Quiz 389: Banking Awareness for Banking Examinations

1.From the given options A to E , please find out the one which is not an objective of a central Bank of a country?
(A)The central Bank of a country aims at profit
(B)The central bank is given powers to control and regulate the working of the commercial banks
(C)Central Bank generally is a organ of the government and run by government officials
(D)Central Bank generally controls the credit
(E)Central bank is generally banker of the government

2.From the given options, bring out the one which is not a function / power of Reserve Bank of India:
(A)To assume the responsibility of meeting directly or indirectly all reasonable demands for accommodation
(B)To hold cash reserves of the commercial banks and make available financial accommodation to them
(C)To enjoy monopoly of the note issue
(D)To assume responsibility of all banking operations of the government
(E)To assume the responsibility of statistical analysis of data related to macro economy of India

3.Many a times we read in the newspapers about margin requirements. From the given options, find out the one which correctly indicates margin requirements:
(A)Margin requirements aim at the regulation of the volume of credit as well as flow of the credit
(B)Margin requirements imply that every bank has to keep certain minimum cash reserves with the reserve bank of India
(C)Margin requirements imply that every bank has to keep certain proportion of its total deposits in the form of cash with it self
(D)Margin requirements imply that RBI has certain rate at which it discounts the bills of exchange of the commercial bank
(E)Margin requirements imply to a cushion against the decline in the value of the security

4.What will be the impact on the cash reserves of commercial banks if RBI conducts a sale of securities ?
(C)Remain constant
(D)Increase or decrease
(E)Increase if the securities are sold in open market operations

5.Which among the following is a major qualitative control measure in India ?
(A)Bank Rate Policy
(B)Open market Operations
(C)ways and means advances
(D)Reserve Ratio Requirements
(E)Margin Requirements

6.Many a times we read in the financial newspapers that Reserve bank of India is “Lender of Last Resort (LOLR) ” In India. Which among the following statement gives the most correct definition of “Lender of Last Resort”?
(A)If a person or firm which is eligible to get a loan, does not get it from any commercial bank, may approach to Reserve Bank of India for loan.
(B)If the state governments are in crisis and need money for short term , they can approach RBI for this purpose
(C)If a commercial bank is in crisis, it may place its reasonable demand for accommodation to Reserve Bank of India
(D)A scheduled commercial bank meets all of its demands in all weathers from Reserve bank of India
(E)Whenever the government declares a debt relief, the RBI will have to bear the brunt of it.

7.(The figures in this questions are imaginary). We suppose that Cash Reserve Ratio in country’s economy is 10%. The banking system wish a cash deposits of Rs. 1000 Crore, creates total deposits of Rs. 10,000 Crores. The reserve Bank wishes that bank should create more deposits. Which
among the following step will be taken by the Reserve Bank?
(A)It will lower the Cash Reserve Ratio
(B)It will raise the Cash Reserve Ratio
(C)It will increase the margin Requirements
(D)It will start selling Government securities
(E)It will start rationing of credit

8.Many a times we read in the newspapers that RBI takes certain steps to curb the menace of Inflation. In this context, which among the following will not help RBI in controlling the inflation in the country?
(A)An increase in the Bank Rate
(B)An increase in the Reserve Ratio Requirements
(C)A purchase of securities in the open market
(D)Rationing of the credit
(E)Increasing the Repo Rate

9.We suppose that Reserve Bank of India would like to increase the cash Reserves of the commercial Banks. Which among the following would be most appropriate action of the RBI to achieve this aim?
(A)RBI would release gold from its reserves
(B)RBI would raise the reserve ratio
(C)RBI would buy the bonds in the open market
(D)RBI will stop the transactions which involve the bills of exchange
(E)RBI will put more reserves in the International Monetary Fund

10.Which among the following is a incorrect statement:
(A)The Reserve Bank of India has the special powers to control and regulate the commercial banking system
(B)A rise in the bank rate is a strong anti-deflationary monetary tool
(C)Minimum Reserve Requirements are fixed to ensure the liquidity and solvency of individual commercial banks
(D)Reserve Ratio Requirement is a quicker method than bank rate and OMO (Open Market Operations) in general credit regulations
(E)Rationing of credit is a powerful qualitative monetary tool

11.Since which year, Reserve bank of India is using the Selective Credit Control measures to control the amount of bank advances against the commodities having limited supply ?

12.The “Service area Approach” was an strategy launched to improve which of the following?
(A)Micro, Small and medium Enterprising
(B)Unorganized Sector
(C)Rural lending
(D)Urban Industrial Lending
(E)A & B

13.Which among the following bank / banks in India have set up the Financial Literacy & Credit Counseling centers ?
(B)Scheduled Commercial banks
(C)Foreign Banks working in India
(D)Regional Rural Banks
(E)All of above

14.Which of the following imaginary circumstances, the Reserve bank of India will opt to sell Government securities in the open market?
(A)When the Foreign funds inflow is meek
(B)When there is enormous Foreign Funds Inflow in the Indian Economy
(C)When banks have low liquidity and need liquidity
(D)When Government of India asks the RBI to sell securities
(E)None of the above

15.Which among the following is correct full form of CAS in context with banking markets in India ?
(A)Cash Authorization Scheme
(B)Credit Authorization Scheme
(C)Credit Access System
(D)Credit Arrangement System
(E)Cash Accreditation Scheme

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