Financial Institutions and Markets

1 of 2 sets

Chapter: Central Banks - RBI

1. The Reserve Bank of India was established on

A. April 1, 1935
B. July 12, 1982
C. May 26, 2006
D. September 30, 2005
Answer:A

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2. On which commission’s recommendations; Reserve Bank of India was
established?
. c
A. Chamberlain Commission
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B. Hilton Young Commission
a
C. Keynes Commission
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D. None of the above
c
Answer:B
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3. Which among the following is incorrect?
A. RBI is the Bank of Issue
B. RBI acts as Banker to the Government
C. RBI is Banker's Bank
D. RBI does not regulate the flow of credit
Answer:D

4. Which of the following is true about the restrictions on RBI?

(i) It is not to compete with the commercial banks.
(ii) It is not allowed to pay interest on its deposits.
(iii) It cannot engage directly or indirectly in trade.
(iv) It cannot acquire or advice loans against immovable property.
(v) It is prohibited from purchasing its own shares or the shares of any other bank
or any company or granting loans on such security.
A. only (i),(ii),(iii), and (iv
 B. only (v
C. all the above
D. none of the above
Answer:C

5. Which of the following is not the work of RBI?

A. Bank of the banks
B. Credit controller
C. Custodian of foreign currency
D. Allocating funds directly to the farmers for agricultural development
Answer:D

6. Which of the following words is not used in Monetary Policy?

A. Cash reserve ratio
B. Repo Rate
C. Bank rate
D. Blue chip
Answer:D

7. For issuing / printing currency notes, the RBI has adopted a system –
A. Minimum Reserve System
B. Fixed fiduciary system.
C. Maximum limit system
D. Proportional reserve system.
Answer:A

8. Central Bank is a
A. Commercial Bank
B. Exchange bank
C. Apex bank.
D. Scheduled bank.
Answer:C

9. Central Bank is an institution which is

A. Privately owned

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 B. State owned
C. Internationally owned
D. Jointly owned by state and private.
Answer:B

10. The methods of credit control used by RBI includes

(i) Open market operation
(ii) Changes in CRR and SLR
(iii) Selective credit control
(iv) Changes in SLR
A. (i), (ii) and (iii
B. (ii), (iii) and (iv
C. (i), (iii) and (iv
D. (i), (ii), (iii) and (iv
Answer:D

11. The full form of EMI used in the banking sector is

A. Easy Monthly Installment
B. Equal Monthly Investment
C. Equated Monthly Installment
D. Equated Mortgage Investment.
Answer:C

12. Bank rate is decided by

A. Reserve Bank of India
B. Govt. of India
C. State Bank of India
D. Securities and Exchange Board of India (SEBI
Answer:A

13. The reserves held by the Commercial Banks over and above the statutory
minimum with the RBI are called
A. Cash reserves
B. Deposit reserves
C. Excess reserves
D. Momentary reserves.

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Answer:C

14. Banking in India is controlled by

A. Union Finance Commission
B. Union Ministry of Finance
C. Union Ministry of Commerce
D. Reserve Bank of India
Answer:D

15. Which of the following is not the function of Reserve Bank of India?
A. Acting as banker to the Government.
B. Keeping foreign Exchange Reserve.
C. Regulating credit in the country.
D. Issuing of one rupee notes and coins.
Answer:D

16. The objectives of monetary policy is / are

A. Price Stability
B. Economic growth
C. Increase import of luxury goods
D. Both (a) and (b
Answer:D

17. Bank rate is defined as

A. Rate of interest charged by commercial banks from borrowers
B. Rate of interest allowed by commercial banks on demand deposits.
C. Rate of interest allowed by commercial banks on time deposits.
D. Rate which RBI purchases or rediscount bills of exchange of commercial banks.
Answer:D

18. The Reserve Bank of India was nationalized in

A. 1st January 1949.
B. 1st April, 1935
C. 1st May, 1947
D. 1st June, 1949

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Answer:A

19. The Governor of RBI is appointed by

A. Board of Directors
B. Central Government
C. Finance Minister
D. None of the above
Answer:B

20. The chairman of the Central Board of RBI is

A. Governor
B. Deputy Governor.
C. Finance Minister, Govt. of India
D. Prime Minister
Answer:A

21. Which of the following is true about the functions performed by RBI -
(i) It is the Bank of Issue
(ii) It acts as banker to the Government
(iii) It is the banker of other banks
(iv) It regulates the flow of credit
A. Both (i) and (ii
B. Both (iii) and (iv
C. All the Above
D. None of the above
Answer:C

22. Which of the following is true about the objectives of RBI trying to achieve-
(i) Price Stability
(ii) Reduce deficit
(iii) Encourage export
(iv) Growth
A. Both (i) and (ii
B. Both (iii) and (iv
C. All the Above
D. None of the above
Answer:C

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23. The custodian of India’s foreign exchange reserve is
A. State Bank of India (SBI
B. Reserve Bank of India (RBI
C. International Monetary Fund (IMF
D. World Bank
Answer:B

24. Which of the following is true about the functions of RBI-

A. Export finance
B. Agriculture finance
C. Collecting data and publication
D. Exchange management and control
Answer:C

25. Which of the following is true that RBI as a banker to the government
(i) Maintaining and operating deposit accounts of Central and State Governments.
(ii) Receipt and collection of payments to the Central and State Governments.
(iii) Making payments on behalf of Central and state Governments.
(iv) Providing ways and means advances to the Central and State Governments.
A. Both (i) and (ii
B. Both (iii) and (iv
C. All the Above
D. None of the above
Answer:C

26. Which of the following coins is not issued by the RBI ?

A. Re. 1
B. Rs. 2
C. Rs. 5
D. Rs. 10
Answer:A

27. RBI has withdrawn the circulation of coins in the denomination of 1 paise, 2
paise, 3 paise, 5 paise, 10 paise, 20 paise and 25 paise in which year ?
A. 2010
B. 2011

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 C. 2012
D. 2013
Answer:B

28. Which of the following is/ are the Quantitative Instrument of RBI ?
A. CRR
B. SLR
C. All of the above
D. None of above
Answer:C

29. Which among the following would not help RBI to control the inflation in the
country ?
A. Increase in Reserve Ratio Requirements
B. Increase in Bank Rate
C. Purchase of securities in open market
D. Increase in Repo Rate
Answer:D

30. What would be the impact on cash reserves of the commercial banks if RBI
conducts the sale of securities?
A. Decrease
B. Increase
C. Either increase or decrease
D. Remains contant
Answer:A

31. Which of the following works as the agent of RBI while it has no own offices ?
A. IMF
B. SBI
C. GOI
D. Ministry of Finance
Answer:B

32. Which of the followong Governors of RBI also served as the Finance Minister
of India ?

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 A. Pranav Mukherjee
B. Amitabha Ghosh
C. Sir Benegal Rama Rao
D. Dr. Manmohan Singh
Answer:D

33. Which of the following statements is/are not true ?

A. RBI is the Bank of Issue.
B. RBI acts as the Banker of the Government.
C. RBI is known as the Banker's Bank.
D. RBI does not regulate the credit flow.
Answer:D

34. Which is not a function of RBI ?

A. Holding cash reserves of all commercial banks and make available financial accommodation to
them.
B. Assuming responsibility of all banking operations of the government.
C. Assuming the responsibility of the statistical analysis of data related to macro economy of India
.
D. Assuming the responsibility to meet directly or indirectly all reasonable demands for the
accommodation.
Answer:C

35. To control inflation and tackle the problem of exchange liquidity due to foreign
exchange inflows, the RBI
A. Sells government securities.
B. Purchase securities
C. Decrease bank rate.
D. Raise interest rate.
Answer:A

36. Ways and Means advanced by RBI refers to

A. Meeting temporary mismatches between receipts and expenditure.
B. Providing short term loans for consumption expenditure.
C. Buying goods from abro

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Answer:A

37. The commercial banks were required to keep some percentages of their time
deposits and their demand deposits with the RBI in the form of reserves is known
as
A. Statutory Liquidity ratio
B. Cash reserve ratio
C. Moral suasion
D. Open market operation
Answer:B

38. Decreasing percentage of statutory liquidity ratio by RBI

A. Increase the volume credits at the hands of commercial banks.
B. Reduce inflation.
C. Decrease the volume credit at the hands of commercial banks.
D. Raise the interest rate charged by the commercial banks.
Answer:A

39. If the RBI wants to control the speculation on the price of essential
commodities, adopted a measure known as
A. Open market Operations.
B. Credit monitoring Arrangement
C. Selective credit control
D. Moral suasion.
Answer:C

40. The RBI’s function of Banker to Government implies

A. Issue of currency
B. Buys and sells government securities
C. Manages public debt by issuing government loans
D. Sells treasury bills on behalf of government
Answer:C

Chapter: Money and Commercial Banking

41. Which of the following is a commercial bank?

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 A. State Bank of India
B. Unit Trust of India (UTI
C. IDBI
D. NABARD
Answer:A

42. Which one of the following is near money?

A. Treasury Bills
B. Bills of Exchange
C. Bonds and Debentures
D. All of the above
Answer:D

43. In July 1969, 14 major Indian scheduled banks were nationalised and 6 more
banks were nationalised in
A. April 1980
B. May 1980
C. April 1981
D. May 1981
Answer:A

44. The liabilities of a bank are

A. Advance and loans
B. Time deposits and shares
C. Cash with reserve ratio
D. Bonds and debentures of share holders
Answer:B

45. The recent conversion of Financial Institutions into Commercial Banks or Non-
Banking Finance Companies (NBFCs) under the regulatory aspect of RBI was
suggested by
A. Narasimham Committee
B. Ministry of Company Affairs
C. Ministry of Finance
D. None of the above
Answer:A

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46. Which property the paper money does not possess
A. Acceptability
B. Divisibility
C. Duality
D. Portability
Answer:C

47. Rupee is a coin

A. Full Value
B. Token money
C. Credit money
D. Convertible
Answer:B

48. Which one of the following is not included in the function of money
A. Make demand and supply
B. Store of value
C. Medium of exchange
D. Measure of value
Answer:A

49. Convertible money means

A. It can buy means
B. Government can give gold against it
C. Illegal money
D. Low value of money
Answer:B

50. Commercial banks create

A. Credit money
B. Token money
C. Legal money
D. Do not create money
Answer:A

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51. The most important features of money is
A. General acceptability
B. Convertibility into gold
C. Store of value
D. Medium of exchange
Answer:A

52. Which movement encourage the formation of commercial banks

A. Swadeshi movement
B. Quit India movement
C. Non-cooperation movement
D. Civil disobedience movement
Answer:A

53. In which year was the Banking Regulation Act passed?

A. 1949
B. 1955
C. 1959
D. 1969
Answer:A

54. What is the most widely used tool of monetary policy?

A. Issuing of notes
B. Open market operation
C. Discount rate
D. None of the above
Answer:C

55. Banking sector comes under which of the following sectors?

A. Manufacturing sectors
B. Industrial sectors
C. Service sectors
D. None of the above
Answer:C

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56. Who is responsible for the supply of coins in India?
A. Reserve bank of India
B. Ministry of finance
C. Ministry of commerce and industry
D. Bankers association of India
Answer:B

57. Difference between total receipt and total expenditure is

A. Capital deficit
B. budget deficit
C. fiscal deficit
D. Revenue deficit
Answer:B

58. The commercial banks in India are governed by

A. Reserve bank of India Act 1934
B. Indian Companies Act 1956
C. Indian Banking Regulation Act 1949
D. Securities and Exchange Board of Indian Act 1993
Answer:C

59. Which of the following limits the power of credit creation by commercial bank
A. Fiscal policy
B. Banking loan
C. Business possession
D. None of the above
Answer:D

60. Deposits which arise from granting of loans are called

A. primary deposits
B. derivative deposits
C. fixed deposits
D. All the above
Answer:B

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61. Which among the following is considered to be the most liquid asset?
A. Gold
B. Money
C. Land
D. Treasury bonds
Answer:B

62. The first financial institution set up in India

A. IDBI
B. ICICI
C. IRBI
D. IFCI
Answer:D

63. In order to control credit and investment , the central bank of a country should
A. Sell securities in the open market and hike the cash reserve ratio
B. Buy securities in the open market
C. Buy securities from the open market and hike the cash reserve ratio
D. Sell securities in the open market
Answer:A

64. Which one of the following is not an instrument of credit control in the banking
system?
A. Open market operation
B. Cash Reserve ratio
C. Tax rate
D. Bonds and debentures
Answer:C

65. The commercial bank do not perform one function out of the following
A. Mobilization of saving
B. Giving loans and advances
C. Issues currency notes
D. Financing priority sectors
Answer:C

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66. Credit creation power of the commercial banks gets limited by which of the
following?
A. Banking habits of the people
B. Cash reserve ratio
C. Credit policy of the Central bank
D. All the above
Answer:D

67. Number of times a unit of money change hands in the course of a year is called
A. Supply of money
B. Purchasing power of money
C. Velocity of money
D. value of money
Answer:C

68. Assets – liability =

A. Profit
B. Working capital
C. Capital
D. Long term liability
Answer:C

69. The assets can be convert into cash within a short period like one year or less
are known as
A. Current asset
B. Fixed asset
C. Tangible asset
D. Investment
Answer:A

70. Debentures is also name as

A. share
B. Bond
C. Equity
D. Reserve

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Answer:B

71. A bills of exchange when drawn requires

A. Nothing
B. Discounting
C. Acceptance
D. Investment
Answer:C

72. The following is not a type of liability

A. Short term
B. Current
C. Fixed
D. Contingent
Answer:A

73. Whichof the following is most liquid measure of money supply in India
A. M1
B. M2
C. M3
D. M4
Answer:A

74. Which of the following money supply is used by RBI?

A. Currency notes
B. Coins
C. Both A &B
D. None of the above
Answer:A

75. The term ‘bank liquidity’ means

A. Its capacity to create credit
B. Its capacity to provide a high rate of interest
C. Its capacity to convert its assets into cash
D. None of the above

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Answer:C

76. Accounting equation is base of

A. Single entry system
B. Dual concept
C. Double entry system
D. Costing measurement system
Answer:C

77. Anything used as money must be

A. Fixed in value
B. Fixed in supply
C. Legal tender
D. Readily acceptable
Answer:D

78. Which of the following can change money supply

A. National Assembly
B. Supreme Court
C. Government
D. State Bank
Answer:D

79. Which of the following increase money supply in the country?

A. Purchase of bonds by State Bank
B. Sale of bonds by State Bank
C. Increase in discount rate
D. Decrease in taxes
Answer:A

Chapter: Non-Banking Financial Institutions

80. ‘One man one vote’ principle in Co-operative Society was recommended by
A. Gorwala Committee
B. Mac Lagan Committee
C. Minto Morley Committee

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 D. Montaque Chelmsford Committee
Answer:B

81. Which of the following organizational structure is followed by cooperatives in

India?.
A. Unitary structure
B. Federal structure
C. Centralized structure
D. Decentralized structure
Answer:B

82. The structure of cooperative banking system in India is federal and pyramid
type of
A. four-tier
B. three-tier
C. two-tier
D. five-tier
Answer:B

83. The Urban Credit Cooperative are also commonly known as

A. Urban Cooperative Banks
B. Cooperative Banks
C. National Banks
D. Non of the above
Answer:A

84. The first District Cooperative Banks was established at ____________ in 1910.
A. Mumbai in Maharastra
B. Ahmedabad in Gujarat
C. Chennai in Tamil Nadu
D. Ajmer in Rajasthan
Answer:D

85. Co-operative movement originated first in

A. Germany
B. England

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 C. France
D. Spain
Answer:B

86. Interest rate of Deposit of cooperative credit societies are fixed by

A. Registrar
B. Government
C. RBI
D. General Body
Answer:A

87. The land mortgage banks grant _______________ to the farmers against the
conveyance of land as security.
A. short term loans
B. medium term loans
C. long term loans
D. short& medium term loans
Answer:C

88. The National Co-operative Development Corporation (NCDC) was established

in
A. march 1960
B. march 1961
C. March 1962
D. March 1963
Answer:D

89. Co-operative banks

A. cannot create credit
B. are of ‘unit banking type’
C. cannotmobilizem\ deposit
D. both (a) and (b
Answer:B

90. The first Development banks in India was

A. IDBI

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 B. ICICI
C. LIC
D. IFCI
Answer:D

91. Development banks provide

A. short-term credit only
B. both short-term and medium-term credits
C. both medium-term and long-term credits
D. long-term credit only
Answer:C

92. What is the apex organisation of Industrial Finance in India?

A. Industrial Finance Corporation of India
B. Industrial Credit and Investment corporation of India
C. Industrial Development Bank of India
D. Life Insurance Corporation of India
Answer:C

93. Which of the following is not an affiliate of the Reserve Bank of India?
A. Deposit Insurance Corporation
B. Agriculture Refinance Corporation
C. Industrial Development Bank of India
D. Unit Trust of India
Answer:D

94. The National Housing Bank was set up in India as wholly-owned subsidiary of
which one of the following?
A. ICICI Bank
B. State Bank of India
C. Reserve Bank of India
D. Life Insurance Corporation of India
Answer:C

95. Which of the following organizations in India is mainly working to meet the
credit needs of all types of agricultural and rural development?

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 A. FCI
B. NABARD
C. IDBI
D. UTI
Answer:B

96. The Industrial Development Banks of India (IDBI) was set up in

A. June 1960
B. July 1964
C. March 1963
D. July 1961
Answer:B

97. The Industrial Reconstruction Corporation of India (IRCI) was set up in

A. 1971
B. 1961
C. 1981
D. 1951
Answer:A

98. The Industrial Reconstruction Corporation of India (IRCI) was converted into
a statutory corporation called the Industrial Reconstruction Bank of India (IRBI)
in
A. March 1982
B. March 1983
C. March 1984
D. March 1985
Answer:D

99. The National Small Industries Corporation (NSIC) was set up by Government
of India in
A. 1954
B. 1955
C. 1956
D. 1957
Answer:B

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100. Changing the role and growth of Financial institutions, in recent years, Select
Financial Institutions viz.,IDBI, ICICI Ltd., EXIM Bank, SIDBI and NABARD
have been brought under the supervisory purview of the
A. Reserve Bank of India (RBI
B. Securities and Exchange Board of India (SEBI
C. Ministry of Finance
D. All of the above
Answer:A

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