanates from different roles played by commercial banks. Explain the different parameters on which banks are rated on scale of 1 to 5. Here 5 is rated as unsatisfactory/poorly performing bank, while 1 rating is deemed as a well run bank.
3) Today most of the banks are focusing on recovery of Non-Performing Assets (NPAs). A large chunk of bank’s money is locked in these assets. Major defaulters are intentional who plan to defraud the bank and run away. The other types of defaulters are those, who because of circumstances or due to some inability are unable to repay the bank loans. Banks have to make huge provisions for NPAs, which reduce the profitability of the banks. However, new legislations have been passed expediting recovery process but more needs to be done. In light of above statements:
- a) Write the major steps taken for recovery since last 10 years
- b) How do you differentiate between intentional defaulters and ability defaulters, and the view of RBI on these two category of defaulters?