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Banking Awareness Quiz 8 – Practi...

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Banking Awareness Quiz 8 – Practice Sets

shape Introduction

Banking Awareness is an important section in the employment related competitive exams in India. In particular, exams like IBPS, SBI and other bank related employment exams have banking awareness questions along with general awareness section. The Banking Awareness section primarily has questions related to the History of Banking, Banking Terms, Banking Products, Functions of Banks, Banks and their Taglines, Schemes, Committees related to Banking, Headquarters of Banks, most recent Banking News, Apps launched by Banks, New Schemes, Monetary Policies etc.

Banking Awareness Quiz 8 – Practice Sets article provides the list of several bank related questions to prepare aspirants of different competitive exams in India, primarily for banking related employment. The article Banking Awareness Quiz 8 – Practice Sets is very useful for different exams such as IBPS PO, Clerk, SSC CGL, SBI PO, NIACL Assistant, NICL AO, IBPS RRB, Railways, Civil Services etc.

shape Quiz

1. Legal Tender Money is____


    A. Accepted only by the Government
    B. Accepted by the people and the Government as per the law
    C. Not accepted for business purposes by the law
    D. Not accepted by the government
    E. None of these


Answer: Option B

2. Stock exchange securities do not include ______


    A. Debentures of companies
    B. Small debentures issued by port trusts
    C. Government promissory note
    D. Participation certificates
    E. None of these


Answer: Option D

3. Which of the following is not commercial bank ?


    A. Foreign Banks
    B. Private Banks
    C. RBI
    D. Regional Rural Banks
    E. None of these


Answer: Option C

4. A non – negotiable crossing is a _____


    A. Restricted crossing
    B. Special crossing
    C. Non- transferable crossing
    D. Parallel crossing
    E. None of these


Answer: Option E

5. Which of the following statements are true about Working Capital ?

(A) Working Capital is a financial metric which represents operating liquidity available to a business, organization, or other entity, including government entity.
(B) Net working capital is calculated as current assets minus current liabilities
(C) The management of Working Capital involves managing inventories, accounts receivable and payable, and cash.


    A. Only A
    B. Only B
    C. Only C
    D. All are true
    E. None of these


Answer: Option D

6. Floating Exchange Rate is also referred to as________


    A. Real Exchange Rate
    B. Controlled Exchange Rate
    C. Fixed Exchange Rate
    D. Flexible Exchange Rate
    E. None of these


Answer: Option D

7. Which of the following Negotiable Instruments can be crossed to the banks ?


    A. Cheques
    B. Bills of Exchange
    C. Drafts
    D. All of above
    E. None of these


Answer: Option B

8. Certificates of Deposits can be issued for a minimum period of______


    A. 1 year
    B. 6 months
    C. 4 months
    D. 3 months
    E. 45 days


Answer: Option D

9. When does the central Bank increase the minimum statutory cash reserve ratio of the commercial banks ?


    A. When the economy is in deflationary condition
    B. When the central Bank aims credit expansion
    C. When the economy is in recession
    D. 1, 2 and 3
    E. None of these


Answer: Option E

10. Which one of the following represents capital adequacy ratio for commercial banks ?


    A. Ratio of capital to risk-weighted assets
    B. Ratio of capital to advances
    C. Ratio of capital to short-term deposits
    D. Ratio of capitalization on-performing assets
    E. None of these


Answer: Option A

1. Near Money is defined as an________


    A. Asset which is not usable as a medium of exchange but has as store of value.
    B. Asset that serves as a temporary medium of exchange and has a store of value.
    C. Asset which adequately fulfill Store of value function and is readily convertible into a medium of exchange but is not itself a medium of exchange.
    D. Asset which has a store of value & 100% liquidity
    E. None of these


Answer: Option C

2. Foreign Exchange Rates in India are determined by______


    A. RBI
    B. SEBI
    C. Planning Commission
    D. Market Forces of demand/supply
    E. None of these


Answer: Option D

3. Which of the following term is used in banking ?


    A. Listing
    B. Open Market Operations
    C. Settlement Day
    D. Stock
    E. None of these


Answer: Option B

4. Which amongst the following banks used Tiny Cards with bio metric identification as a part of the financial inclusion ?


    A. SBI
    B. PNB
    C. ICICI
    D. Axis
    E. HDFC


Answer: Option A

5. Treasury bills are sold in India by


    A. SEBI
    B. State Government
    C. RBI
    D. Commercial Banks
    E. None of these


Answer: Option C

6. Which of the following assets are considered as near money ?


    A. Bond
    B. Equity Shares
    C. Time deposits
    D. Traveller’s cheques
    E. All of above


Answer: Option E

7. Forced saving refers to____


    A. Taxes on individual income & wealth
    B. Compulsory deposits imposed on income tax payers
    C. Provident fund contributions of private sector employees
    D. Reduction of consumption consequent to a rise in prices
    E. None of these


Answer: Option B

8. Which of the following would reduce the credit creation capacity of a commercial bank ?


    A. Time & Demand deposits
    B. Loans
    C. Cash in hand
    D. A & B
    E. All of A, B and C


Answer: Option A

9. Which of the following does not form a part of the foreign exchange reserves of India ?


    A. Foreign currency & securities held by the banks & corporate bodies
    B. Gold
    C. SDR
    D. Foreign currency assets
    E. None of these


Answer: Option A

10. Gains in trade results from__


    A. Exporting as much as possible and receiving gold.
    B. Reallocation of existing goods between the two countries.
    C. The fact that exchange brings both specialization & reallocation of greater output & the increased welfare in each country
    D. One country receiving both imports & exports
    E. None of these


Answer: Option C

1. The Reserve Bank of India has been intervening in foreign exchange market of India and buying dollars to ___.

(A) Check enhanced liquidity in the monetary system
(B) Build – up foreign exchange reserves for debt servicing and debt repayment.
(C) Prevent the rupee strengthening further there by acting as disincentive to export growth.


    A. Only A
    B. A and B
    C. Only C
    D. A and C
    E. None of these


Answer: Option C

2. Non-Performing assets of commercial banks means their loans _____.


    A. Fetching very low rate of Interests.
    B. For which interest/installment has remained unpaid after due date.
    C. Given to sick industrial units .
    D. Have not been disbursed at all .
    E. None of these


Answer: Option C

3. Which of the following is not the feature of Real Time Gross Settlement (RTGS) ?


    A. Payments are settled transaction by transaction
    B. Settlement of funds is revocable.
    C. Settlement is done in real time.
    D. It is a fully secured system which uses digital signatures and public key encryption for safe and secure message transmission.
    E. None of these


Answer: Option C

4. The definition of ‘Banking’ is given in _____.


    A. Negotiable Instrument Act. 1881.
    B. RBI Act, 1934
    C. The Banking Regulation Act, 1949
    D. The Indian Contract Act, 1872
    E. None of these


Answer: Option C

5. In the case of FCNR Accounts the payment of Interest is effected in _____.


    A. Indian Rupee
    B. Only in pound
    C. Same currency in which deposit stands.
    D. Yen
    E. None of these


Answer: Option C

6. The commercial paper is issued to raise deposits by _____.


    A. Commercial Banks
    B. Reserve Bank of India
    C. Every Non-Banking company
    D. State Bank of India
    E. None of these


Answer: Option C

7. The Methods of credit control used by the RBI can be divided into _______.


    A. Long-term and short term
    B. Rural and Urban
    C. Qualitative and Quantitative
    D. Monetary and Fiscal
    E. None of these


Answer: Option C

8. Increase in Bank rate is generally followed by ____.


    A. An increase in market rates of interest
    B. A fall in market rates of interest
    C. A rise only in the deposit rates but not the lending rates.
    D. A rise only in the base rates
    E. None of these


Answer: Option C

9. Which one of the following banks creates credit ?


    A. Reserve Bank of India
    B. Commercial Bank
    C. Industrial Banks
    D. Land Mortgage Banks
    E. None of these


Answer: Option C

10. Which of the following is the least liquid asset ?


    A. Money
    B. Shares
    C. Machinery
    D. Special deposits
    E. None of these


Answer: Option C

1. Which of the following is /are the most important component of the liabilities of Commercial Banks in India ?

(A) Demand deposits
(B) Time Deposits
(C) Inter-Bank liabilities


    A. Only A
    B. Only B
    C. A and C
    D. All A, B and C
    E. None of these


Answer: Option B

2. An increase in foreign exchange assets of Reserve Bank of India will mean_____.

(A) Fall in M1
(B) Increase in interest rate
(C) Increase in high powered money


    A. Only C
    B. A and C
    C. Only B
    D. Only A
    E. None of these


Answer: Option A

3. Which one of the following is not a method of credit control ?


    A. Bank Rate
    B. Credit Deposit Ratio
    C. Cash Reserve Ratio
    D. Statutory Liquidity Ratio
    E. None of these


Answer: Option B

4. The largest Nationalized Commercial Bank in India at present is ____.


    A. Reserve Bank of India
    B. State Bank of India
    C. Central Bank of India
    D. Bank of India
    E. None of these


Answer: Option B

5. Reserve money includes _____.


    A. Time deposit with the Banks only
    B. Currency with the public and cash with Banks
    C. Cash with Banks only
    D. Cash with Banks and post office savings bank deposits
    E. None of these


Answer: Option B

6. Which one of the following is not an objective of fiscal policy ?


    A. Economic growth
    B. Economic stability
    C. Maximization of employment level
    D. Regulation of financial institutions
    E. None of these


Answer: Option D

7. Which of the following is not included in infrastructure in India ?


    A. Energy
    B. Transport
    C. Education
    D. Telecommunications
    E. None of these


Answer: Option C

8. The National Agricultural Insurance Scheme was started by the Government of India in _____.


    A. 1990
    B. 1995
    C. 1999
    D. 1997
    E. None of these


Answer: Option C

9. Interest on national debt is included in ______.


    A. GNP
    B. NNP
    C. Personal Income
    D. National Income
    E. None of these


Answer: Option A

10. Which one of the following is not a measure of Globalization ?


    A. Reduction in import duties
    B. Abolition of import licensing
    C. Allowing free flow of direct foreign investment
    D. Disinvestment of equity in the public sector
    E. None of these


Answer: Option D

1. Which sector contributes most to the savings in India ?


    A. Public sector
    B. Private corporate sector
    C. Household sector
    D. Administrative sector
    E. None of these


Answer: Option C

2. The State Bank of India was established on the recommendation of _____.


    A. Rural Banking Enquiry Committee
    B. Shroff Committee
    C. All India Rural Credit Survey
    D. Banking Enquiry Commission
    E. None of these


Answer: Option C

3. Money Supply as defined by the Reserve Bank of India, M1 includes ___.


    A. Currency with the public
    B. Currency, demand deposits with Banks and other deposits with RBI
    C. Currency with the public and time deposits with Banks
    D. Currency with the public and deposits with National Savings Organizations
    E. None of these


Answer: Option B

4. The most important source of financing the State Government’s Gross Fiscal Deficit (GFD) in India has been______.


    A. Loans from financial institutions
    B. Loans from provident funds and reserve funds
    C. Loans from central government
    D. Market borrowings
    E. None of these


Answer: Option C

5. The system of Ad-hoc Treasury Bills in India was replaced by Ways and Means Advances with effect from ____.


    A. 1 April , 1997
    B. 1 April , 1996
    C. 1 April , 1998
    D. 1 April , 1995
    E. None of these


Answer: Option A

6. In the context of liberalization and globalization _____.

A. Planning has no role to play
B. Planning has an indicative role
C. Planning has a role to play in providing safety net for the poor


    A. Only A
    B. B and C
    C. Only B
    D. All A, B and C
    E. None of these


Answer: Option B

7. Corporation tax ______.


    A. Is levied and appropriated by the states.
    B. Is levied by the union and collected and appropriated by the states.
    C. Is levied by the union and shared by the union and the states.
    D. Is levied by the union and belongs to it exclusively.
    E. None of these


Answer: Option D

8. Which of the following is an example of near money ?


    A. Small coins of 50 paise
    B. Fiat Money
    C. Bank Draft
    D. Treasury Bills
    E. None of these


Answer: Option D

9. _______ is a financial institution which mobilizes savings from the people and invests then in a mix of corporate and government securities.


    A. Commercial Bank
    B. Mutual Fund
    C. Unit Bank
    D. Correspondent Bank
    E. None of these


Answer: Option B

10. Which of the following is not a objective of Bank portfolio management ?


    A. Profitability
    B. Liquidity
    C. Safety
    D. Expansion
    E. None of these


Answer: Option D

1. A Bank which controls credit is called _____.


    A. Unit Bank
    B. Central Bank
    C. Commercial Bank
    D. Correspondent Bank
    E. None of these


Answer: Option B

2. When the government imposes physical and monetary controls to check open inflation, It is known as ____.


    A. Mark-up Inflation
    B. Demand pull Inflation
    C. Creeping Inflation
    D. Suppressed Inflation
    E. None of these


Answer: Option D

3. The causes of deflation is/are _______.

A. Lack of goods and services as compared to money supply.
(B)Low per capital income
(C)Lack of money supply as compared to supply of goods and services.


    A. A and C
    B. All A, B and C
    C. Only C
    D. Only A
    E. None of these


Answer: Option C

4. Which one of the following is not a function of Central Bank in a country ?


    A. Credit Control
    B. Managing Money Supply
    C. Credit Creation
    D. Regulation of Foreign Exchange
    E. None of these


Answer: Option C

5. The system of Note Issue followed by Reserve Bank of India is ____.


    A. Proportional Reserve System
    B. Minimum Reserve System
    C. Minimum Fiduciary System
    D. Maximum Fiduciary System
    E. None of these


Answer: Option B

6. A group of countries which has abolished all Traffis and also quantitative restrictions between themselves is called ________.


    A. Economic Union
    B. Customs Union
    C. Common Market
    D. Free Trade Area
    E. None of these


Answer: Option D

7. Which one of the following is not a priority sector lending by Commercial Banks in India at present ?


    A. Agriculture
    B. Small Scale Industries
    C. Export
    D. Weaker Section
    E. None of these


Answer: Option C

8. Many times we read that a corporate entity is in the process of raising its capital base. Why is a company required to raise money to strengthen its capital base?

A. To finance its expansion plans
(B) To finance its diversification plans
(C) To repay its loans and borrowings


    A. Only A
    B. Only B
    C. Only C
    D. Only A & B
    E. AII A, B & C


Answer: Option A

9. What are Teaser Loan rates charged by Banks ?


    A. Rate of interest in the initial period is more and it goes down subsequently.
    B. Rate of interest in the initial period is less and goes up subsequently.
    C. Fixed Rate of interest charged by Banks
    D. Floating rate of interest charged by Banks.
    E. None of these


Answer: Option B

10. Which of the following institution is considered as ‘ soft loan window’ ?


    A. IMF
    B. IBRD
    C. IDA
    D. IFC
    E. None of these


Answer: Option C

1. Variable Reserve Ratio and Open Market Operations are instruments of ————-


    A. Fiscal policy
    B. Monetary policy
    C. Budgetary policy
    D. Trade policy
    E. None of these


Answer: Option B

2. In which year SMERA (Small & Medium Enterprises Rating Agency) was established ?


    A. 2002
    B. 2005
    C. 2008
    D. 2001
    E. None of these


Answer: Option B

3. The Bank rate policy is a component of ————


    A. Fiscal policy
    B. Monetary policy
    C. Trade policy
    D. Foreign policy
    E. None of these


Answer: Option B

4. Consider the following statements regarding the features of the Indian money market—-

(A) It finds avenues for profitable investment for short -term surplus
(B) It opens the door for the Commercial Banks to occupy a strategic position in regulating
money market.
(C) It provides short- term funds for Banks.

Which of the statements given above is/are correct ?


    A. Only A
    B. Only B
    C. A and C
    D. All A,B and C
    E. None of these


Answer: Option C

5. If the Reserve Bank of India sells securities in the market it will result in ——————-


    A. An immediate change in the Bank rate
    B. A fall in the market rate of interest
    C. An increase in loans to Bank customers
    D. A reduction in Bank deposits
    E. None of these


Answer: Option D

6. The majority of Central Government enterprises belong to the ———-


    A. Public corporations
    B. Public limited companies
    C. Private limited companies
    D. Departmental organisations
    E. None of these


Answer: Option B

7. The Central Bank can decrease the Bank credit component of the money supply by ————


    A. Lowering the cash reserve requirements
    B. Increasing the Bank rate
    C. Lowering the Bank rate
    D. Buying of government securities
    E. None of these


Answer: Option B

8. Parallel Economy is also referred as ———-


    A. Grey Market
    B. Black Market
    C. Black Economy
    D. Both A and B
    E. None of these


Answer: Option C

9. Which of the following was the first commercial Bank of limited liability managed by Indians ?


    A. Punjab National Bank
    B. Oudh Commercial Bank
    C. Imperial Bank of India
    D. Bank of Baroda
    E. None of these


Answer: Option B

10. ————— is an agreement where by an issuing Bank at the request of the importer (Buyer) undertakes to make payment to the exporter (Beneficiary) against stipulated documents.


    A. Bills of exchange
    B. Letter of exchange
    C. Letter of credit
    D. Bill of entry
    E. None of these


Answer: Option C

1. What are Time Liabilities ?


    A. The liabilities which Bank have to pay on demand
    B. The liabilities which Bank have to pay after specific time period.
    C. The liabilities which Bank have to pay to the Reserve Bank of India
    D. The liabilities which Bank have to pay to the central government
    E. None of these


Answer: Option B

2. Regional Rural Banks are classified under —————


    A. Land mortgage Banks
    B. Co-operative Banks
    C. Commercial Banks
    D. Public sector Banks
    E. None of these


Answer: Option D

3. As we all know that Reserve Bank of India manages the circulation of currency. In this context which of the following decides the currency denomination value ?


    A. Planning Commission
    B. Reserve Bank of India Itself
    C. Government of India
    D. Finance Commission
    E. None of these


Answer: Option C

4. The country’s First ever socio-economic and caste census to identify people living below poverty line was recently started from a tribal village Sankhola in _____


    A. Tripura
    B. Assam
    C. West Bengal
    D. Maharashtra
    E. None of these


Answer: Option A

5. Which of the following is India’s one of the major Micro finance Institution ?


    A. Grameen
    B. Bantra
    C. Brae
    D. Spandana
    E. None of these


Answer: Option D

6. When does the Central Bank increases the minimum statutory cash reserve ratio of the Commercial Banks ?

(A) When the economy is in deflationary condition
(B) When the economy is experiencing inflation
(C) When the Central Bank aims credit contraction.


    A. A and C
    B. All A, B and C
    C. B and C
    D. Only B
    E. None of these


Answer: Option C

7. The primary objective of selective credit control is _______.


    A. To raise the cost of credit for all purposes.
    B. To decrease the total supply of credit in the economy.
    C. To regulate total Bank credit and general level of interest rates.
    D. To influence allocation of credit among different borrowers and users.
    E. None of these


Answer: Option D

8. Consider the following measures.

(A) Changing the Bank rate
(B) Open market operation
(C) Increasing the Cash-Reserve Ratio

Which of the measures given above are taken by the Reserve Bank of India to control inflation in India ?


    A. A and B
    B. All A, B and C
    C. A and C
    D. Only C
    E. None of these


Answer: Option B

9. Bank rate refers to the _____.


    A. Interest rate at which Commercial Banks accept deposits from the public.
    B. Rate at which Central Bank re discounts bills of exchange of Commercial Banks.
    C. Prime Lending Rate of Commercial Banks
    D. Interest rate at which Commercial Banks lend to the customers
    E. None of these


Answer: Option B

10. Which of the following would reduce the credit creation capacity of a Commercial Bank ?

(A) Deposits with the Central Bank
(B)Time and Demand deposits
(C) Cash in hand


    A. A and C
    B. Only B
    C. A and B
    D. All A, B and C
    E. None of these


Answer: Option A

1. Which one of the following items is not included in the current account of India’s balance of payments ?


    A. Short-term commercial borrowings
    B. Non-monetary gold movements
    C. Investment income
    D. Transfer payments
    E. None of these


Answer: Option A

2. The Reserve Bank of India placed the greatest reliance on which of the following measures of credit control for maintaining price stability during the last ten years ?


    A. The Bank Rate
    B. Open Market Operations
    C. Cash reserve requirements
    D. Statutory liquidity requirements
    E. None of these


Answer: Option A

3. Which one of the following groups of items is included in India’s foreign exchange reserves ?


    A. Foreign-currency assets, Special Drawing Rights (SDRs) and Loans from foreign countries.
    B. Foreign-currency assets, Gold holdings of RBI and Special Drawing Rights (SDRs)
    C. Foreign-currency assets, Loans from the World Bank and Special Drawing Rights (SDRs)
    D. Foreign-currency assets, Gold holdings of RBI and Loans from the World Bank.
    E. None of these


Answer: Option B

4. If there is an inflationary trend in the economy what would be the trend in the pricing of the Bank products ?


    A. Constant trend
    B. Increasing trend
    C. Decreasing trend
    D. There is no relevance of the inflation in pricing of the banking products
    E. None of these


Answer: Option B

5. For a closed economy having no foreign trade which one of the following is correct ?


    A. GDP > GNP
    B. GDP < GNP
    C. GDP = GNP
    D. GDP < GNP
    E. None of these


Answer: Option C

6. The ability of a commercial Bank to increase its loans and Investment depends on its _______.


    A. Holding of government securities
    B. Cash position
    C. Excess Cash reserves
    D. Outstanding loans and investments
    E. None of these


Answer: Option C

7.’Economic Development’ is a _______.

(A) Continuous process
(B) Short-term process
(C) Long term process


    A. Only C
    B. A and C
    C. Only A
    D. A and B
    E. None of these


Answer: Option B

8. Which of the following is not a feature of Micro finance ?


    A. It provides gainful financial services to unemployed and low-income individuals.
    B. It promotes saving of money by individuals.
    C. Interest rates are generally lower than those offered by normal banks.
    D. Micro finance operations make profit from the poor.
    E. None of these.


Answer: Option E

9. Which of the following is not the part of the scheduled banking structure in India ?


    A. Money Lenders
    B. Public Sector Banks
    C. Private Sector Banks
    D. Regional Rural Banks
    E. State Co-operative Banks


Answer: Option A

10. Which of the following cannot be called as a value Added service offered by a Bank ?


    A. Special accounts for poor sections of the society
    B. Accident insurance cover
    C. Instant Credits of Outstation Cheques
    D. Free cheque book
    E. All are value Added services


Answer: Option D

1. Opening the Saving Bank Account of a minor girl will be called as which of the following in Banking terminology ?


    A. Retail Banking
    B. Merchant Banking
    C. Institutional Banking
    D. Social Banking
    E. Corporate Banking


Answer: Option A

2. Which of the following terms is NOT used in Banking Sector ?


    A. SLR
    B. NPA
    C. Credit Rating
    D. Fixed Deposit
    E. PURA


Answer: Option E

3. Banking Sector will fall under which of the following sectors?


    A. Agriculture Sector
    B. Service Sector
    C. Manufacturing
    D. Industrial Sector
    E. None of these


Answer: Option B

4. Which of the following is NOT a measure of the Risk Management in Banks ?


    A. CRR
    B. RTGS
    C. SLR
    D. Deposit Insurance
    E. All are the measures of risk management


Answer: Option B

5. Which of the following Acts was framed to deal more effectively specially with the problem of Non- Performing Assets in banking system?


    A. SARFAESI ACT
    B. Banking Regulation Act.
    C. Foreign Exchange Management Act
    D. Industrial Dispute Act.
    E. None of these


Answer: Option A

6. Many times we read a term CBS used in banking operation. What is the full form of the letter ‘C’ in the term ‘CBS’?


    A. Core
    B. Credit
    C. Continuous
    D. Complete
    E. None of these


Answer: Option A

7. Name any E-Banking service which is based on voice processing facility ?


    A. Any time banking
    B. Tele-banking
    C. On-line banking
    D. Any where banking
    E. None of these


Answer: Option B

8. Non Performing Assets are those assets which are overdue for a period of more than ?


    A. 90 days in interest and/or installment in term of loan.
    B. 90 days out of order in case of over draft/cash credit. Bills purchased and Bills discounted.
    C. 2 harvest seasons for advances for cultivation of short duration crops.
    D. All of the above
    E. None of these


Answer: Option D

9. _______has been set up for exchange of credit information among its members ?


    A. DICGCI
    B. CIBIL
    C. ECGL
    D. EXIM Bank
    E. None of these


Answer: Option B

10. Basel – II norms are associated with sector.


    A. Banking
    B. Insurance
    C. Share
    D. All of the above
    E. None of these


Answer: Option A