Banking Awareness Questions for RBI Grade-B Phase-1 Exam

Dear Readers,


Just a few days are left for RBI Grade-B Phase-1 Exam. It is time to pace up your preparation of Banking Awareness for RBI Grade-B Officers. These Banking questions will also help you in preparing for other upcoming banking recruitment examination.

Q1. The Reserve Bank of India (RBI) has granted “in-principle” approval to the ________  applicants to set up small finance banks under the “Guidelines for Licensing of Small Finance Banks?
(a) 11
(b) 12
(c) 13
(d) 10
(e) 15

S1. Ans.(d)
Sol. The Reserve Bank of India (RBI) has decided to grant “in-principle” approval to the following 10 applicants to set up small finance banks under the “Guidelines for Licensing of Small Finance Banks in the private sector” (Guidelines) issued on November 27, 2014.
Names of selected applicants
1. Au Financiers (India) Ltd., Jaipur
2. Capital Local Area Bank Ltd., Jalandhar
3. Disha Microfin Private Ltd., Ahmedabad
4. Equitas Holdings P Limited, Chennai
5. ESAF Microfinance and Investments Private Ltd., Chennai
6. Janalakshmi Financial Services Private Limited, Bengaluru
7. RGVN (North East) Microfinance Limited, Guwahati
8. Suryoday Micro Finance Private Ltd., Navi Mumbai
9. Ujjivan Financial Services Private Ltd., Bengaluru
10. Utkarsh Micro Finance Private Ltd., Varanasi

Q2. The minimum paid-up equity capital for small finance banks shall be----------
(a) Rs. 100 crore
(b) Rs. 200 crore
(c) Rs. 300 crore
(d) Rs. 400 crore
(e) Rs. 500 crore

S2. Ans.(a)
Sol. The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore.

Q3. Reserve Bank of India has granted the in-principle licence for small finance banks. The in-principle approval granted by RBI will be valid for a period of ________ months.
(a) 24 months
(b) 10 months
(c) 18 months
(d) 50 months
(e) 12 months

S3. Ans.(c)
Sol. Reserve Bank of India has granted in-principle licence for small finance banks to ten entities. The in-principle approval granted by RBI will be valid for a period of 18 months.

Q4. Where is the headquarter of AU Small Finance Bank?
(a) Jalandhar, Punjab
(b) Ahmedabad, Gujarat
(c) Guwahati, Assam
(d) Bengaluru, Karnataka
(e) Jaipur, Rajasthan

S4. Ans.(e)
Sol. Jaipur, Rajasthan is headquarter of AU Small Finance Bank.

Q5. RBI was granted a licence to small Finance Banks for the commencement of banking business under Section ______ of the Banking Regulation Act, 1949.
(a) Section 38(3)
(b) Section 22(1)
(c) Section 47(4)
(d) Section 12(2)
(e) Section 27(5)

S5. Ans.(b)

Sol. RBI was granted a licence to small Finance Banks for the commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949.

Q6. The foreign shareholding in the small finance bank would be as per the FDI policy for _______________ as amended from time to time.
(a) Private Sector Banks
(b) Public Sector Banks 
(c) Foreign Sector Banks 
(d) Regional Rural Banks
(e) All of the above

S6. Ans.(a)
Sol. The foreign shareholding in the small finance bank would be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time.

Q7. The promoter's minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be ---------?
(a) 50 per cent
(b) 40 per cent
(c) 60 per cent
(d) 30 per cent
(e) 20 per cent

S7. Ans.(b)
Sol. The promoter's minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be 40 per cent and gradually brought down to 26 percent within 12 years from the date of commencement of business of the bank.

Q8. Small Finance Banks will be required to extend ________ of its ANBC to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.
(a) 55%
(b) 35%
(c) 75%
(d) 50%
(e) 10%

S8. Ans.(c)
Sol. The small finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.

Q9. The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including the requirement of maintenance of CRR and SLR. What is the present rate of SLR?
(a) 20.75 per cent
(b) 19.75 per cent
(c) 20.25 per cent
(d) 20.50 per cent
(e) 21.25 per cent

S9. Ans.(d)
Sol. The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including the requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). No forbearance would be provided for complying with the statutory provisions. The present rate of SLR is 20.50 per cent.

Q10. FDI is an investment made by a company or individual in one country in business interests in another country. FDI stands for-
(a) Foreign Direct Industries
(b) Fully Direct Investment
(c) Foreign Department Investment
(d) Foreign Direct Installment
(e) Foreign Direct Investment

S10. Ans.(e)
Sol. Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company.

Q11. What is the full form of ANBC in Banking?
(a) Adjusted Net Bank Cash
(b) Adjusted Net Bank Control
(c) Adjusted Net Bank Core
(d) Adjusted Net Bank Conclusion
(e) Adjusted Net Bank Credit

S11. Ans.(e)
Sol. ANBC stands for Adjusted Net Bank Credit in Banking.

Q12. Who is the chairman of the board of AU Small Finance Bank?
(a) Ganeshan Neelakanta Iyer
(b) Sher Bahadur Deuba
(c) K G Karmakar
(d) Mannil Venugopalan
(e) Shashi Shekar Vempati

S12. Ans.(d)
Sol. Mannil Venugopalan is the chairman of the board of AU Small Finance Bank.

Q13. Who was the chairperson of the External Advisory Committee (EAC) for Small Finance Banks?
(a) Deepak Phatak
(b) MS Sahoo
(c) Usha Thorat
(d) Nachiket M Mor
(e) M Balachandran

S13. Ans.(c)
Sol. Usha Thorat former Deputy Governor, Reserve Bank of India was the chairperson of the External Advisory Committee (EAC) for Small Finance Banks.

Q14. Utkarsh Micro Finance Limited is registered with Reserve Bank of India as Non-Banking Finance Company-MFI (NBFC-MFI). Where is the registered office and corporate office of Utkarsh Micro Finance Limited?
(a) Dehradun, Uttarakhand
(b) Varanasi, Uttar Pradesh
(c) Bhagalpur, Bihar
(d) Siliguri, West Bengal
(e) Puri, Odisha

S14. Ans.(b)
Sol. Utkarsh Micro Finance Limited is registered with Reserve Bank of India as Non Banking Finance Company-MFI (NBFC-MFI). Its registered office and corporate office is in Varanasi (Uttar Pradesh).

Q15. Reserve Bank of India (RBI) has granted the in-principle licence for small finance banks. Which among the following is true about small finance banks?
(a) Undertake basic banking activities of acceptance of deposits and lending 
(b) Allowed to set up subsidiaries to undertake non-banking financial activities
(c) Allowed to distribute mutual fund products, insurance products and pension products
(d) All of the above
(e) Both (b) and (a)

S15. Ans.(d)
Sol. Small finance banks can do:- 
1. Undertake basic banking activities of acceptance of deposits and lending. 
2. Can lend only for financial inclusion including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.
3. Allowed to distribute mutual fund products, insurance products and pension products.