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.
41. Which Act provides legal backing to Priority Sector Lending (PSL) in India?
[A] Reserve Bank of India Act, 1934
[B] Banking Regulation Act, 1949
[C] Indian Banking Act, 1970
[D] Financial Inclusion Act, 2015
Show Answer
Correct Answer: B [Banking Regulation Act, 1949]
Notes:
The Banking Regulation Act, 1949, provides the legal framework for Priority Sector Lending in India, mandating banks to allocate a portion of their credit to sectors crucial for inclusive growth and national development.
42. Which type of banks in India has the highest target for Priority Sector Lending (PSL)?
[A] Domestic Commercial Banks
[B] Foreign Banks with 20 or more branches
[C] Regional Rural Banks (RRBs) and Small Finance Banks (SFBs)
[D] Foreign Banks with less than 20 branches
Show Answer
Correct Answer: C [Regional Rural Banks (RRBs) and Small Finance Banks (SFBs)]
Notes:
RRBs and SFBs have the highest PSL target at 75% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBE), promoting financial inclusion and support for rural sectors.
43. Which regulatory body’s guidelines must be followed for Letters of Credit involving international trade in India?
[A] SEBI
[B] RBI
[C] ICC
[D] IRDAI
Show Answer
Correct Answer: C [ICC]
Notes:
The International Chamber of Commerce (ICC) sets global rules, such as UCP 600, which banks must follow when handling Letters of Credit in international trade.
44. Which organization publishes the “Global Financial Stability Report”?
[A] IMF
[B] World Bank
[C] BIS
[D] FSB
Show Answer
Correct Answer: A [IMF]
Notes:
The International Monetary Fund (IMF) publishes the “Global Financial Stability Report,” which assesses global financial stability risks and developments.
45. Which Indian insurance company was the first to launch a Unit Linked Insurance Plan (ULIP)?
[A] ICICI Prudential Life Insurance
[B] LIC of India
[C] Bajaj Allianz Life Insurance
[D] HDFC Life Insurance
Show Answer
Correct Answer: A [ICICI Prudential Life Insurance]
Notes:
ICICI Prudential Life Insurance was the first company to launch a ULIP in India in 2001.
46. Which type of policy provides coverage for losses due to theft or burglary in business premises?
[A] Fire Insurance
[B] Burglary Insurance
[C] Liability Insurance
[D] Health Insurance
Show Answer
Correct Answer: B [Burglary Insurance]
Notes:
Burglary insurance provides coverage for losses arising from theft or burglary of goods or property in business or residential premises.
47. Which is the only reinsurance company in India?
[A] LIC of India
[B] New India Assurance
[C] General Insurance Corporation of India (GIC Re)
[D] Oriental Insurance
Show Answer
Correct Answer: C [General Insurance Corporation of India (GIC Re)]
Notes:
The General Insurance Corporation of India (GIC Re) is the only reinsurance company in India.
48. What is one of the key concerns regarding increased FDI in the insurance sector?
[A] Increased capital inflow
[B] Better technology
[C] Control by foreign entities over domestic insurance firms
[D] Improved product innovation
Show Answer
Correct Answer: C [Control by foreign entities over domestic insurance firms]
Notes:
A key concern regarding increased FDI in the insurance sector is the potential control by foreign entities over domestic insurance companies, which could impact local decision-making.
49. What is the main purpose of a currency swap in forex markets?
[A] To speculate on currency price movements
[B] To hedge against exchange rate fluctuations
[C] To increase trading profits
[D] To avoid transaction costs
Show Answer
Correct Answer: B [To hedge against exchange rate fluctuations]
Notes:
A currency swap is used primarily for hedging against exchange rate fluctuations by exchanging principal and interest payments in different currencies.
50. Which treasury function involves managing a company’s exposure to foreign exchange risk?
[A] Currency Hedging
[B] Equity Trading
[C] Loan Disbursement
[D] Asset Allocation
Show Answer
Correct Answer: A [Currency Hedging]
Notes:
Currency hedging is a key treasury function that helps manage a company’s exposure to foreign exchange risk by using instruments such as forwards and options.
