Easy2Siksha Sample Papers
GNDU Most Repeated (Important) Quesons
B.B.A 5th Semester
MANAGEMENT OF BANKING OPERATIONS
Based on 4-Year GNDU Queson Paper Trend (2021–2024)
Must-Prepare Quesons (80–100% Probability)
SECTION–A (Monetary Policy & Banking Regulaon)
1. Monetary Policy – Tools, Instruments & Implicaons
Appeared in: 2021 (Q1), 2022 (Q1)
Probability for 2025: (90%)
2. Regulatory Role of Reserve Bank of India (RBI)
Appeared in: 2023 (Q1), 2024 (Q1)
Probability for 2025: (100%)
3. Negoable Instruments Act, 1881 – Provisions, Features & Types
Appeared in: 2021 (Q2), 2022 (Q2)
Probability for 2025: (90%)
2025 Smart Predicon Table
(Based on GNDU 2021–2024 Queson Trend)
No.
Queson Topic
Years Appeared
Probability for 2025
1
Regulatory Role of Reserve Bank of India
2023, 2024
(100%)
2
Bank Credit / Loans – Types and Features
2021, 2023, 2024
(100%)
3
Risk Management & BASEL Norms
2021–24
(100%)
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2025 GUARANTEED QUESTIONS (100% Appearance Trend)
Top 7 Must-Prepare Topics
1. Regulatory Role of Reserve Bank of India
2. Risk Management and BASEL Norms in Banking
GNDU Most Repeated (Important) Answers
B.B.A 5th Semester
MANAGEMENT OF BANKING OPERATIONS
Based on 4-Year GNDU Queson Paper Trend (2021–2024)
Must-Prepare Quesons (80–100% Probability)
SECTION–A (Monetary Policy & Banking Regulaon)
Monetary Policy – Tools, Instruments & Implicaons
Appeared in: 2021 (Q1), 2022 (Q1)
Probability for 2025: (90%)
Ans: Introduction (In a Story Style)
Imagine a huge ship sailing in the middle of an ocean—this ship represents a country’s
economy, and the captain controlling it is the Central Bank (in India, it is the Reserve
Bank of India – RBI). Now, the ocean sometimes becomes stormy—prices may rise wildly
(inflation), jobs may shrink, or too much money may float in the market. To keep the
ship stable and on the right course, the captain uses a powerful tool called Monetary
Policy.
Monetary policy is like a steering mechanism that helps control the flow of money and
credit in the economy. It plays a big role in maintaining price stability, ensuring
economic growth, and controlling inflation.
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Meaning of Monetary Policy
Monetary Policy refers to the actions taken by the central bank of a country to
regulate the supply of money and credit in the economy.
The main aim is to maintain stability in prices while encouraging economic growth.
In India, RBI frames and implements monetary policy through the Monetary Policy
Committee (MPC).
Objectives of Monetary Policy
Just like a teacher tries to balance discipline and learning in class, monetary policy tries
to balance the economy. Its major objectives are:
Objective
Explanation
Price Stability
To control inflation and avoid drastic rise or fall in prices
Economic Growth
To promote balanced and sustainable growth
Employment Generation
To support job creation
Stability of Currency
To maintain the value of the rupee
Regulation of Credit
To control lending and borrowing conditions
Financial Stability
To prevent financial crises
Types of Monetary Policy
Type
Meaning
When Used
Expansionary
Increases money supply, reduces
interest rates
During recession or
slowdown
Contractionary
Reduces money supply, increases
interest rates
During high inflation
Neutral
Maintains status quo
When economy is stable
Tools & Instruments of Monetary Policy
Monetary policy works through various instruments. These are divided into two main
categories:
1. Quantitative (General) Tools
These tools affect the overall money supply in the economy.
Tool
Meaning
Effect
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Bank Rate
Rate at which RBI lends money to
commercial banks for long term
↑ Bank Rate = ↓ Loan
supply
Repo Rate
Short-term lending rate by RBI to
banks against securities
↑ Repo = costlier loans
→ lower inflation
Reverse Repo Rate
Rate at which RBI borrows funds
from banks
↑ Reverse Repo = less
money in market
Cash Reserve Ratio
(CRR)
% of deposits banks must keep with
RBI
↑ CRR = ↓ funds
available for lending
Statutory Liquidity
Ratio (SLR)
% of deposits banks must invest in
govt. securities
↑ SLR = ↓ credit to
public
Open Market
Operations (OMO)
Buying/selling govt. bonds by RBI
Buy bonds = more
money in market
2. Qualitative (Selective) Tools
These tools guide or regulate credit in specific sectors.
Tool
Meaning
Use
Margin Requirements
% difference between loan and
collateral
Controls speculative
lending
Credit Rationing
Limits on loans to certain sectors
Prevents misuse of
credit
Moral Suasion
RBI persuades banks
verbally/circulars
Used in emergencies
Direct Action
Penal action by RBI against banks
Used for violations
Consumer Credit
Regulation
Rules for installment credit
Controls demand
Publicity
Awareness through media
To influence banking
actions
How Monetary Policy Works – A Simple Flow
RBI Changes Repo Rate
↓
Banks Increase/Decrease Loan Rates
↓
Public Borrowing Changes
↓
Spending & Investment Affected
↓
Inflation and Growth Adjusted
Implications of Monetary Policy (Effects on Economy)
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Positive Implications
Benefit
Explanation
Controls Inflation
Tight monetary policy reduces money supply
Promotes Growth
Cheaper loans increase production and investment
Encourages Savings
Higher interest attracts savings
Stabilizes Currency
Prevents fall in rupee value
Supports Banking System
Maintains liquidity
Financial Discipline
Prevents overspending & credit misuse
Limitations of Monetary Policy
Limitation
Explanation
Time Lag
Effect takes months to appear
Weak Financial System
Tools fail if banks don't follow
Less Effective in Developing Countries
Large informal sectors
Liquidity Trap
Low interest doesn’t boost borrowing
Ineffective Alone
Needs fiscal policy support
Example from Indian Economy
During the COVID-19 pandemic (2020), RBI used expansionary monetary policy:
• Repo rate reduced from 5.15% to 4%
• Moratorium on EMIs
• Liquidity injected into banks
• Support to MSMEs and startups
This helped revive economic activity.
In 2022-23, inflation rose due to global oil price hike. So RBI used contractionary policy:
• Increased Repo Rate from 4% to 6.5%
• Withdraw liquidity
• Control inflation
Role of Monetary Policy in Banking Operations
• Guides lending rates of banks
• Regulates CRR & SLR which affects credit supply
• Maintains liquidity in the market
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• Controls risk in credit delivery
• Ensures financial system stability
Recent RBI Monetary Policy Highlights (2024–25)
• Repo Rate: 6.50%
• Reverse Repo: 3.35%
• CRR: 4.50%
• SLR: 18%
• Inflation Target: 4% ± 2%
Conclusion (Strong Ending for Exams)
Monetary policy is the economic heartbeat of a nation. It silently controls how money
flows, how prices rise or fall, and how jobs are created. Just like a skilled doctor treats a
patient by carefully balancing medicines, the central bank uses monetary tools to keep
the economy healthy. Without monetary policy, inflation would destroy savings, people
would lose trust in banks, and the economy would collapse into chaos. Therefore,
monetary policy is not just a financial concept—it is the guardian of economic stability
and progress.
2. Regulatory Role of Reserve Bank of India (RBI)
Appeared in: 2023 (Q1), 2024 (Q1)
Probability for 2025: (100%)
Ans: It’s 1935. India is still under British rule. The economy is fragile, banks are
scattered, and people often lose their savings when small banks collapse. There is no
single authority to guide the financial system. To bring order to this chaos, the Reserve
Bank of India (RBI) is born. Over the years, RBI grows into the guardian of India’s
financial system—a referee, a guide, and a protector, all rolled into one.
Today, whenever you deposit money in a bank, swipe your card, or even pay through
UPI, somewhere in the background, RBI is ensuring that the system runs smoothly and
fairly. Let’s walk through this story step by step: the regulatory role of RBI, explained in
a way that is simple, engaging, and examiner-friendly.
Meaning of RBI’s Regulatory Role
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The Reserve Bank of India is the central bank of the country. Its regulatory role means
it:
• Supervises banks and financial institutions.
• Frames rules and guidelines for safe banking.
• Controls money supply and credit to maintain stability.
• Protects depositors and investors.
Analogy: If India’s financial system is a busy highway, RBI is the traffic police. It sets the
rules, monitors vehicles (banks), prevents accidents (crises), and ensures everyone
reaches their destination safely.
Objectives of RBI’s Regulation
1. Financial Stability – Prevent bank failures and crises.
2. Public Confidence – Ensure people trust banks with their savings.
3. Economic Growth – Support industries, trade, and development.
4. Consumer Protection – Safeguard depositors and borrowers.
Regulatory Functions of RBI
Let’s break down RBI’s regulatory role into clear functions, with examples and stories.
1. Regulating Banks
• RBI issues licenses to banks.
• It sets rules for opening branches, lending, and accepting deposits.
• It monitors banks’ balance sheets to ensure they are healthy.
Story Note: Imagine a small cooperative bank in Punjab. Before it can operate, it must
get RBI’s approval. RBI checks if it has enough capital, trained staff, and proper systems.
This ensures people’s money is safe.
2. Monetary Policy – Controlling Money Supply
• RBI uses tools like repo rate, reverse repo rate, CRR (Cash Reserve Ratio), and
SLR (Statutory Liquidity Ratio) to control inflation and growth.
• If inflation rises, RBI increases interest rates to reduce borrowing.
• If growth slows, RBI lowers rates to encourage loans and spending.
Analogy: RBI is like a thermostat in a room. If it gets too hot (inflation), RBI cools it
down. If it gets too cold (slow growth), RBI warms it up.
3. Supervising Non-Banking Financial Companies (NBFCs)
• RBI regulates NBFCs like Bajaj Finance, Muthoot Finance, etc.
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• Ensures they follow fair lending practices and maintain reserves.
Story Note: When NBFCs faced a liquidity crisis in 2018, RBI stepped in with stricter rules
to protect borrowers and investors.
4. Issuing Currency and Ensuring Its Safety
• RBI is the sole authority to issue currency notes in India.
• It ensures notes are secure, with watermarks and holograms.
• It withdraws fake or damaged notes from circulation.
Example: Every ₹500 or ₹2000 note you hold carries the signature of the RBI Governor.
That’s RBI’s guarantee of its authenticity.
5. Regulating Foreign Exchange (Forex)
• RBI manages India’s foreign exchange reserves.
• It regulates the flow of foreign currency through FEMA (Foreign Exchange
Management Act).
• Ensures stability of the rupee against global currencies.
Story Note: When the rupee weakens sharply, RBI sometimes sells dollars from its
reserves to stabilize the currency.
6. Protecting Depositors
• RBI sets rules like Deposit Insurance (through DICGC) to protect small depositors.
• Even if a bank collapses, depositors get back up to ₹5 lakh of their savings.
Example: When Yes Bank faced a crisis in 2020, RBI intervened, restructured it, and
protected depositors’ money.
7. Promoting Digital Payments and Innovation
• RBI regulates payment systems like UPI, NEFT, RTGS.
• It ensures security in online transactions.
• Encourages fintech innovations while protecting consumers.
Story Note: Thanks to RBI’s push, India is now a global leader in digital payments. Every
time you pay via UPI, RBI’s framework ensures it’s safe and instant.
8. Regulating Cooperative Banks and Rural Credit
• RBI supervises cooperative banks and regional rural banks.
• Ensures credit reaches farmers and rural entrepreneurs.
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Example: Through NABARD (National Bank for Agriculture and Rural Development), RBI
supports rural credit and development.
Developmental Role Alongside Regulation
RBI is not just a strict regulator; it also plays a developmental role:
• Promotes financial inclusion (Jan Dhan Yojana support).
• Encourages priority sector lending (agriculture, MSMEs).
• Runs financial literacy campaigns.
Analogy: RBI is like a teacher—sometimes strict with rules, but always guiding students
(banks and people) to grow.
Challenges in RBI’s Regulatory Role
1. Balancing Growth and Inflation – Too much control can slow growth, too little
can cause inflation.
2. Banking Frauds – Despite regulation, frauds like PNB scam test RBI’s vigilance.
3. Global Shocks – Oil price hikes, global recessions affect India’s economy.
4. Digital Risks – Cybersecurity threats in online banking.
Recap in a Narrative Table
Function
Role of RBI
Example
Bank Regulation
Licenses, supervision,
compliance
Approving new banks
Monetary Policy
Controls inflation & growth
Repo rate changes
NBFC Regulation
Supervises lending practices
Liquidity crisis reforms
Currency Issuance
Issues notes, prevents
counterfeits
₹500 note with RBI Governor’s
signature
Forex
Management
Manages reserves, stabilizes
rupee
Selling dollars to control rupee
fall
Depositor
Protection
Insurance, crisis
management
Yes Bank restructuring
Digital Payments
Regulates UPI, NEFT, RTGS
Secure online transactions
Rural Credit
Supports farmers,
cooperatives
NABARD initiatives
Wrapping the Story
So, the story of the Regulatory Role of RBI is really the story of how India’s financial
system stays safe, stable, and trustworthy.
• RBI is the referee ensuring fair play.
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• RBI is the thermostat balancing inflation and growth.
• RBI is the guardian protecting depositors and investors.
• RBI is the innovator promoting digital payments and inclusion.
Final Analogy: If India’s economy is a giant orchestra, RBI is the conductor. It doesn’t
play the instruments itself, but it ensures every player—banks, NBFCs, markets—plays in
harmony. Without it, the music of the economy would turn into noise.
Negoable Instruments Act, 1881 – Provisions, Features & Types
Appeared in: 2021 (Q2), 2022 (Q2)
Probability for 2025: (90%)
Ans: Long before online banking, UPI transfers, and mobile wallets existed, trade depended
not only on goods and money but on something far more valuable — trust.
Imagine a merchant named Rahim in 1880 living in Kolkata. He wanted to buy spices
from Rao, a trader in Mumbai. But there was a problem. Rahim didn’t want to carry
heavy bags of cash during his long journey by train — it was risky and unsafe. Rao also
worried — what if Rahim cheated and didn’t pay later?
To solve this, Rahim went to a bank, made a promise in writing, and handed Rao a
document that guaranteed payment. This document was accepted by Rao because
people trusted its legal value. This simple paper became their mode of safe payment.
That magical paper was a Negotiable Instrument — a legal document promising
payment. To formalize such transactions and build trust in business, the British
government passed a law in India called the Negotiable Instruments Act, 1881.
This Act is still extremely important today in the world of banking, commerce, business,
and finance. Even though it was made over 140 years ago, it is still used every day when
people write cheques, sign promissory notes, or issue bills of exchange.
Meaning of Negotiable Instrument
A Negotiable Instrument (NI) is a written document that guarantees the payment of a
specific amount of money either on demand or after a fixed period of time, and the
right to receive money can be transferred from one person to another.
Section 13 of the Negotiable Instruments Act, 1881 defines a Negotiable Instrument as:
“A negotiable instrument means a promissory note, bill of exchange, or cheque, payable
either to order or to bearer.”
In simple terms:
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It is a legal promise to pay money
It can be transferred to others easily
The person holding it has the right to receive money
Why was the Negotiable Instruments Act, 1881 introduced?
The Act was introduced to:
• Promote safe payment without cash
• Encourage trade and commerce
• Reduce risks like theft and fraud
• Provide legal protection to people using cheques or promissory notes
• Make transactions simple and trustworthy
Types of Negotiable Instruments
According to the Act, there are three main types:
S.No
Type of
Instrument
Definition
Example
1.
Promissory Note
Written promise to pay
Aman promises to pay ₹5,000
to Rohan
2.
Bill of Exchange
Written order to pay
Seller orders buyer to pay after
60 days
3.
Cheque
Bill of exchange drawn on
a bank
Payment through bank cheque
Let us understand each in detail.
1. Promissory Note (Section 4)
A Promissory Note is a written promise by one person to pay a specific sum of money to
another, on demand or on a fixed date.
Must be signed by the maker
Amount must be certain
Must be unconditional
Example:
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I promise to pay Mr. Rohit or order a sum of ₹20,000 on 30th November 2025.
(Signed) – Suresh Kumar
Here:
• Maker – Suresh
• Payee – Rohit
• Amount – ₹20,000
• Time – 30th November 2025
2. Bill of Exchange (Section 5)
A Bill of Exchange is a written order by one person to another, directing them to pay
money to a third person.
It is not a promise, but an order
It involves three parties
Commonly used in trade transactions
Example:
Pay ₹50,000 to Mr. Raj after 60 days of receiving the goods.
(Signed) – Amit Traders
Here:
• Drawer (Who makes the bill) – Amit Traders
• Drawee (Who is ordered to pay) – Buyer
• Payee (Who receives payment) – Raj
3. Cheque (Section 6)
A Cheque is a type of Bill of Exchange drawn on a bank and payable on demand.
Most common instrument today
Used for payment through a bank
Safer than cash
Types of Cheques:
• Bearer Cheque – Anyone holding it can get payment
• Order Cheque – Payment made to specific person
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• Crossed Cheque – Can only be deposited, not cashed
• Post-dated Cheque – Future date cheque
• Stale Cheque – Older than 3 months – not valid
Features of Negotiable Instruments
Here are the key characteristics:
Feature
Explanation
Transferable
Can be easily transferred
Title of Holder
Holder in due course gets good title
Written & Signed
Must be in writing
Legal Presumption
Signature and consideration are presumed true
Payable in Money Only
No goods or services
Unconditional
Conditions not allowed
Certain Amount
Amount must be clear
Parties Involved
Instrument
Parties
Promissory Note
Maker, Payee
Bill of Exchange
Drawer, Drawee, Payee
Cheque
Drawer, Drawee (Bank), Payee
Important Provisions of the Act
Here are some important sections you must remember:
Section
Provision
Section 4
Promissory Note
Section 5
Bill of Exchange
Section 6
Cheque
Section 13
Negotiable Instrument
Section 138
Cheque Bounce
Section 118
Legal Presumptions
Section 126
Crossing of Cheques
Section 85
Protection to Paying Banker
Section 138 – Cheque Bounce (Very Important!)
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If a cheque is dishonoured (bounces) due to insufficient funds, it becomes a criminal
offense under Section 138. The person issuing the cheque can be punished with:
Imprisonment up to 2 years
Fine up to twice the cheque amount
Both
Advantages of Negotiable Instruments
• Safer than cash
• Legal proof of payment
• Helpful in business credit
• Easy transferability
• Provides security and trust
Difference between Promissory Note & Bill of Exchange
Basis
Promissory Note
Bill of Exchange
Nature
Promise to pay
Order to pay
Parties
Two
Three
Acceptance
Not required
Required
Drawer & Drawee
Same person
Different
Conclusion
The Negotiable Instruments Act, 1881 plays a vital role in banking operations even
today. It provides a legal foundation for transactions using cheques, promissory notes,
and bills of exchange. It makes business transactions smooth, secure, and trustworthy
by ensuring legal protection and easy transfer of money.
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