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. Where can borrowers appeal against enforcement actions under the SARFAESI Act, 2002?
[A] High Court
[B] Debts Recovery Tribunal (DRT)
[C] National Consumer Disputes Redressal Commission
[D] Civil Court
Show Answer
Correct Answer: B [Debts Recovery Tribunal (DRT)]
Notes:
Borrowers can challenge enforcement actions under the SARFAESI Act, 2002 in the Debts Recovery Tribunal (DRT) and subsequently appeal to the Debts Recovery Appellate Tribunal (DRAT) if needed.
32. 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.
33. Which clause in a Letter of Credit specifies that partial shipments are allowed?
[A] Confirmed Clause
[B] Discrepancy Clause
[C] Shipment Clause
[D] Partial Shipment Clause
Show Answer
Correct Answer: D [Partial Shipment Clause]
Notes:
A Partial Shipment Clause in a Letter of Credit explicitly states whether multiple shipments are allowed. If not mentioned, partial shipments are generally allowed as per UCP 600.
34. The National Pension System (NPS) is regulated by which authority?
[A] SEBI
[B] RBI
[C] PFRDA
[D] NABARD
Show Answer
Correct Answer: C [PFRDA]
Notes:
The Pension Fund Regulatory and Development Authority (PFRDA) regulates NPS, a voluntary pension scheme aimed at ensuring income security during retirement.
35. Which of the following is NOT a component of Tier 1 capital?
[A] Common equity
[B] Retained earnings
[C] Perpetual non-cumulative preference shares
[D] Subordinated debt
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Correct Answer: D [Subordinated debt]
Notes:
Subordinated debt is considered part of Tier 2 capital, not Tier 1 capital.
36. Under Basel III, what type of risk does the Net Stable Funding Ratio (NSFR) address?
[A] Credit risk
[B] Long-term liquidity risk
[C] Market risk
[D] Operational risk
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Correct Answer: B [Long-term liquidity risk]
Notes:
The Net Stable Funding Ratio (NSFR) addresses long-term liquidity risk by ensuring that banks maintain a stable funding profile relative to their assets and off-balance sheet activities.
37. Which of the following is a well-known offshore banking jurisdiction?
[A] Germany
[B] Switzerland
[C] India
[D] Brazil
Show Answer
Correct Answer: B [Switzerland]
Notes:
Switzerland is one of the most famous offshore banking jurisdictions, known for its strong privacy laws and stability.
38. Which type of account is typically opened in an offshore bank for international financial management?
[A] Current account
[B] Offshore corporate account
[C] Basic savings account
[D] Recurring deposit account
Show Answer
Correct Answer: B [Offshore corporate account]
Notes:
Explanation: Offshore corporate accounts are commonly used by businesses and individuals for international financial management, cross-border transactions, and tax efficiency.
39. Which of the following is the main benefit of using blockchain technology in banking?
[A] High transaction costs
[B] Increased transparency and security
[C] Centralized control of data
[D] Slower transaction processing
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Correct Answer: B [Increased transparency and security]
Notes:
Blockchain provides a decentralized, transparent, and secure way to process transactions, reducing the need for intermediaries and increasing trust between parties. Its tamper-resistant nature makes it ideal for financial transactions.
40. Which of the following is a key application of AI in credit risk assessment?
[A] Manually verifying customer credit history
[B] Using machine learning models to predict default risks
[C] Conducting physical audits of borrowers
[D] Setting fixed interest rates for all borrowers
Show Answer
Correct Answer: B [Using machine learning models to predict default risks]
Notes:
AI and machine learning models analyze large datasets, such as transaction history and credit behavior, to predict a borrower’s likelihood of default, making credit risk assessment faster and more accurate.
