Money and Banking online Test

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Money and Banking online Test - 19

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Weekly Quiz Competition

Question 1
1 / -0

Merchant banking is generally ________ in character.

A
national

B
international

C
rural

D
none of the above

Solution

The main role of a Merchant bank is to provide financing to large corporate that do business overseas.
Question 2
1 / -0

Which of the following is associated with asset reconstruction company?

A
DICGC

B
ECGC

C
NPA

D
SEBI

Solution

NPA stands for Non Performing Assets which refers to a classification for loans or advances that are in default or are in arrears on scheduled payments of principal or interest. These are usually associated with asset reconstruction company and includes loans like bank overdraft, cash credit etc.
Question 3
1 / -0

As per the RBI Act, $$1934$$, the following functions are described as the functions of a Central Bank:
(i) Banking functions
(ii) Advisory functions
(iii) Supervisory functions
(iv) Promotional functions
Identify the correct combination:

A
(i), (iii) and (iv)

B
(i), (ii) and (iv)

C
(ii), (iii) and (iv)

D
Only (i) and (iii)

Solution

Central bank is an apex bank that controls the entire banking system of a country. It is the sole agency of note issuing and controls the supply of money in the economy. It performs the following functions as per the the Reserve Bank of India Act, 1934:
1. Banking functions: The central bank of an economy performs all types of basic banking services for other commercial banks and government.
2. Supervisory functions: It supervises other banks and government into various economic conditions and guide them at the time of inflation or deflation in the economy.
3. Promotional functions: The central bank also perform promotional functions which includes integrating with world economies and maintaining foreign reserves. They represent the country's economy internationally.
Question 4
1 / -0

Which one of the following is not a money market instrument?

A
Commercial paper

B
Participatory certificates

C
Warrants

D
Treasury Bills
Question 5
1 / -0

If a bank is unable to refund the short term deposits as funds are locked in long term loans, it involves which of the following?

A
Interest rate risk

B
Operational risk

C
Liquidity risk

D
Market risk

Solution

Liquidity risk of a bank refers to the situation when a bank faces cash shortage. In such a situation bank is not able to pay its short term deposits as the funds of these deposits are blocked in long term loans given to the account holders.
Question 6
1 / -0

The RBI set up Department of Computer Technology in ______.

A
1985

B
1990

C
1995

D
2000
Question 7
1 / -0

Which committee made a number of suggestions to overcome the defects of the indian banking system?

A
Dantwala Committee

B
Narasimham Committee

C
Khusro Committee

D
Kelkar Committee

Solution

In the year 1991, the first Narasimhan Committee made a number of recommendations in order to overcome the defects of the Indian banking system. The committee suggested a reduction in the statutory liquidity ratio, the abolition of branch licensing policy, setting up the Asset Reconstruction fund, etc. Based on these recommendations the government lowered the SLR and CRR, allowed the interest rates to be determined by the market forces, opened the banking sector for private enterprises also, etc.
Hence, option (B) is the correct answer.
Question 8
1 / -0

The RBI introduced participation certificates in _______.

A
1969

B
1970

C
1971

D
1972
Question 9
1 / -0

Which of the following is not a traditional function of the RBI?

A
Issue of currency

B
Bankers to Government

C
Banker's Bank

D
Credit to Priority Sector and Weaker sections

Solution

Option - D
Credit to priority sector and weaker sections is not a traditional function of RBI.
RBI is the sole issuer of currency notes in the country. Also, it is considered as the banker to government and banker to other banks in the country.
Question 10
1 / -0

The RBI is managed by the Central Board of Directors comprising ________.

A
10 members

B
15 members

C
21 members

D
25 members

Solution

RBI commenced its operations from 1st April 1935. The Central Board of Directors is headed by the RBI Governor, comprising of 21 members including the Governor. 4 Deputy Governor, 2 Finance Ministry representatives, 10 government nominated directors to represent important elements of Indian economy, 4 directors to represent local boards.

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Re-Attempt Weekly Quiz Competition

Money and Banking online Test - 19

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Money and Banking online Test - 19

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SHARING IS CARING

Question 1

national

international

rural

none of the above

Solution

Question 2

DICGC

ECGC

NPA

SEBI

Solution

Question 3

(i), (iii) and (iv)

(i), (ii) and (iv)

(ii), (iii) and (iv)

Only (i) and (iii)

Solution

Question 4

Commercial paper

Participatory certificates

Warrants

Treasury Bills

Question 5

Interest rate risk

Operational risk

Liquidity risk

Market risk

Solution

Question 6

1985

1990

1995

2000

Question 7

Dantwala Committee

Narasimham Committee

Khusro Committee

Kelkar Committee

Solution

Question 8

1969

1970

1971

1972

Question 9

Issue of currency

Bankers to Government

Banker's Bank

Credit to Priority Sector and Weaker sections

Solution

Question 10

10 members

15 members

21 members

25 members

Solution

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