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Table of Contents
BANKING AND FINANCE FOR INDIAN ECONOMY CLASS
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1. Bank Rate is defined as the rate at which:
(a) RBI lends short term loans to commercial banks
(b) The commercial banks are able to borrow overnight funds from RBI
(c) RBI lends long-term loans to commercial banks
(d) A commercial bank can lend to its customers
Ans. c
2. How many members are there in the MPC?
(a) 5
(b) 6
(c) 7
(d) 8
Ans. b
3. In which year was the RBI formed?
(a) 1935
(b) 1936
(c) 1937
(d) 1938
Ans. a
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4. Which is the oldest Public Sector Bank of India?
(a) State Bank of India
(b) Bank of India
(c) Bank of Baroda
(d) Allahabad Bank
Ans. d
5. How many PSBs are there in India?
(a) 18
(b) 19
(c) 20
(d) 21
Ans. d
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6. What is the stake of RBI in National Housing Board?
(a) 51%
(b) 75%
(c) 100%
(d) No stake of RBI
Ans. c
7. The concept of ‘Universal Banking’ was recommended by:
(a) Abid Hussain Committee:
(b) R. H. Khan Committee
(c) S. Padmanabhan Committee
(d) Y. H. Malegam Committee
Ans. b
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8. Which central nodal agency implements the price support operations for commercial crops?
(a) NABARD
(b) RBI
(c) FCI
(d) NAFED
Ans. d
9. Which of the following can be accepted by the RBI in SLR?
(a) Cash
(b) Gold
(c) Approved securities
(d) All of the above
Ans. d
10. Which of the following statement related to the Basel Committee on Bank Supervision is correct?
(a) It formulates broad supervisory standards and guidelines and recommends statements of best practice in banking supervision
(b) The committee makes banking policy guidelines for both member and non-member countries and helps authorities to implement its suggestions
(c) It does not issue binding regulation; it functions as an informal forum
(d) All of the above
Ans. d
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11. In which year was the Basel I norms published?
(a) 1987
(b) 1988
(c) 1989
(d) 1990
Ans. b
12. In which year was the Basel II norms published?
(a) 2001
(b) 2002
(c) 2003
(d) 2004
Ans. d
13. In which year was the Basel III norms published?
(a) 2007
(b) 2008
(c) 2009
(d) 2010
Ans. c
14. CRR is the fraction of the total:
(a) GDP
(b) GNP
(c) NNP
(d) NDTL
Ans. d
15. Which among the following is/are the qualitative tools to control credit creation by RBI?
(a) Open Market Operations
(b) Repo Rate
(c) Credit Rationing Policy
(d) All of the above
Ans. c
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16. Which of the following functions can be performed by a Payment bank?
(a) Opening current deposit accounts
(b) Accept NRI deposits
(c) Both of the above
(d) None of the above
Ans. c
17. Choose the one which is not an RBI subsidiary:
(a) SIDBI
(b) NABARD
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Ans. a
18. Which one is a qualitative tool of monetary policy?
(a) Bank Rate
(b) Credit Ceiling
(c) Credit rationing
(d) Cash Reserve Ratio
Ans. c
19. Gold and silver bullions need to be atleast ………% pure.
(a) 90
(b) 95
(c) 8.7
(d) 99.5
Ans. d
20. Which among the following is not a pillar of Basel III?
(a) Minimum capital standards
(b) Supervisory review
(c) Market discipline
(d) Consolidation of assets
Ans. d
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21. Which among the following was the first bank purely managed by Indians?
(a) Punjab National Bank
(b) Oudh Commercial Bank
(c) Allahabad Bank
(d) None of these
Ans. a
22. In which year was the NABARD established?
(a) 1980
(b) 1981
(c) 1982
(d) 1983
Ans. c
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23. The minimum interest rate of a bank below which it is not viable to lend, is:
(a) Base Rate
(b) Repo Rate
(c) Marginal Rate
(d) Prime Lending Rate
Ans. a
24. In India, the Foreign Exchange Reserves are kept in the custody of:
(a) RBI
(b) SEBI
(c) PMO
(d) Ministry of Finance
Ans. a
25. ………is the portion of deposits banks have to park with RBI
(a) SLR
(b) CRR
(c) RR
(d) RRR
Ans. b
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26. White Label ATMs are:
(a) Not owned by banks
(b) Owned by the government
(c) Owned by the public sector banks
(d) Both (a) and (b)
Ans. a
27. Which among the following is correct in context with the Brown ATMs (Automated Teller Machines)?
(a) ATMs owned by Foreign Companies
(b) ATMs not owned by banks but by private ATM service providers
(c) Outsourced ATM Service by Banks
(d) ATMs owned by Government
Ans. c
28. In which year was SIDBI established?
(a) 1988.
(b) 1989
(c) 1990
(d) 1991
Ans. c
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29. Deficit financing can be done by:
(a) Borrowing from RBI
(b) Issuing fresh currency notes
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Ans. c
30. A decrease in Cash Reserve Ratio (CRR) leads to:
(a) Increase in cash availability of the banks
(b) Increase in repo rate
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Ans. a
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31. Which of the following also acts as a mechanism for government lending?
(a) CRR
(b) Repo rate
(c) Reverse repo rate
(d) SLR
Ans. d
32. Which of the following is an activity of RBI?
i. Managing inflation
ii. Acting as banker’s bank
iii. Managing India’s Forex
iv. Handling government’s borrowing program
(a) Only i and ii
(b) Only ii and iii
(c) Only iii and iv
(d) i, ii, iii and i
Ans. d
33. The term ‘narrow banking’ is best described as:
(a) Banks acting only as payment banks
(b) Banking by non-banking financial companies
(c) Limited areas of operation by banks
(d) Banks lending only to risk free sectors
Ans. d
34. In which year did paper currency start in India?
(a) 1861
(b) 1862
(c) 1863
(d) 1864
Ans. a
35. Money supply refers to the total stock of money held by Public. Which of the following is/are not part of the term public in this context?
(a) Households
(b) Commercial banks
(c) NBFCs
(d) Reserves in IMF in Indian currency kept with RBI
Ans. b
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36. Who can operate as Banking Correspondents?
(a) Individual kirana/medical/fair price shop owner
(b) Retired Teachers
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Ans. c
37. Which of the following can be called as the reserve/s in the bank?
i. CRR
ii. SLR
iii. Currency in ATM’s
Select the correct answer using the code given below:
(a) i and iii only
(b) i and ii only
(c) ii and iii only
(d) i, ii and iii
Ans. d
38. Consider the following statements regarding RBI:
i. RBI is the independent authority for conducting monetary policy in the best interests of the economy.
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ii. RBI is called as a banker to the Government of India because at times prints money’ in case of a budget deficit.
Which of the statements given above is/are incorrect?
(a) i only
(b) ii only
(c) Both i and ii
(d) Neither i nor ii
Ans. d
39. CRISIL stands for:
(a) Credit Rating Information Services of India Limited
(b) Credit Rating & Investment Services of India Limited
(c) Credit Reporting & Information Sharing of India Limited
(d) Credit Reporting & Information Service of India limited
Ans. b
40. Which bank has launched India’s first Aadhaar-based ATM?
(a) SBI Bank
(b) DCB Bank
(c) Vijaya Bank
(d) Lakshmi Vilas Bank
Ans. b
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41. With which of the following was the FMC merged with last year for better controlling of the Commodity Future Market?
(a) RBI
(b) SEBI
(c) NABARD
(d) None of these
Ans. b
42. Which of the following has issued The Insolvency and Bankruptcy Code, 2016?
(a) RBI
(b) Finance Ministry
(c) BBB
(d) IBBI
Ans. d
43. Merchant payments in India is controlled by:
(a) FICCI
(b) RBI
(c) SEBI
(d) None of the above
Ans. c
44. The term ‘BSR’ refers to:
(a) Basic Statistical Returns
(b) Annual returns submitted by banks to RBI in respect of priority sector advances
(c) Quarterly statement of advances to agriculture
(d) None of the above
Ans. a
45. Which is the final authority for deciding the design, form and material of bank notes?
(a) Indian Banks Association
(b) Reserve Bank of India
(c) Note Issuing Authority of India
(d) None of these
Ans. b
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46. Which bank launched India’s first certified green bond at the London Stock Exchange?
(a) SBI
(b) Axis Bank
(c) ICICI Bank
(d) IDBI Bank
Ans. b
47. The Reserve Bank of India (RBI) Internal Working Group (IWG) on Rationalisation of Branch Authorisation Policy has proposed easing bank branch norms. The working group was chaired by –
(a) US Paliwal
(b) Deepali Pant Joshi
(c) Lily Vadera
(d) None of these
Ans. c
48. The first bank managed by Indians was:
(a) PNB
(b) Oudh Bank
(c) Punjab & Sind Bank
(d) None of these
Ans. b
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49. In which year was the Liquidity Adjustment Facility introduced?
(a) 2000
(b) 2001
(c) 2002
(d) 2003
Ans. a
50. Which of the following bank was fined 60 million rupees by RBI in June 2018?
(a) South Indian Bank
(b) Tamilandu Mercantile Bank Limited
(c) Bardoli Nagarik Sahakari Bank Ltd
(d) None of the above
Ans. b
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51. What is the full form of MCX?
(a) Minor Commodity Exchange
(b) Macro Commodity Economics
(c) Multi Commodity Exchange
(d) None of these
Ans. c
52. Public Sector Banks in India have decided to rationalize overseas operations. How many operations have the PSBs shortlisted to rationalize?
(a) 32
(b) 33
(c) 34
(d) 35
Ans. d
53. Mark the correct statement about the scenario related to availability of loans in India:
(a) As compared to informal sector it is easy to get loans from formal sector.
(b) In India large number of people gets loans from formal sector only.
(c) Generally formal sector charges higher rate of interest.
(d) None of the above
Ans. d
54. Which of the following is not a participant in the Foreign Exchange market?
(a) Commercial banks
(b) Foreign exchange brokers
(c) Monetary authorities
(d) None of the above
Ans. d
55. ‘Vault Cash’ is:
(a) To deal with day to day cash needs of bank
(b) Virtual cash like Bitcoin
(c) New type of cash introduced in Japan
(d) None of the above
Ans. a
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56. Which of the following are also known as ‘paper gold?
(a) CRR
(b) SLR
(c) SDR
(d) All of the above
Ans. c
57. Credit control is an important tool used by:
(a) RBI
(b) SEBI
(c) Cyber authorities to check cryptocurrencies
(d) None of the above
Ans. a
58. Increase in CRR and SLR results in:
(a) Increase in money supply
(b) Decrease in money supply
(c) Does not affect money supply
(d) CRR and SLR are constant thus can’t be changed
Ans. b
59………… is the process by which RBI tries to keep the money supply unchanged.
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(a) Open market operations
(b) Sterilisation
(c) Reimbursement
(d) Both (a) and (c)
Ans. b
60. The interest rate which the RBI charges on its long-term lending is known as:
(a) Bank Rate
(b) Reverse Repo Rate
(c) Repo Rate
(d) Statutory liquidity ratio (SLR).
Ans. a
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61. Debt receipts are those:
(a) Government needs to repay without any interest
(b) Government needs to repay with interest
(c) Come to government by sale of assets
(d) Come to governments by consolidated fund of India
Ans. b
62. Angel investors provide financial backing to:
(a) RBI
(b) Government of India
(c) Entrepreneurs
(d) None of the above
Ans. c
63. Scheduled banks are to be included in which of the following act?
(a) RBI Bank Act, 1934
(b) RBI Bank Act, 1938
(c) RBI Bank Act, 1944
(d) RBI Bank Act, 1954
Ans. a
64. Which of the following are Scheduled Banks?
(a) SBI
(b) Bank of India
(c) RRBs
(d) All of the above
Ans. d
65. Which of the following is the long term lending rate of RBI to the banks?
(a) Repo rate
(b) Reverse Repo rate
(c) Bank rate
(d) None of the above
Ans. c
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66. …….is the rate at which bank lends rate to the best customers.
(a) Bank rate
(b) Prime lending rate
(c) Priority Sector lending
(d) MCLR
Ans. b
67. Which of the following fall under the capital receipt components of government of India?
i. Interest Receipts
ii. Recovery of loans and advances made by union government to PSUs
iii. User charges
iv. Disinvestment proceed
v. Dividends from PSUs
Select the correct option.
(a) i, iii and v
(b) i, ii and iii
(c) iv and v
(d) ii and iv
Ans. d
68. Mark the correct statement regarding CRR.
(a) It is the liabilities which bank has to keep with itself
(b) Bank keep the reserve with RBI
(c) It is not used as monetary tool
(d) All of the above are correct
Ans. b
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69. In Open market operations:
(a) RBI buys the government securities
(b) RBI sells the government securities
(c) Both (a) and (b)
(d) None of the above
Ans. c
70. RBI borrows at:
(a) Bank rate
(b) Repo rate
(c) Reverse Repo rate
(d) RBI can’t borrow
Ans. c
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71. Mark the correct statement about RBI.
i. Sterilization is the process by which RBI tries to increase the money supply in the system.
ii. RBI borrows from the banks at the interest rate equals to repo rate.
iii. Open Market Operations are the process in which RBI buys and sells the government securities.
Select the correct option.
(a) i and ii
(b) Only ii
(c) Only iii
(d) None
Ans. c
72. Sterilization by RBI refers to:
(a) Operations by RBI to neutralize effect of excess inflow of foreign investment in the economy
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(b) Operations by RBI neutralized the effects of high non-performing assets on the economy.
(c) Operations by the RBI to neutralize the effects of high fiscal deficit on the economy
(d) None of the above
Ans. a
73. In which year was the EXIM Bank established?
(a) 1979
(b) 1980
(c) 1981
(d) 1982
Ans. d
74. Which of the following was established by law?
(a) ICICI Bank
(b) EXIM Bank
(c) IDBI Bank
(d) IDFC Bank
Ans. c
75. How many Presidency Banks were there in India under the British rule?
(a) 2
(b) 3
(c) 4
(d) 5
Ans. b
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76. In which year was the Imperial Bank of India formed?
(a) 1921
(b) 1922
(c) 1923
(d) 1924
Ans. a
77. In 2017, how many associate banks of SBI were merged into SBI?
(a) 4
(b) 5
(c) 6
(d) 7
Ans. c
78. In which year was the RBI nationalized?
(a) 1947
(b) 1948
(c) 1949
(d) 1950
Ans. c
79. How many banks were nationalized in the year 1969?
(a) 11
(b) 12
(c) 13
(d) 14
Ans. d
80. In which year was the first Indian commercial bank which was wholly owned and managed by Indians established?
(a) 1909
(b) 1910
(c) 1911
(d) 1912
Ans. c
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81. What is the minimum amount that can be remitted via NEFT?
(a) O
(b) ₹ 1000
(b) ₹ 100
(d) ₹ 2000
Ans. a
82. In which year was the Insolvency and Bankruptcy Code established in India?
(a) 2013
(b) 2014
(c) 2015
(d) 2016
Ans. d
83 Where was the headquarters of the RBI situated originally?
(a) Hyderabad
(b) Kolkata
(c) Chennai
(d) Mumbai
Ans. b
84. What does the T in RTGS stand for?
(a) Time
(b) Telephonic
(c) Top
(d) Test
Ans. a
85. Which of the following did the Hilton-Young Commission suggest the formation of?
(a) The Reserve Bank of India
(b) The Presidency Banks
(c) The Imperial Bank
(d) The Insurance Sector
Ans. a
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86. The Reserve Bank of India was earlier also the currency- issuing authority of Myanmar. In which of the following did it cease to be so?
(a) 1939
(b) 1940
(c) 1941
(d) 1942
Ans. d
87. Which of the following schedule of the Reserve Bank of India Act, 1934 do the banks need to be listed to be called a Scheduled Bank?
(a) 1st
(b) 2nd
(c) 3rd
(d) 4th
Ans. b
88. How many associate banks of SBI were there when the bank was just formed?
(a) 6
(b) 7
(c) 8
(d) 9
Ans. c
89. When a group of persons come together to own and control three or more independently chartered banks, then it is called:
(a) Mixed banking
(b) Branch banking
(c) Unit banking
(d) Chain banking
Ans. d
90. What is the full-form of DICGC?
(a) Deposit Insurance and Credit Guarantee Corporation
(b) Deposit Insurance and Credit Guarantee Company
(c) Deposit Insurance and Cost Grant Corporation
(d) Department of Insurance and Credit Guarantee Company
Ans. a
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91. Which of the following features is not true about the Current Accounts?
(a) They are usually for high scale transactions
(b) It earns very nominal interest
(c) There is overdraft facility
(d) Minimum balance requirement is not needed
Ans. b
92. Which of the following is not an example of secured loans?
(a) Housing Loans
(b) Gold Loans
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Ans. d
93. What is the maximum amount that an account holder can keep in a Payment Bank?
(a) ₹ 50,000
(b) ₹ 1 lakh
(c) ₹ 1.5 lakh
(d) ₹ 10 lakh
Ans. b
94. Which of the following will fall under the category of Operational Risks of a Bank?
(a) Staff fraud
(b) Programming errors
(c) Increased competition
(d) All of these
Ans. d
95. Based on which committee’s report was the concept of Payments Bank introduced in India?
(a) Bimal Jalan Committee
(b) Nachiket Mor Committee
(c) Raghuram Rajan Committee
(d) Madhav Gadgil Committee
Ans. b
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96. SARFAESI Act 2001′ is applicable in banking industry for:
(a) Regulating the service conditions of employee
(b) Appointment of nominee directors on the bank boards
(c) Other than those given as options
(d) Facilitating Enforcement of security for recovery of bad loans
Ans. d
97. Which of the following is not a primary function of a bank?
(a) Accepting Deposit
(b) Clearing of cheques
(c) Providing reference on financial standing on its customer
(d) Financing of foreign trade
Ans. c
98. In a bank’s balance sheet which of the following is an asset?
(a) Its paid up capital
(b) Its saving deposits
(c) Its investment in government securities FEL
(d) Its accumulated reserve funds
Ans. c
99. BCSBI is an autonomous and Independent body set up. by the:
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(a) Government of India (GOI)
(b) Securities and Exchange Board of India (SEBI)
(c) The Reserve Bank of India (RBI)
(d) Indian Banks’ Association (IBA)
Ans. c
100. A Non-Performing Asset in Banking Business means:
(a) A fixed asset of bank is not been utilised
(b) A portion of deposits not been utilised
(c) A loan asset on which interest and/or Installments remain unchanged
(d) The account that remains ‘out of order’ for more than 90 days
Ans. b
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