BANK MANAGEMENT MCQ

Primary Banking Services

1. Nomination can be done in

a) Savings Bank account

b) Recurring Deposit account

c) Fixed Deposit account

d) All of above

Ans: D

2. KYC means

a) Know your customer

b) Know your character

c) Both of above

d) None of above

Ans: A

3. Who can open bank account?

a) Indian citizen

b) Non-Resident Indian

c) Illiterate

d) All of above

Ans: D
4. PAN means

a) Permanent Assistance Number

b) Primary Account Number

c) Permanent Account Number

d) None of above

Ans: C

5. E or S means

a) East or South zone

b) Easy and Swift

c) Either or Survivor

d) None of above
Ans: C

6. Bank Pass Book is

a) Issued by Bank

b) Contains transaction details of Bank account

c) Shows balance in account

d) All of above

Ans: D

7. Nomination once done can

a) Not be cancelled

b) Be cancelled

c) Not be changed

d) None of above

Ans: B
8. Payment of cheque can be stopped by

a) Beneficiary

b) Nominee

c) Drawer of cheque

d) All of above

Ans: C

9. PAN number is required for

a) Deposits less than Rs.50,000/-

b) Deposits in excess of Rs.1 lac

c) Deposits Rs.50,000/- & above

d) All transactions

Ans: A

10. Maximum amount of Cheque

a) Rs.100 crore

b) No limit

c) Rs.1 crore

d) None of above

Ans: B

11. In Recurring Deposits

a) a fixed sum is deposited every month

b) period of deposit is a fixed tenure

c) interest is paid at FDR rate

d) All of above
Ans: D

12. Maximum tenure of Fixed Deposit

is

a) 5 years

b) 7 years

c) 8 years

d) 10 years

Ans: D

13. What kinds of services are available free in ‘Basic Savings Bank Deposit Account’?

a) Receipt / credit of money through NEFT / RTGS

b) No annual maintenance charges on ATM-cum-Debit card

c) 4 withdrawals in a month

d) All of above

Ans: D

14. Which type of deposits earns higher interest rate?

a) Current account

b) Savings Account

c) Fixed Deposits

d) None of above

Ans: C
15. In case of banking company incorporated outside India, aggregate value of its paid-up capital
and reserve shall not be less than Rs. __________.

a) 3 Lakhs

b) 12 Lakhs

c) 15 Lakhs

d) 18 Lakhs

Ans: C

16. In case of an Indian banking company, the sum of its paid-up capital and reserves if it has
places of business in more than one State shall not be less than

a) 5 Lakhs

b) 12 Lakhs

c) 35 Lakhs

d) 18 Lakhs

Ans: A

17. A cheque dated subsequent to the date of its issue is

a) Post-dated cheque

b) Blank cheque

c) Crossed cheque

d) Account payee cheque

Ans: A

18. Cheque is payable on

a) Demand

b) Usage

c) Fixed future date

d) After sight

Ans: A

19. The reasonable period allowed in India for the presentation of a cheque is

a) 1 year

b) 3 months

c) 9 months

d) depending upon custom

Ans: B

20. Which of the following are not the Negotiable Instruments as defined by the Statute…

a) Banker’s Note

b) Bill of Exchange

c) Cheques

d) All of the Instruments are Negotiable Instruments

Ans: A

Monetary Policy Trend and Challenges in Bank\

21. Bank rate is the rate at which the Reserve Bank of India provides loans to

a) Public sector undertakings

b) Commercial banks

c) Private corporate sector

d) Non-banking financial institutions

Ans : B
22. When the supply for money increases and the demand for money reduces, there will be

a) A fall in the level of prices

b) A decrease in the rate of interest

c) An increase in the rate of interest

d) A fall in the level of demand

Ans: B

23. If the interest rate decreases in an economy, it will

a) Decrease the investment expenditure in the economy

b) Increase the loan repayment by the government

c) Increase the consumption expenditure in the economy

d) Increase the total savings in the economy

Ans: C

24. The cost of bank credit is determined on the basis of base rate and all bank loans are given at
a rate equal to or higher than the base rate. Of the following, who determines this base rate?

a) It is fixed by the Reserve Bank of India

b) It is determined by the Ministry of Finance

c) It is determined by market forces of supply and demand for credit.

d) It is determined by the bank concerned

Ans: D

25. Consider the following statements regarding relation between marginal cost and average cost
of lending, which one of the following statements is correct?

a) Average cost of lending is higher than marginal cost of lending.

b) For the first borrowing, average cost of lending and marginal cost of lending are equal.

c) Average cost of lending is lower than marginal cost of lending

d) Marginal cost of lending has no effect on average cost of lending

Ans: B

26. When the Reserve Bank of India announces an increase in the cash reserve ratio, what does it
mean?

a) The commercial banks will have less money to lend.

b) The union government will have less money to lend.

c) The union government will have more money to lend.

d) The commercial banks will have more money to lend.

Ans: A

27. Which one of the following is not an instrument of selective credit control in India?

a) Regulation of consumer credit

b) Rationing of credit

c) Margin requirement

d) Reserve ratios

Ans: D

28. Which agency has the foremost role in regulation of banking sector in India?

a) Reserve Bank of India

b) Union Finance Commission

c) Union Ministry of Finance

d) Union Ministry of Commerce

Ans: A
29. Which of the following guidelines by the RBI does not hamper the profitability of commercial
banks in India?

a) Cash reserve ratio

b) Statutory liquidity ratio

c) Margin requirements

d) Bank rate

Ans: D

30. The banks are required to maintain a certain ratio between their liquid assets and total deposits.
This ratio is called

a) CRR (cash reserve ratio)

b) SLR (statutory liquidity ratio)

c) CAR (capital adequacy ratio)

d) CLR (central liquid reserve)

Ans: B

31. What is the implication of high bank rate in the economy?

a) The most of credit charged by the banks to corporate borrowers reduces.

b) Banks start lending at high rates to various types of borrowers.

c) The demand for credit increases on account of rise in bank rate.

d) Commercial banks start borrowing more money from the Reserve Bank of India

Ans: B

32. The accounting year of the Reserve Bank of India is

a) April-March

b) July-June

c) October-September
d) January-December

Ans: B

33. Lending to which of the following sectors is not a part of priority sector lending?

a) Small-scale industry

b) Housing for poor

c) Allied activities to agriculture

d) Iron and Steel industry

Ans: D

34. To finance its deficit, the government prefers borrowing from the public over the RBI. What
can be the best reason for this?

a) Rate of interest charged by the RBI is higher.

b) The government has to return the sum to the RBI within a fixed period of time

c) Public borrowing does not affect the money supply in the market

d) It increases the sale of government bonds.

Ans: C

35. Which of the following situations occurs during the period when borrowers and lenders expect
inflation?

a) The nominal rate of interest exceeds the real rate of interest

b) The real rate of interest exceeds the nominal rate of interest

c) The nominal rate of interest equals the real rate of interest

d) Nominal and real rates of interest become zero

Ans: A
36. What is “monetary base”?

a) The cash issued under the authority of the central bank

b) The money whose real value exceeds its nominal value

c) The currency with public and deposits maintained by the commercial banks with the Reserve
Bank of India

d) None of the above

Ans: C

37. Sterilization by the RBI is carried through:

a) Open market operation

b) Reduction in bank rate

c) Deficit financing operation

d) Reduction in statutory liquidity ratio

Ans: A

38. Which of the following is not included in the reserve money?

a) Currency in circulation

b) Banker’s deposits with the RBI

c) Government deposits with the RBI

d) Demand deposit with banks

Ans: D

39. What is bank rate?

a) Rate on deposits given by commercial banks

b) Rate charged by banks on loans and advances

c) Rate payable on bonds

d) Rate at which the Reserve Bank of India discounts the bills of exchange

Ans: D

40. Which of the following is/are the possible effects of introducing fresh currency?

(1) Increase in money supply with the public

(2) The rise in the nominal income of public

(3) The fall in the general price level

Select the correct answer using the codes given below:

a) 1 only

b) 1 and 2 only

c) 2 only

d) 1, 2, and 3

Ans: B

Secondary Banking Services

41. RTGS stands for ……………
a. Real Time Gross Settlement
b. Real Term Gross Settlement
c. Real Time Goal Settlement
d. Real Term Goal Settlement

Ans: A

42. cancellation of cheque is known as ……………

a. crossing
b. opening of crossing
c. double crossing
d. general crossing

Ans: B

43.Those banking services based on the voice processing facility available with the bank
computers
(a) Internet banking
(b) Home banking
(c) E banking
(d) Tele banking

Ans: D

44. Which type of bank assets remained as NPA for a period exceeding 12 months
(a) standard assets
(b)Sub-standard assets
(c) Consortium banking
(d) None of these

Ans: B

45. Under which banking aims at targeting customers with large value transaction
(a) Whole sale banking
(b) Merchant banking
(c) Retail banking
(d) Internet banking

Ans: A
46. State Bank of India started merchant banking in ______ followed by ICICI in ______.
a. 1972, 1974
b. 1978, 1980
c. 1973, 1974
d. 1980, 1981

Ans: C

47. In India, merchant Banks operate in the form of divisions of India and foreign banks and
financial institution, Subsidiary companies established by
1. SBI Capital Markets Ltd.
2. Can Bank Financial Services Ltd.
3. PNB Capital Services Ltd.
4. BOI Finance Ltd.
5. Indian Bank Merchant Banking Services Ltd.
a. 1, 2, 4, 5
b. 2, 3, 4, 5
c. 1, 2, 3, 4, 5
d. 1, 3, 4, 5

Ans: C

48. CRISIL has been promoted by ____ and _____.

a. ICICI, UTI
b. IDBI, SBI
c. AXIS, UTI
d. PNB, SBI

Ans: A
49. The ______ is the apex organization in the Indian money market.
a. SBI
b. RBI
c. ICICI
d. IDBI

Ans: A

50. The first bank to set up a separate merchant banking division in India.
(a) Punjab national bank
(b) Standard charted bank
(c) National & Grin days bank
(d) National city bank.

Ans: C

51. If locker rent is not paid, Bank can

a) seal the locker
b) stop operation of locker
c) break open the locker after giving suitable notice
d) All of above

Ans: D

52. Which function is the Secondary Function of Commercial Banks?

(a) Agency Function
(b) General Utility Function
(c) Social Function
(d) All of these

Ans: D
53. Which is the Agency Function of Commercial Banks?
(a) Advancing Loans
(b) Accepting Deposits
(c) Act as Trustee
(d) Locker Facility

Ans: C

54. Cash which is stored electronically on a microchip is called

(a) E purse
(b) Debit card
(c) AYM
(d) Credit card

Ans: A

55. A cheque is in circulation for a long period is called ----

a. Anti-dated cheque
b. Stale cheque
c. Mutilated cheque
d. None of these

Ans: B

56. -------- crossing is not recognized by law, but only by banking custom
a. Account payee crossing
b. Double crossing
c. Special crossing
d. Not negotiable crossing

Ans: A
57. ------ is an endorsement made by an authorized person on behalf of another
a. Pre pro endorsement
b. Facultative endorsement
c. Partial endorsement
d. None of these

Ans: A

58. In the case of ----cheque, the payee need not be named and it can be transferred by mere
delivery.
a. Bearer cheque
b. Order cheque
c. stale cheque
d. None of these.

Ans: A

59. A cheque which bears a date which has already elapsed is called-----
a. Post-dated cheque
b. Ante-dated cheque
c. Mutilated cheque
d. None of these.

Ans: B

60. Which of the following is known as plastic money

(a) Credit card
(b) Debit card
(c) None of these
d) Both of these

Ans: D
Banking system overview
61) ____________ allocates saving efficiently in an economy to ultimate users either for
investment in real assets or for consumption.

a) Economic system

b) Banking system

c) financial system

d) Market system

Ans: C

62) Which of the following is not a regulatory institution in Indian financial system?

a) RBI

b) CIBIL

c) SEBI

d) IRDA

Ans: B

63) _____________ is regarded as a queen of Indian financial system.

a) SEBI

b) RBI

c) Finance Ministry

d) BSE

Ans: B

64) National Housing bank is a fully owned subsidiary of___________.

a) HDFC

b) HSBC
c) RBI

d) HUDCO

Ans: C

65) Financial institutions are also known as ______________.

a) financial organization

b) financial intermediaries

c) financial system

d) Any of the above

Ans: B

66) ____________is the first development financial institution in India.

a) IDBI

b) ICICI

c) IFCI

d) RBI

Ans: C

67) IDBI was established in ____________.

a) 1948

b) 1954

c) 1992

d) 1964

Ans: D
68) ______________is an apex institution to coordinate, supplement and integrate the activities of
all existing specialized financial institutions.

a) IFCI

b) IDBI

c) RBI

d) SEBI

Ans: B

69) Which of the following is not an asset held by Commercial Banks?

a) Bills of Exchange

b) Current Account Deposits

c) Money Lent at short Notice

d) Credit Balances with the Reserve Bank

Ans: B

70) Which of the following combinations is correct?

a) NABARD--------Industrial Loan

b) RBI---------------Long term Finance

c) RRB---------------Agriculture Finance

d) IDBI---------------Short Term Loans

Ans: C

71) Which of the following is not an organized sector in India?

a) Nationalized Banks

b) Regional Rural Banks

c) Cooperative Banks
d) Chits and Money lenders

Ans: D

72) In which year was the Banking Regulation Act passed?

a) 1949

b) 1955

c) 1959

d) 1969

Ans: A

73) When did the National Bank of Agriculture and Rural Development establish?

a) July, 1982

b) July, 1969

c) June, 1951

d) June, 1961

Ans: A

74) Which of the following is the apex institution which handles refinance for agriculture and rural
development in India?

a) RBI

b) SIDBI

c) NABARD

d) RBI

Ans: C
75) At which of the following cities is the Head Office of Reserve Bank of India located?

a) Mumbai

b) New Delhi

c) Kolkata

d) Dehradun

Ans: A

76) “Scheduled bank” in India means a bank _____.

a) Incorporated under the Companies Act, 1956

b) Authorized to the Banking business

c) Governed by the Banking Regulation Act, 1949

d) Included in the Second schedule to the Reserve Bank of India Act 1934

Ans: D

77) Which is the largest commercial bank in India?

a) Bank of India

b) Axis Bank

c) State Bank of India

d) HDFC

Ans: C

78) Co-operative Societies Act was enacted in which year?

a) 1912

b) 1949

c) 1935

d) 1913
Ans: A

79) With whom does the ownership of Public sector banks rest?

a) Government of India

b) Jointly with Government of India and share-holders from the public

c) Jointly with Government of India and State Bank of India

d) Jointly with Government of India and Reserve Bank of India

Ans: A

80) In which year was the Bank of Maharashtra established?

a) 1937

b) 1935

c) 1934

d) 1949

Ans: B

Analysis of balance sheet

81. Analysis of any financial Statement comprises

a) Balance sheet

b) P&L Account

c) Trading account

d) All of the above

Ans: D

82. Break-even point refers to that point where:

(a) Total Costs are more than Total Sales

(b) Total Costs are less than Total Sales

(c) Total Costs are half of the Total Sales

(d) Total Cost are equal to total sales

Ans: D

83. What is shown by Balance Sheet?

(a) Accuracy of books of accounts

(b) Profit or loss of a specific period

(c) Financial position on a specific date

(d) None of the above

Ans: C

84. Which of the following shows the actual financial position of an enterprise?

(a) Fund Flow

(b) Balance Sheet

(c) P & L A/c

(d) Ratio Analysis

Ans: B

85. A firm buys products but does not pay to suppliers instantly. This is recorded as

A) Account Receivable

B) Account Payable

C) Accumulated Liabilities

D) Current Liabilities

Ans: B
86. Financial securities which can be changed into cash to their book value price are categorized
as

A) Short-term Investments

B) Inventories

C) Long-term Investments

D) Cash Equivalents

Ans: D

87. On balance sheet, accruals, notes payable, and account payable are listed under which
category?

A) Current Liabilities

B) Accumulated Liabilities

C) Noncurrent Liabilities

D) Accrued Liabilities

Ans: A

88. Earnings that have a cumulative amount and are not paid to the stockholder as a dividend is
known as

A) Common Earnings

B) Preferred Earnings

C) Non-paid Earnings

D) Retained Earnings

Ans: D

89. Information that is used by investors for expecting future earnings is recorded in

A) Annual Report

B) Five Years Report

C) Exchange Report

D) Stock Report

Ans: A

90. Equity ₹ 90,000 Liabilities ₹ 60,000 Profit of the year ₹ 20,000. Then total assets will be :

(a) ₹ 1.70,000

(b) ₹ 1,50,000

(c) ₹1,10,000

(d) ₹ 80,000

Ans: A

91. The reserve which is created for a particular (specific) purpose and which is a charge against
revenue is called:

(a) Capital Reserve

(b) General Reserve

(c) Secret Reserve

(d) Specific Reserve

Ans: D

92. The profit and loss disclosed by the accounts of a company is:

(a) Transferred to share capital account

(b) Shown under the head of ‘Current liabilities’ and provisions

(c) Shown under the head ‘Reserves and Surplus

(d) None of these

Ans: C
13. Balance Sheet is a:

(a) Account

(b) Statement

(c) Both (a) and (b)

(d) All the above

Ans: B

94. Preliminary expenses are shown in the Balance Sheet under the head:

(a) Non-current assets

(b) Current assets

(c) Non-current liabilities

(d) Deducted from securities premium reserve

Ans: D

95. Dividend is usually paid:

(a) On Authorized Capital

(b) On Issued Capital

(c) On Paid-up Capital

(d) On Called-up Capital

Ans: C

Structure of commercial banks

96. Current account deposits are

a) Non repayable

b) Non repayable on demand

c) Repayable on demand
d) None of these

Ans: C

97. What is Repo Rate?

a) Rate at which RBI allows temporary loan facilities to commercial banks against government
securities only on the condition that the bank will repurchase the securities within a short period.

b) Rate offered by banks to their prime customers.

c) When any bank has excess cash, securities are bought from RBI against cash with the condition
that they will resell the securities to RBI on a pre fixed day and price.

d) When a bank is in need of cash it can discount bills of exchange and avail loan facilities from
Reserve Bank of India.

Ans: A

98. Which is the first commercial bank incorporated by the Indians in 1881?

a) Imperial Bank Of India

b) Awadh Commercial Bank

c) Reserve Bank Of India

d) State Bank Of India

Ans: B

99. By performing open market operation transactions, RBI regulates which of these factors

a) Borrowing power of the commercial banks

b) Inflation

c) Money supply in the economy

d) Both B & C

Ans: D
100. When RBI increases the cash reserve ratio (CRR), it will

a) Decrease money supply in the economy

b) Increase money supply in the economy

c) Increase supply initially but decrease automatically later on.

d) No impact on money supply in the economy

Ans: A

101. Canara Bank is an example of

a) Private Bank

b) Public Bank

c) Foreign Bank

d) None of these

Ans: B

102. Banking sector falls under which of the following sectors?

a) Industrial sector

b) Service sector

c) Manufacturing sector

d) None of these

Ans: B

103. What is known as ‘Lender of Last Resort’?

a) Whenever the government declares a debt relief, the RBI will have to bear the brunt of it.

b) If a person or firm which is eligible to get a loan, does not get it from any commercial bank,
may approach the Reserve Bank of India for a loan.

c) If the state governments are in crisis and need money for short term , they can approach RBI for
this purpose
d) If a commercial bank is in crisis, it may place its reasonable demand for accommodation to
Reserve Bank of India

Ans: D

104. The most widely used tool of monetary policy is known as?

a) Open market operations

b) Discount rate

c) Issuing of notes

d) None of these

Ans: A

105. NBFC stands for

a) New banking finance company

b) New business finance and credit

c) National banking and Finance Corporation

d) Non banking financial company

Ans: D

106. Which is the primary activity of a commercial bank?

a) Maintaining deposit accounts including current accounts

b) Issue and pay cheques

c) Collect cheques for the bank’s customers

d) All of these

Ans: D
107. Who can open bank account?

a) Indian citizen

b) Non-Resident Indian

c) Illiterate

d) All of above.

Ans: D

108. PAN number is required for

a) Deposits less than Rs.50,000/-

b) Deposits in excess of Rs.1 lac

c) Deposits Rs.50,000/- & above

d) All transactions

Ans: C

109. TDS means

a) Time Deposit Scheme

b) Total Deposit Scheme

c) Tax Deducted at Source

d) None of above.

Ans: C

110. Maximum amount of Cheque

a) Rs.100 crore

b) No limit

c) Rs.1 crore

d) None of above.
Ans: B

111. Bank draft is issued by

a) Private Sector Banks

b) Regional Rural Banks

c) Public Sector Banks

d) All of above.

Ans: D

Loans and Advances

112. One of the differences between overdraft and cash credit is:

(A) Overdraft is always subject to limit whereas cash credit has no limit.

(B) Overdraft is allowed on any kinds of account whereas cash credit is allowed on current account.

(C) Overdraft is allowed on current account whereas cash credit is a separate account.

Ans: C

113. Lien, one of the modes of charging securities, is the right to retain:

(A) Goods and securities until debt is satisfied

(B) Property mortgaged to the bank.

(C) Both property and goods and securities.

Ans: A

114. When a manufacturer wants to borrow money on the security of raw materials or stock-in
process which are in the process of being manufactured into finished products, bank prefers:

(A) Lien of goods.

(B) Hypothecation of goods.

(C) Pledge of goods.

Ans: B

115. Contract Act-1872 has defined pledge as:

(A) A charge against property for an amount of debt where neither ownership nor possession is
passed on to the creditor.

(B) The right to retain a particular commodity in respect of which the debt arose.

(C) A bailment of goods as security for payment of debt or performance of a promise.

Ans: C

116. Mortgage, a mode of charging security, has been defined in:

(A) Transfer of Property Act-1882.

(B) Sale of Goods Act-1876.

(C) N.I. Act-1876.

Ans: A

117. Will you give loan against a Fixed Deposit Receipt jointly held by two persons with the
instructions: payable to either or survivor?

(A) No, because either or survivor clause bars the bank

(B) No, because FDR is in the names of two persons

(C) No, unless necessary documents are signed by both the persons names of whom are appearing
on the FDR.

Ans: C

118. Goods as security under Hypothecation can:

(A) Be brought under pledge by a bank, if desired.

(B) Can never be brought under pledge since it is violation of contract.

(C) Can be brought under pledge if customers consents.

Ans: A

119. While giving loans against security of shares, one of the points a bank ensures that:

(A) The shares are partly paid because these are safe

(B) The shares are fully paid but not quoted in stock exchange.

(C) The shares are fully paid and quoted in stock exchange.

Ans: C

120. Can a minor be sanctioned an overdraft secured by guarantee:

(A) Yes, guarantee is the security.

(B) No, guarantee is not enforceable as minor is the borrower

(C) Yes, minor can borrow himself and bind himself with the bank.

Ans: B

121. Can Public Limited Company give guarantee?

(A) Yes, if its Memorandum permits

(B) Yes, if Registrar of Joint Stock Companies gives permission in writing

(C) Yes, Controller of Capital Issues permits.

Ans: A

122. Letter of Continuity is taken in case of:

(A) Cash Credit or Overdraft.

(B) Pledge or Hypothecation.

(C) Term Loan.

Ans: A

123.In a contract of guarantee, there are three parties. They are:

(A) Promisor / Promisee / guarantee.

(B) Promisee / guarantee / contractor.

(C) Debtor / creditor/ Guarantor.

Ans: A

124. In case of Hypothecation, the banker customer relationship is:

(A) Baylor -Bailee

(B) Debtor -Creditor

(C) Pledgor -Pledgee

Ans: B

125. In case of contract of mortgage-

(A) Ownership passes to the mortgagee

(B) Ownership is not passed to the mortgagee but legal or equitable interest is transferred

(C) None of the above.

Ans: B

126. How does base for provision calculated in respect of Classified Loan?

A) Based on total outstanding

B) Total outstanding minus interest suspense

C) Total outstanding minus interest suspense minus eligible security

D) Total outstanding minus eligible security

Ans: C
127. What is the percentage of provision kept for Doubtful Loans and Advances?

A) 5% of base for provision.

B) 20% of base for provision.

C) 50% of base for provision.

D) 100% of base for provision

Ans: C

128. When shall a continuous loan be past due/overdue?

A) After the date of expiry

B) After 3 month of expiry date

C) After 6 month of expiry date

D) After last payment date.

Ans: A

129.Principles of sound lending is followed by the bankers:

(A) To minimize risk.

(B) To maximise profit.

(C) None of the above.

Ans: B

130. In a guarantee, the liability of the surety is:

(A) Absolute

(B) Primary

(C) Conditional.

Ans: C
Hi-Tech Banking and E Payment System
131. banking refers to the use of technology and communication systems in delivering banking
products and services to customers.

A. Hi-tech banking

B. Virtual banking

C. PC

D. Home banking.

Ans: A

132.Which of the following is known as plastic money

A. Credit card

B. Debit card

C. None of these

D. Both of these

Ans: D

133. Debit card means

A. Pay later

B. Pay now

C. Both of these

D. None of these

Ans: B

134. Which is the fastest possible money transfer system through banking channel

A. RTGS

B. EFT
C. ATM

D. None of these

Ans: A

135. Paperless banking is known as

A. RTGS

B. Internet banking

C. EFT

D. mobile banking

Ans: C

136. Those banking services based on the voice processing facility available with the bank
computers

A. Internet banking

B. Home banking

C. E banking

D. Tele banking

Ans: D

137.Cash which is stored electronically on a microchip is called

A. E purse

B. Debit card

C. AYM

D. Credit card

Ans: A
138. RTGS stands for _____

A. Real time goods settlement

B. Real time gross settlement

C. Real time gross standardize

D. none

Ans: B

139. There is ____ in terms of transaction with E-banking

A. privacy

B. risk

C. freedom

D. none

Ans: B

140. There is no competition between traditional banking and e- banking

A. Ture

B. False

C. all

D. none

Ans: B

141. There is risk in E-banking

A. True

B. False

C. all

D. none
Ans: B

142. E-banking will lead to new type of job opportunity

A. True

B. False

C. all

D. none

Ans: A

143. IFSC stands for ………

A. Indian Financial System Code

B. International Financial System Code

C. Indian Fund Service Code

D. None of these

Ans: B

144. SWIFT stands for …………

A. Society for Worldwide Internet Financial Telecommunications

B. Solution for Worldwide Interbank Financial Telecommunications

C. Society for Worldwide Internet Financial Telecommunications

D. Solution for Worldwide Interbank Financial Telecommunications

Ans: D

145. Credit Information Bureau India Limited is India’s first credit rating agency which was
incorporated in the year……

A. 1988
B. 2000

C. 2005

D. 1995

Ans: B

146. MICR refers to……………

A. Magnetic Ink Character Recognition

B. Magnetic Information Character Recognition

C. Magnetic Ink Code Recognition

D. Magnetic Icon Character recognition

Ans: A

147. ----- are norms for banks aimed at mitigating the risk and strengthening the capital structure
of the banks of member countries.

A. IRAC rules

B. BASEL norms

C. Capital Adequacy Norms

D. None of these

Ans: B

148. RuPay Card has been launched by ____

A. IDRBT

B. RBI

C. NPCI

D. IBA

Ans: C
Regulatory Environment in Banking
149. The Foreign Exchange Regulation Act was replaced by the ______ in India.

A. Foreign Exchange Currency Act

B. Foreign Exchange Finances Act

C. Foreign Exchange Funds Act

D. Foreign Exchange Management Act

Ans: D

150.Which are the important factor/factors required to maintain a quality relationship with the

customer?

A. Trust and Commitment

B. Trust and Indolence

C. Trust and Suspect

D. Commitment and Denial

Ans: A

151. Which is the Act which provides legal framework for e-Governance in India

A.IT (amendment) Act 2008

B. Indian Penal Code

C.IT Act 2000

D. None of the above

Ans: C

152.Which of the following section of Negotiable Instrument Act, 1881 describes about "Cheque"?

A. Section 4

B. Section 5
C. Section 7

D. Section 6

E. Section 8

Ans: D

153. Which of the following organization is penalized by RBI for violation of the Fair Practices

Code?

A. Bajaj Finance

B. Yes Bank

C. Bank of Baroda

D. Allahabad bank

E. None of these

Ans: A

154. Which of the following is/are true regarding a Cheque?

A.A type of promissory note

B. Payable on conditional

C. Includes the electronic image of a truncated

D. All of the above

E.A type of Bank note

Ans: C

155. Which of the following is not considered as "Negotiable Instrument" as per the Negotiable

Instruments Act, 1881?

A. Promissory note

B. Demand Drafts
C. Bills of exchange

D. Cheques

E. Currency notes

Ans: E

156. The banking regulation act, 1949 provides

A. A frame work of regulation

B. Supervision of Commercial banking activities

C. a and b

D. Supervision of private sector bond

E. None of the above

Ans: C

157. In terms of Section 24 of the Reserve Bank of India Act, 1934, the Reserve Bank of India
may

issue bank notes for the maximum denomination of

A.Rs. 500

B.Rs. 5000

C.Rs. 10000

D.Rs. 1000

E. None of these

Ans: C

158. Which of the following is the sole authority for issue of currency in India?

A. Government of India

B. Reserve Bank of India

C. Controller of Currency

D. All of the above

E. None of the above

Ans: B

159. The minting of Indian comes under the act coin

A. Coinage Act, 1906

B. Reserve Bank of India Act, 1934

C. Banking Regulation Act, 1949

D. Currency Act, 1902

E. None of the above

Ans: A

160. One-rupee notes and coins are issued by

A. Reserve Bank of India

B. State Bank of India on behalf of Government of India

C. Government of India

D. Finance Minister of Central Government

E. None of the above

Ans: C

161. Which of the following instruments of credit control adopted by Reserve Bank of India does

not fall within k general' or 'quantitative? methods of credit control?

A. Stipulation of certain minim.um margin in respect of advance against specified

commodities

B. Open market operations

C. Bank rate

D. Variable reserve requirements

E. None of the above

Ans: A

162. The opening of branches by banks is governed by the provisions of

A. Section 23 of the Banking Regulation Act, 1949

B. Section 24 of Reserve Bank of India Act, 1934

C. Section 131 of the Negotiable Instruments Act, 1881

D. Section 45 of Bank Nationalisation Act, 1969

E. None of the above

Ans: A

163. Which of the following fall under the qualitative methods of credit control adopted by Reserve

Bank of India?

A. Selective Credit Control

B. Credit Authorisation Scheme

C. Moral Suasion

D. All of the above

E. None of the above

Ans: D

164. Bank rate means

A. the rate of interest charged by commercial banks on advances

B. the rate at which commercial banks discount bills of exchange for their clients

C. the rate of interest allowed by banks on the deposits

D. the standard rate at which the Reserve Bank of India is prepared to buy or rediscount

bills of exchange other commercial paper are eligible for purchase under the Reserve

Bank of India Act,1934.

E. None of the above

Ans: D

165. The monetary authority in India, viz Reserve Bank of India, is bound to maintain a reserve

against the notes issued, whatever may be the amount. This system is called as

A. minimum reserve system

B. proportional reserve system

C. maximum fiduciary issue system

D. Simple deposit system

E. None of the above

Ans: B

166. Banks and other financial institutions in India are required to maintain a certain amount of

liquid assets like cash, precious metals and other short term securities as a reserve all the time

in banking world, this is known as

A. CRR

B. Fixed asset

C. SLR

D. PLR

E. None of these

Ans: C
167. The term 'Currency of India' refers to

A. one-rupee notes and coins

B. bank notes issued by Reserve Bank of India viz, Rs. 2, Rs. 5, Rs. 10, Rs. 20, Rs. 50, Rs.

100 and for other higher denominations

C. one-rupee notes and coins and bank notes issued by Reserve Bank of India

D. one-rupee notes only

E. None of the above

Ans: A

168. The rate of interest banks charge its main/major and prime customers is popularly called as

A. Risk Premium

B. Prime Lending Rate

C. Repo Rate

D. Reverse Repo Rate

E. Cost of fund

Ans: B

Trends and Challenges in Banks

169. A trader wants to make an electronic transfer of funds through NEFT. He does

not have a bank account. What is the maximum amount he can transfer?

(a) 65,000

(b) 50,000

(c) 49,000

(d) 45,000

Ans: B
170. The financial instrument issued by the bank for remitting money and which

cannot be dishonored is a:

(a) Bank draft

(b) Bank overdraft

(c) Cheque

(d) Debit card

Ans: A

171. What are the operating hours of NEFT?

(a) 24x7x365 basis.

(b) 8x7x365 basis.

(c) 12x6x365 basis.

(d) 24x5x365 basis.

Ans: A

172. National Electronic Funds Transfer is a nation-wide centralized payment system owned and
operated by the Reserve Bank of India (RBI) is known as

(a) NEFT

(b) RTGS

(c) NFT

(d) NIFT

Ans: A

173. The minimum amount to be remitted through RTGS is …

(a)₹ 50,000

(b) ₹ 2,50,000
(c) ₹ 1,00,000

(d) ₹ 2,00,000

Ans: D

174. RTGS is available 24x7x365 with effect from….

(a) December 10, 2020.

(b) December 11, 2020.

(c) December 14, 2020.

(d) December 15, 2020.

Ans: C

175.A fund transfer method through which money is sent in ‘real time’ basis without any delays
is known as….

(a) NEFT

(b) RTGS

(c) NFT

(d) NIFT

Ans: B

176. Which of the following is not a features RTGS?

(a) Real-time online fund transfer

(b) Used for high-value transactions

(c) Safe and secure, with RBI’s backing

(d) Funds credited on a gross and one-on-one basis

(e) Maximum Limit for fund transfer ₹ 5,00,000

Ans: E
177. The most appropriate statement with reference to the electronic fund transfer through NEFT
is:

(a) The fund transfer in NEFT takes place on real time, without any waiting period.

(b) National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment system
owned and operated by the Reserve Bank of India (RBI).

(c) The NEFT transfer takes place from one person to another.

(d) The NEFT transfer takes place on gross settlement basis.

Ans: B

178. IFSC or Indian Financial System Code is an alpha-numeric code that uniquely identifies a
bank-branch participating in the NEFT system. It’s a 11-digit code with the first 4 alpha characters
representing the bank, and the last 6 characters representing ……

(a) The Branch

(b) Head Office

(c) RBI

(d) None of these

Ans: A

179. A payment instrument which is drawn by a bank branch instructing another bank branch to
pay the specified amount to the entity named in the draft is known as…….

(a) Demand Draft

(b) Cheque

(c) Bills Receivables

(d) None of these

Ans: A

180. Which of the following is wrong?

(a) NEFT- National Electronic Fund Transfer

(b) RTGS- Real Time Gross Settlements

(c) ATM- Automated Teller Machine

(d) EFT- Electric Fund Teller

Ans: D

181. Which of the following is not the feature of E-banking?

(a) E-Banking services can be used by those bank customers who have been authorised for this.

(b) Banking transaction are conducted through electronically connected devices.

(c) A bank customer may use either his own computer resource for conducting specified banking
transaction or may use computer resource available at the cyber cafe.

(d) There is face to face contact.

Ans: D

182. The Full Form of CVV is?

(a) Credit Verification Value

(b) Crime Verification Value

(c) Card Verification Value

(d) Country Verification Value

Ans: C

183. Which of the following is Not a type of risk in Banking Sector?

(a)Credit Risk

(b)Operational Risk

(c)Market Risk

(d)Liquidity Risk

(e)Account Risk
Ans: E

184. The risk that arises from the possibility of non-payment of loans by the borrowers is known
as-

(a)Credit Risks

(b)Market Risks

(c)Moral Hazard

(d)Business Risk

(e)Liquidity Risk

Ans: A

185._________ risk arises because of the fact that the financial system is one intricate and
connected network.

(a)Credit

(b)Operational

(c)Market Risk

(d)Systemic

(e)Account

Ans: A

186. The major component of Market risk is-

(a)Interest rate risk

(b)Equity risk

(c)Foreign exchange risk

(d)Commodity risk

(e)All of the above

Ans: E
187. When bank’s image and public standing is in doubt and leads to public’s loss of confidence
in a bank, it is called as-

(a)Reputational risk

(b)Moral Hazard

(c)Operational risk

(d)Market risk

(e)None of the above

Ans: A

Treasury Operations in Banking

188. DGFT stands for

a) Director General of Foreign Trade

b) Director General of Futures Trade

c) Director General of Further Trade

d) Director General of Full Trade

Ans: A

189. Information Technology provides electronic platform through

a) Networked computers

b) Books

c) Channels

d) Branches

Ans: A

190. What is a Reverse REPO rate?

a) It is the rate at which central bank lends money to commercial banks in case of
shortfall

b) It is the rate at which central bank borrows money from commercial banks

c) It is the rate at which commercial banks lend money to traders

d) It is the rate at which commercial banks lend money to borrowers

Ans: B

191. What is latest the Repo rate as per RBI Monetary Policy?

a) 3.5%

b) 3.75%

c) 4%

d) 4.25%

Ans: C

192. RBI imposes SLR on the banks in our country as per Section __________/

a) Section 24 of Banking Regulation Act.

b) Section 42 of Banking Regulation Act

c) Section 24 of RBI Act.

d) Section 42 of RBI Act

Ans: A

193. State Bank of India, Mumbai has opened a Current Account with Citi Bank, New

York (in US $) in order to facilitate its forex transactions through this account. What

is the name of this account?

a) Vostro Account

b) Narrow Account

c) Nostro Account
d) Escrow Account

Ans: C

194. Currency Forward Contracts and Currency Futures Contracts are in our country. In

this, which one of the parameters is unique to Currency Futures Contracts.

a) They are forex hedging instruments.

b) They are derivatives.

c) They are standardized lots.

d) They are subject to KYC requirements.

Ans: A

195. What is the rate of interest payable by RBI on the balances kept by the banks with it,

in the form of CRR?

a) 3%

b) 4%

c) 5%

d) No interest is payable.

Ans: B

196. Treasury assets are

a) Not negotiable or tradable

b) Marketable or tradable

c) Perpetual

d) Marketable but not tradable

Ans: B
197. NIM for banks stands for

a) Net Interest Margin

b) Net Investment Money

c) Net Investment Market

d) Net Interest Month

Ans: A

198. Which of the below is the type of interest on Bonds?

a) Fixed rate

b) Floating (variable) rate

c) Both A & B

d) Only A

Ans: C

199. Treasury bonds and notes pays interest rate is classified as?

a) LIBOR rate monthly

b) Coupon interest monthly

c) Coupon interest semiannually

d) Coupon interest annually

Ans: C

200. Barbell strategy refers to

a) Combination of back-end and front-end loaded maturity strategy

b) Buying the bond and holding it till the maturity

c) Investing in debentures issued by private sector entities

d) Invest in highest return paying bonds

Ans: A

201. What is ‘rotation of dealers’ from compliance perspective?

a) Laying off the dealers

b) Giving notices to the dealers

c) Policy of not keeping a dealer on the same desk for long

d) Circular movement of a dealer

Ans: C

202. What is risk-based audit?

a) Identify income seepage

b) Grading the risks as low, medium and high and quantify the impact

c) Imposing penalty on the bank

d) Audit done by RBI

Ans: B

203. Cost Center is

a) A department that does not directly add to profits of a bank but still incurs costs to

the bank.

b) A department that does not directly add to costs of a bank but still incurs profits to

the bank

c) Manage People of the Bank

d) Manage Logistics of the Bank

Ans: A
204. In floating exchange rate system

a) The exchange rate is determined by demand and supply of currency vs other

currencies in foreign exchange market

b) The central government or central bank determines the exchange rate of a

currency

c) Government or Central bank intervenes to maintain bank rate within a narrow

band

d) Government or Central bank intervenes to maintain the repo rate within a narrow

band.

Ans: A

205. In the study of Risk Analysis, why the concept of Stop loss limit is kept for a Dealer

in dealing room?

a) To limit making profit in the trading.

b) To make the dealer to come to a break-even position.

c) To limit the dealer from incurring losses

d) To curb the dealer from taking any trading position.

Ans: C

206. The three money market products of RBI, Reverse Repo, Repo and MSF put together

is called as __________.

a) Liquidity Allotment Facility

b) Liquidity Apportionment Facility

c) Liquidity Allocation Facility

d) Liquidity Adjustment Facility

Ans: D
207. Integrated treasury refers to integration of all of the followings except?

a) Money Market

b) Securities Market

c) Foreign Exchange Operations

d) Credit Appraisal

Ans: D