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Banking Awareness MCQs for Bank Exams 2016 – Practice Set

Banking Awareness MCQs for Bank Exams 2016 – Practice Set

1. If a customer wishes to purchase some US dollars in India. He/She should have to visit
(A) Postal Division.
(B) American Express Bank only.
(C) RBI or any bank branch that is authorized for such business……
(D) Ministry of foreign affairs
(E) None of the above.

2. Which of the following practices would result in a fall in asset prices?
(A) Low liquidity in the economy…..
(B) High Liquidity in the economy.
(C) Increasing the reverse repo rates by RBI.
(D) RBI allowing more banks to pay
(E) None of the above.

3. Consider the following
I. Bank Rate Policy.
II. Open Market Operations.
III. Devaluation of Rupee.
Which of the above are called fiscal measures?
(A) Only II
(B) Both I and II
(C) Both I and III
(D) Only III…….
(E) None of these.

4. Sometimes we read a term ‘Hot Money’ in newspapers. What are the characteristics of Hot Money?
I. The term is used for fresh currency notes issued by the RBI.
II. It is the fund which flows into the market to take advantage of high-interest rates.
III. It is the fund which is thrown in the market to create the imbalance in the stock markets.
Select the correct answer using the codes given below.

(A) Only I
(B) Only II.
(C) Only III
(D) All of these
(E) None of these.

5. Who is the final authority for deciding the design, form, and material of bank notes?
(A) Central Government.
(B) Reserve Bank of India
(C) Indian Banks Association
(D) Not Issuing Authority of India
(E) None of the above.

6. The interest rate at which the RBI lends to commercial banks in the short term to maintain liquidity is known as
(A) Interest Rate
(B) Bank Rate (BR)
(C) Reverse Repo Rate (RRR)
(D) Repo Rate.
(E) None of these.

7.As we all know, banks in India are required to maintain a portion of their demand and time liabilities with Reserve Bank of India (RBI). This portion is called
(A) Statutory Liquidity Ratio (SLR)
(B) Cash Reserve Ratio (CRR).
(C) Bank Deposit
(D) Reverse Repo
(E) Government Securities.

8. Reserve Bank of India (RBI) is the lender of the last resort to scheduled commercial banks because
(A) the parties can approach RBI when their limits are exhausted
(B) they are not able to get loans from other banks
(C) RBI meets directly or indirectly all their reasonable demands for financial accommodation subject to certain terms and conditions which constitute its discount rate policy.
(D) All of these

9. The currency notes issued by RBI have a cent percent cover in
(A) Gold
(B) Approved Assets.
(C) Foreign Exchange
(D) Trustee Securities

10) Which of the following do not fall within the functions of the RBI?
(A) Control of Credit
(B) Regulation of currency
(C) Banker to the government, banker’s bank and lender of the last resort
(D) Accepting deposits and making loans and advances to the public.
(e) None of these

11)The public debt office of the Reserve Bank of India.
(A) is a central depository for all types of government securities except treasury bills.
(B) attends to the function of note issue the Reserve Bank of India.
(C) is responsible for maintaining external value of the rupee
(D) controls the balance of payment position of the government of India
(E) None of these.

12) In periods of depression when the RBI desires to encourage the banking system to create more credit it
(A) Reduces the bank rate
(B) Raises the bank rate.
(C) Permits the bank rate to be decided by market forces.
(D) All of the above.

13) When the RBI needs to restrict expansion of credit it
(A) raises the bank rate.
(B) reduces the bank rate.
(C) freezes the bank rate.
(D) All of the above
(E) None of these.

14) Under Section 19 of RBI Act 1934, Reserve Bank of India (RBI) has been prohibited from which of the following options
(A) Allowing interest on deposits or current accounts.
(B) Drawing or accepting bills payable otherwise than demand.
(C) making loans on advances
(D) All of the above.

15) Drawing, Accepting, making or issuing of any promissory note, hundi or bill of exchange expressed to be payable to bearer on demand by a person other than the RBI or the Central Government is prohibited under
(A) Negotiable Instrument act, 1881.
(B) Banking Regulation Act , 1949.
(C) Indian Contract Act, 1872
(D) Section 31 (1) of the Reserve Bank of India Act, 1934.
(E) None of the above.

16) The currency notes are issued by the Reserve Bank of India under the signature of
(A) Executive Director
(B) Deputy Governor
(C) Governor.
(D) Secretory
(E) None of the above.

17)Reverse Repo Rate is a tool used by Reserve Bank of India (RBI) to ______________.
(A) absorb liquidity…..
(B) inject liquidity
(C) increase the liquidity with a banking system
(D) to keep liquidity at one level
(E) None of these.
18) The opening of branches by banks is governed by the provision of
(A) Section 24 of RBI Act, 1934.
(B) Section 131 of the Negotiable Instruments Act, 1881.
(C) Section 45 of Bank Nationalization Act, 1969.
(D) Section 23 of the Banking Regulation Act, 1949.

19) The minting of rupee coin is governed by
(A) Coinage Act, 1996.
(B) RBI Act 1934
(C) Banking Regulation Act, 1934
(D) Currency Act, 1996

20) The note issue system in India is based on
(A) Gold Deposit system
(B) Minimum Reserve system
(C) Proportional Reserve System.
(D) Simple Deposit System
(E) None of the Above.

21) When the growth of GDP in a country slows down suddenly, people start losing their jobs and the situation continues for several weeks. What name is given to this state of an economy?
(A) Deflation
(B) Inflation
(C) Recession
(D) Economic boom

22) Which of the following is not a measure adopted by the government or RBI to control inflation?
(A) Price Control
(B) Fiscal Policy
(C) Financial Inclusion.
(D) Monetary Policy
(E) Public Distribution System

23) What does the letter L denote in the term ‘LAF’ as referred every now and then in relation to the monetory policy of the RBI?
(A) Liquidity.
(B) Price control
(C) Public Distribution System
(D) Financial Inclusion

24) Whenever RBI does some Open Market Operation transactions actually it wishes to regulate which of the following ?
(A) Inflation Only
(B) Liquidity in economy.
(C) Borrowing powers of the banks
(D) Flow of foreign direct investments

25) When banks accept of fixed sum of money from an individual for a definite term and pay on maturity with interest, the deposit is known as ________
(A) Bond
(B) Mortgage
(C) Advance
(D) Demand Deposit
(E) Term Deposit.

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