Banking and Financial Awareness for IBPS/BOM Exams

Q1. Interest below which a bank is not expected to lend to customers is known as _____________. 
(a) Deposit Rate
(b) Base Rate
(c) Prime Lending Rate
(d) Bank Rate
(e) Discount Rate

Q2. Which of the following schemes is launched specifically for helping senior citizens to avail loan by mortgage of their residential property? 
(a) English Mortgage Scheme
(b) Senior Capital loan Scheme
(c) Reverse Mortgage Loan scheme
(d) Senior Citizen Personal Loan scheme
(e) None of the above

Q3. Which one of the following is not a 'Money Market Instrument'?
(a) Treasury Bills
(b) Commercial Paper
(c) Certificate of Deposit
(d) Equity Shares
(e) None of the above

Q4. ‘Sub Prime Lending’ is a term applied to the loans made to- 
(a) those borrowers who do not have a good credit history
(b) those who wish to take loan against the mortgage of tangible assets
(c) those who have a good credit history and are known to bank since 10 years
(d) those borrowers who are most preferred customers of the Bank
(e) None of the above

Q5. The arrangement under which banks sell insurance products acting as the agents of the respective companies is called the...............?
(a) Insurance joint venture
(b) Bancassurance Model
(c) Hybrid Insurance Model
(d) Insurance Broking
(e) Integrated Model

Q6. As we have notices, many banks are now entering into Insurance business. Why are Banks entering into this sector, particularly when many insurance companies are already there in India?
(1) By providing insurance products, banks are earning additional revenue in terms of fee/commission.
(2) Banks with their huge customer base are leveraging on their existing relationship to convert customers into policyholders.
(3) With increase of health-related problems, everybody wants an insurance cover, no matter how big or small it is. Banks are coming up with many attractive offers, which are also affordable.
(a) Only (1) 
(b) Only (2)
(c) Only (3) 
(d) All (1), (2) & (3)
(e) Only (1) & (2)

Q7. As reported in some major financial newspapers, many times it is said that "Other Income" boosts the profit of a bank to a substantial level. What is this other income for a bank ? [Pick up the option(s) which are the part(s) of this other income.
(1) Commission for selling insurance policies
(2) Fee for providing various services (like ATM/Extra cheque etc)
(3) Interest on advances and loans
(a) Only (1) 
(b) Only (2)
(c) Both (1) & (2)
(d) Only (3)
(e) All (1), (2) & (3)

Q8. As we all know, Govt of India is giving much emphasis these days on the development of Small and Medium Enterprises (SMEs). Which of the following statements reflects the importance of the SME sector in the India economy?
(1) The Govt is following a policy of keeping some items reserved for SMEs only. Hence a good number of items for local consumption come from these alone.
(2) The main advantages of SMEs are reduction of regional imbalances, low investment, greater operational flexibility and low production cost. This helps in good control over prices of such items in local markets.
(3) A very large number of people are employed in this sector and this sector is the second largest employer in India, after agriculture.
(a) Only (1) 
(b) Only (2)
(c) Only (3) 
(d) All (1), (2) & (3)
(e) None of the above

Q9. Banks in India are required to maintain a portion of their demand and time liabilities with the Reserve Bank of India. This portion is called _____________. 
(a) Statutory Liquidity Ratio
(b) Cash Reserve Ratio
(c) Bank Deposit
(d) Reserve Repo
(e) Government Securities

Q10. In banking business, when the borrowers avail a Term Loan, initially they are given a repayment holiday and this is referred as _____________.
(a) Subsidy 
(b) Interest Waiver
(c) Re-phasing 
(d) Interest concession
(e) Moratorium

Q11. As reported in various newspapers, many banks have revised their interest rates on home loans, car loans and other such loans. Which of the following phenomenon prompted these banks to make such an upward revision in their interest rates?
I. RBI has revised the CRR and other such rates upward, which has created a liquidity crunch in the market.
II. Stock markets in the country are showing very high fluctuations as visible through their indexes. As a result, banks have lost a huge amount of money in trading. Banks now want to recover that money by increasing their interest rates.
III. Banks are in need of a huge amount of money, as they have to give revised pay to all its employees.
Select the correct answer using the codes given below
(a) Only I 
(b) Only II
(c) Only III 
(d) All of the above
(e) None of the above

Q12. Loans and advances a bank, provides come under which of the following category?
(a) Assets
(b) Liabilities
(c) Costs 
(d) All of the above
(e) None of the above

Q13. Which of the following products of a bank is specifically designed to provide financial help to children in their higher studies in India or in a foreign nation?
(a) Personal loan
(b) Corporate loan
(c) Educational loan
(d) Mortgage loan
(e) None of the above

Q14. Which of the following is a payment and settlement system used by the banks in India?
(a) Liquidity adjustment facility
(b) Real time gross settlement
(c) Forward rate agreements
(d) Central depository service
(e) Negotiated dealing system

Q15. The industrial Finance Corporation of India provides loans to
(a) government companies only which are in core sector (i.e., power generation, steel, coal and cement, etc)
(b) newly established industries in backward districts
(c) industries in private sector
(d) joint stock companies and cooperative societies engaged in the manufacturing and processing of goods
(e) None of the above


S1. Ans.(b)
S2. Ans.(c)
S3. Ans.(d)
S4. Ans.(a)
S5. Ans.(b)
S6. Ans.(e)
S7. Ans.(c)
S8. Ans.(d)
S9. Ans.(b)
S10. Ans.(e)
S11. Ans.(a)
S12. Ans.(a)
S13. Ans.(c)
S14. Ans.(b)
S15. Ans.(d)