PRINCIPLES OF BANKING

Sample Questions and Sample Questions and AnswersAnswers

Multiple ChoiceMultiple Choice

Question 1Question 1

Which of the following instruments is used by Which of the following instruments is used by public to directly lend to the Government?public to directly lend to the Government?

(a) Bank Deposits(a) Bank Deposits (b) Public Provident Fund(b) Public Provident Fund (c) T-Bills(c) T-Bills (d) Certificates of Deposit(d) Certificates of Deposit

Answer 1: b

Question 2Question 2

Inter-bank call money refers to borrowing Inter-bank call money refers to borrowing among banks foramong banks for

(a) Overnight(a) Overnight (b) Two days(b) Two days (b) More than 14 days(b) More than 14 days (c) Less than 14 days(c) Less than 14 days

Answer 2: a

Question 3Question 3

Certificates of Deposits have to be of Certificates of Deposits have to be of a minimum value ofa minimum value of

(a) Rupees 1 lakh(a) Rupees 1 lakh (b) Rupees 10 lakh(b) Rupees 10 lakh (c) Rupees 25 lakh(c) Rupees 25 lakh (d) Rupees 1 crore(d) Rupees 1 crore

Answer 3: a

Question 4Question 4

Commercial paper can be issuedCommercial paper can be issued (a) By all corporates(a) By all corporates (b)(b) By all corporates with net worth By all corporates with net worth

of at least Rs. 10 croresof at least Rs. 10 crores (c) By all corporates with net worth (c) By all corporates with net worth

of at least Rs. 5 croresof at least Rs. 5 crores (d) Can be issued only by banks(d) Can be issued only by banks

Answer 4: c

Question 5Question 5

Commercial Bills market is a part ofCommercial Bills market is a part of (a) Organised money market(a) Organised money market (b) Unorganised money market(b) Unorganised money market (c) Stock market(c) Stock market (d) None of the above(d) None of the above

Answer 5: a

Question 6Question 6 Which of the following statements is not Which of the following statements is not

true?true? (a) Call money market deals with (a) Call money market deals with

overnight loansovernight loans (b) As special cases, few FIs like LIC, UTI (b) As special cases, few FIs like LIC, UTI

can borrow in the call money marketcan borrow in the call money market (c) Call loans are made on a ‘clean’ basis(c) Call loans are made on a ‘clean’ basis (d) Is a part of organised money market(d) Is a part of organised money market

Answer 6: b

Question 7Question 7

A scheduled commercial bank is one:A scheduled commercial bank is one: (a) Which is included in the Second (a) Which is included in the Second

Schedule of the RBI Act 1934Schedule of the RBI Act 1934 (b) Which is included in the Banking (b) Which is included in the Banking

Regulation Act, 1949Regulation Act, 1949 (c) Both (a) and (b)(c) Both (a) and (b) (d) None of the above(d) None of the above

Answer 7: a

Question 8Question 8

Indigenous bankers are regulated byIndigenous bankers are regulated by (a) Reserve Bank of India(a) Reserve Bank of India (b) Ministry of Finance(b) Ministry of Finance (c) Registrar of Co-operative (c) Registrar of Co-operative

SocietiesSocieties (d) None of the above(d) None of the above

Answer 8: d

Question 9Question 9

What is the current SLR What is the current SLR requirements of banks?requirements of banks?

a)a) 40% of the deposits40% of the deposits

b)b) 25% of the deposits25% of the deposits

c)c) 31% of the deposits31% of the deposits

d)d) None of the AboveNone of the Above

Answer 9: d

Question 10Question 10

What is the CRR currently What is the CRR currently prescribed by RBI ?prescribed by RBI ?

a)a) 5.5%5.5%

b)b) 6.0%6.0%

c)c) 6.5%6.5%

d)d) 7.0%7.0%

Answer 10: c

Question 11Question 11

What is the stipulated share of the What is the stipulated share of the priority sector in the net bank priority sector in the net bank credit?credit?

a)a) 35%35%

b)b) 20%20%

c)c) 40%40%

d)d) 45%45%Answer 11: c

Question 12Question 12

Mutual funds are regulated byMutual funds are regulated by– (a) Association of Mutual Funds of India (a) Association of Mutual Funds of India

(AMFI)(AMFI)– (b) Securities and Exchange Board of (b) Securities and Exchange Board of

India (SEBI)India (SEBI)– (c) Reserve Bank of India(c) Reserve Bank of India– (d) None of the above(d) None of the above

Answer 12: b

Question 13Question 13

A growth fund isA growth fund is– (a) One in which the money is invested (a) One in which the money is invested

in equitiesin equities– (b) One in which the money is invested (b) One in which the money is invested

in government bondsin government bonds– (c) One in which the money is invested (c) One in which the money is invested

equally in equity and bondsequally in equity and bonds– (d) Money is invested only in money (d) Money is invested only in money

market instrumentsmarket instruments

Answer 13: a

Question 14Question 14

ARCIL is an example of ARCIL is an example of

(a) A financial institution(a) A financial institution

(b) A mutual fund(b) A mutual fund

(c) An asset management company set (c) An asset management company set up to acquire NPAs of banksup to acquire NPAs of banks

(d) A discount and financing house(d) A discount and financing house

Answer 14: c