Banking Exam Question Paper : 1

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1. Which of the following are functions of foreign bank?

a. remitting money from one country to another.
b. discounting of foreign bills.
c. buying and selling of metals.
d. helping in import and export trade.

i. only a and b
ii. b and c
iii. a b and c
iv all of the above.

ANSWER: iv all of the above.

2. What does the M in M-banking stands for?

a. money
b. marginal
c. message
d. mutual fund
e. mobile

ANSWER: e. mobile

3. Section 14 of banking regulations act 1949 deals with:-

a. prohibition of a banking company form creating a charge upon anu unpaid capital of the company.
b. system of licensing of banks by RBI
c. regarding holidays of the bank
d. none of the above.

ANSWER: a. prohibition of a banking company form creating a charge upon anu unpaid capital of the company.

4. As per which act, holidays are provided in the banks?

a. RBI act
b. Banking regulation act
c. As per orders of govt.
d. Banking nationalization act.

ANSWER: b. Banking regulation act

5. World investment report is published by?

a. UNDP
b. World bank
c. IMF
d. UNCTAD

ANSWER: d. UNCTAD

6. Which of the following schemes are not meant for investment purposes?

a. national saving certificate
b. mutual funds
c. infrastructure bonds
d. letter of credit
e. none of the above

ANSWER: d. letter of credit

7. What was the purpose of setting up Narsimhan committee-2?

a. efficiency and productivity of financial institution
b. banking reform process
c. export of it sector
d. fiscal reform process

ANSWER: b. banking reform process

8. Merchant banking in India is governed by:-

a. SEBI
b. RBI
c. IRDA
d. ministry of finance

ANSWER: a. SEBI

9. Money laundering means:-

a. hiding of income source mainly to avoid income tax
b. money acquired through criminal sources.
c. money acquired from undisclosed foreign sources.
d. process of conversion of money obtained illegally to appear to have originated from legitimate sources.

ANSWER: d. process of conversion of money obtained illegally to appear to have originated from legitimate sources.

10. If you wish to purchase US dollars to travel abroad, you will approach:-

a. ministry of finance
b. US embassy
c. any bank branch authorized for such activity
d. RBI
e. external affairs ministry.

ANSWER: c. any bank branch authorized for such activity

11. What is the full form of CBS?

a) Core Banking Solution
b) Core Banking Software
c) Core Banking System
d) Core Banking Service

ANSWER: a) Core Banking Solution

Core Banking Solution (CBS) is a delivery channel for quick and fast delivery.

12. ‘Subprime lending’ is a term applied to the loans made to ___________________________.

a) Those borrowers who do not have a good credit history
b) Those borrowers who have a good credit history
c) Those borrowers who do not have a good debit history
d) Those borrowers who have a good debit history

ANSWER: a) Those borrowers who do not have a good credit history

These loans are characterized by higher interest rates, poor quality collateral, and less favorable terms in order to compensate for higher credit risk.

13. Which among the following is the act of taking on a risk for a fee?

a) Guidewire
b) Initial Public Offering
c) Predictive analytics
d) Underwriting

ANSWER: d) Underwriting

Underwriting is provided by a bank, insurer or investment house.

14. Which among the following is called the rate of interest charged by RBI for lending money to various commercial banks by rediscounting of the bills in India?

a) Bank Rate
b) Discount Window
c) Monetary Policy
d) Overnight Rate

ANSWER: a) Bank Rate

It is also referred to as the discount rate.

15. Which of the following are to be followed by Commercial Banks for risk management?

a) Basel II norms
b) Basel III norms
c) Basel I norms
d) Solvency II norms

ANSWER: a) Basel II norms

Basel II is the second of the Basel Accords which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.

16. What is the full form of CRR?

a) Cash Reserve Rate
b) Cash Reserve Ratio
c) Cash Recession Ratio
d) Core Reserve Rate

ANSWER: b) Cash Reserve Ratio

Cash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.

17. What is the full form of ‘MAT’?

a) Maximum Alternate Tax
b) Minimum Alternate Tax
c) Maximum Alternate Time
d) Minimum Alternate Time

ANSWER: b) Minimum Alternate Tax

The intent of introducing MAT was to ensure that no taxpayer with substantial income can avoid tax liability by using exclusions, deductions and incentives.

18. What is the full form of NDTL?

a) New Demand & Tenure Liabilities
b) Net Demand & Time Liabilities
c) National Deposits & Total Liquidity
d) Net Demand & Tax Liabilities

ANSWER: b) Net Demand & Time Liabilities

The Cash Reserve Ratio of scheduled banks is fixed at a certain percentage of their NDTL.

19. Which one of the following is known as the recession occurring two times with a small gap in between?

a) Deep Recession
b) Deflation
c) Double-dip Recession
d) Double Inflation

ANSWER: c) Double-dip Recession

A “double-dip recession” is also referred to as a “W-shaped” recession.

20. “Basel Committee on Banking Supervision” is also known as ___________________________.

a) Bank for International Settlements Committee
b) Banking Regulation Committee
c) Financial Stability Board
d) Global Financial System

ANSWER: a) Bank for International Settlements Committee

At the end of 1974, the central bank governors of the G10 countries established a Committee on Banking Regulations and Supervisory Practices. The Committee was designed as a forum for regular cooperation between its member countries on banking supervisory matters.