Banking & General Financial Awareness
Banking & General Financial Awareness Multiple Choice Questions (MCQs) and Answers with explanation for All Banking Exams of 2024-25 such as IBPS Bank PO, IBPS Bank Clerical, RRB PO and Clerical, SBI PO and SBI Clerical, IBPS Recruitments, RBI Grade B and RBI Banking Examinations.
31. Which of the following would not make a distinction between a hire purchase and a ‘normal’ purchase?
[A] Purchaser pays for item by instalments over a period of time
[B] Asset does not belong to purchaser when delivery is received from supplier
[C] Cost to buyer is likely to be higher than it would be for a normal purchase
[D] Trade discounts cannot be offered on hire purchase
Show Answer
Correct Answer: D [Trade discounts cannot be offered on hire purchase]
Notes:
Purchaser pays for items, Assets and cost to buyer will make a distinction between a hire purchase and a ‘normal’ purchase.
32. In which city headquarters of Life Insurance Corporation of India is located?
[A] Delhi
[B] Mumbai
[C] Hyderabad
[D] Gurugram
Show Answer
Correct Answer: B [Mumbai]
Notes:
Life Insurance Corporation of India(LIC) was established in 1956. LIC is an Indian state-owned insurance group and investment company headquarters in Mumbai. It is the largest insurance company in India.
33. What is the total strength of central board of directors in RBI?
[A] 17
[B] 18
[C] 21
[D] 25
Show Answer
Correct Answer: C [21]
Notes:
The overall direction of the RBI lies with the 21-member central board of directors, composed of: the governor; four deputy governors; two finance ministry representatives (usually the Economic Affairs Secretary and the Financial Services Secretary); ten government-nominated directors; and four directors who represent local boards for Mumbai, Kolkata, Chennai, and Delhi. Each of these local boards consists of five members who represent regional interests and the interests of co-operative and indigenous banks
34. What is the mandated fraction of total credits that commercial banks in India must provide towards the Agriculture Sector?
[A] 10%
[B] 12%
[C] 18%
[D] 7.5%
Show Answer
Correct Answer: C [18%]
Notes:
Commercial banks in India are required to allocate 18% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE) towards the Agriculture Sector, as per regulatory guidelines.
35. Which of the following is excluded from the scope of the SARFAESI Act?
[A] Secured loans above ₹1 lakh
[B] Unsecured loans
[C] Agricultural land
[D] Non-Performing Assets (NPAs)
Show Answer
Correct Answer: B [Unsecured loans]
Notes:
The SARFAESI Act applies only to secured loans, excluding unsecured loans, small loans, and agricultural land, allowing banks to seize assets of defaulting borrowers without judicial intervention for loans above ₹1 lakh classified as NPAs.
36. Which body regulates the Asset Reconstruction Companies (ARCs) under the SARFAESI Act, 2002?
[A] Ministry of Finance
[B] Securities and Exchange Board of India (SEBI)
[C] Reserve Bank of India (RBI)
[D] Insurance Regulatory and Development Authority (IRDA)
Show Answer
Correct Answer: C [Reserve Bank of India (RBI)]
Notes:
The Reserve Bank of India (RBI) is responsible for regulating Asset Reconstruction Companies (ARCs) under the SARFAESI Act, 2002, ensuring effective management of distressed assets held by banks.
37. What is “vishing,” and how do fraudsters execute this scam?
[A] Sending fake emails to obtain sensitive information
[B] Creating fake websites to trick users into entering credentials
[C] Posing as bank officials over phone calls to extract sensitive details
[D] Using malware to hack into banking systems
Show Answer
Correct Answer: C [Posing as bank officials over phone calls to extract sensitive details]
Notes:
Vishing, or voice phishing, involves scammers impersonating legitimate officials in phone calls to gain trust and extract sensitive information, exploiting urgency to manipulate victims into compliance.
38. Which regulations govern bank mergers in India under the Competition Act, 2002?
[A] Banking Regulation Act, 1949
[B] Combination Regulations, 2011
[C] Securities and Exchange Board of India Act, 1992
[D] Reserve Bank of India Act, 1934
Show Answer
Correct Answer: B [Combination Regulations, 2011]
Notes:
The Combination Regulations, 2011 under the Competition Act, 2002 mandate that any bank merger likely to adversely affect competition must be notified to the Competition Commission of India (CCI), which has the authority to approve or reject such mergers based on their competitive impact.
39. How does the Foreign Exchange Management Act (FEMA) facilitate external trade and payments in India?
[A] By allowing all capital account transactions
[B] By permitting current account transactions unless prohibited
[C] By prohibiting all foreign exchange dealings
[D] By eliminating the need for Authorized Persons
Show Answer
Correct Answer: B [By permitting current account transactions unless prohibited]
Notes:
FEMA allows current account transactions for external trade while regulating capital account transactions to ensure economic stability. It mandates that all foreign exchange dealings occur through Authorized Persons, promoting transparency and control in financial transactions. This framework supports legitimate trade activities while managing capital flows effectively.
40. What is the minimum Liquidity Coverage Ratio (LCR) required under Basel III?
[A] 80%
[B] 90%
[C] 100%
[D] 70%
Show Answer
Correct Answer: C [100%]
Notes:
Basel III requires banks to maintain a minimum Liquidity Coverage Ratio (LCR) of 100%, ensuring they have sufficient high-quality liquid assets to withstand a 30-day liquidity stress scenario.
