Banking Quiz

1. Which of the statements mentioned below is/are correct?
1. T-bills are issued by the Government of India on behalf of the RBI
2. T-bills are short-term money market instruments
3. T-bills cannot be purchased by a resident of India
(a) All are correct    
(b) 2 & 3 are correct
(c) Only 2 is correct  
(d) Only 3 is correct

2. Which of the following is an incorrect statement?
(a) Reverse Repurchase operation by RBI is aimed at increasing the liquidity in the banking system
(b) Special Drawing Rights (SDR) are issued by IMF
(c) Rupee appreciation results in decrease in imports
(d) Increase in the inflation rate leads to decline in real interest rate

3. What purpose does the MICR number, which is present on a cheque, serve?
(a) It is used to identify the genuineness of the cheque
(b) It is used to identify the bank branch
(c) It is nothing but a type of cheque number
(d) Both (a) and (b)

4. In TRIPS, what does ‘I’ stand for?
(a) Intellectual  
(b) Information  
(c) Indian    
(d) Infra

5. Insurance companies use the bank sales channels to sell their products. Which of the following terms describes this selling process?
(a) Scheduled banking    
(b) Scheduled Insurance
(c) Bankinsuring            
(d) Bancassurance

6. Which of the following acts is useful in controlling HAWALA transactions?
(a) FEMA Act    
(b) RBI Act  
(c) DICGC Act  
(d) Banking Regulation Act

7. What does the term SME stand for?
(a) Small and Micro Enterprises    
(b) Small and Medium Enterprises
(c) State and Medium Economy  
(d) Small and Medium Economy

8. ‘CAMELS’ is a type of Bank Rating System. In CAMELS, what does ‘C’ stand for?
(a) Currency            
(b) Compensation
(c) Capital Adequacy  
(d) Capitalisation

9. A Eurobond is
(a) A bond released in a currency of the European countries
(b) A bond released in an Indian currency in European nations
(c) A bond released in Euro in our country
(d) A bond released in a currency other than the currency of the country in which it is issued

10. In banking parlance, ‘NPA’ stands for
(a) Non Performing Asset  
(b) Net Producing Asset
(c) Net Performing Asset  
(d) Not Promoting Asset

11. LAF is an indirect instrument of monetary policy, which is used by RBI to regulate the liquidity in banking system. ‘LAF’ stands for:
(a) Liquidity Adjustment Facility  
(b) Liquidity Account Facility
(c) Liquidity Allotment Facility    
(d) Long Adjustment Facility

12. On the basis of which commission was RBI established?
(a) Hilton Young Commission  
(b) British Commission
(c) Federal Commission          
(d) Federation Commission

13. Life insurance and general insurance companies like LIC, ICICI Prudential, ICICI Lombard, National Insurance etc. are regulated by which organisation?
(a) RBI  
(b) PFRDA  
(c) IRDA  
(d) IBA

14. Bank rate is defined as the
(a) Rate of interest charged by commercial banks from borrowers
(b) Rate of interest at which RBI lends money to banks against government securities
(c) Rate of interest allowed by commercial banks on their deposits
(d) Rate at which RBI purchases or rediscounts bills of exchange of commercial banks

15. An IDR (Indian Depository Receipt) is
(a) An instrument of monetary policy used by RBI
(b) A deposit account with a depository in India
(c) An instrument in the form of depository receipt created by an Indian depository against underlying equity shares of the issuing company
(d) An instrument in the form of deposit receipt issued by an Indian depository



ANSWERS – 
1. (c) Only 2 is correct
2. (c)  
3. (a) MICR number is used to identify the genuineness of cheque.
4. (a) TRIPS: Trade Related Intellectual Property Rights.
5. (d) Bancassurance.
6. (a) FEMA Act. (Foreign Exchange Management Act)
7. (b) Small and Medium Enterprises.
8. (c) CAMELS is a type of Bank Rating System. (C) stands for Capital Adequacy, (A) for Asset Quality, (M) for Management, (E) for Earnings, (L) for Liquidity and (S) for Sensitivity to Market Risk.
9. (d) A bond released in a currency other than the currency of the country in which it is issued.
10. (a) Non Performing Asset.
11. (a) Liquidity Adjustment Facility.
12. (a) Hilton Young Commission.
13. (c) Insurance companies in India are regulated by IRDA (Insurance Regulatory and Development Authority.)
14. (d) Rate at which RBI purchases or rediscounts bills of exchange of commercial banks

15. (c) An instrument in the form of depository receipt created by an Indian depository against underlying equity shares of the issuing company