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Banking Awareness: Structure of Banking in India Part II

1. Which of the following is NOT an advantage of Unit Banking?
[A]They have fast decision making
[B]The management enjoys more autonomy
[C]They have risk diversification
[D]All of above are advantages of Unit Banking

Answer

They have risk diversification
Due to small size and due to unit structure; the decision making in unit banks is very fast. The management in unit banks enjoy more autonomy and more discretionary powers. However, due to single units, the risk is not distributed or diversified.

2. With reference to various types of Banking, what is “Mixed Banking”?
[A]when banks undertake the activities of commercial and investment banking together
[B]when banks undertake the activities of wholesale and retail banking together
[C]when banks undertake the activities of offline and online banking together
[D]when banks undertake the activities of commercial and cooperative banking together

Answer

when banks undertake the activities of commercial and investment banking together

3. What is the current number of Local Area Banks in India?
[A]Three
[B]Four
[C]Six
[D]Eight

Answer

Four
As of May 2015, these four local area banks are: 1.Coastal Local Area Bank Ltd – Vijayawada (Andhra Pradesh) 2.Capital Local Area Bank Ltd – Phagwara (Punjab) 3.Krishna Bhima Samruddhi Local Area Bank Ltd, Mahbubnagar (Andhra Pradesh) 4.Subhadra Local Area Bank Ltd., Kolhapur (Maharashtra).

4. Which country has largest shadow banking market in the world?
[A]China
[B]UK
[C]Netherland
[D]USA

Answer

USA
Shadow banking refers to the activities of financial institutions that operate outside government-regulated banking systems. United States has the largest shadow banking market followed UK and China.

5. In terms with Banking Sector, Anywhere Banking refers to __:
[A]The customer can deposit/ withdraw cash at any branch other than the branch in which he holds the account
[B]The customer can deposit/ withdraw cash at any bank other than the bank in which he holds the account
[C]The customer can deposit/ withdraw cash in foreign countries
[D]The customer can deposit/ withdraw cash at all points of sale

Answer

The customer can deposit/ withdraw cash at any branch other than the branch in which he holds the account
Anywhere Banking means that the customer can deposit/ withdraw cash at any branch other than the branch in which he holds the account. Anywhere banking frees the customer from geographical boundaries and limitations and gives the flexibility to the customer to use his account across the board.

6. Which among the following types of Banking is most helpful in cross selling?
[A]Virtual Banking
[B]Relationship Banking
[C]Wholesale Banking
[D]Personal Banking

Answer

Relationship Banking
Relationship banking is a banking system in which banks make deliberate efforts to understand customer needs and offer him products accordingly.

7. Which of the following is the first financial institution of India that adopted the Universal Banking System?
[A]ICICI
[B]SBI
[C]IDBI
[D]None of the above

Answer

ICICI
Universal banking is a one-stop shop of financial products and services. The Industrial Credit and Investment Corporation of India Limited (ICICI) is the first financial institution of India that adopted the Universal banking system. It was set up in January 1955 as a joint stock company with support from the Government of India, the World Bank, the Commonwealth Development Finance Corporation, and other foreign institutions.

8. In which of the following types of banking, there is a direct execution of transactions between a bank and its consumers?
[A]Retail banking
[B]Universal Banking
[C]Virtual Banking
[D]Unit Banking

Answer

Retail banking
When there is a direct execution of transactions between a bank and its consumers, rather than with corporations or other banks, then this type of banking system is known as Retail banking.

9. A commercial bank will launch a medium term note (MTN) programme to ___:
[A]Provide loans
[B]Raise Funds
[C]Sell Equity
[D]Purchase shares

Answer

Raise Funds
Medium term note (MTN) is a debt bond which usually matures in 5 to 10 years. Obviously it is used for raising funds in domestic or international markets. Recently Union Bank of India has hit the global debt market to raise around USD 500 million through bond issuance.

10. Which Indian bank has opened its first branch in China in May, 2015?
[A]Axis Bank
[B]HDFC Bank
[C]ICICI Bank
[D]Corporation Bank

Answer

ICICI Bank
Country’s top private sector bank ICICI bank has opened its first branch in China. It was inaugurated by Prime Minister Narendra Modi. The bank will be based in Shanghai. ICICI Bank with presence in 17 countries earlier had a representative office in China, which it had opened over 10 years ago in 2003. Reference

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