General Awareness Questions for Bank Exams - 1

General Awareness Questions for Bank Exams

1.       Which of the following statements is true?
(a) Banks cannot accept demand and time deposits from public
(b) Banks can accept only demand deposits from public
(c) Banks can accept only time deposits from public
(d) Banks can accept both demand and time deposits from public 
(e) Banks can accept demand and time deposits only from government
Ans: (d)

2.       Which of the following is the correct statement?
(a) State Bank of India is the sole authority to issue and manage currency in India
(b) A nationalized bank is the sole authority to issue and manage currency in India
(c) A cooperative bank is the sole authority to issue and manage currency in India
(d) RBl is the sole authority to issue and manage currency in India
(e) None of the above
Ans: (d)

3.       Interest payable on savings bank account is
(a) not regulated by RBI
(b) regulated by State Governments
(c) regulated by Central Government
(d) regulated by RBI 

(e) regulated by Finance Minister

Ans: (d)

4.       The usual deposit accounts of banks are
(a) current accounts, electricity accounts and insurance premium accounts
(b) current accounts post office savings bank accounts and term deposit accounts
(c) loan accounts, savings bank accounts and term deposit accounts
(d) current accounts, savings bank accounts and term deposit accounts
(e) current bill accounts and term deposit accounts
Ans: (d)

5.       Fixed deposits and recurring deposits are
(a) repayable after an agreed period
(b) repayable on demand
(c) not repayable
(d) repayable after death of depositors
(e) repayable on demand or after an agreed period as per bank’s choice
Ans: (a)

6.       Accounts are allowed to be operated by cheques in respect of
(a) both savings bank accounts and fixed deposit accounts
(b) savings bank accounts and current accounts
(c) both savings bank accounts and loan accounts
(d) both savings bank accounts and cash accounts only
(e) both Current accounts and fixed deposit accounts

Ans: (b)

7.       Which of the following is a correct statement?
(a) Normally no interest is paid on current deposit accounts
(b) Interest is paid on current accounts at the same rate as term deposit accounts
(c) The rate of interest on current account and savings account are the same
(d) No interest is paid on any deposit by the bank
(e) Savings deposits are the same as current deposits
Ans: (a)

8.       Mortgage is a
(a) security on movable property for a loan given by a bank
(b) security on immovable property for a loan given by a bank
(c) concession on immovable property for a loan given by a bank
(d) facility on immovable property for a loan given by a bank
(e) security on immovable property for a deposit received by a bank
Ans: (b)

9.       Which of the following is known as cross selling by banks?
(a) Sale of a debit card to a credit card holder.
(b) Sale of Insurance policy to a depositor.
(c) Insurance of cash against cheque presented by a third party.
(1) Only (a)         (2) Only (b)         (3) Only (c)          (4) Both (a) and (c)         

(5) All  the three (a), (b) and (c)

Ans: (5)

10.   Financial inclusion means provision of
(a) financial services namely, payments, remittances, savings, loans and insurance at affordable cost to persons not yet given the same
(b) ration at affordable cost to persons not yet given the same
(c) house at affordable cost to persons not yet given the same
(d) food at affordable cost to persons not yet given the same
(e) education at affordable cost to persons not yet given the same

Ans: (a)

11.    When a bank returns a cheque unpaid, it is called
(a) payment of the cheque
(b) drawing of the cheque
(c) canceling of the cheque
(d) dishonour of the cheque
(e) taking of the cheque
Ans: (d)

12.   NEFT means
(a) National Electronic Funds Transfer system
(b) Negotiated Efficient Fund Transfer system
(c) National Efficient Fund Transfer solution
(d) Non Effective Fund Transfer system
(e) Negotiated Electronic Foreign Transfer system

            Ans: (a)

13.   Upper limit prescribed for RTGS transaction is
(a) Rs. 1 lac          (b) Rs. 2 lacs       (c) Rs. 5 lacs        (d) Rs. 50 lacs     (e) No upper limit is prescribed

Ans: (e)

14.   Distribution of insurance products and insurance policies by banks as corporate agents is known as
(a) General Insurance    (b) Non-life Insurance   (c) Bancassurance            (d) Insurance Banking    (e) Deposit Insurance
Ans: (c)

15.   In order to attract more foreign exchange the Government of India decided to allow foreign investment in LLP firms. What is full form of ‘LLP’ as used in this reference?
(a) Local Labour Promotion
(b) Low Labour Projects
(c) Limited Loan Partnership
(d) Longer Liability Partnership
(e) Limited Liability Partnership
Ans: (e)

16.   Interest on Saving bank account is now calculated by banks on
(a) minimum balance during the month
(b) minimum balance from 7th to last day of the month
(c) minimum balance from 10th to last day of the month
(d) maximum balance during the month
(e) daily product basis
Ans: (e)

17.   Largest shareholder (in percentage shareholding) of a nationalized bank is
(a) RBI                   (b) NABARD       (c) LICI                  (d) Government of India              (e) IBA

           Ans: (d)

18.   When the rate of inflation increases
(a) purchasing power of money increases
(b) purchasing power of money decreases
(c) value of money increases
(d) purchasing power of money remains unaffected
(e) amount of money in circulation decreases
Ans: (b)

19.   A centralized database with online connectivity to branches, internet as  well as ATM-network that has been adopted by almost all major banks of our country is known as
(a) Investment Banking                                 (b) core Banking
(c) Mobile Banking          (d) National Banking                       (e) Specialized Banking

            Ans: (b)

20.   The Unit Trust of India came into existence in
(a) 1960                (b) 1962                (c) 1964                (d) 1966                (e) 1968

Ans: (c)

 

Loan Against Fixed Deposits

Evaluating personal loan against fixed deposits!

By Nirjharini Tripathy | Bankbazaar.com – Fri 11 Apr, 2014  

  

Fixed deposits in banks are one of the most preferred investments by risk averse Indians who also look forward to earn a higher interest rate as compared to the normal savings account in the bank. Now these fixed deposits have another wonderful benefit to offer the customers and that is the provision to take a personal loan against it in times of requirement. This a great idea for personal loan that actually comes at a much lower rate of interest as the bank gets the security of the fixed deposit against which it provides the loan.

Key benefits of Personal Loans against Fixed Deposits

The reason for the growing popularity of this option as against traditional unsecured personal loans is the host of added benefits that come with such a loan.

• The interest rates available for personal loans against fixed deposits are lesser than conventional personal loans. The rates for such loans are generally 1 to 2% higher than the rates being paid by the bank for the fixed deposit.
• Such a loan does not require one to liquidate the FD which in that case lesser interest for being broken midway. This way the asset remains while the immediate financial requirements are met.
• The tenure for the personal loans against fixed deposits normally extends up to the maturity of the fixed deposits.
• The processing is also hassle free as the bank where you already have the fixed deposit will itself provide the personal loan against it.
• There is no prepayment penalties associated with these kinds of loans which gives the borrower the freedom to repay whenever his cash flow situation improves.

The Procedure for Personal Loans against Fixed Deposits

The process involved in availing a personal loan against fixed deposits is relatively simple and fast. In this case the fixed deposit will have to be hypothecated to the bank. At the time of the application the following documents will have to be submitted to the bank.

• Demand Promissory Note
• Pledge/lien Letter
• Loan Documents
• Overdraft Agreement
• Application Form
• Deposit Receipt
• Signed Receipt

There is a small processing fees that will be charged by the bank for the approval of this loan and the loan will be sanctioned in a very small time frame.

However one must carefully analyse the actual losses that will be accrued by taking a loan against the fixed deposit at an early stage of the deposit as compared to taking it against a deposit that is nearing maturity. In most cases it is preferable to take loan against deposits that are closer to maturity as the amount due will be more in this case. But at the same time one must understand that the tenure available for repayment reduces in this case. Weighing the pros and cons of both the situations the borrower will have to decide for himself which is the most advantageous situation for him. However in all cases taking a personal loan against fixed deposit is always better than a high interest rate pure personal loan.

State Bank of India - Selective Questions - 3

State Bank of India – Selective Questions - 3

1.       In how many different ways can the letters of the word 'FLEECED' be arranged ?
(a) 840         (b) 2520                (c) 1680                (d) 49                    (e) None of these

Ans: (a)     7!

2.       Arul was going to market from his home. He walked 4 Km to the north, turned right and walked 3 Km. He then turned left and walked 4 Km. Then he took a left and walked till he reached the market which was exactly to the east of his house. Find the distance of the market from his home along north.

Ans: 8 km. ( The question is meant to confuse. From the house Arul walks totally 8 km North. The Market is towards East of his house but at what distance is not given. Only the distance along North from his house is asked. Hence the answer is 8 km.)

3.       Starting from his house, Rahul walked 5 Km to the north east to reach a shop. From there he took a right and walked another 5 Km to reach his friend’s house. How far is his friend's house from his house (along eastern direction)?

Ans: √50

4.       Once economically sound city introduced a series of reform measures to _____ the economy.
(a) improve                               (b) revive            (c) hurt                 (d) encourage

Ans: (b) (Confusion may arise as to whether (a) or (b) is the answer. The question talks about    once economically sound city. Hence ‘Revive’ would be the right answer).

5.       Wounds go away but deep _____ may turn permanent.
(a) Worries                                (b) Pain                                (c) Cuts                 (d) Scars

Ans: (d)  ( Here the confusion will be between ‘Cuts’ and ‘Scars’. Deep cuts over a priod are likely to disappear while the Scars remain permanent. In the context of the question ‘Scars’ would be an appropriate answer.

6.        ______ packets of a popular shampoo are being distributed free to people in this apartment as a part of advertisement/promotion exercise.
(a) Large                     (b) Sample          (c) Fortified        (d) Extra

Ans: (b)  (Normally in all advertisement/promotional activities sample packets are generally given)

7.       A train of length 150 meters can cross a bridge in 30 seconds when travelling at a speed of 40km/hr. Then what is the length of the bridge?
(a) 180m                     (b) 182m              (c) 183m               (d) 185m

Ans: (c)

The speed of the train is 40 kmph. Or 40 *5/18 = 100/9 mtrs/sec.

The train crosses the bridge in 30 seconds. Thus the distance travelled in 30 seconds is 3000/9 or 1000/3 meters -> 333.33meters. The length of the train is 150 meters.

Hence the length of the bridge is 333.33 – 150 -> 183.33 meters -> 183 meters.

8.       A train crosses a bridge and a bike standing on the bridge in 40 seconds, 25 seconds respectively. What is the length of the bridge if the speed of the train is 50.4km/hr?
(a) 180m                     (b) 210                  (c) 183                   (d) 185

Ans: (b)

The speed of the train is 50.4 kmph. Or 50.4 * 5/18 -> 14 meters/sec.

The train crosses the bridge in 40 seconds. Hence the distance travelled in 40 seconds is 14 * 40 -> 560 meters. ( The train travelled its length and the bridge length)

The train crossed the bike on the bridge in 25 seconds. Distance travelled in 25 seconds -> 14 * 25 -> 350 meters ( The train’s length)

Hence, the length of the bridge is 560 – 350 -> 210 meters.

9.    In what time a train 120 meters long travelling at a speed of 70km/hr crosses a cyclist who is at                 the speed 5km/hr in the direction opposite to the train?
       (a)  4.76sec                  (b)   5.76sec        (c)   8.92sec         (d)  6.14sec

       Ans:  (b)

The Train and the Cyclist are moving in opposite directions at speeds of 70 kmph and 5 kmph     respectively. Hence the relative speed is 70 + 5 = 75 kmph -> 75 * 5/18 -> 125/6 meters/second.

The train of length 120 meters has to travel its length to cross the cyclist. Hence the time taken to cross is 120/ (125/6) = 5.76 seconds.

  

State Bank of India - Reasoning - 1

State Bank of India – Reasoning - 1

1.       How many such pairs of digits are there in number ‘36725918’ each of which has as many digits between them in the number as when the digits are arranged in descending order within the numbers?

(a) None

(b) One

(c) Two

(d) Three

(e) More than three

Ans : (c) (7&6) (8&5)

2.       What should come next in the following number series?

6 8 8 1 2 6 8 6 1 2 3 6 8 8 1 2 3 4 6 8 6 1 2 3 4 5 6 8?

(a) 6

(b) 1

(c) 4

(d) 8

(e) None of these

Ans : (d)

3.       In a certain code PAGE is written as ‘3%7@’, SORE is written as 8©9@. How is ‘PEAS’ written in that cod ?

(a) 3@©8

(b) 3@%9

(c) 3@%8

(d) 3%@8

(e) None of these

Ans : (C)

       4.    If ‘@’ means ‘x, ‘©’ means ‘÷’, ‘%’ means ‘+’ and ‘$’ means ‘–’ then ……6 % 12 © 3 @ 8 $ 3 =?

(a) 37

(b) 35

(c) 39

(d) 33

(e) None of these

Ans : (b)  ( Use the principle of BODMAS)

       5.     In a certain code ‘MOUSE’ is written as ‘PRUQC’. How is ‘SHIFT’ written in that code?

(a) VKIRD

(b) VKIDR

(c) VJIDR

(d) VIKRD

(e) None of these

Ans : (b)

6.      How many meaningful English words can be made with the letters ‘OEHM’ using each letter only once in each word?

(a) None

(b) One

(c) Two

(d) Three

(e) More than three

Ans : (b)

7.       Among A, B, C, D and E each scoring different marks in a test, C scored more than D but not as much as E. E scored more than A who scored less than B. Who score third highest marks?

(a) B

(b) A

(c) C

(d) Data inadequate

(e) None of these

Ans : (d)

8.       Pointing to a girl, Mr. Suraj said “she is the only daughter of my father’s son-in-law”. How is the girl related to Mr. Suraj ?

(a) Niece

(b) Cousin

(c) Sister

(d) Daughter

(e) Cannot be determined

Ans : (a)

9.        Sneha correctly remembers that her father’s birthday is before 16th June but after 11th June whereas her younger brother correctly remembers that their father’s birthday is after 13th June but before 18th June and her elder brother correctly remembers that their father’s birthday is on an even date. On what date in June is definitely their father’s birthday?

(a) Sixteenth

(b) Twelfth

(c) Fourteenth or Sixteenth

(d) Data inadequate

(e) None of these

Ans : (e) (Fourteenth is the right answer)

10.       How many such digits are there in the number ‘37152869’ each of which is as far away from the beginning of the number as when the digits are arranged in ascending order within the number ?

(a) None

(b) One

(c) Two

(d) Three

(e) More than three

Ans : (c)

11.       How many such pairs of letters are there in the word ‘CONFIRM’ each of which has as many letters between them in the word as in the English alphabet?

(a) None

(b) One

(c) Two

(d) Three

(e) More than three

Ans : (c)

  12.        ‘KN’ is related to ‘QT’ in the same way as ‘DG’ related to ……….

(a) JN

(b) IM

(c) JM

(d) IN

(e) IL

Ans : (c)

Directions—(Q. 13–15) Following questions are based on the five three-digit numbers given below:

518         849         365         783         291

13.          If the positions of first and third digits in each number are interchanged, which of the following will be the second digit of third highest number?

(a) 1

(b) 4

(c) 8

(d) 9

(e) 6

Ans : (e)

14.          If the first digit in all the numbers starting with an even digit is replaced by a number preceding it, then which of the following will be the sum of the first digit of the resulting highest and the lowest numbers?

(a) 4

(b) 8

(c) 7

(d) 6

(e) 13

Ans : (b) 

15.          If the positions of the first and the second digits in each number are interchanged, which of the following will be the second highest number?

(a) 849

(b) 365

(c) 783

(d) 291

(e) 518

Ans : (c)

 

 

State Bank of India - Selective Questions - 2

State Bank of India – Selective Questions - 2

1.       Bala buys an equal number of pens, pencils, and sketch pens costing Rs.2.50, Rs.3, and Rs.5 respectively. How many of each did he buy if he spends totally Rs.168?
a)12                       b)16                       c)18                        d)20
Ans:  (b)

Let ‘x’ be the number of Pens, Pencils and Sketch Pens purchased by Bala.

Then we have an equation (2.50)*x + 3*x + 5*x = 168.

Solving we get the value of ‘x’ as 16.  

2.       Prabha and Aarthi paid a total of Rs.600 for some goods. If Prabha paid 120 more than that of Aarthi, then how much is already paid by Aarthi?
a)Rs.250               b)Rs.150               c)RS.550               d)Rs.240
Ans:  (d)

Let the amount paid by Aarthi be ‘x’. Then we have an equation  x + (x+120) = 600.

Solving we get the value of ‘x’ as Rs 240.00

3.       A fruit seller had some apples. He sells 30% apples at the rate of Rs.30 per apple and the remaining 315 apples at the rate of Rs.20 per apple. The total amount realized by him is how much?
a)Rs.15900          b)Rs.10350          c)RS.11550          d)Rs.12420
Ans: (b)

He sold 30% of apples at Rs 30/- per apple and the remaining 315 apples at Rs 20/- per apple. We now know the remaining 70% apples amounts to 315. Hence the 30% apples he sold were 135 in numbers. Now applying the price at which he sold them, we have

(135 x 30 = 4050) + (315 x 20 = 6300) -> 10350.

4.       Devi buys some material worth Rs. X. She gets a deduction of Rs.650 on it. After getting deduction she pays tax of Rs.169. Then find X the value if she pays Rs.6000 for that material.
a)Rs.6481             b)Rs.5689            c)RS.6819             d)Rs.5181
Ans : (a)

Let ‘x’ be the price of the material. Then from the given information we have one simple equation ->  x – 650 + 169 = 6000. Solving we get the value of ‘x’ as RS 6481

5.       If two-third of two-seventh of a number is 60, then two-fifteenth of that number is
a)60                       b)42                       c)315                     d)21
Ans: (b)

2/3 * 2/7 = 60. Hence the whole number is 60 * 21/4 = 315.

2/15 of 315 is 315 * 2/15 = 42.

6.       Two times of the third of three consecutive even integers is three times of the first. Then the second integer is:
a)60                       b)42                       c)10                        d)12
Ans: (c)

Let the three consecutive even numbers be  x, x+2, and x+4

We are informed two times of the third is equal to three times of the first

Thus 2(x+4) = 3x. Solving we get ‘x’ equal to 8. The second number is x+2 = 8+2 -> 10.

7.       Find the integer which when decreased by 2 is 80 times the reciprocal of the same number
a)60                       b)42                       c)10                        d)12
Ans:  (c)

Let ‘x’ be the integer. Then we have an equation x-2 = 80 (1/x) -> x-2 = 80/x

Combining both we have x² – 2x – 80 = 0. This can be written as (x-10)(x+8)

The value of ’x’ can either be 10 or -8. Since the value cannot be negative the value of the integer is 10.

8.       Four of the following five are alike in a certain way and so form a group. Which is the one that does not belong to the group?
(a) 115                  (b) 145                  (c) 95                     (d) 155                  (e) 75
Ans: (e)

75 is the only number that is divisible by 3.

9.       How many meaningful words can be made from the letters ADEL using each letter only once?
(a) None              (b) One                                (c) Two                 (d) Three             (e) More than three
Ans: (d)  (The words are LEAD, LADE and DEAL)

10.   How many such pairs of letters are there in the word "ADVERTISE', each of which has as many letters between them in the word, as they have in the English alphabet?
(a) None              (b) One                                (c) Two                 (d) Three             (e) More than three

Ans: (b)  Letters D and I

 

State Bank of India - Selective Questions - 1

 State Bank of India – Selective Questions-1

In the following questions identify the one that answers the main question:

1.       In Agency agreement,
a) the Principal should be a major
b) the Agent should be a major
c) anyone can be a minor
d) both should be major

Ans: (a)

2.       In Sale of Goods Act “quiet possession” means
a) Buyer will get protection
b) Seller will not make noise
c) Buyer will remain quiet
d) Buyer will possess and enjoy.

Ans: (d)

3.       The income earned on a Debenture is
a) dividend
b) interest
c) discount
d) incentive
Ans: (a)

4.       The bank receives the following four cheques through clearing. Which one of them is deemed to be a Crossed Cheque?
a) On the top of the cheque the words, “Crossed Cheque” are written without any other marking.
b) Two parallel transverse lines are drawn on the face of the cheque.
c) On the back of the cheque two parallel transverse lines are drawn.
d) A big “X” mark is made on the top of the cheque without any other marks.
Ans: (b)

5.       Among the options which is open source software ?
a) Java
b) Windows
c) Unix
d) Linux
Ans: (d)

6.       Spreadsheet is used for ________
a) To perform numerical and statistical calculation
b) To maintain records
c) To create documents
d) All the above
Ans: (a)

7.       Vanya Mishra was awarded in 2012 with __________.
a) Kalpana Chawla award
b) Arjuna award
c) C.V.Raman award
d) J.C.Bose award
Ans: (a)

8.       Orhan Pamuk wrote the book _________
a) The Famous Five
b) The Enchanted Wood
c) Snow
d) The Jungle Book
Ans: (c)

9.       The author of the children book "Where the Wild things are" is _________
a) Rudyard Kipling
b) Maurice Sendak
c) George Orwell
d) Charles Perrault
Ans: (b)

10.   Mario Vargas Llosa got Nobel prize in Literature for the novel ________ .
a) The Dream of the Celt
b) The Feast of the Goat
c) Death in the Andes
d) The Time of Hero
Ans: (a)

11.   The number of medals won by India in Olympics 2012 is _____
a) 2
b) 5
c) 6
d) 1
Ans: (c)

12.   Which of the following London Olympic medalist were honored with “Rajiv Gandhi Khel Ratna”?
a) Vijay Kumar
b) Sushil Kumar
c) Yogeshwar Dutt
d) Saina
Ans: (a) and (c)

13.   In the London Olympics 2012, the player qualified for wrestling was __________.
a) Abhinav Bindra
b) Geeta Poghat
c) Gagan Narang
d) Aslam Sher Khan
Ans: (b)

14.   Rajyavardhan Singh Rathore was head of ___________ committee.
a) Arjuna Award
b) Dronacharya Award
c) Rajiv Gandhi Khel Ratna Award
d) Dhyan Chand Award
Ans: (c)


 

International Monetary Fund - IMF

I take pleasure in presenting here an interesting article on the above subject.

An Introduction to The International Monetary Fund (IMF)

By Reem Heakal 

The International Monetary Fund (IMF) is an international organization that provides financial assistance and advice to member countries. This article will discuss the main functions of the organization, which has become an enduring institution integral to the creation of financial markets worldwide and to the growth of developing countries.

What Does It Do?
The IMF was born at the end of World War II, out of the Bretton Woods Conference in 1945. It was created out of a need to prevent economic crises like the Great Depression. With its sister organization, the World Bank, the IMF is the largest public lender of funds in the world. It is a specialized agency of the United Nations and is run by its 186 member countries. Membership is open to any country that conducts foreign policy and accepts the organization's statutes.

The IMF is responsible for the creation and maintenance of the international monetary system, the system by which international payments among countries take place. It thus strives to provide a systematic mechanism for foreign exchange transactions in order to foster investment and promote balanced global economic trade.

To achieve these goals, the IMF focuses and advises on the macroeconomic policies of a country, which affect its exchange rate and its government's budget, money and credit management. The IMF will also appraise a country's financial sector and its regulatory policies, as well as structural policies within the macro economy that relate to the labour market and employment. In addition, as a fund, it may offer financial assistance to nations in need of correcting balance of payments discrepancies. The IMF is thus entrusted with nurturing economic growth and maintaining high levels of employment within countries.

How Does It Work?
The IMF gets its money from quota subscriptions paid by member states. The size of each quota is determined by how much each government can pay according to the size of its economy. The quota in turn determines the weight each country has within the IMF - and hence it’s voting rights - as well as how much financing it can receive from the IMF.

Twenty-five percent of each country's quota is paid in the form of special drawing rights (SDRs), which are a claim on the freely usable currencies of IMF members. Before SDRs, the Bretton Woods system had been based on a fixed exchange rate, and it was feared that there would not be enough reserves to finance global economic growth. Therefore, in 1968, the IMF created the SDRs, which are a kind of international reserve asset. They were created to supplement the international reserves of the time, which were gold and the U.S. dollar. The SDR is not a currency; it is a unit of account by which member states can exchange with one another in order to settle international accounts. The SDR can also be used in exchange for other freely-traded currencies of IMF members. A country may do this when it has a deficit and needs more foreign currency to pay its international obligations.

The SDR's value lies in the fact that member states commit to honour their obligations to use and accept SDRs. Each member country is assigned a certain amount of SDRs based on how much the country contributes to the Fund (which is based on the size of the country's economy). However, the need for SDRs lessened when major economies dropped the fixed exchange rate and opted for floating rates instead. The IMF does all of its accounting in SDRs, and commercial banks accept SDR denominated accounts. The value of the SDR is adjusted daily against a basket of currencies, which currently includes the U.S. dollar, the Japanese yen, the euro, and the British pound.

The larger the country, the larger its contribution; thus the U.S. contributes about 18% of total quotas while the Seychelles Islands contribute a modest 0.004%. If called upon by the IMF, a country can pay the rest of its quota in its local currency. The IMF may also borrow funds, if necessary, under two separate agreements with member countries. In total, it has SDR 212 billion (USD 290 billion) in quotas and SDR 34 billion (USD 46 billion) available to borrow.

IMF Benefits
The IMF offers its assistance in the form of surveillance, which it conducts on a yearly basis for individual countries, regions and the global economy as a whole. However, a country may ask for financial assistance if it finds itself in an economic crisis, whether caused by a sudden shock to its economy or poor macroeconomic planning. A financial crisis will result in severe devaluation of the country's currency or a major depletion of the nation's foreign reserves. In return for the IMF's help, a country is usually required to embark on an IMF-monitored economic reform program, otherwise known as Structural Adjustment Policies (SAPs).  

There are three more widely implemented facilities by which the IMF can lend its money. A stand-by agreement offers financing of a short-term balance of payments, usually between 12 to 18 months. The extended fund facility (EFF) is a medium-term arrangement by which countries can borrow a certain amount of money, typically over a three- to four-year period. The EFF aims to address structural problems within the macro economy that are causing chronic balance of payment inequities. The structural problems are addressed through financial and tax sector reform and the privatization of public enterprises. The third main facility offered by the IMF is known as the poverty reduction and growth facility (PRGF). As the name implies, it aims to reduce poverty in the poorest of member countries while laying the foundations for economic development. Loans are administered with especially low interest rates.  

The IMF also offers technical assistance to transitional economies in the changeover from centrally planned to market run economies. The IMF also offers emergency funds to collapsed economies, as it did for Korea during the 1997 financial crisis in Asia. The funds were injected into Korea's foreign reserves in order to boost the local currency, thereby helping the country avoid a damaging devaluation. Emergency funds can also be loaned to countries that have faced economic crisis as a result of a natural disaster.  

All facilities of the IMF aim to create sustainable development within a country and try to create policies that will be accepted by the local populations. However, the IMF is not an aid agency, so all loans are given on the condition that the country implement the SAPs and make it a priority to pay back what it has borrowed. Currently, all countries that are under IMF programs are developing, transitional and emerging market countries (countries that have faced financial crisis).

Not Everyone Has the Same Opinion
Because the IMF lends its money with "strings attached" in the form of its SAPs, many people and organizations are vehemently opposed to the activities. Opposition groups claim that structural adjustment is an undemocratic and inhumane means of loaning funds to countries facing economic failure. Debtor countries to the IMF are often faced with having to put financial concerns ahead of social ones. Thus, by being required to open up their economies to foreign investment, to privatize public enterprises, and to cut government spending, these countries suffer an inability to properly fund their education and health programs. Moreover, foreign corporations often exploit the situation by taking advantage of local cheap labour while showing no regard for the environment. The oppositional groups say that locally cultivated programs, with a more grassroots approach towards development, would provide greater relief to these economies. Critics of the IMF say that, as it stands now, the IMF is only deepening the rift between the wealthy and the poor nations of the world.

Indeed, it seems that many countries cannot end the spiral of debt and devaluation. Mexico, which sparked the infamous "debt crisis" of 1982 when it announced it was on the verge of defaulting on all its debts in the wake of low international oil prices and high interest rates in the international financial markets, has yet to show its ability to end its need for the IMF and its structural adjustment policies. Is it because these policies have not been able to address the root of the problem? Could more grassroots solutions be the answer? These questions are not easy. There are, however, some cases where the IMF goes in and exits once it has helped solve problems. Egypt is an example of a country that embarked upon an IMF structural adjustment program and was able to finish with it.

The Bottom Line
Providing assistance with development is an ever-evolving and dynamic endeavour. While the international system aims to create a balanced global economy, it should strive to address local needs and solutions. On the other hand, we cannot ignore the benefits that can be achieved by learning from others.