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 body regulates the Stock Exchanges in India?
[A] Reserve Bank of India
[B] Securities and Exchange Board of India
[C] Finance Ministry
[D] Securities and Exchange Commission
Show Answer
Correct Answer: B [Securities and Exchange Board of India]
Notes:
The Securities and Exchange Board of India (SEBI) is a regulatory authority established under the SEBI Act 1992. It is the principal regulator for Stock Exchanges in India.
SEBI has recently penalised the National Stock Exchange (NSE), its former CEOs Chitra Ramkrishna and Ravi Narain for governance lapses in hiring of its chief operating officer (COO) Anand Subramanian.
32. What is the key feature of a Standby Letter of Credit?
[A] It is used only for local trade
[B] It guarantees payment in case of non-performance
[C] It cannot be transferred to another party
[D] It requires immediate payment upon presentation
Show Answer
Correct Answer: B [It guarantees payment in case of non-performance]
Notes:
A Standby Letter of Credit acts as a financial guarantee and is only drawn upon if the applicant fails to meet their obligations, such as payment or performance under a contract.
33. What is the primary goal of the Financial Literacy Centres (FLCs) set up by the RBI?
[A] To issue loans to the rural poor
[B] To educate consumers about banking products
[C] To regulate financial markets
[D] To provide cash management services
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Correct Answer: B [To educate consumers about banking products]
Notes:
FLCs are designed to educate individuals about financial products, services, and good money management practices to improve financial inclusion.
34. Which regulatory body is responsible for the Investor Protection and Education Fund (IPEF)?
[A] SEBI
[B] IRDAI
[C] RBI
[D] PFRDA
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Correct Answer: A [SEBI]
Notes:
SEBI manages the Investor Protection and Education Fund (IPEF) to promote investor awareness and protect the interests of investors in the securities market.
35. Basel II categorized capital requirements into how many risk categories?
[A] One
[B] Two
[C] Three
[D] Four
Show Answer
Correct Answer: C [Three]
Notes:
Basel II introduced capital requirements for three major types of risk: credit risk, market risk, and operational risk.
36. 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.
37. What is the main purpose of offshore banking?
[A] Promoting local trade
[B] Providing services in foreign jurisdictions with financial benefits
[C] Reducing domestic regulations
[D] Supporting microfinance institutions
Show Answer
Correct Answer: B [Providing services in foreign jurisdictions with financial benefits]
Notes:
Offshore banking allows individuals and corporations to open accounts in foreign jurisdictions that offer financial benefits, such as lower taxes, greater privacy, and flexible regulations.
38. Which global initiative ensures financial transparency and combats the misuse of offshore banking?
[A] Basel IV
[B] OECD’s Global Forum on Transparency and Exchange of Information
[C] FATF Blacklist
[D] WTO Banking Agreement
Show Answer
Correct Answer: B [OECD’s Global Forum on Transparency and Exchange of Information]
Notes:
The OECD’s Global Forum on Transparency and Exchange of Information promotes financial transparency and combats the misuse of offshore banking for tax evasion and other illicit purposes.
39. Which cybersecurity threat involves attackers encrypting a bank’s data and demanding payment for its release?
[A] Phishing
[B] Ransomware
[C] DDoS attack
[D] Man-in-the-middle attack
Show Answer
Correct Answer: B [Ransomware]
Notes:
Ransomware is a type of cyberattack where attackers encrypt sensitive data and demand a ransom in exchange for the decryption key. It is a threat to financial institutions.
40. Which facility allows banks to borrow from the RBI against government securities to manage short-term liquidity mismatches?
[A] Liquidity Adjustment Facility (LAF)
[B] Market Stabilization Scheme (MSS)
[C] Selective Credit Control
[D] Bank Rate Policy
Show Answer
Correct Answer: A [Liquidity Adjustment Facility (LAF)]
Notes:
The Liquidity Adjustment Facility allows banks to borrow from or lend to the RBI using repo and reverse repo agreements to manage liquidity in the short term.
