Table of Contents
BANKING AND FINANCE FOR INDIAN ECONOMY CLASS
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1. Bank rate refers to:
(a) The rate at which banks lend to its prime borrowers
(b) The maximum rate that banks can pay for deposit
(c) The rate at which banks rediscount bills with RBI
(d) None of these
Ans. c
2. According to a recent Reserve Bank’s Instructions on banking matters, banks cannot accept Interest free deposits other than in –
(a) Demand deposit account
(b) Term deposit account
(c) Current account
(d) None of these
Ans. c
3. Which of the following is correct regarding the Statutory Liquidity ratio (SLR)?
(a) It restricts commercial bank’s leverage in pumping more money in to the economy
(b) It is maintained only in the form of cash
(c) It controls liquidity in banking system
(d) It does not ensure the solvency of commercial banks
Ans. a
4. Which of the following is/are traditional type of open market operations used by the Reserve Bank of India?
(a) Outright purchase
(b) Repurchase agreement (REPO)
(c) Both (a) and (b)
(d) None of these
Ans. c
5. What does ‘D’ stand for in DBT?
(a) Direct
(b) Debit
(c) Devaluation
(d) Depreciated
Ans. a
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6. Which of the following has the authority to appoint Banking Ombudsman in India?
(a) SEBI
(b) RBI
(c) NABARD
(d) CHI
Ans. b
7. Which of the following, in the banking sector, measures the ability of a company to meet its short term debt obligations?
(a) Current ratio
(b) Acid test ratio
(c) Cash ratio
(d) All of the above
Ans. d
8. What does ALM stand for in the banking industry?
(a) Application Lifecycle Management
(b) Asset Liability Management
(c) Application for Loan Management
(d) Asset Loss Management
Ans. b
9. The full form of IFSC is:
(a) Indian Financial System Code
(b) Instant Fund for System Change
(c) Internet Foreign Sales Code
(d) Indian Foreign Service Compliance
Ans. a
10. The system of cheque clearing and settlement between banks based on electronic data/ images or both without physical exchange of instrument is known as:
(a) Cheque Truncation
(b) Cheque Embossing
(c) Cheque Standardization
(d) Cheque Digitalization
Ans. a
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11. Savings Bank Interest is calculated on the basis of:
(a) Minimum available balance
(b) Banks liquidity
(c) Profitability preferences of a bank
(d) Daily balance method
Ans. d
12. Which policy of the Reserve Bank of India does not deal in fixing Interest rates?
(a) Monetary Policy
(b) Expansionary policy
(c) Contractionary policy
(d) Credit Policy
Ans. d
13. Which of the following bodies/organizations responsible for the inspection, supervision surveillance of Regional Rural Banks (RRBs)?
(a) NABARD
(b) SEBI
(c) RBI
(d) IRDA
Ans. a
14. Which of the following is not correct regarding the Cheque Truncation System (CTS) In India?
(a) It speeds up the process of collection of cheques
(b) It reduces the scope for cheque clearing-related frauds
(c) Truncation of cheques is yet to be legalized
(d) It lowers the cost of collection of cheques
Ans. c
15. What is the liability of the Banker in Case of Wrongful Dishonor of Cheques?
(a) He is liable to compensate the customer for the loss suffered by him
(b) He is not liable to compensate the customer for the loss
(c) He can transfer the matter to the customer Grievance Redressal Department
(d) Both the customer and the banker have to split the compensation in the ratio of 50:50
Ans. a
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16. In the field of banking sector, what is the full form of ECS?
(a) E-Commerce Service
(b) Entity component system
(c) Embodied cognitive science
(d) Electronic Clearing Service
Ans. d
17. Banks are required to maintain secrecy and confidentiality of customers’ accounts under:
(a) Indian Contract Act, 1872
(b) Banker’s Book Evidence 1891
(c) Consumer Protection Act. 1986
(d) Banking Regulation Act, 1949
Ans. c
18. Which of the following authorities instructs a bank that funds held on behalf of a debtor should not be released until directed by it?
(a) Reserve Bank of India
(b) Banking Ombudsman
(c) Court
(d) Union Ministry of Finance
Ans. c
19. Which of the following statements sum up the features of a Debit Card?
(a) It is a plastic payment card
(b) Payments using a debit card are immediately transferred from the cardholders designated bank account
(c) The debit card transactions are routed through the Visa or Master Card networks
(d) All of the above
Ans. d
20. Which of the following bodies is responsible for maintaining the Cash Reserve Ratio?
(a) All scheduled commercial banks
(b) All Private Banks
(c) Regional Rural Banks
(d) Non-Banking Financial Companies
Ans. a
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21. Foreign Exchange Reserves in India are maintained and managed by
(a) SEBI
(b) RBI
(c) IRDA
(d) Planning Commission
Ans. b
22. A cheque which bears the word ‘Not Negotiable’ between the two parallel lines is considered as a:
(a) Uncrossed cheque
(b) Truncated cheque
(c) Valid cheque
(d) Crossed cheque
Ans. d
23. What is the full form of the term DEPB in banking?
(a) Developmental Enterprises Promotion Board
(b) Duty Entitlement Pass Book
(c) Duty Enforcement and Promotion Board
(d) Development, Export and Procurement Bureau
Ans. b
24. Which of the following Acts helps a bank in its day to day activities?
(a) Competition Act
(b) Negotiable Instruments Act
(c) Hindu Marriage Act
(d) Hindu Succession Act
Ans. a
25. Which of the following is NOT one of the major functions of the National Bank for Agricultural and Rural Development (NABARD)?
(a) Acting as a regulator for cooperative banks and RRB
(b) Extending assistance to the government and others in matters relating to rural development
(c) Providing refinance to lending institution in rural areas
(d) Review of monetary and credit policy
Ans. d
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26. As we all know Banks in India are required to maintain a portion of their demand and time liabilities with the Reserve Bank of India. This portion is called:
(a) Statutory Liquidity Ratio
(b) Cash Reserve Ratio
(c) Bank Deposit
(d) Reverse Repo
Ans. a
27. Which of the following terms is used in the field of Banking and Finance?
(a) Special Drawing Rights
(b) Affirmative Defence
(c) Civil Procedure
(d) Informed Consent
Ans. a
28. RBI’s open market operation transactions are carried out with a view to regulate……….
(a) Liquidity in the economy
(b) Prices of essential commodities
(c) Inflation
(d) All the above
Ans. d
29. When more than one banks are allowing credit facilities to one party in coordination with each other under a formal arrangement is generally known as……….
(a) Participation
(b) Consortium
(c) Syndication
(d) Multiple banking
Ans. b
30. The stance of RBI monetary policy is……………
(a) inflation control with adequate liquidity for growth
(b) Improving credit quality of the banks
(c) strengthening credit delivery mechanism
(d) supporting investment demand in the economy
Ans. a
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31. Currency Swap is an instrument to manage………..
(a) Currency risk
(b) Interest rate risk
(c) Currency and Interest rate risk
(d) Cash flows in different currencies
Ans. d
32. ‘Sub-prime’ refers to……….
(a) lending done by banks at rates below PLR
(b) funds raised by the banks at sub-Libor rates
(c) Group of banks which are not rated as prime banks as per Bankers Almanac
(d) Lending done by financing institutions including banks to customers not meeting with normally required credit appraisal standards
Ans. d
33. The rate at which banks borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities is known as:
(a) Repo rate
(b) Marginal Standing Facility
(c) Open Market Operations facility
(d) Gilt edged securities rate
Ans. b
34. What is Call Money?
(a) Money borrowed or lent for a day or over night
(b) Money borrowed for more than one day but up to 3 days
(c) Money borrowed for more than one day but up to 7 days
(d) Money borrowed for more than one day but up to 14 days
Ans. a
35. One of the major challenges banking industry is facing these days is money laundering. Which of the following acts/norms are launched by the banks to prevent money laundering in general?
(a) Know Your Customer Norms
(b) Banking Regulation Act
(c) Negotiable Instrument Act
(d) Narcotics and Psychotropic Substance Act
Ans. a
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36. A decreasing current ratio indicates:
(a) A stable liquidity
(b) An Increasing liquidity
(c) A strained liquidity
(d) Satisfactory current solvency
Ans. c
37. Export-Import Bank of India is the premier export finance institution in India, established in the year?
(a) 1985
(b) 1982
(c) 1984
(d) 1990
Ans. b
38. NABARD was established under the National Bank for Agriculture and Rural Development Act 1981 on the recommendations of –
(a) B. Sivaraman Committee
(b) J. Narayanswami Committee
(c) M.V. Narayanan Committee
(d) Shivsundaram Reddy Committee
Ans. a
39. Which bank has become the first Indian bank to deploy software robotics for power banking operations?
(a) State Bank of India
(b) HDFC Bank
(c) ICICI Bank
(d) UCO Bank
Ans. c
40. A worldwide financial messaging network which exchanges messages between banks and financial institutions is known as:
(a) CHAPS
(b) SWIFT
(c) NEFT
(d) SFMS
Ans. b
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41. What is Basel III norms?
(a) Norms for risk management aspects of banking
(b) Norms on bank capital adequacy
(c) Norms on bank stress tasting
(d) All of the above
Ans. d
42. Subprime lending is a term applied to the loans made to:
(a) Those borrowers who do not have a good credit history
(b) Those borrowers who have a good credit history financial
(c) Those borrowers who do not have a good debit history
(d) Those borrowers who have a good debit history
Ans. a
43. Which of the following is not an apex institution?
(a) SBI
(b) SIDBI
(c) NABARD
(d) State Cooperative bank
Ans. a
44. When demand for US dollars increases under flexible exchange rate system, then:
(a) The rupee depreciates
(b) The dollar appreciates
(c) No effect on Rupee
(d) Both (a) and (b)
Ans. d
45. What is meant by ‘Shadow Banking?
(a) NBFIs
(b) Private Banking
(c) Rural Banking
(d) Corporate Banking
Ans. a
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46. White Label ATMs are opened by:
(a) Microfinance Units
(b) Cooperative Banks
(c) NBFCs
(d) RRBs
Ans. c
47. Which of the following is/are the feature(s) of Hot Money?
(a) Quick Migration.
(b) Short-term profit/interest
(c) To and For one country to another
(d) All of these
Ans. d
48. When we talk about the Policy Rate we are actually mentioning about the:
(a) Cash Reserve Ratio
(b) Repo Rate
(c) Bank Rate
(d) Statutory Liquidity Ratio
Ans. b
49. Which of the following is a doubtful asset?
(a) 60 days of non-payment
(b) 90 days of non-payment
(c) NPA for 12 months
(d) Sub-standard asset for 12 or more months
Ans. d
50. What does the Negative Interest Rate Policy aim to achieve?
(a) Improve the balance sheet of the Public Sector Banks
(b) Reduce money supply and keep the inflation under control
(c) Increase the market interest rate
(d) Create downward pressure on market interest rate and to keep more liquidity in the system
Ans. d
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51. Which of the following is known as Plastic money?
(i) Demand Draft
(ii) Credit Card
(iii) Debit Card
(a) Only (j)
(b) Only (ii)
(c) Only (iii)
(d) Both (ii) and (iii)
Ans. d
52. What is the proportion of deposits that banks have to keep as cash with the Central Bank called?
(a) Repo Rate
(b) Reverse Repo Rate
(c) CRR
(d) MSF
Ans. c
53. What is the normal validity of a cheque?
(a) 1 month
(b) 6 months
(c) 3 months
(d) 4 months
Ans. c
54. Which of the following micro finance company was given a license by RBI to start a bank?
(a) Bandhan Financial Services Pvt. Ltd
(b) Grameen Financial Services Pvt. Ltd.
(c) SKS Micro finance Ltd.
(d) Janalalakshami Financial services Pvt. Ltd
Ans. a
55. What is Unit Banking?
(a) Banks that are dealing with only one field such as either commercial or investment banking
(b) Banks with only a single branch
(c) Banks that take care of a single locality
(d) Banks that are only in a single locality
Ans. d
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56. Find the correct relation:
(a) MSF< Repo Rate
(b) Reverse Repo Rate> Repo Rate
(c) MSF-2= Reverse Repo Rate
(d) Bank Rate + 1 = MSF
Ans. c
57. Eligible Total Capital/RWA = ?
(a) CRAR
(b) Capital Expenditure Ratio
(c) Leverage Ratio
(d) Debt to Risk Ratio
Ans. a
58. Which of the following is a Bancassurance?
(a) Bond with a face value of less than $ 1000 usually in $100 denominations
(b) Phenomenon whereby a bank sells insurance product via cross selling
(c) Short-term credit investment created by a non financial firm and guaranteed by a bank to make the payments
(d) There is no such thing
Ans. b
59. Which of the following statement correctly defines the term bilateral nominal exchange rate?
(a) It is the ratio of foreign to domestic prices, measured in the same currency.
(b) It is the exchange rate for one currency against another in money terms.
(c) It means that goods cost the same in two countries when measured in the same currency.
(d) It is the measure of a country’s international competitiveness.
Ans. b
60. In how many years is the Finance Commission formed in India?
(a) 4 years
(b) 5 years
(c) 6 years
(d) 7 years
Ans. b
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61. Which of the following banks has introduced the Dhan Aadhaar Card?
(a) Union Bank of India.
(b) City Union Bank
(c) Bank of India
(d) Karur Vysya Bank
Ans. c
62. For being able to benefit from the RBI’s S4A scheme, …….or more of the existing debt needs to be sustainable:
(a) 40%
(b) 45%
(c) 50%
(d) 55%
Ans. c
63. Under which act is the Reserve Bank of India responsible for regulating and supervising the Non-Banking Financial Companies?
(a) Industrial Disputes (Banking and Insurance Companies) Act, 1949
(b) Banking Regulation Act, 1949
(c) Reserve Bank of India Act, 1934
(d) Banker’s Book Evidence Act, 1891
Ans. c
64. The Finance Ministry has asked the Reserve Bank of India to allow common ATMs that will be owned and managed by non-banking entitles, Such ATMs are known as
(a) Brown Label ATMs
(b) Green Label ATMs
(c) White Label ATMs
(d) Red Label ATMs
Ans. c
65. RuPay was launched by:
(a) State Bank of India
(b) National Payments Corporation of India
(c) Reserve Bank of India
(d) National Securities Depository Limited
Ans. b
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66. Which of the following does not constitute customer identification process in the Banking sector?
(a) Confirming the date of birth from an official document.
(b) Confirming the permanent address.
(c) Contacting the customer by telephone by letter or by e-mail to confirm the information supplied after an account has been opened.
(d) Confirming the marital status of the customer.
Ans. d
67. What is the maximum amount that can he remitted through RTGS?
(a) Unlimited
(b) 50 lakh
(c) 1 crore
(d) 10 crore
Ans. a
68. Which pair is not correct?
(a) Exim Bank-Financing for export-import
(b) RBI-Banker’s Bank
(c) IDBI-Industrial finance
(d) FCI-Financial assistance to Commercial institutions
Ans. d
69. The nationalization of the major commercial banks took place in:
(a) 1947
(b) 1956
(c) 1969
(d) 1980
Ans. c
70. Scheduled Bank is that bank which is:
(a) Nationalised
(b) Non Nationalised
(c) Based at foreign country
(d) Included in the second schedule of RBI
Ans. d
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71. Which bank in India becomes the first bank to open its branch in China?
(a) IDBI Bank
(b) HDFC Bank
(c) State Bank of India
(d) Punjab National Bank
Ans. c
72. The first public sector bank in India which obtained license for Internet banking from RBI is:
(a) Punjab National Bank
(b) Oriental Bank of Commerce
(c) Corporation Bank
(d) State Bank of India
Ans. a
73. Which of the first subsidiary bank of SBI was merged with State Bank of India?
(a) State Bank of Indore
(b) State Bank of Patiala
(c) State Bank of Hyderabad
(d) State Bank of Saurashtra
Ans. d
74. NABARD was established in:
(a) Fourth Plan
(b) Fifth Plan
(c) Sixth Plan
(d) Eighth Plan
Ans. c
75. In which date, the merger of State Bank of Indore with SBI became effective?
(a) August 16, 2010
(b) August 18, 2016
(c) August 26, 2010
(d) September 1, 2010
Ans. c
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76. RBI has decided to release ‘Plastic Notes’ in circulation. The first such series to be circulated will be of:
(a) rupees 5 notes
(b) rupees 10 notes
(c) Both rupees 5 and rupees 10 notes
(d) None of the above
Ans. b
77. Which of the following banks are implementing the Micro Finance Programme linked with Self Help-Groups (SHGs)?
(a) Commercial Banks and Co-operative Banks only
(b) Co-operative Banks and Regional Rural Banks only
(c) Regional Rural Banks and Commercial Banks only
(d) All of the above
Ans. d
78. High powered money is:
(a) Banks’ reserves at Central Bank
(b) Money held by the Banks
(c) All loans and advances of Banks
(d) Currency held by Public and cash reserves of the Banks
Ans. d
79. According to the four concepts of money supply M1, M2, M3, and M4, sequence them in chronological order in terms of their liquidity:
(a) M3, M2, M1, and M4
(b) M1, M2, M3, and M4
(c) M4, M3, M2 and M1
(d) M4, M2, M3 and M1
Ans. c
80. The RBI made Indian Rupee fully convertible (On current account transactions related to goods and services) in the year:
(a) 1985
(b) 2002
(c) 1994
(d) 2011
Ans. c
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81. Banks Board Bureau:
i. selects the heads of Public Sector Banks only.
ii. is an element of the Indradhanush Plan for PSUS.
(a) i only
(b) ii only
(c) Both i and ii
(d) Neither i nor ii
Ans. c
82. ……….is/are declared as Domestic Systemically Important Banks (D-SIBs)?
i. SBI
ii. ICICI
iii. RBI
iv. Bandhan Bank
(a) i only
(b) ii and ii only
(c) iii only
(d) iv only
Ans. b
83. Find the incorrect statements regarding NABARD:
(a) It was established on the recommendations of the Shivaraman Committee
(b) The Government of India and RBI hold stakes in NABARD
(c) Its headquarters is in Mumbai
(d) None of these
Ans. b
84. Which of the following was formed by the RBI?
(a) NABARD
(b) NPCI
(c) Exim Bank
(d) SIDBI
Ans. b
85. What does the term SIP stand for in banking?
(a) Stock Investment Plan
(b) Substitute Investment Plan
(c) Systematic Investment Plan
(d) Serial Investment Plan
Ans. c
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86. Which of the following regulates Regional Rural Banks?
(a) RBI
(b) Government of India
(c) NABARD
(d) Both (a) and (b)
Ans. c
87. Which of the following was established on the recommendation of the Shivaraman Committee?
(a) NABARD
(b) SIDBI
(c) EXIM
(d) SEBI
Ans. a
88. Which of the following banks has started India’s first EMI facility in debit cards?
(a) State Bank of India
(b) IDBI Bank Ltd
(c) ICICI Bank
(d) Canara Bank
Ans. c
89. Which of the following banks has taken over the Centurion Bank of Punjab?
(a) ICICI Bank
(b) IDBI Bank
(c) HDFC Bank
(d) AXIS Bank
Ans. c
90. ………. was one of the entities to have been given in principle approval for opening a payment bank:
(a) Reliance Industries Limited
(b) Fino Pay Tech Limited
(c) National Securities Depository
(d) Cholamandalam Distribution Services
Ans. d
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91. Which among the following is India’s first small financial bank?
(a) Disha MicroFin Pvt. Ltd.
(b) Anu financers
(c) Capital Local Area Bank
(d) Janalakshmi Financial Services Pvt. Ltd
Ans. c
92. The newly introduced Indian rupees symbol is based on:
(a) Roman script
(b) Devnagri script
(c) Both (a) and (b)
(d) None of the above
Ans. c
93. 20 rupee and above value notes are printed in:
(a) Currency Note Press, Nashik Road
(b) Bank Note Press, Dewas
(c) Security Printing Press, Hyderabad
(d) All of these
Ans. b
94. Consumer Protection Act (COPRA) was implement in:
(a) 1985
(b) 1986
(c) 1987
(d) 1988
Ans. b
95. The headquarter of SIDBI is in:
(a) Lucknow
(b) New Delhi
(c) Mumbai
(d) Bengaluru
Ans. a
96. ‘Open market operation’ is a part of:
(a) Income Policy
(b) Fiscal Policy
(c) Credit Policy
(d) Labour Policy
Ans. c
97. For AePS, an IIN is required. What is the full form of the 2nd ‘I’?
(a) Issuer
(b) Issuing
(c) Identification
(d) Identifier
Ans. c
98. The regulator of NBFC Micro Finance in India is:
(a) Finance Ministry
(b) Reserve Bank of India
(c) State Bank of India
(d) None of these
Ans. d
99. CRISIL:
(a) Evaluates the credit documents of a company
(b) Provides financial assistance to industries
(c) Provides finances for rural areas
(d) Promote Exports
Ans. a
100. IRBI Industrial Reconstruction Bank of India was established in:
(a) 1975
(b) 1985
(c) 1990
(d) 1992
Ans. b
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