Objective type Questions and Answers on Banking and Insurance
1. Which bank is the sponsor of Prathama Gramin Bank?
a) Bank of Baroda
b) Indian Bank
c) Punjab National Bank
d) Syndicate Bank
ANSWER: d) Syndicate Bank
Prathama Bank is the first Regional Rural Bank established on 2 October 1975.
Prathama Bank is the first Regional Rural Bank established on 2 October 1975.
2. Which of the following is not a public sector bank in India?
a) Andhra Bank
b) Federal Bank
c) IDBI Bank
d) Vijaya Bank
ANSWER: b) Federal Bank
Federal Bank Limited is a major Indian commercial bank in the private sector headquartered at Aluva, Kerala.
Federal Bank Limited is a major Indian commercial bank in the private sector headquartered at Aluva, Kerala.
3. What is the expanded form of the term ALM used in banking sector?
a) Asset Liability Maintenance
b) Asset Liability Management
c) Asset Liability Manipulation
d) Asset Liability Maximisation
ANSWER: b) Asset Liability Management
ALM is the practice of managing risks that arise due to mismatches between the assets and liabilities.
ALM is the practice of managing risks that arise due to mismatches between the assets and liabilities.
4. Which of the following is not a part of India's Money Market?
a) Banks
b) Bill Markets
c) Call Money Market
d) Indian Gold Council
ANSWER: d) Indian Gold Council
The Money market in India is the money market for short-term and long-term funds with maturity ranging from overnight to one year in India including financial instruments that are deemed to be close substitutes of money.
The Money market in India is the money market for short-term and long-term funds with maturity ranging from overnight to one year in India including financial instruments that are deemed to be close substitutes of money.
5. Which one of the following does not belong to regulatory bodies in India?
a) FMC
b) IRDA
c) PFRDA
d) SEBI
ANSWER: d) SEBI
Reserve Bank of India, Insurance Regulatory and Development Authority, Forward Market Commission India, Pension Fund Regulatory and Development Authority are the regulatory bodies in India.
Reserve Bank of India, Insurance Regulatory and Development Authority, Forward Market Commission India, Pension Fund Regulatory and Development Authority are the regulatory bodies in India.
6. Which one of the following is the special drawing rights given by the International Monetary Fund to its member countries?
a) Cold money
b) Hot money
c) Paper gold
d) None of these
ANSWER: c) Paper gold
It is an accounting entry. It is used only among governments and IMF for balance of payment settlements.
It is an accounting entry. It is used only among governments and IMF for balance of payment settlements.
7. In pursuance of which one of the following was the General Insurance Corporation of India was formed?
a) General Insurance Business (Nationalisation) Act, 1972
b) Insurance Act, 1938
c) Insurance Amendment Act, 2002
d) IRDA Act 1999
ANSWER: a) General Insurance Business
(Nationalisation) Act, 1972
The entire general insurance business in India was nationalised by the Government of India through the General Insurance Business (Nationalisation) Act of 1972.
The entire general insurance business in India was nationalised by the Government of India through the General Insurance Business (Nationalisation) Act of 1972.
ANSWER: c) System
Banking
Awareness - MCQs with answers - Part I
1. What is the full form of CBS?
a) Core Banking Solution
b) Core Banking Software
c) Core Banking System
d) Core Banking Service
ANSWER: a) Core Banking Solution
Core Banking Solution (CBS) is a delivery channel for quick and fast delivery.
Core Banking Solution (CBS) is a delivery channel for quick and fast delivery.
2. '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
c) Those borrowers who do not have a good debit history
d) Those borrowers who have a good debit history
ANSWER: a) Those borrowers who do not have a
good credit history
These loans are characterized by higher interest rates, poor quality collateral, and less favorable terms in order to compensate for higher credit risk.
These loans are characterized by higher interest rates, poor quality collateral, and less favorable terms in order to compensate for higher credit risk.
3. Which among the following is the act of taking on a risk for a fee?
a) Guidewire
b) Initial Public Offering
c) Predictive analytics
d) Underwriting
ANSWER: d) Underwriting
Underwriting is provided by a bank, insurer or investment house.
Underwriting is provided by a bank, insurer or investment house.
4. Which among the following is called the rate of interest charged by RBI for lending money to various commercial banks by rediscounting of the bills in India?
a) Bank Rate
b) Discount Window
c) Monetary Policy
d) Overnight Rate
ANSWER: a) Bank Rate
It is also referred to as the discount rate.
It is also referred to as the discount rate.
5. Which of the following are to be followed by Commercial Banks for risk management?
a) Basel II norms
b) Basel III norms
c) Basel I norms
d) Solvency II norms
ANSWER: a) Basel II norms
Basel II is the second of the Basel Accords which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.
Basel II is the second of the Basel Accords which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.
6. What is the full form of CRR?
a) Cash Reserve Rate
b) Cash Reserve Ratio
c) Cash Recession Ratio
d) Core Reserve Rate
ANSWER: b) Cash Reserve Ratio
Cash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.
Cash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.
7. What is the full form of 'MAT'?
a) Maximum Alternate Tax
b) Minimum Alternate Tax
c) Maximum Alternate Time
d) Minimum Alternate Time
ANSWER: b) Minimum Alternate Tax
The intent of introducing MAT was to ensure that no taxpayer with substantial income can avoid tax liability by using exclusions, deductions and incentives.
The intent of introducing MAT was to ensure that no taxpayer with substantial income can avoid tax liability by using exclusions, deductions and incentives.
8. What is the full form of NDTL?
a) New Demand & Tenure Liabilities
b) Net Demand & Time Liabilities
c) National Deposits & Total Liquidity
d) Net Demand & Tax Liabilities
ANSWER: b) Net Demand & Time
Liabilities
The Cash Reserve Ratio of scheduled banks is fixed at a certain percentage of their NDTL.
The Cash Reserve Ratio of scheduled banks is fixed at a certain percentage of their NDTL.
9. Which one of the following is known as the recession occurring two times with a small gap in between?
a) Deep Recession
b) Deflation
c) Double-dip Recession
d) Double Inflation
ANSWER: c) Double-dip Recession
A "double-dip recession" is also referred to as a "W-shaped" recession.
A "double-dip recession" is also referred to as a "W-shaped" recession.
10. "Basel Committee on Banking Supervision" is also known as ___________________________.
a) Bank for International Settlements Committee
b) Banking Regulation Committee
c) Financial Stability Board
d) Global Financial System
ANSWER: a) Bank for International
Settlements Committee
At the end of 1974, the central bank governors of the G10 countries established a Committee on Banking Regulations and Supervisory Practices. The Committee was designed as a forum for regular cooperation between its member countries on banking supervisory matters.
At the end of 1974, the central bank governors of the G10 countries established a Committee on Banking Regulations and Supervisory Practices. The Committee was designed as a forum for regular cooperation between its member countries on banking supervisory matters.
Banking
Awareness - MCQs with answers - Part II
1. What is the full form of NAV?
a) Net Actual Value
b) Net Annual Value
c) Net Asset Value
d) Net Average Value
ANSWER: c) Net Asset Value
NAV is calculated by the Asset Management Company (AMC) at the end of every business day.
NAV is calculated by the Asset Management Company (AMC) at the end of every business day.
2. Who issues 'Commercial Papers'?
a) A Company to a Bank
b) Banks to Banks
c) Banks to Companies
d) Company to its suppliers
ANSWER: b) Banks to Banks
Commercial Paper is one of the instruments through which Corporates raise debt from the market.
Commercial Paper is one of the instruments through which Corporates raise debt from the market.
3. What is the full form of SWIFT?
a) Safe Window for Interbank Financial Transactions
b) Safe Window In case of Financial Transaction
c) Society for Worldwide Interbank Financial Telecommunication
d) Safe Window Institute For Transactions
ANSWER: c) Society for Worldwide Interbank
Financial Telecommunication
The Society for Worldwide Interbank Financial Telecommunication provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment.
The Society for Worldwide Interbank Financial Telecommunication provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment.
4. Which of the following is known as the concept of a standard contract to buy or sell a specified commodity at a certain date in future and at a market driven price?
a) Forward Contract
b) Futures Contract
c) Market Contract
d) Standard Contract
ANSWER: b) Futures Contract
Their main purpose is to mitigate risk of default by either party in the intervening period.
Their main purpose is to mitigate risk of default by either party in the intervening period.
5. Which one of the following set up core banking infrastructure for rural banks?
a) IBA
b) NABARD
c) RBI
d) SIDBI
ANSWER: b) NABARD
National Bank for Agriculture and Rural Development has set up joint liability groups (JLG) of farmers to facilitate delivery of credit to farmers. Providing refinance to State Co-operative Banks, Scheduled Commercial Banks and Regional Rural Banks; co-ordinating the activities of different agencies in the field of agriculture and rural credit; improving absorptive capacity of credit delivery system are the major activities of NABARD.
National Bank for Agriculture and Rural Development has set up joint liability groups (JLG) of farmers to facilitate delivery of credit to farmers. Providing refinance to State Co-operative Banks, Scheduled Commercial Banks and Regional Rural Banks; co-ordinating the activities of different agencies in the field of agriculture and rural credit; improving absorptive capacity of credit delivery system are the major activities of NABARD.
ANSWER: a) CIBIL
Credit Information Bureau Limited is the first Credit Information Company in India.
Credit Information Bureau Limited is the first Credit Information Company in India.
7. Which one of the following organisations has been set up to facilitate connectivity between the Bank's switches and their ATMs, and inter bank payment gateway for authentication and routing the payment details of various e-commerce transactions?
a) IBA
b) IDRBT
c) IRDA
d) SIDBI
ANSWER: b) IDRBT
Institute for Development & Research in Banking Technology is a banking research institute established by Reserve Bank of India in 1996.
Institute for Development & Research in Banking Technology is a banking research institute established by Reserve Bank of India in 1996.
8. Which is a tool that helps RBI to stabilize money supply and prices of Government securities?
a) EOQ
b) EPQ
c) JIT
d) OMO
ANSWER: d) OMO
An Open Market Operation is an activity by a central bank to buy or sell government bonds on the open market.
An Open Market Operation is an activity by a central bank to buy or sell government bonds on the open market.
ANSWER: b) SEBI
The Securities and Exchange Board of India is the regulator for the securities market in India.
The Securities and Exchange Board of India is the regulator for the securities market in India.
10. What is 'fiat money'?
a) The currency is backed by Government Guarantee
b) The currency is backed by tangible assets
c) The currency is backed by gold reserves
d) The currency is backed by budgetary support
ANSWER: a) The currency is backed by Government
Guarantee
A fiat-money currency generally loses value once the issuing government or central bank either loses the ability to or refuses to further guarantee its value.
A fiat-money currency generally loses value once the issuing government or central bank either loses the ability to or refuses to further guarantee its value.
Banking
Awareness - MCQs with answers - Part III
1. What is a Lease?
a) A rental agreement between owner of a flat/house and the Tenant, whereby the Tenant pays specified amount on specified dates to the owner
b) A legal contract between the owner of an asset and its user, containing many conditions including payment of a specified amount by the user to the Owner for use of the asset
c) Both (a) and (b)
d) None of the above
ANSWER: b) A legal contract between the
owner of an asset and its user, containing many conditions including payment of
a specified amount by the user to the Owner for use of the asset.
Lease financing for equipment is provided by banks, captives and independent finance companies.
Lease financing for equipment is provided by banks, captives and independent finance companies.
2. What is Factoring?
a) An easy way of raising capital from a factoring company by small business
b) Selling of account receivables on a contract basis for cash payment to a factor before it is due
c) An arrangement for raising short term money against prepaid expenses
d) A method of discounting of long term bills
ANSWER: b) Selling of account receivables on
a contract basis for cash payment to a factor before it is due
The three parties involved are the one who purchases the receivable, the one who sells the receivable, and the debtor who has a Financial Liability.
The three parties involved are the one who purchases the receivable, the one who sells the receivable, and the debtor who has a Financial Liability.
3. Which one of the following is called as initial repayment holiday given to a borrower for repayment of loan?
a) Amortization
b) Moratorium
c) Subvention
d) None of the above
ANSWER: b) Moratorium
The interest rate charged during the moratorium is charged quarterly or half yearly on simple interest basis.
The interest rate charged during the moratorium is charged quarterly or half yearly on simple interest basis.
4. Who sets up 'Base Rate' for Banks?
a) Individual Banks Board
b) Interest Rate Commission of India
c) RBI
d) None of the above
ANSWER: c) RBI
Base Rate is the rate below which no Bank can allow their lending to anyone.
Base Rate is the rate below which no Bank can allow their lending to anyone.
5. Which of the following are Bank advances of a Bank?
a) Bad debts
b) Non-performing Assets
c) Out of order accounts
d) Overdrawn accounts
ANSWER: b) Non-performing Assets
A Non-performing Asset is defined as a credit facility in respect of which the interest has remained 'past due' for a specified period of time.
A Non-performing Asset is defined as a credit facility in respect of which the interest has remained 'past due' for a specified period of time.
6. Which of the following are benefited through the Reserve mortgage scheme?
a) Government employees
b) Minors
c) Senior citizens
d) All the above
ANSWER: c) Senior citizens
Some financial institutions that provide the scheme in India are Dewan Housing Finance, State Bank of India, Punjab National Bank, Bank of Baroda, Central Bank of India, Union Bank of India, LIC Housing Finance, Indian Bank, Andhra Bank, Corporation Bank, Canara Bank.
Some financial institutions that provide the scheme in India are Dewan Housing Finance, State Bank of India, Punjab National Bank, Bank of Baroda, Central Bank of India, Union Bank of India, LIC Housing Finance, Indian Bank, Andhra Bank, Corporation Bank, Canara Bank.
7. Which of the following are the amounts owed to a company that are not going to be paid?
a) Bad debts
b) Non-performing Assets
c) Out of order accounts
d) Overdrawn accounts
ANSWER: a) Bad debts
The bad debts associated with accounts receivable is reported on the income statement as Bad Debts Expense or Uncollectible Accounts Expense.
The bad debts associated with accounts receivable is reported on the income statement as Bad Debts Expense or Uncollectible Accounts Expense.
8. Whom with Primary Dealers deal in both primary and secondary markets?
a) Corporate Bonds
b) Debentures
c) Equities
d) Government Securities
ANSWER: d) Government Securities
A primary dealer is a firm that buys government securities directly from a government with the intention of reselling them to others.
A primary dealer is a firm that buys government securities directly from a government with the intention of reselling them to others.
9. What will be the impact if Reserve Bank of India reduces the Bank Rate by 1%?
a) Less liquidity in the market
b) More liquidity in the market
c) No change in the market liquidity
d) Mobilisation of more deposits by commercial banks
ANSWER: b) More liquidity in the
market
Market liquidity is a market's ability to facilitate an asset being sold quickly without having to reduce its price.
Market liquidity is a market's ability to facilitate an asset being sold quickly without having to reduce its price.
10. What is the full form of IRR?
a) Internal Rate of Return
b) Internal Reserve Ratio
c) Internal Rate of Ratio
d) Internal Recession Rate
ANSWER: a) Internal Rate of Return
The internal rate of return is a rate of return used in capital budgeting to measure and compare the profitability of investments.
The internal rate of return is a rate of return used in capital budgeting to measure and compare the profitability of investments.
Banking
Awareness - MCQs with answers - Part IV
1. Which among the following made the initial contribution for setting up Financial Inclusion Fund and Financial Inclusion Technology Fund?
a) Government of India, NABARD and RBI
b) NABARD, UTI and RBI
c) SIDBI, Government of India and IDBI Bank
d) SIDBI, NABARD and UTI
ANSWER: a) Government of India, NABARD and
RBI
The objectives of the FIF shall be to support “developmental and promotional activities with a view to securing greater financial inclusion, particularly among weaker sections, low income groups and in backward regions/hitherto unbanked areas. The objectives of FITF shall be to enhance investment in Information Communication Technology (ICT) aimed at promoting financial inclusion, stimulate the transfer of research and technology in financial inclusion, increase the technological absorption capacity of financial service providers/users and encourage an environment of innovation and cooperation among stakeholders.
The objectives of the FIF shall be to support “developmental and promotional activities with a view to securing greater financial inclusion, particularly among weaker sections, low income groups and in backward regions/hitherto unbanked areas. The objectives of FITF shall be to enhance investment in Information Communication Technology (ICT) aimed at promoting financial inclusion, stimulate the transfer of research and technology in financial inclusion, increase the technological absorption capacity of financial service providers/users and encourage an environment of innovation and cooperation among stakeholders.
2. Which one of the following is known as the real return to the investor getting reduced due to sudden rise in the prices of the commodities?
a) Cost risk
b) Demand risk
c) Market risk
d) Systemic risk
ANSWER: c) Market risk
Market risks include equity risk, interest rate risk, currency risk, and commodity risk.
Market risks include equity risk, interest rate risk, currency risk, and commodity risk.
3. Which among the following refers to misselling?
(i) When mutual funds are sold without telling the likely returns
(ii) When agents sell the products without telling investors what are the risks involved in investing in mutual funds
(iii) When agents invest somebody's money in mutual funds without their knowledge
a) Only (ii)
b) Both (i) and (iii)
c) All (i), (ii) and (iii)
d) None of the above
ANSWER: c) All (i), (ii) and (iii)
Selling life insurance to someone who has no dependents is regarded as misselling.
Selling life insurance to someone who has no dependents is regarded as misselling.
4. Which of the following is the correct definition of Hot Money?
a) This is the fund which is dumped into a country to get the advantage of a favourable interest rate
b) This is the fund which is provided by a bank in US $ at very short notice and at a very high rate of interest and for a longer period of repayment
c) This is the fund which is pushed into market through illegal methods
d) None of the above
ANSWER: a) This is the fund which is dumped
into a country to get the advantage of a favourable interest rate
They can move in and out of the market very quickly leading to market instability.
They can move in and out of the market very quickly leading to market instability.
5. What will bank customers pay for using safe deposit locker facilities?
a) Commission on locker
b) Exchange on locker
c) Rent on locker
d) Safe custody charges
ANSWER: c) Rent on locker
A safe deposit box is an individually secured container usually held within a larger safe or bank vault.
A safe deposit box is an individually secured container usually held within a larger safe or bank vault.
6. Which one of the following is known as a Savings Bank Account opened with a commercial bank with zero balance or very minimal balance?
a) Current Account
b) No frill account
c) Savings Bank-ordinary Account
d) Students Savings Bank Account
ANSWER: b) No frill account
7. What does the letter 'R' denote in the abbreviation 'BR Act' which controls banking activities in the country?
a) Reclamation
b) Reformation
c) Regulation
d) Rule
ANSWER: c) Regulation
Winding up of a banking company is done under the provisions of the Banking Regulation Act, 1949. The reasons for this are inability to pay its debts; moratorium placed on the bank or failure to comply with minimum capital adequacy; failure to comply with requirements of Banking Regulation Act.
Winding up of a banking company is done under the provisions of the Banking Regulation Act, 1949. The reasons for this are inability to pay its debts; moratorium placed on the bank or failure to comply with minimum capital adequacy; failure to comply with requirements of Banking Regulation Act.
8. What is Mortgage?
a) A security created on immovable property for a deposit received by a bank
b) A security created on immovable property for a loan given by a bank
c) A facility created on movable property for a deposit received by a bank
d) A security created on movable property for a loan given by a bank
ANSWER: b) A security created on immovable
property for a loan given by a bank
In the case of creation of registered mortgages, the mortgage deed should be presented for registration with Registrar of Assurances within 4 months from the date of execution of the deed.
In the case of creation of registered mortgages, the mortgage deed should be presented for registration with Registrar of Assurances within 4 months from the date of execution of the deed.
9. Which is the minimum lending rate decided by RBI which shall be adopted by all Public Sector Banks?
a) Bank rate
b) Base rate
c) Overnight rate
d) None of the above
ANSWER: b) Base rate
It is also known as prior probabilities.
It is also known as prior probabilities.
10. Which one of the following depicts the financial position of a bank or business enterprise at a given point of time?
a) Balance sheet
b) Cash flow statement
c) Income statement
d) Model audit
ANSWER: a) Balance sheet
A balance sheet is described as a "snapshot of a company's financial condition".
A balance sheet is described as a "snapshot of a company's financial condition".
Banking
Awareness - MCQs with answers - Part V
1. What is the full form of FIMMDA?
a) Fixed Income Money Markets & Derivatives Association
b) Foreign Income Money Markets & Derivatives Association
c) Floating Income Money Markets & Derivatives Association
d) Fixed Income Money Markets & Derivatives Affiliation
ANSWER: a) Fixed Income Money Markets &
Derivatives Association
FIMMDA is a voluntary market body for the bond, money and derivative markets.
FIMMDA is a voluntary market body for the bond, money and derivative markets.
2. Which one of the following provides banking services to all villages having a population upto 2000?
a) Plan for Financial Inclusion
b) Plan for Financial Exclusion
c) Plan for Financial Inclusion Technology
d) None of the above
ANSWER: a) Plan for Financial
Inclusion
'Financial Inclusion' is the latest powerful tool adopted by Reserve Bank of India to fulfill the basic objective of connecting every Indian to the country's banking system.
'Financial Inclusion' is the latest powerful tool adopted by Reserve Bank of India to fulfill the basic objective of connecting every Indian to the country's banking system.
3. What is the full form of FSDC?
a) Financial Security and Development Council
b) Financial Stability and Development Council
c) Financial Security and Development Convention
d) Fiscal Stability and Development Council
ANSWER: b) Financial Stability and
Development Council
The Government of India constituted Financial Stability and Development Council.
The Government of India constituted Financial Stability and Development Council.
4. What is the full form of LIBOR?
a) Local Indian Bank Offered Rate
b) London-India Bureau Of Regulations
c) Liberal International Bank Official Ratio
d) London Inter Bank Offered Rate
ANSWER: d) London Inter Bank Offered Rate
The London Inter Bank Offered Rate is the average interest rate estimated by leading banks in London.
The London Inter Bank Offered Rate is the average interest rate estimated by leading banks in London.
5. Which one of the following is called the frequent changes made by Banks in their product profile?
a) Product Control
b) Product Enhancement
c) Product Enrichment
d) Product Marketing
ANSWER: d) Product Marketing
Product marketing deals with product, pricing, place, promotion, physical environment, process and people.
Product marketing deals with product, pricing, place, promotion, physical environment, process and people.
6. What does the letter 'M' depict in the term SME as used in the financial world?
a) Maximum
b) Medium
c) Market
d) Mutual
ANSWER: b) Medium
Small and medium-sized enterprises are businesses whose personnel numbers fall below certain limits.
Small and medium-sized enterprises are businesses whose personnel numbers fall below certain limits.
7. Which organization provides guarantee to the exporters?
a) Exim Bank
b) Export Credit Guarantee Corporation
c) Reserve Bank of India
d) Registrar of companies
ANSWER: b) Export Credit Guarantee
Corporation
On 30 July 1957, the ECGC Limited was established with an objective to provide insurance cover in respect of risks in export trade.
On 30 July 1957, the ECGC Limited was established with an objective to provide insurance cover in respect of risks in export trade.
8. Which of the following defines 'Para Banking' services?
a) Eligible financial services rendered by banks
b) Services provided through business correspondents
c) Services provided to armed forces personnel
d) Utility services provided by banks
ANSWER: d) Utility services provided by
banks
Para Banking activities that a bank normally involves are Global Debit Card, Global Credit Card, Bancassurance, Life insurance products, Non life insurance products, cash management.
Para Banking activities that a bank normally involves are Global Debit Card, Global Credit Card, Bancassurance, Life insurance products, Non life insurance products, cash management.
9. Under whose chairmanship did RBI constitute a Working Group for making balance of payments manual?
a) Anand Sinha
b) Deepak Mohanty
c) Harun Rashid Khan
d) Kamalesh Chandra Chakrabarty
ANSWER: b) Deepak Mohanty
Deepak Mohanty is the highest ranked economist in Reserve Bank of India.
Deepak Mohanty is the highest ranked economist in Reserve Bank of India.
10. What does 'Nomination' for a deposit account in the bank mean?
a) Mandate given by the close relatives 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
c) Mandate of the depositor in favor of one or more persons to claim the amount on death of the depositor
d) Mandate of the depositor in favor of a close relative who can claim the amount on death of the depositor
ANSWER: d) Mandate of the depositor in favor
of a close relative who can claim the amount on death of the depositor
The account holders can change the nomination anytime.
The account holders can change the nomination anytime.
Banking
Awareness - MCQs with answers - Part VI
1. What does RTGS enable?
a) Immediate transfer of money from customer of one bank to customer of another bank
b) Immediate transfer of money from customer of one bank to customer of another branch within the same bank
c) Immediate transfer of money from customer of one bank to customer of another country
d) Immediate transfer of money from customer of one bank to customer of RBI
ANSWER: a) Immediate transfer of money from
customer of one bank to customer of another bank
Real Time Gross Settlement Systems are specialist fund transfer systems where transfer of money takes place on "real time" and on "gross basis"
Real Time Gross Settlement Systems are specialist fund transfer systems where transfer of money takes place on "real time" and on "gross basis"
2. Which of the following permit cheque operation?
a) Savings bank accounts and fixed deposit accounts
b) Current accounts and fixed deposit accounts
c) Savings bank accounts and cash accounts
d) Savings bank accounts and current accounts
ANSWER: d) Savings bank accounts and current
accounts
When a customer draws a cheque on a bank, it is a mandate on that bank to pay.
When a customer draws a cheque on a bank, it is a mandate on that bank to pay.
3. What happens if a crossed cheque is presented for payment?
a) It can be paid only through a banker
b) It cannot be paid at all
c) It can be paid across the counter in another bank
d) None of the above
ANSWER: a) It can be paid only through a
banker
A crossed cheque is a cheque that has been marked to specify an instruction about the way it is to be redeemed.
A crossed cheque is a cheque that has been marked to specify an instruction about the way it is to be redeemed.
4. Under which sector will banking sector fall?
a) Agricultural sector
b) Industrial sector
c) Service sector
d) None of the above
ANSWER: c) Service sector
The Indian banking sector is broadly classified into scheduled banks and non-scheduled banks.
The Indian banking sector is broadly classified into scheduled banks and non-scheduled banks.
5. Which is known as the arrangement when more than one banks allow credit facilities to one party in cordination with each other?
a) Amortization
b) Consortium
c) Moratorium
d) Subvention
ANSWER: b) Consortium
A consortium is an association of two or more individuals, companies, organizations or governments with the objective of participating in a common activity or pooling their resources for achieving a common goal.
A consortium is an association of two or more individuals, companies, organizations or governments with the objective of participating in a common activity or pooling their resources for achieving a common goal.
6. What is an Indian Depository Receipt?
a) An instrument in the form of deposit receipt issued by Indian depositories
b) An instrument in the form of depository receipt created by an Indian depository against underlying equity shares of the issuing company
c) A deposit account with a Public Sector Bank
d) A depository account with any of Depositories in India
ANSWER: b) An instrument in the form of
depository receipt created by an Indian depository against underlying equity shares
of the issuing company
Standard Chartered PLC became the first global company to file for an issue of Indian depository receipts in India.
Standard Chartered PLC became the first global company to file for an issue of Indian depository receipts in India.
7. 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
ANSWER: a) Money borrowed or lent for a day
or over night
If it exceeds one day, it is referred to as “notice moneyâ€.
If it exceeds one day, it is referred to as “notice moneyâ€.
8. What is the most powerful tool used by the Reserve Bank of India to control inflation?
a) Raise interest rates
b) Raise current supply
c) Reduce current supply
d) Reduce interest rates
ANSWER: a) Raise interest rates
9. What does crossing of cheques make them?
a) Invalid document
b) Ineligible to endorse to a person other than the payee
c) Remain the same
d) Ineligible to get cash across the bank counter
ANSWER: b) Ineligible to endorse to a person
other than the payee
Crossing ensures security to the holder of the cheque.
Crossing ensures security to the holder of the cheque.
10. What happens when a bank dishonours a cheque?
a) It is called settlement of the cheque
b) It is called withdrawing of the cheque
c) It is called nullifying of the cheque
d) It is called return of the cheque unpaid
ANSWER: d) It is called return of the cheque
unpaid
Insufficient fund, the death of the drawer, irregular signature, non-existing account, bankruptcy, frozen account, when there is attention, a post-dated cheque, if there is difference between the amount written in words and that in figures, when payment is stopped are the reasons why most bank cheques are being dishonoured.
Insufficient fund, the death of the drawer, irregular signature, non-existing account, bankruptcy, frozen account, when there is attention, a post-dated cheque, if there is difference between the amount written in words and that in figures, when payment is stopped are the reasons why most bank cheques are being dishonoured.
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