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General Awareness - Basic Banking & Financial Issues - Useful For Bank exams

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BANKING: PRODUCTS, SERVICES & PRACTICES



1. Which of the following terms appropriately explains the role of banks in an economy?

(a) Financial conglomerate

(b) Holding companies

(c) Financial intermediaries

(d) Indigenous banking

Ans : (c)

2. In the financial sector there are many companies who are providing banking-like activities though they are not recognized as banks. How is this particular type of activity known?

(a) Informal banking

(b) Indigenous banking

(c) Shadow banking

(d) Development banking

Ans : (c)

3. What would a lender examine to judge whether a business can be given a funding facility?

(a) The financial statements

(b) The credit history

(c) The business risk

(d) All of the above

Ans : (d)

4. You might have heard of ‘a bank run’. What does it mean?

(a) Identifies those banks which are performing very well

(b) Banks that are promoting marathon sports events

(c) When people rush to withdraw funds from their bank accounts

(d) When banks do door to door publicity campaigns

Ans : (c)

5. Which of the following is a stipulation under the Basel III norms?

(a) The total minimum capital adequacy ratio to be 9%

(b) Banks to maintain an overall minimum capital adequacy ratio of 11·5%

(c) Banks to reach the minimum capital adequacy ratio of 11·5% by 31st March 2018

(d) Banks to maintain a capital adequacy ratio of 10% by 2013

Ans : (c)

6. Basel Committee on Banking Supervision is associated with which of the following?

(a) Banking Regulation Committee

(b) Bretton Woods Institution

(c) Bank for International Supervision

(d) Federal Reserve

Ans : (c)

7. What is known as the Open Market Operations of RBI?

(a) Buying and selling of stocks

(b) Auctioning of foreign exchange

(c) Trading in securities

(d) Transactions in gold

Ans : (c)

8. Fiat money is best described by which of the following?

(a) Money which is accepted internationally

(b) Money accepted temporarily in lieu of gold

(c) Decreed as money by the government

(d) Money which is issued by keeping gold and silver as deposit

Ans : (c)

9. When did the rupee become a freely convertible currency in the current account of India?

(a) 1994 (b) 1999

(c) 2000 (d) 2001

Ans : (a)

10. ISO 4217 is the international standard describing 3 letter code for what?

(a) Bank code (b) Currency codes

(c) Forex code (d) None of these

Ans : (b)

11. Cash balances held in the currency chests are the property of which of the following?

(a) Respective banks where the currency chest is located

(b) Reserve Bank of India

(c) The government

(d) The individual bank branch

Ans : (b)

12. Which of the following statements is true about RBI’s recent branch licensing policy for banks?

(a) Banks are permitted to open branches freely in Tier 2 to Tier 6 centers

(b) Banks can open branches in metropolitan centers without approval from RBI

(c) Loss-making semi-urban branches to be closed

(d) Merging adjacent branches in urban centers

Ans : (a)

13. What was achieved by passing the Banking Companies Act, 1969?

(a) Starting of regional rural banks

(b) Nationalization of 14 commercial banks

(c) Introduction of Lead Bank scheme

(d) Introduced the concept of social control of banks

Ans : (b)

14. What is the maximum denomination of currency notes that can be printed in India?

(a) ` 10,000 (b) ` 5,000

(c) ` 1,000 (d) No limit

Ans : (a)

15. Which of the following schemes/facilities available in the financial markets is not meant for investment purposes?

(a) National savings certificates

(b) Infrastructure bonds

(c) Mutual funds

(d) Letter of credit

Ans : (d)

16. Small savings schemes like national savings certificates, public provident funds, monthly income schemes are popular among salaried people. Which financial institutions manage

these schemes?

(a) Public sector banks

(b) Commercial banks

(c) Post offices

(d) Cooperative banks

Ans : (c)

17. Which of the following do you think is the accepted practice?

(a) Banks offer higher interest rates to senior citizens on their fixed deposits as compared to others

(b) Banks charge lesser interest from senior citizens on their personal loans

(c) Senior citizens can open bank accounts without the need to follow KYC norms

(d) Senior citizens are not permitted to use mobile banking

Ans : (a)

18. A bank customer could not get his grievance resolved by his bank even after referring his complaint to the designated official. Whom should he approach next?

(a) consumer protection court

(b) RBI

(c) Banking ombudsman

(d) Finance ministry

Ans : (c)

19. The Banking Ombudsman Scheme is applicable to the working of which of the following?

(a) All scheduled commercial banks

(b) All scheduled commercial banks excluding regional rural banks

(c) All scheduled commercial banks excluding private sector banks

(d) All public sector banks

Ans : (a)

20. What is common between Equity Linked Savings Schemes, National Savings Certificates, and Public Provident Funds?

(a) Financial schemes handled by post offices

(b) Investments in these schemes are permitted up to a specified limit

(c) All are mutual fund schemes

(d) These are tax saving schemes

Ans : (d)

21. A savings account is considered to be an inoperative account if there is no operation in the account for a continuous period. What is this time period?

(a) 2 years (b) 1 year

(c) 5 years (d) 3 years

Ans : (a)

22. Which of the following is a punishable offense for a bank account holder?

(a) For bouncing of cheques issued by him

(b) For providing the wrong introduction for opening an account

(c) For losing his passbook

(d) For asking for stop payment of cheques regularly

Ans : (a)

23. In case a public provident fund account does not have a nomination, what is the maximum amount that the legal heirs may get without a succession certificate?

(a) ` 50,000 (b) ` 75,000

(c) ` 1,00,000 (d) ` 2,00,000

Ans : (c)

24. A very popular savings scheme of the post office has been withdrawn as per the current provisions. Which is that scheme?

(a) National savings certificates

(b) Kisan Vikas Patra

(c) Recurring deposit scheme

(d) Monthly income scheme

Ans : (b)

25. The rate of interest banks charge to their customers on credit facilities is linked to which benchmark

rate?

(a) Risk premium rate

(b) Base rate lending

(c) Benchmark prime lending rate

(d) Reverse repo rate

Ans : (b)

26. When a vehicle is financed by a bank what kind of charge does the bank have over the primary

security?

(a) Pledge (b) Hypothecation

(c) Assignment (d) Lien

Ans : (b)

27. SIDBI has a scheme for providing seed capital to business enterprises. What is meant by the seed

capital?

(a) Equity required by a commercial organization

(b) Initial funds required by an enterprise with high potential for growth

(c) The funds invested to run an organization

(d) The money provided to start an agricultural unit

Ans : (b)

28. Where substantial funds are required to be mobilized, crowdfunding as a strategy is often

adopted. In which of the following do you think crowdfunding would be appropriate?

(a) For political parties

(b) For charity issues

(c) For rehabilitating weak banks

(d) For pumping money into the stock exchange

Ans : (b)

29. Which of the following organizations maintain the individual borrower’s credit history in

India?

(a) RBI (b) CRISIL

c) CIBIL (d) CARE

Ans : (c)

30. Banks permit the grant of credit facilities against book debts to companies. What are these book

debts?

(a) All debts due to the banks by a business enterprise

(b) All debts due by a business to suppliers/ traders other than banks

(c) Debts owing to a business arising out of the sale of goods and services to their customers on credit

(d) Amounts due on the purchase of books

Ans : (c)

31. Which of the following is not a document of title to goods as per law and practice?

(a) Bill of lading (b) Airway bill

(c) Warehouse receipt (d) Bill of exchange

Ans : (d)

32. Public and private sector banks that have a shortfall in lending to the priority sector are required to contribute allocated amounts to a designated fund to meet their obligations. Which is this special account?

(a) Account with SIDBI

(b) The Rural Infrastructure Development Fund with NABARD

(c) Fund with RBI

(d) NABARD

Ans : (b)

33. In the case of foreign banks which do not meet the target of 32% lending to the priority sector, the shortfall has to be deposited with which authority?

(a) SIDBI

(b) RBI

(c) NABARD

(d) Exempted from depositing the shortfall

Ans : (a)

34. Which is the contract/agreement under which an issuing bank at the request of the importer undertakes to make payment to the exporter against certain specified documents?

(a) Bill of exchange (b) Bill of lading

(c) Bill of entry (d) Letter of credit

Ans : (d)

35. Banks have the benefit of using a substantial amount of money when cheques are sent in clearing as there is usually a 2-3 days gap between the debit of the account holder’s account and credit to the account of the payee/beneficiary of the cheque. What is this money known as?

(a) Float money

(b) Suspense money

(c) Unaccounted funds

(d) All of the above

Ans : (a)

36. Which of the following is true?

(a) Asset classification is for judging the quality of loan accounts

(b) Non-performing assets include standard assets

(c) Provisioning is uniform for all loan accounts

(d) All legal cases of banks are for the loss of assets

Ans : (a)

37. In the case of personal loans from banks the interest rate applicable is which of the following?

(a) The base rate of lending

(b) Lower than the base rate

(c) Higher than the base rate

(d) None of the above

Ans : (c)

38. Which of the following ways of charging interest on loans is most beneficial to the borrower?

(a) Daily reducing balance

(b) The balance being reduced monthly

(c) Quarterly reducing balance

(d) Yearly reducing balance

Ans : (a)

39. What is the target for priority sector lending that foreign banks having more than 20 branches

in India are required to fulfill?

(a) 32% (b) 40%

(c) 36% (d) 38%

Ans : (b)

40. Why do banks prefer customers to use ATMs to withdraw cash rather than coming to branches for this purpose?

(a) Staff problems are reduced

(b) Customers demand currency according to their choice from branches

(c) Cost of ATM operations to the bank is much less

(d) All of the above

Ans : (c)

41. Which of the following denote demand deposits of a bank?

(a) Deposits in savings accounts

(b) Deposits in savings and current accounts

(c) Balances in recurring deposit accounts

(d) Balances in current and recurring deposit accounts

Ans : (b)

42. Banks often look to have a sizable portion of CASA deposits in their total deposit portfolio. In what does it help?

(a) The cost of funds to the bank is low

(b) It fulfills the mandated requirement

(c) There is no need to renew the deposits

(d) Less manpower is required to maintain these deposits

Ans : (a)

43. Non-performing assets of public sector banks during the last quarter of FY 2012-13 have shown an increase. What does it indicate?

(a) The assets of the banks are not performing as per their expectations

(b) The loans and advances of banks are not performing as per standard norms

(c) More loans and advance accounts of banks are becoming irregular in payment

(d) None of these

Ans : (c)

44. Compliance with Employees’ State Insurance Corporation rules is necessary for companies and firms. Why?

(a) It is a social security measure mandatory for employees whose salary does not exceed ` 15,000

(b) The employees are insured by their respective employers

(c) It is an employees’ association that protects its members compulsorily

(d) The corporation helps the companies in arranging for insurance policies

Ans : (a)

45. In the case of a contract of guarantee :

(a) The liability of the guarantor is secondary only when the principal debtor does not pay

(b) The liability of the guarantor does not arise as the principal debtor is solely responsible

(c) The guarantor’s liability is coextensive with that of the principal debtor and is liable to pay whether or not the principal debtor pays

(d) The guarantor is liable to pay only half the amount as he shares the liability with the principal debtor.

Ans : (c)

46. Payment of a crossed cheque can be made—

(a) Only in cash

(b) Through clearing account of a bank

(c) Both in cash and through clearing account of a bank

(d) Through none of the above

Ans : (b)

47. A demand draft issued by one bank branch on another branch is legal—

(a) Cheque (b) Promissory note

(c) Delivery order (d) Supply bill

Ans : (b)

48. Currently banks claim that they have achieved 100% CBS. What are they referring to?

(a) It means all their branches are technology-driven with core banking solutions

(b) It suggests complete banking services

(c) It is an indication of customized banking services

(d) None of the above

Ans : (a)

49. An asset reconstruction company looks for business from banks. What do you understand from this statement?

(a) These companies assist banks in getting potential clients for big-ticket loans

(b) Banks identify potential borrowers for infrastructure lending by these companies

(c) Banks sell their bad debts to these companies

(d) Asset reconstruction companies buy bad debts at a discount from banks

Ans : (d)

50. Banks fix separate cash limits and overall spending limits for each credit card. What is the disadvantage of withdrawing cash on credit cards?

(a) Cash withdrawn means the credit balance is reduced

(b) An amount is charged by the bank as cash withdrawal fees

(c) Cash withdrawal fees together with service tax are charged to the cardholder

(d) Less time is given for payment as compared to other debits for purchases

Ans : (c)

51. Many Indian corporates are expecting to launch their new banking company. How is this possible?

(a) By tying up with foreign banks as joint ventures

(b) RBI has announced new norms for issuing licenses for opening banks

(c) Applications have been sent to the Finance Ministry for approval

(d) Weak banks may be taken over

Ans : (b)

52. Which is the last private sector bank to have been allowed to open in the country?

(a) YES Bank (b) AXIS Bank

(c) ING VYSYA Bank (d) IDBI Bank

Ans : (a)

53. Which of the following is a public sector bank?

(a) HDFC bank (b) IDBI bank

(c) HSBC (d) SIDBI

Ans : (b)

54. Banks earn income from fee-based activities. Which of the following qualify as a fee-based business?

(a) Issue of demand drafts

(b) Doing foreign exchange business

(c) Providing Demat accounts

(d) Selling insurance products

Ans : (d)

55. Banks are not comfortable in lending to the infrastructure sector. What are the reasons for this?

(a) Banks find it difficult to fund infrastructure projects of 15 years and more

(b) Infrastructure projects require large scale funding

(c) Infrastructure financing becomes an asset-liability problem for banks

(d) All of the above

Ans : (d)

56. Which of the following is an example of a cash-less purchase?

(a) Debit card (b) Credit card

(c) POS payment (d) All of these

Ans : (d)

57. Which of the following identifies itself as a foreign exchange transaction?

(a) Payment through debit cards

(b) Purchase of foreign currency

(c) Negotiating inland bills of exchange

(d) All of the above

Ans : (b)

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