100+BANKING AND FINANCE FOR INDIAN ECONOMY CLASS

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BANKING AND FINANCE FOR INDIAN ECONOMY CLASS

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1. The Reserve Bank of India (RBI) has issued guidelines for banks to set up new currency chests. Which of the following statements is/are true in this regard?

1. Area of the strong room/ vault of at least 1,500 sq. ft. For those situated in hilly/ inaccessible places, the strong room/vault area of at least 600 sq. ft.

2. The new chests should have a processing capacity of 6.6 lakh pieces of banknotes per day. Those situated in the hilly/ inaccessible places, a capacity of 2.1 lakh pieces of banknotes per day.

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(a) Both 1 and 2

(b) None of 1 and 2

(d) Only 2

Ans. a

2. Expand the term FSDC which is used in financial sectors?

(a) Financial Security and Development Council

(b) Financial Stability and Development Council

(d) Fiscal Stability and Development Council

Ans. b

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3. In opinion of the RBI, which one of the following is/are a threat to the smooth functioning of Indian Companies?

(A) Rising input costs.

(B) High interest rates.

(a) Only (A)

(b) Only (B)

(d) All (A). (B) & (C)

Ans. d

4. The RBI reviews its credit and monetary policy at regular intervals and also in between. What is the purpose of the same?

(A) To ensure that Inflation does not cross the limit.

(B) To ensure that banks have enough liquidity.

(a) Only (A)

(b) Only (B)

(d) Only (B) & (C)

Ans. c

5. DSCR indicates the ability of a company to:

(a) meet its current liabilities

(b) service its shareholders

(d) raise further capital

Ans. a

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6. According to the current provisions of RBI Act, 1934, the RBI can issue banknotes in the denomination not more than:

(a) 5,000

(b) 1,000

(d) 10,000

Ans. d

7. The Banking Codes and Standard Board of India is:

(a) An independent and autonomous body

(b) An overseer of compliance with the Code of Banks Commitment to Customers

(d) None of the above

Ans. c

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8. ‘Nomination’ for a deposit account in the bank means:

(a) Mandate given by the close relative/s of the depositor, to settle the death claim in case of death of the depositor

(b) Mandate decided by the bank to settle the death claim of its depositor

(d) Mandate of the depositor in favour of a close relative who claim the amount death of the depositor.

Ans. d

9. In the context of financial inclusion, what does USB refer to?

(a) Ultra Small Banking

(b) Ultra Simplified Banking

(d) Ultra Small Branch

Ans. d

10. Very often we read about financial inclusion in newspapers these days. Financial inclusion means:

(a) Providing loans to all eligible persons.

(b) Creating a mechanism of providing financial help to business people of society whenever they are in need of the same.

(d) To ensure that each and every person pays tax on/his income regulatory and honestly

Ans. c

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11. If you visit the branch of a bank you will normally not see a department/section/counter name as:

(a) Cash

(b) Credit

(d) Housekeeping

Ans. d

12. Which of the following is not the function of Reserve Bank of India (RBI)?

(a) Provide credit facility to the general public

(b) Keep Govt. money in various accounts heads

(d) All are RBI’s function

Ans. a

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13. In banking world when a loan given by a bank to an individual or organisation is not return by the borrower wishfully or otherwise, it is known as:

(A) Standard Asset

(B) Non-Performing Asset

(a) Only (A)

(b) Only (B)

(d) Both (A)and (B) only

Ans. b

14. When someone wants to open a new saving bank account, the bank asks him/her to bring various documents. Which of the following is one of these documents?

(a) Certificate of medical and Identity

(b) Degree Certificate

(d) Address of two persons who can give guarantee

Ans. c

15. A student has got admission to a foreign university. From where can he/she get the foreign currency?

(a) From the bank of that country only

(b) From the Ministry of Foreign Affairs

(d) From an authorised foreign exchange dealer

Ans. d

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16. Which of the following is the major function of an ATM installed by banks?

(a) To distribute cash by way of withdrawal from one’s account

(b) To transfer money from one place to another place

(d) To arrange currency notes in serial order and count them

Ans. a

17. Which of the following is an example of cashless buying

(A) ATM withdrawal

(B) Credit Card

(a) Only (A)

(b) Only (B)

(d) Only (B) and (C)

Ans. d

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18. Banks are required to take permission from which of the following before opening a new branch?

(a) Reserve Bank of India

(b) Securities and Exchange Board of India

(d) None of these

Ans. d

19. Which of the following terms is NOT used in banking/ Finance-related matters?

(a) Discount Rate

(b) Letter of Credit

(d) Law of Motion

Ans. d

20. What is the full form of ‘LAF’, as used in banking world very frequency?

(a) Liquid Advance Finance

(b) Liquidity Adjustment Facility

(d) Local Advance Finance

Ans. b

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21. Whenever somebody needs foreign currency against Indian Rupee, banks give equivalent amount desired currency based on prevalent:

(a) Bank rate

(b) Currency rate

(d) Exchange rate

Ans. d

22. The financial result of banks and other organisations normally are expressed in quarter. What does Q-1 mean?

(a) Result of January-March

(b) Performance during April-June

(d) The period when the profits are highest

Ans. d

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23. Which of the following Acts has specially been launched to facilitate banks in recovery of bad loans?

(a) RBI Act

(b) Banking Regulation Act

(d) SARFAESI Act

Ans. d

24. As we know, a lot of new concepts are being used in the field of banking these days. Which of the following is NOT one such concept/product directly associated with banks?

(a) E-payment

(b) SMS Alert

(d) Number Portability

Ans. d

25. Who among the following cannot open an account in any bank in India?

(a) One who is not earning regularly

(b) A housewife

(d) An individual who is well-to-do but his source of income is not known

Ans. d

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26. Who among the following cannot open ‘No Frill Account’ in a bank?

(a) Agriculture labourer

(b) Student

(d) Farmer

Ans. c

27. We frequently read about ‘MFI’ in newspapers. What is the full form of the term, which is used in financial sector?

(a) Micro-Finance Institutions

(b) Micro Functional Issues

(d) Monetary Forum of India

Ans. a

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28. A bank branch receives a counterfeit note of Rs. 100 from the customer, which the customer wants back. Which of the following action should be taken by the Bank?

(a) Will return to customer

(b) Will impound and not return

(d) Will replace with genuine note

Ans. b

29. Debit cards are known as:

(a) Hard money

(b) Easy money

(d) Real money

Ans. d

30. What are teaser loans?

(a) Fixed rate of Interest charged by banks

(b) Floating rate of interest charged by banks

(d) Rate of interest in the letters years goes down substantially

(e) None of these

Ans. c

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31. Which of the following aptly describes the business of Insurance?

(a) Insurance is about collective bearing of risk

(b) Insurance pay to one person from money collected from another person

(d) Insurance is about paying for others mistakes

Ans. a

32. A Saving bank account opened with a commercial bank with zero or very minimum balance is known as:

(a) Saving Bank Ordinary Account

(b) Student Saving Bank Account

(d) Current Account

Ans. c

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33. ‘Base Rate in banks is:

(a) the rate of interest payable on demand deposits

(b) the rate of interest payable of fixed deposits

(d) the minimum interest rate fixed by individual banks below which they cannot lend funds accept cases like of government sponsored schemes.

Ans. d

34. A savings bank deposit account is one where:

(a) the deposits are made only once in a year

(b) amounts are deposited and are withdraw as per the requirement of customers

(d) the deposits are made once in every month

Ans. b

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35. Mobile banking requires:

(a) account with the bank with mobile phone linked to interbank mobile payment service

(b) account with mobile post office

(d) account with banks and mobile phone linked to interstate mobile payment service

Ans. a

36. In a bank, which of the following are the usual type of accounts?

(a) Savings accounts, Electricity accounts and Insurance premium accounts

(b) Fixed deposits, Post office savings bank accounts and Current deposit accounts

(d) Loan accounts, Savings bank accounts and Term deposit accounts

Ans. c

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37. Crossing of cheques makes them:

(a) invalid documents

(b) ineligible to endorse to a person other than the payee

(d) ineligible to get cash across the bank counter

Ans. d

38. NEFT and RTGS in banking terminology speak of:

(a) various deposit products

(b) various loan products

(d)electronic fund transfer from bank to bank

Ans. d

39. Which of the following statements correctly describe Brown Label ATMs in India?

(a) They are those ATMs where hardware and the lease of the ATM machine is owned by a service provider

(b) They are those ATMs where dish management and connectivity to banking networks is provided by a sponsor bank

(d) All of the above

Ans. d

40. If there is increase in the money supply in the market, it will lead to:

(a) Increase in investment

(b) Decrease in Inflation

(d) Decrease in price level

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41. Adjusted net bank credit (ANBC) is calculated as:

(a) Bank credit in India + Bills rediscounted with RBI or other approved Fls + investment in non-SLR bonds in HTM categories + investments eligible to be treated as priority sector

(b) Bank credit in India minus Bills rediscounted with RBI or other approved Fls + investment in non-SLR bonds/debentures in HTM categories + investments eligible to be classified as priority sector

(c) Bank credit in India minus Bills rediscounted with RBI or other approved Fls + investment in non SLR bonds in HTM categories minus investments eligible to be treated as priority sector

(d) Bank credit in India minus Bills rediscounted with RBI or other approved Fls minus investment in Non SLR bonds in HTM categories + investments eligible to be treated as priority sector

Ans. b

42. Banks can reset the interest rates under Marginal Cost of Funds based Lending Rate MCLR system, for which the periodicity can be:

(a) 1 year or lower

(b) 6 months or lower

(d) 1 month or lower

Ans. a

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43. Statutory Liquidity Ratio is maintained by banks on which of the following:

(a) Demand and Time deposit

(b) Net demand and time deposits (i.e. excluding inter-bank transactions)

(d) Demand and time liabilities and net worth of the bank

Ans. c

44. Why does RBI review credit and Monetary Policy at regular intervals?

(A) To ensure that inflation does not cross the limit.

(B) To ensure banks have enough liquidity.

(C) To ensure cost of funds does not reach very high level.

Select the correct answer using the codes given below

(a) Only (A)

(b) Only (B)

(d) All of the above given options

Ans. d

45. Consider the following statements;

1. ‘Bankruptcy’ is the situation when the liabilities of a firm exceed its assets.

2. ‘Insolvency’ is the situation when the liabilities of a firm cannot be paid from its assets.

Which of the above is/are correct?

(a) Only 1

(b) Only 2

(d) Neither 1 nor 2

Ans. d

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46. Consider the statements about ‘Islamic Banking:

1. They operate on the principle of ‘Shariah.

2. They provide fixed returns to either the depositor or collect fixed interest from the borrowers.

Which of the above is/are correct?

(a) Only 1

(b) Only 2

(d) Neither 1 nor 2

Ans. b

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47. Consider the following statements regarding ‘fractional Banking’:

1. According to it bank maintain a minimum reserve cash ration to mobilise adequate liquidity to meet the customer’s cash demands.

2. The Cash Reserve Ratio provision in India for the banks is a part of it.

Which of the above is/are correct?

(a) Only 1

(b) Only 2

(d) Neither 1 nor 2

Ans. c

48. Consider the following statements on the Islamic Share Index’:

1. It is a share price index of sect companies that dominate the petroleum producing Islamic countries.

2. The Index cannot include the shares of non-Islamic Banks.

Which of the above statements is/are correct?

(a) Only 1

(b) Only 2

(d) Neither 1 nor 2

Ans. d

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49. Consider the following statements about the Manual on Financial and Banking Statistics:

1. It is published biannually by the Basel-based Bank of International Settlement.

2. It provides the updated data on the World Bank and also new prudential norms of running banking industry.

Mark the correct statements:

(a) Only 1

(b) Only 2

(d) Neither 1 nor 2

Ans. d

50. …………. not a major field of the BASEL III norms?

(a) Risk Coverage

(b) Adequate capital provision

(d) Adequate liquidity

Ans. c

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51. Consider the following liquid assets:

I. Demand deposits with the banks.

II. Saving deposits with the banks.

III. Time deposits with the banks.

IV. Currency

Which of the following is the correct sequence of these in the ascending order of liquidity?

(a) IV, III, II, I

(b) I, IV, III, II

(d) IV, I, III, II

Ans. c

52. Consider the statements regarding Liquidity Adjustment Facility (LAF):

1. It is a monetary policy tool that allows banks to borrow money through repo rates and reverse repo rates.

2. The funds under LAF are used by the banks for their day-to-day mismatches in liquidity.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. c

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53. Consider the following statements regarding disinflation:

1. Disinflation is the reduction in the general price level in the economy sustained for a very long period of time.

2. Disinflation occurs when the increase in the ‘consumer price level’ slows down from the previous period.

3. Disinflation may result of a recession. Which of the above statements given above is/are correct?

(a) 1 and 2 only

(b) 1 only

(d) 2 only

Ans. c

54. Consider the following statements about Reserve Deposit Ratio:

1. Cash Reserve Ratio and Statutory Liquidity Ratio are the tools to maintain a reserve deposit ratio.

2. Reserve money consists of the vault cash in banks and deposits of commercial banks with RBI.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. c

55. Consider the following statements about a specific bank-situation –

1. Everybody wants to take money out of one’s bank account before the bank runs out of its reserves.

2. This situation may cause the bank failures. Which of these situations is being described?

(a) Bank run

(b) Bank failure

(d) Economic system distortion

Ans. a

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56. Consider the following statements about the bank rate policy:

1. The bank rate is the rate of interest commercial banks have to pay RBI when they borrow money from RBI.

2. A low bank rate encourages banks to keep smaller proportion of their deposits as reserves.

3. A low bank rate enhances the multiplier process via assisting secondary money creation.

Which of the statements given above is/are correct?

(a) 1, 2 and 3

(b) 3 only

(d) 2 only

Ans. a

57. Consider the following statements about RBI money-control.

1. This is the process by which the RBI removes money from the banking system to neutralise the fresh money entering the system.

2. This process will be carried out by selling the government bonds that it holds in books.

3. RBI employs this process if it does not want to cut rates.

4. This process is part of open market operations.

The above statements characterize which of the following processes?

(a) Sterilisation

(b) Moral suasion

(d) Monetary policy

Ans. a

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58. Consider the following statements regarding Non-bank financial companies (NBFCs):

1. These are financial institutions that provide banking services and hold a banking license issued by RBI.

2. NBFC cannot accept demand deposits.

3. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is available to depositors of NBFCs.

Which of the statements given above is/are incorrect?

(a) 1 and 3 only

(b) 2 only

(d) 1, 2 and 3

Ans. a

59. Consider the following statements about payment banks:

1. They can lend money up to Rs. 1 lac.

2. They cannot accept demand deposits.

3. They can issue ATM/debit cards as well as credit cards.

Which of the statements given above is/are incorrect?

(a) 1 and 2 only

(b) 3 only

(d) None of the above

Ans. c

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60. Consider the following statements about Scheme for Sustainable Structuring of Stressed Assets (S4A) that was launched

1. The Finance Ministry had launched S4A scheme to resolve the corporate debt problem and strengthen

the lenders’ ability to deal with stressed assets.

2. Under this scheme, a company’s debt is bifurcated into two parts sustainable and unsustainable based on the cash flows of the company’s project.

Which of the statements given above is/are incorrect?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. a

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61. Which of the following are the components of Reserve Money?

1. Bankers’ deposits with RBI

2. Currency in circulation

3. ‘Other’ deposits with RBI.

(a) 1 and 2

(b) 2 and 3

(d) 1, 2 and 3

Ans. d

62. Consider the following statements regarding Cash Reserve Ratio (CRR):

1. It ensures safety to the people’s deposits in banks.

2. Increase in CRR increases the lending ability of the banks.

3. Banks earn interest on CRR.

Which of the statements given above is/are incorrect?

(a) 1 only

(b) 1 and 3 only

(d) 1, 2 and 3

Ans. b

63. Consider the following statements regarding ‘Open Market Operations’:

1. Open market operations (OMO) refers to the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system.

2. It is conducted by Commercial Banks.

Which of the statements given above is/are incorrect?

(a) 1 only

(b), 2 only

(d) Neither 1 nor 2

Ans. b

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64. Consider the statements about Base Rate.

1. It is the minimum rate below which banks cannot lend.

2. It is decided by the RBI.

3. It is decided by the respective banks.

4 It is same for all the banks.

Which of these statements is/are correct?

(a) 1, 2 and 4 only

(b) 1 and 3 only

(d) 2 and 4 only

Ans. b

65. www.sachet.rbi.org.in is a RBI website. Choose the correct options about the website.

(1) Controlling the unauthorized acceptance of deposits by unscrupulous entities.

(2) People can file and track a complaint here if any firm has illegally accepted money or defaulted in repayments.

(3) The State Level Coordination Committees will have both the regulators – RBI and SEBI.

(a) Only 1

(b) Only 1 and 2

(d) Only 2 and 3

Ans. b

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66. Assertion (A): Monetarists disagreed with the Phillips curve analysis.

Reason (R): There are no unique correspondence of inflation rate with unemployment rate Answer from the codes below:

Codes:

(a) Both (A) and (R) explanation of (A) are true and (R) is the correct

(b) Both (A) and (R) are true and (R) is not the correct explanation of (A)

(d) (A) is false and (R) is true

Ans. a

67. Consider the following:

1. Purchase of Government Securities from the Public by the Central Bank.

II. Deposit of currency in Commercial Banks by the Public.

III. Borrowings by the Government from the Central Bank.

IV. Sale of Government securities to the public by the Central Government.

Which of these would increase money-circulation in the economy?

Codes:

(a) I only

(b) II and IV

(d) II, III and IV

Ans. c

68. How can a Central Bank work as a custodian of cash reserves?

(1) Maintains CRR

(2) It determined Repo Rate

(a) Only 1

(b) Only 2

(d) Neither 1 nor 2

Ans. a

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69. Why does the central bank act as a clearing house for all banks?

(1) It has cash reserves of all banks commercial banks.

(2) All banks have their accounts in Central Bank.

(a) Only 1

(b) Only 2

(d) Neither 1 nor 2

Ans. c

70. Consider the following roles:

(1) A Banker

(2) A fiscal agent

(3) A financial advisor

Which of these roles are played by the RBI?

(a) Both 1 and 2

(b) Both 2 and 3

(d) 1, 2 and 3

Ans. d

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71. The Central Bank works as a lender of last resort to:

(1) The Commercial Banks

(2) The depositors

Which of the above is correct?

(a). Only 1

(b) Only 2

(d) Neither 1 nor 2

Ans. a

72. Monetary expansion can still be effective in getting out of liquidity trap if it combined with:

(a) Restrictions on bank loans

(b) Increased taxes

(d) Expansionary fiscal policy

Ans. d

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73. Which of the following statement(s) regarding Small Banks and Payment Banks is/are not correct?

1. Payment Banks cannot issue debit cards, although both can accept deposits.

2. Small Banks are required to maintain SLR and PSL although both are required to maintain CRR.

3. Both have the same initial minimum capital requirement of 100 cr INR.

(a) 1 only

(b) 1 and 2 only

(d) 1, 2 and 3

Ans. d

74. Which of the following statements is/are correct regarding Cash Reserve Ratio (CRR)?

1. It requires banks to maintain reserves in the form of gold, cash or government securities.

2. RBI lowers CRR to take an expansionary monetary policy.

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. b

75. Receipts in budget can be capital or revenue. Which of these is/are capital receipts?

1. Loan recoveries

2. Provident funds deposits

3. Grants

Select the correct answer using the codes given below:

(a) Only 1 and 2

(b) Only 2 and 3

(d) 1, 2 and 3

Ans. a

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76. Assertion (A): The working of Regional Rural Banks (RRBs) revealed that they eroded their capital base.

Reason (R): Many RRBS are non-viable and having high operating costs.

Of the above two statements, give the correct answer from the given codes:

Codes:

(a) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(b) Both (A) and (R) are correct, but (R)is not the correct explanation of (A).

(d) (A) is false, but (R) is true.

Ans. b

77. Consider the following statements with respect to NEFT:

1. The IFSC Code required for this service always has 0 as its 5th digit

2. Transactions up to Rs. 1 lakh can be transferred through this service

3. It transfers money in hourly batches

Which of the following are correct?

(a) Only 1 and 2

(b) Only 2 and 3

(d) All of these

Ans. b

78. Consider the following statements about NBFCs:

1. Deposits with NBFCs are not insured under the Deposit Insurance Scheme.

2. An unrated NBFC cannot accept public deposits.

3. There is no Ombudsman for hearing complaints against NBFCs.

Which of the above are true?

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(a) Only 1 and 2

(b) Only 2 and 3

(d) All of these

Ans. c

79. The Basel III norms prescribe minimum common equity of 4.5%. Which of the following is not an element of common equity?

(a) Statutory reserves

(b) Balance in Profit and Loss Account at the end of the previous financial area

(d) All of these

Ans. d

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80. The changes brought in by RBI regarding bad loan divergence practice is/are…………..

1. Banks are required to disclose divergence when the additional provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before provisions and contingencies for the reference period, instead of the earlier rule of 15% of the published net profits after tax.

2. The norms on divergence on gross non-performing assets (NPAs) continues to be a material divergence of 25 per cent, as found by the RBI auditors and as reported by the bank has left unchanged.

(a) Only 1

(b) Only 2

(d) Neither 1 nor 2

Ans. a

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81. The taking over of the Centurion Bank of Punjab by HDFC was one of the biggest mergers in the country. Assume that Reserve Bank of India reduces the Bank Rate by 1%, what will be its impact?

(a) Less liquidity in the market

(b) More liquidity in the market

(d) Mobilisation of more deposits by commercial banks

Ans. b

82 Consider the following statements about types of ATMs:

1. Brown Label ATMs are set up, owned and operated by non-bank entities.

2. White label ATMs are owned and maintained service provider whereas the bank whose brand used on ATM takes care of cash management and by network connectivity.

Which of the statements given above is/are incorrect?

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(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. c

83. Consider the following statements regarding Small Finance Bank:

1. They will provide financial inclusion to sections of the economy not being served by other banks.

2. They can borrow funds from Reserve Bank of India like other scheduled commercial banks.

3. They are not required to adhere to maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(d) 1, 2 and 3

Ans. c

84. Consider the following statements about the co-operative banks in India:

1. These are small-sized units operating both in urban and non-urban centres.

2. They are regulated by the RBI, Banking Regulation Act, 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Which of the above is/are correct?

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(a) Only 1

(b) 1 and 2

(d) None of these

Ans. b

85. Consider the following statements regarding urban co-operative banks in India:

1. Until 1996, they could only lend for non-agricultural purposes.

2. They provide safe deposit lockers, loan or mortgages to private and business customers.

Which of the above is/are correct?

(a) Only 1

(b) 1 and 2

(d) None of these

Ans. b

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86. Which of the following should not be done by RBI under ‘expansionist’ monetary policy?

1. Cut CRR and optimise SLR

2. Increase MSFR (marginal Standing Facility Rate).

3. Cut Bank Rate and increase Reverse Repo Rate

Codes:

(a) 1 and 2

(b) Only 1

(d) Only 2

Ans. d

87. Find out the correct answer from the code given below:

Main features of Regional Rural Banks (RRBs)

I. RRBs have been established by “sponsor bank’ which is usually a public sector commercial bank

II. RRBs grant direct loans and advances only to small and marginal farmers, rural artisans and agricultural labourers.

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III. The area of RRB is limited to a specified region comprising one or more districts of a state.

IV. The lending rates of RRBs should not be higher than the prevailing lending rates of co-operative societies.

Codes:

(a) II and III are correct.

(b) I and III are correct.

(d) I, II, III and IV are correct

Ans. d

88. Consider the following activities in the technique of selective credit control of RBI:

I. Determination of margin requirement for loans against certain securities.

II. Determination of maximum amount of advances or other financial accommodation.

III. Changing of discretionary interest rates on certain type of advances

IV. Changing the cash reserve requirements of commercial banks.

Which of the above is/are true?

(a) I and II are correct.

(b) II and III are correct.

(d) I and IV are correct.

Ans. b

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89. In India, who is related with term lending institution?

I. Industrial Development Bank of India.

II. EXIM Bank.

III. Small Industrial Development Bank of India.

IV. NABARD.

Codes:

(a) and II

(b) I, III and IV

(d) I, II and III

(e) III and IV are correct.

Ans. a

90. Which of the following financial institutions are operating in the money market?

I. Non-banking financial institutions

II. Acceptance Houses

III. Central Bank

IV. Stock Exchanges

Select the correct answer from the given codes:

(a) II and III

(b) I and III

(d) 1, II and III

Ans. d

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91. Assertion (A): The minimum rate at which the Central Bank is ready to lend is bank rate.

Reason (R): The bank rate is determined by demand and supply of money.

Codes:

(a) Both (A) and (R) are individually true and (R) is correct explanation of (A).

(b) Both (A) and (R) are individually true, but (R) is not the correct explanation of (A).

(d) (A) is false, but (R) is true.

Ans. c

92. Recapitalization of public sector banks involves ……….

1. Reduction of Repo Rate.

2. Reduction of Statutory Liquidity Ratio (SLR).

3. Infusion of more capital into the banks.

(a) 2 only

(b) 1 and 3 only

(d) 2 and 3 only

Ans. c

93. Which of the following statements is/are correct about shadow banking?

1. While commercial banks functions transparently,

shadow banking lacks transparency.

2. While commercial banks can create money being depository institutions, shadow banking cannot create money.

3. While liabilities of commercial banks are insured, shadow banking liabilities are not.

4. Shadow banking does not have access to central bank at the time of need but commercial banks have that access.

(a) 1 only.

(b) 1 and 2 only

(d) 1,2,3 and 4

Ans. c

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94. Assertion (A): The capital base of regional rural banks (RRBS) is weak.

Reason (R): Deposited mobilization of RRBs has been inadequate.

From the above two statements, select the correct answer from the given codes:

(a) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(b) Both (A) and (R) are correct but (R) is not the correct explanation of (A).

(d) (A) is correct but (R) is incorrect.

Ans. b

95. ……………. services are provided by the Indian Postal Network.

1. Credit Services

2. Savings Bank

3. Insurance Services

4. Wage disbursement

(a) 1, 2 and 4 only

(b) 1 and 3 only

(d) 1, 2, 3 and 4

Ans. c

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96. Consider the following statements regarding RBI:

1. RBI is the independent authority for conducting monetary policy in the best interests of the economy.

2. 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) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. d

97. What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?

(a) To lessen the Government of India’s perennial burden of fiscal deficit and current account deficit

(b) To support the infrastructure projects of Central and State Governments

(d) To aim at faster resolution of stressed assets of 50 crore or more which are under consortium lending

Ans. d

98. The Chairmen of public sector banks are selected by the:

(a) Banks Board Bureau

(b) Reserve Bank of India

(d) Management of concerned bank

Ans. a

99. Consider the following statements:

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The Reserve Bank of India’s recent directives relating to ‘Storage of Payment System Data, popularly known as data diktat, command the payment system providers that:

1. they shall ensure that entire data relating to payment systems operated by them are stored in a system only in India.

2. they shall ensure that the systems are owned and operated by public sector enterprises.

3. they shall submit the consolidated system audit report to the Comptroller and Auditor General of India by the end of the calendar year.

Which of the statements given above is/are incorrect?

(a) 1 only

(b) 1 and 2 only

(d) 1, 2 and 3

Ans. a

100. Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news?

(a) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.

(b) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.

(d) The incentive given by the Government, to merchants for promoting digital payments by their customers through Point of Sale (POS) machines and debit cards.

Ans. c

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101. Consider the following statements: If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?

1. Cut and optimize the Statutory Liquidity Ratio.

2. Increase the Marginal Standing Facility Rate.

3. Cut the Bank Rate and Repo Rate.

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 2 only

(d) 1, 2 and 3

Ans. b

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ALSO VISIT : INDIAN ECONOMY

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New Industrial Policy	Inflation Targeting Economy	Inflation Economy for	indian economy quiz 8
Multiplier Economics for	Monopoly (Economics)	Law of Variable Proportions (Economics)	indian economy quiz 9
Perfect Competition (Economics)	Law of Demand (Economics)	Interest (Economics)	indian economy quiz 10
Wages (Economics)	Rent (Economics)	Balance of Payment	indian economy quiz 12
Demonetisation	GST (Goods and Services Tax)	The Cost Of Production
Price Elasticity Of Demand	Law of Demand	Sustainable Development and Environment
Manufacturing Industries	Indian Financial Markets And Funds	Industries
MCQs ON ECONOMY	ECONOMICS THEORIES (2)	ECONOMICS THEORIES
General Questions Set 3 (Economy)	General Questions Set 2 (Economy)	General Questions Set 1 (Economy)
POVERTY_AS_CHALLENGE	Infrastructure	EMPLOYMENT AND ITS ACT
Rural Life and Rural Development (Economy)	Human capital formation in India	Economic Reforms Since 1991 (2)
Indian Economy (1950-1990)	Five Year Plans of India	Development Policies & Experience (1947-1990)
Economic Data of India	Government Budget and The Economy	BANKING SYSTEM IN INDIA PART-2
Banking System in India	Concept Of Macro Economics	BASIC CONCEPTS OF ECONOMICS- 2
BASIC CONCEPTS OF ECONOMICS	INTRODUCTION TO ECONOMICS
PUBLIC FINANCE MCQ WITH ANSWERSINDIAN ECONOMY CHARACTERISTICS
MCQ ON BIOLOGICAL CLASSIFICATION CLASS 11
BAISC FEATURES OF INDIAN ECONOMY MCQ
MCQ ON NATIONAL INCOME OF INDIA

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