Banking & General Financial Awareness
Banking & General Financial Awareness Multiple Choice Questions (MCQs) and Answers with explanation for All Banking Exams of 2020-2021 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 is not a fee‐based financial service?
[A] Corporate counseling
[B] Profit management
[C] Lease financing
[D] Issue management
Show Answer
Correct Answer: C [Lease financing]
Notes:
Lease financing is one of the important sources of medium- and long-term financing where the owner of an asset gives another person, the right to use that asset against periodical payments. It is not a fee‐based financial service.
32. Which of the following helps in monitoring the status of all issue in issue management process?
[A] Issue manager
[B] Issue recorder
[C] Issue register
[D] Issue tracker
Show Answer
Correct Answer: C [Issue register]
Notes:
Issue Register or Issue Log, keeps a record of all issues within a project. It helps you to monitor the status of your issues and track the actions taken to resolve them.
33. Which is the oldest government owned stock exchange in Asia?
[A] Bengal Stock Exchange and Administration
[B] Murshidabad Stock Exchange
[C] Calcutta Stock Exchange
[D] None of the above
Show Answer
Correct Answer: C [Calcutta Stock Exchange]
Notes:
Calcutta Stock Exchange (CSE) located at the Lyons Range, Kolkata, India, is the oldest government owned stock exchange in Asia. It was founded on 1 December 1863. It was reconstituted in its current form in 1908 and is the second largest bourse in India.
34. What fraction of India’s GDP is attributed to the Mortgage Industry?
[A] 10%
[B] 13%
[C] 20%
[D] 25%
Show Answer
Correct Answer: B [13%]
Notes:
The Mortgage Industry in India accounts for approximately 13% of the GDP, which is relatively low compared to developed nations, where the figure typically ranges from 20% to 30%.
35. What is the main advantage of using Dynamic CVV over static CVV for payment security?
[A] It uses biometric data for authentication.
[B] It generates a new code periodically, reducing the risk of fraud.
[C] It requires two-factor authentication for transactions.
[D] It encrypts the cardholder’s data end-to-end.
Show Answer
Correct Answer: B [It generates a new code periodically, reducing the risk of fraud.]
Notes:
Dynamic CVV enhances security by generating a new code for each transaction, making it harder for fraudsters to use stolen card information, unlike static CVVs which remain unchanged and are more vulnerable to theft.
36. What role does the Indian Evidence Act, 1872 play in banking transactions?
[A] It regulates interest rates on loans.
[B] It governs the admissibility of evidence in legal disputes.
[C] It sets the minimum capital requirements for banks.
[D] It outlines the procedures for opening a bank account.
Show Answer
Correct Answer: B [It governs the admissibility of evidence in legal disputes.]
Notes:
The Indian Evidence Act, 1872 is vital in banking as it ensures that records like ledger books are recognized as valid evidence in legal proceedings, facilitating the resolution of banking disputes. For instance, certified copies of entries in a banker’s book are considered prima facie evidence, aiding in financial transaction disputes.
37. Which type of Letter of Credit can be amended or revoked by the issuing bank at any time without prior notice to the beneficiary?
[A] Irrevocable Letter of Credit
[B] Revocable Letter of Credit
[C] Revolving Letter of Credit
[D] Back-to-Back Letter of Credit
Show Answer
Correct Answer: B [Revocable Letter of Credit]
Notes:
A Revocable Letter of Credit allows the Issuing Bank to modify or cancel the credit at any time without informing the beneficiary. However, such credits are no longer common under modern trade practices and UCP 600 guidelines.
38. Which of the following ratios was introduced in Basel III to manage short-term liquidity risk?
[A] Loan-to-deposit ratio
[B] Liquidity Coverage Ratio (LCR)
[C] Credit risk ratio
[D] Capital adequacy ratio
Show Answer
Correct Answer: B [Liquidity Coverage Ratio (LCR)]
Notes:
The Liquidity Coverage Ratio (LCR) was introduced in Basel III to ensure that banks hold sufficient high-quality liquid assets to cover net cash outflows over a 30-day period.
39. Which international body is responsible for formulating global banking supervision standards?
[A] World Bank
[B] Bank for International Settlements (BIS)
[C] International Monetary Fund (IMF)
[D] Financial Stability Board (FSB)
Show Answer
Correct Answer: B [Bank for International Settlements (BIS)]
Notes:
The Bank for International Settlements (BIS) houses the Basel Committee on Banking Supervision (BCBS), which formulates global banking supervision standards and guidelines.
40. How can blockchain technology enhance cybersecurity in banking?
[A] By decentralizing data storage and using cryptographic validation
[B] By centralizing sensitive data in a single server
[C] By increasing the complexity of financial transactions
[D] By providing real-time transaction deletion capabilities
Show Answer
Correct Answer: A [By decentralizing data storage and using cryptographic validation]
Notes:
Blockchain enhances cybersecurity by decentralizing data storage across a distributed ledger and using cryptographic validation, making it highly resistant to tampering and unauthorized access.
