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Money and Banking online Test - 20

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Money and Banking online Test - 20
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Weekly Quiz Competition
  • Question 1
    1 / -0
    The RBI laid down capital adequacy norms in _______.
    Solution
    The RBI laid down the capital adequacy norms in April 1992 based on the recommendations of the first Narasimhan Committee. As per the RBI norms, the capital adequacy ratio to be maintained by the Indian scheduled commercial banks is 9%. The capital adequacy ratio to be maintained by the Indian public sector banks is 12%. The CAR maintained by the banks ensures their solvency.
    Hence, option (B) is the correct answer.
  • Question 2
    1 / -0
    The Lead Bank Scheme was introduced in ______.
    Solution
    A committee under the chairmanship of Prof. D R gadgil recommended an area approach which would help in bridging the structural credit gap between the rich and the poor. The area approach was directed towards having a targeted and focused banking. It would also help with employment and increasing the standard of living. Hence, the Lead Banking scheme states that each district could be allotted to a particular bank , which would play a role of lead bank.
  • Question 3
    1 / -0
    The head office of the RBI is located at __________.
    Solution
    The Central Office of the Reserved Bank of India was first established in Kolkata but was later moved to Mumbai in 1937.
  • Question 4
    1 / -0
    Which of the following refers to the Goiporia committee? 
    Solution
    RBI appointed Goiporia committee under the chairmanship of MN Goiporia. The committee made recommendations to improve customer service of banks. It mainly made recommendations regarding the speed, accuracy and efficiency of customer service.
  • Question 5
    1 / -0
    "Capital adequacy norms" is laid down by _________.
    Solution
    RBI lays down and regulates the capital adequacy norms in India. Capital adequacy means the amount of capital a bank or a financial institution is required to maintain. This amount is fixed by RBI in India. The first Narasimhan committee recommended the maintenance of the capital adequacy ratio. It is necessary to maintain the fixed CAR because it depicts the solvency of the bank. As per the circular, Indian scheduled commercial banks need to maintain a capital adequacy ratio of 9%. However, Indian public sector banks need to maintain a ratio of 12%.
    Hence, option (C) is the correct answer.
  • Question 6
    1 / -0
    The expected rate of return of the money market is _________.
    Solution
    The money market yield will be lower than the yield on stocks and bonds because of the low risk.
  • Question 7
    1 / -0
    In India, the Commercial Banks are given license of operation by _________.
    Solution

    A commercial bank is that financial institution which  accepts deposit from people and offers loan for the purpose of consumption or investment. In India, the commercial banks are given license of operation by the Reserve bank of India which is an apex bank that controls the entire banking system of India. 

  • Question 8
    1 / -0
    The RBI has introduced prudential accounting norms for banks since ______.
    Solution
    The RBI has introduced prudential accounting norms for banks since 1980-81. According to the prudential accounting norms, interests should not be debited on the accrual basis but only on the cash basis. This prudential norm which is introduced by the central bank of India is expected to follow by all other commercial banks.
  • Question 9
    1 / -0
    Only institutional investors can participate in __________.
    Solution
    Only institutional investors can participate in money market. The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods, typically up to twelve months.
    Hence, option (D) is the correct answer.
  • Question 10
    1 / -0
    What does Greesham's Law state?
    Solution
    Gresham's law is a monetary principle stating that "bad money drives out good." It is primarily used for consideration and application in currency markets.
    Gresham’s law was originally based on the composition of minted coins and the value of the precious metals used in them. However, since the abandonment of metallic currency standards, the theory has been applied to the relative stability of different currencies' value in global markets.
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