1. which of the following cannot be included in the...

1. Which of the following cannot be included in the direction of a ‘financial intermediary’?

a) banks and non-bank finance companies

b) financial institutions

c) mutual funds

d) Companies engaged in manufacturing of goods

2. A Financial system means the structure that is available in an economy to mobilize ------------from various sectors of the economy and distribute the same to needy sectors

a) Capital

b) People

c) Vote

d) None of these

3. Banks are ‘financial intermediaries’ who intermediate between

a) Savers and Users

b)Debtors and Creditors

c) RBI and SBI

d) None of these

4. Two distinct roles of a Central Banking Authority are

a) Monetary control and banks supervision

b) Important and export

c) Clearing and Settlement

d) None of these

5. Monetary control is exercised through

a) CRR

b) SLR

c) Bank Rate

d) Repo/ Reverse Repo Mechanism

e) All of these

6. Banking is defined wide section 5(1) (b) of the Banking Regulation Act, 1949 as;

a) The accepting, for the purpose of lending or investment of deposits of money from the public,repayable on demand or otherwise and withdrawal by cheque, drafts order or otherwise.

b) Accepting deposits and making advances to public

c) Accepting money and keeping the same in their vault and repay the same on the demand ofcustomer

d) None of these

7. RBI was established in 1935 pursuant to the recommendation of;

a) The Hilton Young Commission

b) All India Rural Credit Survey Committee

c) Gorawala Committee

d) Talwar Committee

8. RBI was Nationalized in;

a) 1935

b) 1949

c) 1955

d) 1969

9. On 9th July 1969, 14 banks were nationalized, these banks had deposits of more than;

a) Rs.25 Crore

b) Rs.75 Crore

c) Rs.85 Crore

d) Rs.100 Crore

10. In 1993, a loss making nationalized bank was merged with the profit making PunjabNational Bank as a result total number of public sector bank is now;

a) 27

b) 28

c) 19

d) 14

11. Which of the following cannot be included in the money market:

a) call or notice money

b) corporate securities

c) certificate deposit

d) treasury bills

12. Commercial banks consist of

a) Public Sector banks

b) Private Sector banks

c) Foreign banks

d) Co-operative banks

e) a, b and c

f) All of these

13. The main activity of commercial banks is

a) Acceptance of deposits

b. Lending money

c) Investment

d. All of these

e) None of these

14. NBFC means

a) Non-Banking Finance Company

b) Net Borrower of Foreign Currency

c) New Bombay Finance Company

15. Which of the following bodies exercise control over NBFCs?

a) Central Govt.

b) RBI

c) a and b

d) None of these

16. RBI has now permitted banks to carry on the business of leasing, Hire Purchase andFactoring directly by themselves the leading under each category should not exceed;

a) 1% of the total bank credit

b) 5% of the total bank credit

c) 10% of the total bank credit

d) None of the above

17. As per sec. 6 of the BR Act, a banking company can undertake;

a) Merchant banking

b) Issue of guarantee and indemnity

c) Executor and trustee business

d) All of the above

18. The Banking Companies Act, 1949 was enacted to consolidate and amend the law relatingto banking companies w.e.f. 1st March 1966, the name of the act has been changed as:

a) Negotiable Instruments Act

b) Reserve Bank of India Act

c) The Banking and Transfer of Undertaking Act

d) The Banking Regulation Act

19. New Private Sector Banks (NPSB) have been authorized to be set up under the newliberalization policy, the minimum paid up capital should be;

a) Rs.50 Crore

b) Rs.100 Crore

c) Rs.150 Crore

d) Rs.200 Crore

20. The first public sector bank to issue capital to public is;

a) Corporation Bank

b) Indian Overseas Bank

c) Oriental Bank of Commerce

d) Punjab National Bank

21. Which of the following is part of the money market?

a) bonds issued by the govt.

b) bonds issued by public sector undertakings

c) term money

d) debentures

22. NBFCs are permitted to raise deposits from the public for lending through:

a) Leasing

b) Hire Purchase

c) Bill discounting

d) All of these

23. Primary Dealers (PD) deal in:

a) Gold and Silver

b) Government Securities

c) Primary Gold

d) None of these

24. Financial Institutions (FI) provide ---------- for industry and agriculture;

a) Long Term Funds

b) Short Term Funds

c) Raw Materials

d) Export Incentive

25. FIs are regulated in India by:

a) SEBI

b) RBI

c) Govt. of India

d) State Governments

Key

1.d 2.a 3.a 4.a 5.e 6.a 7.a 8.a 9.b 10.a 11.b 12.e 13.d

14.a 15.b 16.c 17.d 18.d 19.d 20.c 21.c 22.d 23.b 24.a 25.b

1. What is a Financial System?

a) Financial System means a mechanism in an economy to mobilize the monetary resources/capital from various surplus sectors of the economy and to all allocate and distribute the sameto various needy sectors

b) A system to access the demand and supply of the finance

c) An arrangement to finance the farmers of the country

d) A system to put financial management on the borrowers of the schedule commercial banksof the country

2. Financial system consists of two broad categories, normally;

a) Scheduled and non scheduled commercial banks

b) Public sector and private sector banks

c) Organized sector and unorganized sector

d) Reserve Bank of India and Government of India

3. Organized sector refers to;

a) Nationalised banks and private sector banks

b) Regional Rural Bans, Co-operative Banks Development Banks

c) Both (a) and (b)


4. Unorganized sector includes;

a) Money lenders, indigenous bankers

b) Power brokers, traders etc

c) Non Banking financial companies which do not fulfil the criteria notified by the Reserve Bankof India

d) All of the above

5. Central Monetary Authority of India is;

a) Government of India, Ministry of Finance

b) Reserve Bank of India

c) Planning Commission

d) Central Bank of India

6. The central banking authority i.e. RBI in India, is performing two distinct roles in the contextof money market that include:

a) monetary control and banking supervision

b) issue of currency and maintenance of CRR

c) handling govt. business and maintaining price stability

d) banking supervision and financial stability

7. Urban co-operative banks are jointly controlled by State governments and -------

a) RBI

b) NABARD

c) SEBI

d) Central Government

8. Other co-operative banks are controlled by State governments and ------------

a) NABARD

b) RBI

c) Central Government

d) SEBI

9. An efficient and effective Payment & Settlement Systems is required for a well run financialsystem.

a) True

b) False

10. Some of the ‘other activities’ undertaken by the central banks are

a) Maintenance of clearing houses

b) Creation of currency chests at various place

c) Creation of the mechanism of electronic transfer

d) a above

e) a and b above

f) a, b and c above

11. Which of the following is authorized to act as agent of Reserve Bank of India at the placeswhere is not branch of Reserve Bank of India?

a) Central Bank of India

b) State Bank of India

c) All banks situated at that place

d) All Nationalised Banks

12. Which of the following banks is not wholly owned by the Govt. of India?

a)Reserve Bank of Indiab) State Bank of India

c) All banks situated at that place

d) All Nationalized Banks

13. Share Capital of Nationalised banks is held by;

a) Central Government and Public


c) Both (a) and (b)

d) None of these

14. At present, there are–––––– of Nationalised banks is held by;

a) 14

b) 20

c) 19

d) 27

15. Commercial Banking System means;

a) Scheduled and Non Scheduled Banks

b) Private Sector and Public Sector Banks

c) Both (a) and (b)

d) Regional Rural Banks, Co-operative Bank and NBFCs.

16. Monetary control is exercised by RBI in India through:

a) Payment system

b) Issue of current

c) Cash reserves and liquid reserve ratios

d) Repo rate and reverse repo rate

17. Stock exchange is regulated by

a) RBI

b) NABARD

c) SEBI

d) Central Government

18. Only brokers approved by SEBI can operate in the stock exchange

a) True

b) False

19. Brokers perform the job of ---------- between buyers and sellers of securities

a) Intermediating

b) arranging meeting

c) marketing

20. Brokers are entitled to charge

a) Interest

b) Exchange

c) Discount

d) Brokerage

21. Regional Rural Banks are empowered to transact the business of banking as defined under;

a) Section 5 b) of Banking Regulation Act 1949

b) Union Budget every year

c) Regional Rural Bank Act 1976

d) Negotiable Instruments Act 1881

22. RRBs have been making contribution in the area of rural credit since reception still theysuffer from the following weaknesses;

a) Poor capital structure

b) Increasing overheads and decreasing profits

c) Lack of effective coordination between Commercial Banks, Co-operative Banks and RRBs inthe area of their operation

d) All of the above

23. The Regulatory Authority for Regional Rural Bank is;

a) RBI and NABARD

b) Sponsoring Bank

c) State Government and Central Government and Sponsoring Bank in the ration of 15: 50: 35.


24. Regional Rural Banks are allowed to pay half percent additional interest on;

a) Saving Accounts

b) Current Accounts

c) Time deposits of less than 3 years

d) (a) and (c)

25. On the current account balances maintained by the Regional Rural Banks with theSponsoring Commercial Bank, interest is payable at the rate of;

a) 9%

b) 6%

c) As applicable to savings accounting

d) Mutually agreed to

Key

1.a 2.c 3.c 4.d 5.b 6.a 7.a 8.a 9.a 10.f 11.b 12.b 13.a

14.c 15.c 16.c 17.c 18.a 19.a 20.d 21.a 22.d 23.a 24.d 25.d

1. The base rates for lending of banks are impacted by RBI by changing:

a) CRR

b) SLR

c) Repo rate and bank rate

d)Guidelines u/s 35A of B R Act

2. Companies who wish to raise money in the capital market have to get approval from

a) Central Govt.

b) RBI

c) a and b

d) SEBI

3. Merchant Bank

a) Requires approval from SEBI

b) Help corporate raise resources

c) Provides advisory services

d. Provides advice on mergers and acquisitions

e) All of these

f) None of these

4. Give the expansion of FII

a) Foreign Institutional Investor

b) Financial Investment Institution

c) Financial Institution of India

5. FII are foreign based funds authorized by SEBI to invest in Indian equity and debt marketthrough :

a) Banks

b) Mutual Funds

c) Stock Exchanges

d) Insurance companies

6. Regional Rural Banks are classified as;

a) Scheduled Commercial Banks

b) Public sector Banks

c) Co-operative Banks

d) Private Sector Banks

7. Paid up share capital of Regional Rural Bank is contributed by;

a) Nationalised Banks

b) NABARD


d) Central Government, State Government and the Sponsoring Commercial Bank in the ratio of50: 15: 35, respectively.

8. A Regional Rural Bank has an authorized capital of;

a) Rs.5 Crore

b) Rs.50 lacs

c) Rs.1 Crore

d) Non limit

9. The Regional Rural Banks are sponsored by;

a) Reserve Bank of India

b) NABARD

c) Any Scheduled Commercial Bank

d) All of these

10. The working of RRBs was reviewed in 1986 and their continuance and greater involvementof the sponsor bank in their management was recommended by;

a) Narasimham Committee

b) Kelkar Committee

c) Khusro Committee

d) Marathe Committee

11. Which of the following functions is not the function coming under functions of Centralbanking authority in India:

a) supervision over NBFC

b) supervision over the foreign institutional investors

c) management of payment system

d) regulating the money market

12. Who are Depositories?

a) Depositories hold securities in dematerialized (DEMAT) from

b) Maintain accounts of Depository Participants (DP)

c) Transfers securities from sellers to buyers in electronic form

d) All of these

e) None of these

13. What is true of Mutual Funds?

a) It is a collective investment that pools money from investors

b) It invests the pooled funds in stocks, debt and other securities

c) Less risky than direct investment in stock exchanges

d) It operates through an Asset Management Company for each of its scheme

e) All of these

f) None of these

14. The role of the ‘Registrar’ is to

a) Maintain register of share and debenture holders

b) Process share and debenture allocation

c) Licence the companies

d) a and b above

e) All of the above

15. IRDA stands for

a) Insurance Regulatory and Development Authority

b. International Registrar for Direct Agencies

c) Inter Regional Dispute Authority

16. Regional Rural Banks were established pursuant to the recommendations of;

a) Narasimham Committee

b) Kelkar Committee

c) Khusro Committee

d) Marathe Committee

17. In 1992 RBI had appointed a committee to make recommendations to tone up the workingof the Urban Co-operative Banks. The name of the committee was;

a) Marathe Committee

b) Narasimham Committee

c) Tondon Committee

d) Talwar Committee

18. The Land Development Banks grant medium term loan for Land Development etc, againstthe mortgage of lands. In some states these banks are known as;

a) Primary Agricultural Credit Societies

b) State Co-operative Banks

c) Urban Co-operative Banks

d) Land Mortgage Banks

19. A scheduled banks is one, the name of which is included in the second scheduled of RBIAct 1934. Such a bank should have a paid up Capital and Reserves of an aggregate value ofnot less than;

a) Rs. One lakh

b) Rs. Five lakh

c) Rs. Ten lakh

d) Rs. Hundred lakh

20. Sec. 20 of the BR Act prohibits a bank from granting any advance against the security of;

a) Its own shares

b) Partly paid shares

c) Personal Guarantee of its directors, manager

d) Guarantee of other banks

21. Which of the following is not a function of capital market regulatory authority of i.e. SEBI, inIndia:

a) regulation of debt market

b) control over the equity market

c) framing the rules for pension funds

d) supervision over listed companies

22. IRDA is the regulator for

a) Life Insurance

b) General Insurance

c) Pension Funds

d) All of these

23. What is the role of IRDA?

a) Regulates all aspects of insurance business

b) Grants licence to insurance companies

c) Frames regulations about the conduct of the business

d) Supervises insurance activities in the country

e) All of these

24. Which of the following is a newly introduced financial Instrument?

a) Commercial Paper

b) Certificate of deposits

c) Cash management

d) None of these

25. The primary responsibility for providing market for government securities and strengtheningthe Government securities market is that of:

a) Commercial banks

b) RBI

c) NBFCs

d) PDs

Key

1.c 2.d 3.e 4.a 5.c 6.a 7.d 8.a 9.c 10.b 11.b 12.d 13.e

14.d 15.a 16.a 17.a 18.d 19.b 20.a 21.c 22.d 23.e 24.c 25.d

1. Capital of Reserve Bank of India s held by;a) Central Government

b) Central and State Government

c) Central Government, State Government and public


2. The Central Office of Reserve Bank is situated at;a) New Delhi

b) Mumbai

c) Chennai

d) None of these

3. Resources of Land Development Banks are raised by;

a) Share capital from members which is linked to their borrowings from the bank

b) Reserve created out of profit

c) Borrowings comprising of interim accommodation deposits and debenture

d) All of the above

4. Merchant Banking connotes;a) Services rendered by Banks for merchants and traders

b) Catering to the needs of corporate customers for raising finance

c) Special scheme for sanction of term loan to merchants


5. Which is an apex body in the field of industrial finance in the country?

a) Industrial Development Bank of India

b) EXIM Bank

c) Industrial Credit and Investment Corporation of India Ltd

d) ECGC

6. The regulatory authority for the activities of Merchant Banker in India is;

a) Reserve Bank of India:

b) Ministry of Finance

c) Securities and Exchange Board of Delhi

d) Indian Banks Association

7. What are major functions undertaken by merchant bankers?

a) Issue Management

b) Capital structuring /restructuring

c) Market maker in capital market

d) All of the above

8. Which of the following is not the function of a merchant banker?

a) Collection of bills and cheques

b) Issue Management

c) Preparation of project reports

d) Syndication of loans

9. The small companies / organizations that have been created exclusively to deal in govt.securities are called;

a) NBFCs

b) mutual funds

c) primary dealers

d) asset management companies

10. The Central Board of Reserve Bank consists of ;

a) Governor and four Deputy Governors

b) Governor and five Deputy Governors

c) Either a or b

d) None of these

11. Reserve Bank can issue notes of different denominations from;

a) Rs.1 to Rs.5000

b) Rs.2 to Rs.5000

c) Rs.2 to Rs.10,000

d) All the above

e) None of the above

12. Reserve Bank is the banker to;

a) Central Government

b) State Government

c) Central and State Governments

d) None of these

13. Ways and Means advances are provided by Reserve Bank only to ; --------------


b) State Government

c) Both (a) and (b)


14. Merchant bankers which have net worth of more than rupees one crore are allowed by SEBIto function as;

a) Lead managers for issue of shares /debentures

b) Underwriters for issue of shares /debentures

c) Both (a) and (b)

d) Collection of cheques

15. Merchant bankers with net worth of Rs.50 lac and up to Rs.1 Crore are permitted to act as;

a) Co-managers for share/ debentures issue

b) Underwriters for share/ debenture issue

c) Both of above

d) Collection of cheques

16. Merchant bankers with net worth of over

Rs.20 lac and up to Rs.50 lac are allowed to act as;a) Advisors to issue of shares/ debentures

b) Underwriters for issue of shares/ debentures

c) Collection of cheques

d) All of the above

17. The following constitute the code of conduct for merchant bankers as stipulated by SEBI;a) Maintenance of high degree of standards of integrity and fairness in dealings

b) Providing true and adequate information to investors and abide by the provisions of variousacts, rules and regulations etc

c)Ethical conduct of business and provision of information to customers in respect of code

d) All of the above

18. Which is the apex institution accredited with all matters concerning policy, planning in thefield of credit for agriculture and other economic activities in rural areas?

a) NABARD

b) SIDBI

c) IFCI

d) Regional Rural Bank

19. Which of the following have been created to provide long term funds for industry oragriculture:

a) mutual funds

b) Financial institutions

c) asset management companies

d) non-bank finance companies

20. What is ‘Ways and Means advances’ provided by Reserve Bank?

a) They are temporary advances to meet immediate needs of the Governments.

b) They are long term advances to Governments for building infrastructure

c) None of the above

21. Which of the following come under regulatory powers of Reserve Bank?

a) Power to licence banks

b) Power to regulate the business of banks

c) Power to inspect and supervise banks

d) Power to collect and furnish credit information

e) All of these

f) None of these

22. RBI has removed the minimum and maximum CRR to be maintained by commercial banks;

a) True

b) False

23. Banks in India are mainly governed by:a) RBI Act

b) BR Act

c) (a)and (b)

d) None of these

24. The objective and functions of IDBI include?

a) To provide technical and administrative assistance for promotion or expansion of industry

b) To undertake market and investment research and survey, technical and economic studies inconnection with development of industry

c) To act as ender of last result and to finance projects that are in conformity with nationalpriorities

d) All of the above

25. The following institutions are eligible for refinance facilities form IDBI;

a) State Financial Corporations and State Industrial Development Corporations

b) Commercial Banks

c) Regional Rural Banks

d) All of the above

Key

1.a 2.b 3.d 4.b 5.a 6.c 7.d 8.a 9.c 10.a 11.c 12.c 13.c

14.c 15.c 16.a 17.d 18.a 19.b 20.a 21.e 22.a 23.c 24.d 25.d

1. In the case of minor irrigation finance, NABARD provides refinance to the extent of;

a) 95%

b) 90%

c) 75%

d) 67%

2. The Merchant Banking Division provides following services;

a) Credit Syndication and Issue Management

b) Project Counselling

c) Counselling for Financial Reconstruction and Rehabilitation

d) All of the above

3. The IFCI is undertaking diversified activities such as;

a) Merchant Banking

b) Fund Management

c) Venture Capital

d) All of the above

4. Which of the following functions is not carried out by RBI:

a) Bankers to govt.

b) raising deposits from public

c) lender of last resort to banks

d) management of govt. debt

5. The clearing house facilities for payment and delivery of securities is provided by:

a) SEBI

b) Stock Exchange

c) Clearing Corporation of India

d) All the above

6. Which of the following bodies exercises control over banks in India?

a) Central Govt.

b) RBI

c) a and b

d) None of these

7. Banking is defined in;

a) S.5 (b) of BR Act

(b) S.5(b) of RBI Act

c) None of these

8. The main functions of banks are;

a) Acceptance of deposits

b) Lending to the needy people

c) Making investments

d) All of these

9. The banker can accept only deposits of money and not anything else:

a) True

b) False

10. Which of the following institutions have been promoted by IFCI?

a) ICRA- Investment information & Credit Rating Agency of India Ltd

b) Institute of Labor (Labour) Development

c) Tourism advisory & Financial Services Corporation of India Ltd

d) All of the above

11. The Industrial Finance Corporation of India provides loans to;

a) Government companies only which are core sectors (i.e. power generation, steel, coal andcement etc.)

b) Newly established industries in backward districts.

c) Industries in private sector

d) Joint stock companies and co-operative societies engaged in the manufacturing andprocessing of goods.

12. The operations of IFCI comprise of;

a) Project Finance

b) Financial Services

c) Corporate Advisory Services

d) All of the above

13. The Industrial Finance Corporation of India is the first institution established to build a termfinancing institutional structural in India; it was established on;

a) July 1948

b) August 1969

c) September 1957

d) December 1970

14. NABARD,s refinance is available to commercial banks under non farm sector for investmentactivities of;

a) Artisans

b) Small Scale industries, tiny sector, village and cottage industries

c) Handicrafts, handlooms, power looms etc

d) All of the above

15. The funds based outside India and authorized by SEBI to invest in Indian equity marketthrough the stock exchange are called:

a) foreign institutional investors

b) overseas corporate bodies

c) non-resident funds

d) foreigner investment funds

16. The corporate securities are held in electronic form instead of physical form, by:

a) Registrars

b) Custodians

c) Depositories

d) Mutual funds

17. Which of the following is the role of mutual funds:

a) To promote unit based scheme to inculcate saving habit

b) Pooling of investor money for investment in capital market and other securities

c) manage the funds of high net worth individuals

d) all the above

18. Can a banker refuse to open account for undesirable persons?

a) Yes

b) No

c) None of these

19. According to S.49A of BR Act no person other than a bank is authorized to accept deposits/withdrawals by cheque;

a) True

b) False

20. Acceptance of deposits by Non-Banking Finance Companies (NBFC) is regulated by;

a) Reserve Bank as per RBI Act

b) Reserve Bank as per BR Act

c) Both (a)and (b)

d) None of these

21. Companies accepting deposits from public are regulated by;a) Reserve Bank under Companies Act

b) Central Government under Companies (Acceptance of Deposits) Rules as per S.58A of theCompanies Act


22. Under its investment credit (medium and long term) refinance scheme, refinance isavailable to following activities in agriculture and allied activities;

a) Minor irrigation, farm mechanism, land development and soil conservation

b) Dairy, sheep rearing, poultry, piggery, horticulture/ plantation, forestry, fishery, storage

c) Biogas and other alternate sources of energy, sericulture, apiculture, animals and animalsdriven carts, agro processing, agro service centres etc.

d) All of the above

23. For loans and advances granted by commercial banks to small, road and water transportoperations scheme (SRWTED) NABARD provides refinance under Automatic RefinanceFacility, subject to the conditions;

a) Repayment of loan should not exceed 5 years with moratorium of 6 months

b) Refinance amount is restricted to Rs.15 lakh per borrower

c) The borrower should be from rural area and should utilize the vehicle mainly fortransportation of rural farm and non farm products and inputs and passengers to/ frommarketing centers

d) All of the above

24. A refinance to the extent of 90% under Automatic Refinance Facility is available for loansand advances granted under:

a) Farm mechanismb) PMRY for all activities

c) SGSY for all activities other than minor irrigation

d) All of the above25. 100% refinance is available in the case of;

a) Agriclinic and Agribusiness Centres

b) SC/ ST Action Plan, ARWIND, MAHIMA

c) Dry Land Development/ Waste Land Development Scheme for Individuals.

d) (a) (b) and (c)

Key

1.a 2.d 3.d 4.b 5.b 6.c 7.a 8.d 9.a 10.d 11.d 12.d 13.a

14.d 15.a 16.c 17.b 18.a 19.a 20.a 21.b 22.d 23.d 24.d 25.d

1. Which of the following is not a correct statement:

a) RBI exercises monetary control through CRR and SLR

b) Clearing houses at various centres are maintained by SBI

c) IRDA is the regulator of insurance market

d) raising of money through issue of shares by a company is part of capital market

2. The deposit of cash under CRR requirement with ––– is –––– requirement:

a) RBI, discretionary

b) RBI, mandatory

c) RBI, voluntary

d) SEBI, voluntary

3. Whether individuals, firms and other unincorporated associations of persons whose principlebusiness is the business of a financial institution or lending or acceptance of deposits, canaccept deposits from public?

a) Yes they are permitted to accept the deposits from the public as per Reserve Bank of IndiaAct

b) Such persons are now prohibited under S.45S of RBI Act from accepting deposits from thepublic except relatives

c) The prohibition does not apply to those who are mainly engaged in manufacturing or trading

d) b and c


4. Whether a licence from Reserve Bank of India is necessary for opening a bank in India?

a) Yes under S.22 of BR Act

b) Yes under S.22 of RBI Act

c) No only from Central Government


5. Which of the following business can be undertaken by banks in India?

a) Borrowing, raising or taking up of money

b) Lending either with or without security

c) Issue of LCs, Travelers Cheques

d) Buying selling and dealing in bullion

e) All of the above

f) None of the above

6. RBI has stipulated certain regulatory restrictions on lending;

a) True

b) False

7. Automatic Refinance Scheme is available to the persons financed under;

a) The scheme of setting up of Agriclinic and Agribusiness Centers

b) Rural non farm sector( investment credit) up to Rs.15 lakh

c) Composite loan scheme

d) All of the above

8. NABARD extends refinance to;

a) State Land Development Banks, State Co-operative Banks

b) Regional Rural Banks

c) Commercial Banks and other financial institutions approved by RBI

d) All of the above

9. What are the major activities of NABARD?

a) It provides refinance to State Co-operative Banks. Scheduled Commercial Banks andRegional Rural Banks etc.

b) It co-ordinates the activities of different agencies in the field of agriculture and rural credit

c) It improves absorptive capacity of credit delivery system

d) all of the above

10. NABARD has been established on the recommendation of;

a) Talwar Committee

b) Tondon Committee

c) CRAFI CARD

d) James Raj Committee

11. The Capital of NABARD is held by;

a) Reserve Bank of India and the Government of India in equal proportion

b) State Bank of India and other Nationalised Banks

c) Central Government and State Government

d) Reserve Bank of India Regional Rural Bank

12. Urban cooperative banks are controlled by:

a) NABARD

b) Central govt. and NABARD

c) State govt. and RBI

d) RBI and NABARD

13. Which of the following denomination notes can be issued by RBI:

a) Rs. 2 to Rs. 1000

b) Re. 1 to Rs. 1000

c) Rs. 1 to Rs. 10000

d) Rs. 2 to Rs. 10000

14. FERA has been replaced by;

a) Exchange Control Regulations

b) FEMA

c) Import Export Policy

15. RBI has set up the following specialized financial institutions;

a) Small Industries Development Bank of India (SIDBI)

b) National Bank for Agriculture and Rural Development (NABARD)

c) Export Import Bank of India (EXIM Bank)

d) Deposit Insurance Corporation

e) National Housing Bank

f) All of these

16. Which of the following activities cannot be undertaken by banks in India?

a) Engaging in trading activity

b) Buying or selling of goods

c) Both a and b

d) None of these

17. Holding of immovable properties by a bank howsoever acquired, is prohibited except as isrequired for its own use, for a period exceeding seven years from the acquisition of theproperty;

a) True

b) False

18. DFHI has enabled;

a) Corporate to invest their short term surplus gainfully and to liquidate them wherevernecessary

b) Banks and financial institutions to earn an income by investing their money for short periodsand also to raise short term money


d) Both of the above

19. Export-Import Bank of India was set up as a statutory corporation, wholly owned byGovernment of India, in ;

a) January 1981

b) August 1947

c) January 1984

d) None of these

20. Export-Import Bank of India has been set up for the purpose of;a) Functioning as a specialized institution for providing credits to foreign trade on internationalcompetitive terms

b) Offering advisory services to exporters

c) Providing refinance facilities in regard to export finance extended by commercial banks andother financial institutions

d) (a), (b) and (c)

21. EXIM Bank meets the needs of various groups ;viz;

a) Indian Exporters

b) Overseas Entities

c) Commercial Banks

d) All of these

22. The following are the schemes of assistance extended by Exim Import Bank of India;a) It extends as assistance to exporters engaged in export of plant, equipment, machinery andrelated services by way of medium term loans for the period exceeding six months. This creditassistance enables exporters to extend deferred credit it the foreign buyer

b) It extends financial assistance to Indian promoters who promotes overseas joint ventures tosupport their equity investments through overseas investment finance

c) It extends overseas buyer’s credit to foreign importers for import of India capital goods andrelated services

d) All of the above

23. RBI continuously taken initiatives to maintain the –––––––– of the banks and financialinstitutions:a) profitability

b) financial stability

c) profit stability

d) profits

24. IN USA, the banking regulator is:

a) Bank of USA

b) Federal Reserve Board

c) Reserve Bank of USA

d) Securities Reserve Board

25. Which is the CORRECT statement in respect of EXIM banks Lending Program for ExportOriented Units?

a) Interest rate on rupee term loan may be floating of fixed based on bank’s cost of funds

b) Interest rate on foreign currency term loan may be floating of fixed based on bank’s cost offund

c) Interest rate is charged half-yearly

d) All of the above

Key

1.b 2.b 3.d 4.a 5.e 6.a 7.d 8.d 9.d 10.c 11.a 12.c 13.d

14.b 15.f 16.c 17.a 18.d 19.a 20.d 21.d 22.d 23.b 24.b 25.d

1. Under Bulk Import Finance Programme (BIF) of Export-Import Bank of India?

a) Short term working capital advance is provided to manufacturing for consumable inputs

b) Short term loans are provided which can be in Indian rupees and / or foreign currencydepending upon the need of exporter

c) Credit is offered for import of eligible items with a minimum order size of Rs.100 lac

d) All of the above

2. Which is the CORRECT statement about Bulk Import Programme?

a) The maximum repayment is 12 months

b) Rate of interest on foreign currency loans is directly dependent on the cost of funds to EximBank. Subject to maximum of 0.75% over the LIBOR (London Inter Bank Offer Rate)

c) Interest rate on rupee loan is 1% below the interest rate charged on cash credit account bycommercial banks subject to minimum interest rate fixed by the EXIM Bank.

d) All of the above

3. Export Import Bank of India also operates the following scheme of assistance;

a) Refinance of export credit to eligible commercial banks in India against their medium to longterm post-shipment credits to Indian exports of capital goods

b) Lines of credit to foreign governments and financial institutions for import of Indian capitalgoods

c) Re-lending facility to banks situated in foreign countries to enable them to provide termfinance to importers of Indian capital goods

d) All of the above

4. Exim Bank under its Foreign Currency Preshipment Credit (FCPC), Exim Bank gives shortterm foreign currency finance to eligible exports for procurement of inputs and to commercialbanks for on lending to export customers; the terms of finance are;

a) Interest rate on finance is maximum 2% over LIBOR (London Inter Bank Offer Rate)

b) Maximum period of finance is 180 days from the date of disbursement

c) For Commercial Banks, loans availed from EXIM Bank are exempted from the requirement ofCash Reserve Ratio, Statutory Liquidity Requirement and Incremental Credit-Deposit Ratiorequirements

d) All of the above

5. Nationalized Banks are governed by;

a) Banking Companies (Acquisition and Transfer of Undertaking ) Act, 1970

b) Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980

c) Both (a) and (b)


6. State Bank of India is formed under;

a) State Bank of India Act 1955

b) Reserve Bank of India Act

c) State Bank (Subsidiary Banks) Act 1959

d) None of these

7. Regional Rural Banks are governed by;

a) Reserve Bank of India Act

b) Banking Regulation Act

c) Regional Rural Banks Act

d) None of these

8. Private Sector Bank are banking companies registered under;a) Reserve Bank of India Act


c) Companies Act 1956

d) None of these

9. The Central Board of RBI comprise, a Governor, 4 deputy governors and –––– directors :a) 5

b) 7

c) 10

d) 15

10. RBI acts as banker to Central govt. on –––– basis and state governments on–––– basis:

a) by agreement, by agreement

b) mandatory, on agreement

c) by agreement, mandatory

d) mandatory, mandatory

11. For availing refinance from IDBI;

a) The industrial unit should not be SSI

b) Promoters contribution should be 25% of project cost

c) Debt equity ratio should not be more than 2:1

d) All of the above

12. Bills rediscounting scheme of IDBI is available to commercial banks for obtaining refinancein respect of;

a) Trade bills, arising out of genuine commercial transactions discounted by banks

b) Government supply bills

c) Bills discounted which are drawn by the suppliers of machinery when machinery is sold ondeferred payment terms


13. Under its Bills Rediscounting Scheme, IDBI refinances banks upto 100% of invoice valuesubject to minimum amount of rediscounting of bills being;a) Rs.1,00,000

b) Rs.10,000

c) Rs.5,00,000

d) Rs.10,00,000

14. The Small Industries Development Bank of India (SIDBI) was set up by the Government ofIndia in April 1990 as a wholly owned subsidiary of;

a) RBI

b) IFCI

c) IDBI

d) ICICI

15. The objective of setting up SIDBI are;

a) To initiate steps for technological upgradation and modernization of existing units

b) To expand channels for marketing of SSI sector products in India and abroad.

c) To promote employment –oriented industries in semi-urban areas and to check migration ofpopulation to big cities

d) All of the above

16. A co-operative Bank is registered under;

a) Multi-Unit Co-operative Societies Act

b) State Co-operative Societies Act

c) Either a or b

d) None of these

17. Has the Central Government any powers to regulate banks?

a) Yes powers to suspend operations of BR Act

b) To give exemption from any of the provisions of BR Act on the recommendations of theReserve Bank;

c) To notify other forms of business which a bank may undertake u/s 6(1) (0) of the Act

d) To make rules as provided in S.52 of BR Act

e) All of the above

f) None of the above

18. A Co-operative bank operating in one state only is registered under the respective StateCo-operative Societies Act:

(True/ False)

19. Can banks undertaken non-banking business of dealing in shares and debentures and whois the regulator for such transactions?

a) Yes and SEBI is the regulator

b) No since BR Act does not permit

c) None of these

20. Which of the following statement is correct:

a) normally the rate of SLR is lower than CRR

b) all the scheduled commercial banks can undertake forex business of their own

c) micro and small enterprises are part of priority sector

d) RBI has no powers to amalgamate the weak banks into strong banks

21. Monetary and credit policy is formally announced by RBI:

a) Once in a year

b) Twice in a year

c) Thrice in a year

d) Four times in a year

22. The main functions of SIDBI are;

a) To provide refinance for loans and advances extended by the primary lending institutions toSSI units and also to provide resources support to them

b) It discounts and rediscounts bill arising from sale of machinery to or manufactured byindustrial units in the SSI sector

c) It extends seed capital/ soft loan assistance under National Equity Fund, Mahila Udyam Nidhiand Mahila Vikas Nidhi and Seed Capital Schemes through specified lending agencies

d) All of the above

23. The Discount and Finance House of India (DFHI) was established in April 1988 as per therecommendations of;

a)Working group on Money Market needed by Shri N.Vaghul

b) Narasimham Committee on banking reforms

c) Reserve Bank of India


24. The share capital of DFHI is Rs.200 crore, which has been subscribed by;

a) RBI & Financial institutions

b) Public Sector Banks

c) RBI Public Sector Banks and Financial Institutions in the ratio of 51: 33: 16


25. DFHI deals in;

a) Treasury Bills

b) Commercial Bills

c) Certificates of Deposit and Commercial Paper

d) All of the above

Key

1.d 2.d 3.d 4.d 5.c 6.a 7.c 8.c 9.d 10.b 11.d 12.c 13.b

14.c 15.d 16.c 17.e 18.a 19.a 20.c 21.a 22.d 23.a 24.d 25.d

1. Discount and Finance House of India Ltd;

a) Participates in call and short notice money market and inter bank term deposit market bothas borrower and lender

b) Deals in Government of India dated securities from April 1992

c) Both of the above

d) Deals in stock market

2. On cancellation of licence of any bank, an appeal may be made to Central Government

(True/ False)

3. RBI licence is necessary for opening a new branch as per;

a) Section 22 of BR Act

b) Section 42 of RBI Act

c) Section 23 of BR Act

d) None of these

4. RBI issues a licence to a foreign bank to open branch in India provided;

a) The foreign bank brings US $ 25 million as the minimum capital;

b) The foreign bank brings US $ 50 million as the minimum capital

c) None of these

5. Banks in India which want to open a branch or a subsidiary or joint ventures abroad will;

a) Have to obtain RBI approval

b) Have to obtain Central Govt. approval

c) Both a and b


6. Normally what type of movement is seen in interest with change in bank rate by RBI:

a) If bank rate is reduced, interest rates of Banks increase

b) if bank rate is increased, interest rates of banks decrease

c) if bank rate is reduced, the interest rates of banks decrease

d) if bank rate is reduced or increased, there is no change in the interest rates of banks

7. Which of the following is an importance reason for regulation of banking system:

a) To promote confidence of public in banking system

b) to protect interest of the investors

c) to ensure that the financial markets are efficient and transparent

d) all the above

8. Unit Trust of India (UTI) was set up under an Act of Parliament in 1964 or Statutory PublicSector Investment Institution. The objectives of the institution are;

a) To provide to the investors of small and moderate means the same advantages ofinvestments as enjoyed by the large capitalist

b) To diminish or minimize the risk of investment in stocks by spreading or diversifyinginvestments over a large number of different kinds of stock

c) To provide professional management of portfolio to help the small investors to each therelatively higher rate of return.

d) All of the above

9. The activities of Unit Trust of India, inter alia, include;

a) Sale and Purchase of units

b) Investment and Securities

c) Short term and Long term debt financing

d) All of the above

10. UTI extends the assistance to corporate sector by way of;

a) Term loans

b) Under writing/ direct subscription to shares/ debentures


d) Cash credits

11. Unit Trust of India has floated the following;a) UTI Investor Services Ltd

b) UTI Bank Ltd

c) UTI Securities Exchange Ltd

d) All of these

12. With the repeal of UTI Act 1963, with effect from 01.02.2003, Unit Trust of India has beenre-organized into;a) UTI-1 which comprises of US-64 and all other assured returns schemes

b) UTI-Mutual Fund (UTIMF) Which comprises of all the net asset value based schemes of UTI



13. Is RBI permission required for relocation/ merger/ closure of branches in metropolitan andurban areas?a) Yes, it can be done only with prior approval of RBI

b) No; only it has to be reported to RBI


14. Is RBI permission required for closure of branches in rural areas?

a) Yes

b) No

c) None of these

15. Is RBI permission required for accepting FCNR (B) deposits at specific branches?

a) Yes

b) No

c) None of these

16. As a cover for bank not issue ,RBI keeps some minimum value of total approved assets inthe form of :

a) Cash and bank balances

b) cash, gold coins and bank balances

c) gold coins, bullion and foreign securities

d) all the above

17. For conducting routine banking business for govt., RBI receives:

a) Interest

b) commission

c) charges

d) none of the above

18. Stock Holding Corporation of India Ltd is promoted by;

a) IDBI and ICICI

b) LIC, GIC, UTI

c) IRBI and IFCI

d) All of these

19. Stock Holding Corporation of India Ltd, provides;

a) Depository post trading and custodial services to institutional investors and retail investors

b) Securities lending to institutional investors and retail investors

c) Derivatives clearing, SGL constituent account services, mutual funds and capital marketinstruments distribution

d) All of the above

20. The primary activity of stock Holding Corporation of India Ltd, is to;

a) Secure effective post trade services relation to transactions in securities carried out byfinancial institutions

b) Keep stocks of its members in god owns on warehouse pattern

c) Render the services of taking delivery and holding stock of imported raw material forindustrial units


21. Which is the authority for regulation insurance business in India?

a) IRDA


c) Government of India

d) All of these

22. The life Insurance business was Nationalized in --------- and Life Insurance Corporation ofIndia were set up;a) 1947

b) 1956

c) 1969

d) 1977

23. Whether SEBI’s permission is required for undertaking capital market activities like holdingof shares in demat form on behalf of customers, or to conduct merchant banking activities etc?a) No only RBI permission is required

b) Yes SEBI’s permission required


24. Can banks set up subsidiaries for undertaking financial services activities?

a) Yes with prior approval of RBI

b) Permission of ROC is required

c) Permission of SEBI required


25. Maximum extent of shares of a limited company which can be held by any bankingcompany as security or as absolute owner is;

a) 50% of paid up capital of the company

b) 30% of paid up capital of the company

c) 30% of bank’s paid up capital and reserves

d) Out of both b and c whichever is lower

e) None of these

Key

1.c 2.a 3.c 4.a 5.c 6.c 7.d 8.d 9.c 10.d 11.c 12.d 13.b

14.a 15.a 16.c 17.d 18.d 19.a 20.a 21.b 22.b 23.b 24.a 25.d

1. Can the Central Government suspend the business of banks and amalgamate or reconstitutethem?

a) Yes under the provisions of RBI Act

b) Yes under the provisions of BR Act

c) Yes under the provisions of NI Act


2. The supervisory functions of RBI are looked after by:

a) Inspection Department of RBI

b) Board of Financial Supervision of RBI

c) Supervision Authority of RBI

d) Central Supervisor for Banking

3. The foreign exchange reserves of India are managed by:

a) Exim Bank

b) RBI

c) FEDAI

d) SEBI

4. The business of general insurance was nationalized in 1972 and was vested in the hand of;

a) General Insurance Corporation of India (GIC)

b) Subsidiaries of GIC: viz., Oriental Insurance, New India Assurance, United India Insurance,National Insurance

c) Both (a) and (b)


5. Life Insurance policies generally consists two elements;

a) Substantial element savings

b) Insurance or risk element


d) Tax saving

6. Life Insurance policies are of generally;

a) Whole Life Policy

b) Endowment Policy


d) Money Back Policy

7. LIC is required to invest a certain percentage of its funds in government and approvedsecurities. The percentage is;

a) 35%

b) 50%

c) 100%

d) No minimum limit is stipulated

8. National Housing Bank was established under National Housing Bank Act, 1987 and startedfunctioning from 9th July 1988. On the recommendation made by a High Level Group headedby;

a) Dr. C.Rangarajan

b) Dr. Bimal Jalan

c) Mr. Narsimham

d) Mr.I.G.Patel

9. Licensing of State cooperative banks and regulating their banking business is under thecontrol of;

a) RBI

b) State Government


10. In the case of cooperative banks which are registered under the Deposit Insurance andCredit Guarantee Corporation Act, the Reserve Bank has the power to order their winding up

a) True

b) False

11. What should be the minimum capital required for a banking company incorporated in Indiaand having places of business in more than one state?

a) Rs.10 lacs

b) Rs.5 lacs

c) Rs.20 lacs

d) None of these

12. If a banking company is incorporated in India and has branches in more than one state andin the city of Mumbai or Kolkata or both, it should have a minimum capital of ;

a) Rs.10 lacs

b) Rs.20 lacs

c) None of these

13. The authority to issue various policies in which of the following does match:

a) Credit policy and monetary policy-RBI

b) Fiscal Policy-Ministry of Commerce, Govt. of India

c) Foreign Trade Policy- Ministry of Finance, Govt. of India

d) All the above

14. For controlling inflationary or deflationary situations in India, RBI makes use of (which one isexcluded):

a) Cash Reserve Ratio

b) Statutory Liquidity ratio

c) Open Market operations

d) Liquidity adjustment facility

15. National Housing Bank is wholly owned by;


b) Housing Development Finance Corporation Ltd

c) Housing Development Board of Various States

d) All of the above

16. The main objectives of National Housing Bank are;

a) To promote and develop specialized housing finance institutions for mobilization of resourcesand extending finance institutions and to scheduled banks

b) To extend refinance facilities to housing finance institutions and to scheduled banks

c) To provide guarantee and underwriting facilities to housing finance institutions

d) All of the above

17. Which of the following institutions is the apex institution in the matter of housing finance?

a) National Housing Banks

b) Housing Development Finance Corporation Ltd

c) Housing and Urban Development Corporation

d) All of the above

18. For availment of refinance from National Housing Bank, Scheduled Commercial Bank hasto satisfy the following conditions;

a) The capital adequacy ratio of the Banks should be as per the norms prescribed by theReserve Bank of India

b) The Net Non-Performing Assets to the net advances of the Bank should not exceed 10%

c) The Scheduled Commercial Bank has earned profit for the last two years

d) All of the above

19. What is the present Capital Adequacy Ratio for banks in India?

a) 8%

b) 10%

c) 9%

d) None of these

20. Which of the following are included in the Tier I capital of a banking company?

a) Paid-up capital, statutory reserve and other disclosed free reserves if any

b) Capital reserve representing surplus arising out of sale proceeds of fixed assets

c) Both a and b

d) None of these

21. What are the components of Tier II capital of a Bank?a) Undisclosed reserves and cumulative perpetual preference shares

b) Revaluation reserve on account of revaluation of assets that are undervalued on the bank’sbooks, typically bank premises and marketable securities which are included under Tier II at adiscount of 55%

c) Both a and b

d) None of these

22. Which of the following are the other components of Tier II capital of a bank?a) Hybrid debt capital instruments

b) Subordinated debt

c) General provisions on standard assets and general provision/ loss reserve up to 1.25% ofrisk weighted assets

d) All of these

23. The authority to issue various policies in which of the following does match:a) Credit policy and monetary policy-RBI

b) Fiscal Policy-Ministry of Commerce, Govt. of India

c) Foreign Trade Policy- Ministry of Finance, Govt. of India

d) All the above

24. For controlling inflationary or deflationary situations in India, RBI makes use of (which one isexcluded):

a) Cash Reserve Ratio

b) Statutory Liquidity ratio

c) Open Market operations

d) Liquidity adjustment facility

25. National Housing Bank provides refinance assistance for direct/ indirect loans alreadyadvanced by them for purchase/ construction/ repairs and up gradation of housing to;

a) Scheduled Primary (Urban) Co-operative Bank

b) Scheduled State Co-operative Banks

c) Scheduled Commercial Banks (Public Sector Banks, Private Sector Banks and ForeignBanks in India)

d) All of the above

Key

1.b 2.b 3.b 4.c 5.d 6.b 7.a 8.a 9.a 10.a 11.b 12.a 13.a

14.d 15.a 16.d 17.d 18.d 19.c 20.c 21.c 22.d 23.a 24.d 25.d

1. National Housing Bank provides refinance to Scheduled Commercial Banks in respect ofdirect housing loans up to;

a) Rs.100 lakh

b) Rs.2 lakh

c) Rs.10 lakh

d) Rs.5 lakh

2. A company is demand as Non-Banking Financial Company;

a) If its financial assets are more than 50% of its total tangible assets

b) If its income from financial assets is more than 50% of the gross income of the company

c) Both the above

d) Financial assets are more than 40% of its total assets.

3. As per the provision of the Reserve Bank of India (Amendment) Act 1997, Non-BankingFinance Company has;

a) To apply to the Reserve Bank of India for a certificate of registration

b) To have a minimum net owned fund (NOF) of

Rs.15 lakh

c) Both of above

d) Minimum NOF of Rs.10 lakh

4. As per the existing guidelines of Reserve Bank of India;

a) NBFCs are not allowed to offer more than 11% per annum interest on deposits.

b) No official agency should guarantee or undertake the repayment of deposits of interest

c) NBFC deposits are uninsured and not backed by any society

d) All of the above

5. NBFCs consists of;

a) Equipment Leasing Company and Investment Company

b) Hire-Purchase Finance Company and Mutual Benefit Finance Company

c) Housing Finance Company

d) All of the above

6. What should be the minimum paid-up capital required for establishing a Private Sector Bank?

a) Rs.200 crore

b) Rs.300 crore

c) None of these

7. No person can exercise more than 10% of total voting rights of shareholders of a bank

(True/ False)

8. Why RBI has restricted the voting rights of a person to 10% of total voting rights ofshareholder of bank;

a) This measure is introduced by RBI in order to prevent any one powerful person or groupfrom controlling management of bank

b) One person or a group controlling the management will not be in the interest of the financialhealth of the bank or in the interest of the depositors

c) Both a and b


9. What is the period of office of whole- time directors of a bank at a time?

a) 5 years

b) 3 years

c) No such period stipulated

d) None of these

10. Which of the following is not covered under selective credit control, at present:

a) Sugar

b) Buffer stocks of sugar

c) Unreleased stocks of sugar with sugar mills representing free and levy sugar


11. Against which type of the following security, the banks can sanction loans:

a) Commercial paper

b) Certificate of deposit

c) FDR issued by other bank


12. In January 1998, the Reserve Bank of India introduced new regulatory frame work for safeguarding the interest of depositors. The guideline comprises;

a) NBFCs falling short of the stipulated minimum Net Owned funds (NOF) were precluded fromaccepting public deposits

b) An NBFC not having minimum credit rating as prescribed by RBI, is not eligible to acceptfresh deposits

c) Ceiling on the quantum public deposits was related to the level of credit rating given by theapproved credit rating agencies

d) All of the above

13. In regard to NBFCs, which statement it CORRECT?

a) It cannot offer more than 2% brokerage

b) It cannot offer gifts/ incentive

c) NBFCs seeking public deposit should be a profit making company

d) All of the above

14. Which of the following statements is CORRECT?

a) The deposits of NBFCs are not insured

b) No NBFC shall lend against its own share

c) No NBFC shall lend to any single borrower or to any single group of borrowers exceeding15% or 20% respectively of its owned fund

d) All of the above

15. The word ‘Bank’ is derived from;

a) German word ‘back’ which means joint stock fund

b) Italian word ‘banco’

c) Words ‘bancus’ or ‘banque’ which means a bench

d) All of the above

16. The Banking Regulation Act, 1949 was enacted to consolidate and amend the law relatingto banking companies, w.e.f. 1st March 1966, the name of the Act has been changed as;

a) The Banking Regulation Act 1949

b) The Banking and Transfer of Undertaking Act

c) Negotiable Instrument Act

d) D.I.R Act

17 What is the period of office of part-time directors?

a) 5years

b) 8 years

c) 10 years

d) None of these

18. Which of the following persons cannot be a director of a banking company?

a) Insolvent

b) A person convicted of an offence involving moral turpitude

c) Both a & b


19. A whole-time director of a banking company;

a) Cannot be a director of any other company

b) Can be a director of a subsidiary of the banking company

c) Can be a director of a company registered under S.25 of companies Act

d) All the above


20. Not less than --------- % of the total number of members of the Board of Directors of abanking company shall consist of persons who shall have special knowledge or practicalexperience in Accountancy, Banking, Agriculture, SSI, Finance, Law, Economics etc;

a) 39

b) 51

c) 25

d) None of these

21. As per RBI regulations, the banks should not sanction new or additional facility to borrowersappearing in RBI list of willful defaulter for a period of –––– years from date of publication of listby RBI:

a) 2 years

b) 3 years

c) 5 years

d) 10 years

22. Retail banking has 3 basic features and the business such as deposits, credit cards,insurance, investment and securities, is part of which of the following feature:

a) Multiple customer group

b) Multiple products

c) Multiple channels of distribution


23. The Banking Regulation Act, 1949 was enacted with the objective of;

a) Checking bank failures

b) Ensuring adequate branch expansion in rural areas

c) Consolidating and amending the law relation to banking companies


24. The Banking Regulation Act, 1949 came into force on;

a) March 16th, 1949

b) 15th August 1947

c) 19th July 1969

d) 1st January 1949

25. As per Section 6 of BR Act 1949, a banking company is permitted to undertake;

a) Merchant banking business

b) Issuance of guarantee and indemnity

c) Executor and trustee business

d) All of the above

Key

1.a 2.c 3.c 4.d 5.d 6.b 7.a 8.c 9.a 10.a 11.d 12.d 13.d

14.d 15.d 16.c 17.b 18.c 19.d 20.b 21.c 22.b 23.a 24.d 25.d

1. Banking Regulation Act, 1949, does not, at all apply to;

a) Nationalized Banks

b) State Bank of India and its Subsidiaries

c) Foreign banks having branches in India

d) Primary agricultural credit and societies and co-operative land mortgage banks

2. Section 20 of the Banking Regulation Act, prohibits a bank from granting any advanceagainst security of;

a) It s own shares

b) Partly paid shares

c) Personal guarantee of directors and managers

d) Guarantee of other banks

3. Can the directors of a banking company have substantial interest in or be connected with asemployee, manager or managing agent in a company or firm which carries on trade, commerce or industry except SSI as per Section 10A (2) of BR Act ?

a) No

b) Yes

c) None of these

4. The term of office of a whole –time Chairman or Managing Director should not exceed;

a) 8 years

b) 3 years

c) 5 years

d) None of these

5. The banking company or the person against whom the Reserve Bank of India issues removalorder may prefer an appeal to the Central Government within;

a) 1 month

b) 2 months

c) 3 months

d) None of these

6. When the Reserve Bank of India appoints a person as a whole time Chairman or ManagingDirector for filling up the vacancy in the interest of the banking company, his term of officeshould not exceed

a) 5 years

.b) 3 years

c) 8 years

d) None of these

7. Which of the following products in retail banking do not fall under retail deposit products:

a) No frill accounts

b) Deposit accounts of senior citizens

c) Depository services

d) All the above

8. When banks have business relationship with the industrial and business entities, this is partof which type of baking:

a) Universal banking

b) International banking

c) Wholesale banking

d) Retail banking

9. As per the provision of Section 20 of the BR Act, a bank is also prohibited from granting anyloan or advance to;

a) Its director

b) Any firm (s) in which director(s) is (are) interested as director, manager etc

c) Any company in which a director (s) is (are) interested as director, manager etc

d) All of the above

10. Section 17 of the Banking Regulation Act, 1949, lays down that bank shall create a reservefund out of the balance of profit of each year, also before the declaration of dividend a certainpercentage of such profit should be transferred to the reserve fund. The percentage is;

a) 10% of such profit

b) 15% of such profit

c) 20% of such profit

d) 25% of such profit

11. Section 16 of the Banking Regulation Act, 1949 prohibits a person;a) To be appointed as director of banking company if he is an undischarged insolvent

b) To be appointed as director of banking company if he is not of sound financial position

c) To be appointed as director of more than one banking of company

d) None f the above

12. As per Section 12 of the Banking Regulation Act, 1949, minimum ratio between authorized,subscribed and paid up capital of a banking company should be;

a) 2:2:1

b) 1:1:1

c) 4:2:1

d) 2:1:2

13. A customer has a right to ask the bank to return him a paid instrument before the expiry ofperiod of such instruments under the provisions of;a) Section 131 of the Negotiable Instrument Act 1881

b) Section 34 of Reserve Bank of India Act 1934

c) Section 45 Z of the Banking Regulation Act 1949

d) All of the above

14. Can a bank sanction a loan or advance to a company in which the director of the bankingcompany is a director or to a firm in which he holds substantial interest, or to the partners ofsuch firms or to the employers?

a) Yes

b) No

c) None of these

15. Is an individual allowed to act as a bank?a) No, only a company is permitted to act as a bank,

b) Yes, provided he obtains a permission from RBI

c) None of these

16. What are the objectives of the regulation of FIs/ banks by RBI?

a) To maintain and promote confidence and trust of the Public in the financial/ banking system’

b) To protect investor’s interests by adequate/ timely disclosure by the institutions

c) To ensure that the financial markets are both fair and efficient

d) To ensure that the participants in the financial system measure up to the rules of the marketplace

e) All of these

17. What are the main objective for which RBI has been set up?

a) To maintain monetary stability

b) To maintain financial stability and ensure sound financial institutions

c) To maintain stable payment systems so that financial transactions can be safely andefficiently executed

d) To ensure price stability

e) To ensure that credit allocation by the financial system broadly reflects the national economicpriorities and social concerns

f) All of these

18. Which of the following is value added service as part of wholesale banking:

a) Structured finance

b) Channel financing

c) Supply chain management

d) Letter of credit

19. Providing RTGS facility to a large corporate is part of which of the following types ofservices under wholesale banking:

a) Fund based services

b) value added services

c) non-fund based services

d) Internet banking services

20. The joint stock Banking system started in the;

a) Late 18th century/ early 19th century

b) Late 17th century/ early 18th century

c) Late 19th century/ early 20th century

d) Early 21st century

21. The Bank of Bengal got its charter in;

a) 1809

b) 1819

c) 1810

d) 1820

22. The following bank was one of the presidency banks;

a) State Bank of India

b) Imperial Bank of India

c) Bank of Madras

d) All of these

23. The three presidency banks were merged in 1921 with the establishment of;


b) Imperial Bank of India

c) Punjab National Bank

d) Reserve Bank of India

24. The Reserve Bank of India was established in 1935 pursuant to the recommendations of;

a) The Hilton Young Commission

b) All India Rural Credit Survey Committee

c) Gorawala Committee

d) Dr. I.G Patel committee

25 The Annual Statement of Policy is now reviewed by RBI

a) Annually

b) Half Yearly

c) Quarterly

d) None of these

Key

1.a 2.d 3.a 4.c 5.a 6.b 7.c 8.c 9.d 10.c 11.c 12.c 13.a

14.b 15.a 16.e 17.f 18.b 19.b 20.a 21.a 22.d 23.b 24.a 25.c

1. Who is the chairman of The Board for Financial Supervision?

a) Governor of RBI

b) Any Dy Governor of RBI

c) A Dy Governor of RBI by rotation

d) Finance Secretary of the Government

Q. The RBI’s role in the financial system/ banking system is

a) Regulatory and supervisory role

b) Developmental role

c) a & b

2. The negotiable financial instrument which is traded on a stock exchange of another countrybut represents security issued by foreign listed company, is called:

a) buyer’ s credit

b) depository receipt

c) cross listed stock

d) participatory note

3. The depository receipts that are traded on stock exchange in USA, are called:

a) Global depository receipts

b) participatory notes

c) international depository receipts


4. Reserve Bank of India was nationalized in;

a) 1935

b) 1949

c) 1955

d) 1969

5. The report of (All India Rural Credit Survey Committee Gorawala Committee) led to theformation of;


b) State Bank of India

c) The Imperial Bank of India

d) Bank of Bengal

6. Which Bank had taken over the Imperial Bank of India?



c) Indian Bank

d) Central Bank of India

7. Social Control on Banks was introduced in;

a) February 1961

b) February 1969

c) July 1969

d) February 1980

8. Fourteen Banks were nationalized on;

a) 15th April 1980

b) 10th July 1969

c) 19th February 1969

d) 31st October 1984

9. AD (Authorized Dealer) circulars are issued by

a) Finance Ministry

b) RBI

c) SBI

d) None of these

10. Retail Banking means doing banking business with

a) Individual customers

b) Retail traders

c) None of these

11. Which of the following is true in respect of Retail Banking?

a) Deals with both liabilities and assets of the balance sheet

b) Characterized by Multiple products

c) Characterized by Multiple channels of distribution

d) Characterized by Multiple customer groups

e) All of these

12. Which are the drivers of retail business in India?

a) Economic prosperity and related increase in purchasing power

b) Changing customer demographics

c) Convenience banking

d) Bank’s perception of relatively low risk

e) All of these

13. Global depository receipts are normally traded on:

a) US Stock Exchanges

b) European Stock exchanges

c) International stock exchanges

d) Indian stock exchanges

14. Through depository receipt, the companies can raise capital:

a) In their own country only

b) In the American market only

c) In the European markets only

d) In the world markets

15. The Banking Companies Act, 1949 was enacted to consolidate and amend the law relatingto banking companies, w.e.f. 1st March 1966, the name of the Act has been changed as;

a) The Banking Regulation Act, 1949

b) The Banking and Transfer of Undertaking Act

c) Negotiable Instrument Act

d) D.I.R Act

16. Section 14A (1) of the Banking Regulation Act, 1949 prohibits a banking company from;

a) Allowing advance against its own share

b) Creating floating charge on the undertaking or any property of the company or any partthereof

c) Disclosing secret reserve created by it


17. Section 21 of the Banking Regulation Act, 1949 empower Reserve Bank of India to;

a) Control advances by Banking Companies

b) Inspect the Banking Companies

c) Appoint chairman and managing director of a banking company

d) Regulate CRR/ SL:R

18. Section 45 ZA of the Banking Regulation Act, 1949 relates to;

a) Appointment and termination of the services of Managing Director of a banking company

b) Return to unclaimed deposits

c) Nomination in respect of bank deposits


19. Section 26 of the banking Regulation Act, 1949 requires every banking company to submitan annual return to the Reserve Bank of India, in respect of;

a) Advance to agriculture sector

b) All accounts in India which have not been operated up on for ten years

c) Advances allowed to priority sector

d) Details of its demand and time liabilities

20. Wholesale banking means doing business with

a) Industrial entities

b) Business entities

c) Both a and b

d) None of these

21. Wholesale banking generally caters to the requirements of

a) Corporates

b) Domestic and Export trading houses

c) Public sector companies

d) All the above


22. Wholesale banking business can be a combination of

a) Fund based services

b) Non-Fund based services

c) Value Added Services

d) Internet Banking Services

e) All of these

23. International Banking business caters to

a) Cross-border transaction

b) Forex market

c) Both a and b

24. The contract notes issued by foreign institutional investors representing their investment inIndian equity market is called:a) Participatory notes

b) depository receipts

c) stock options

d) contract notes

25. Which of the following can issue participatory notes:

a) SEBI

b) RBI or SGL holders

c) FII or their sub-accounts

d) FDI or sub-accounts

Key

1.a 2.b 3.d 4.b 5.b 6.a 7.b 8.b 9.b 10.a 11.e 12.e 13.b

14.d 15.a 16.b 17.a 18.c 19.b 20.c 21.d 22.e 23.c 24.a 25.c

1. Except Section 34 A, the provision of the Banking Regulation Act, 1949 do not apply to;

a) Non Scheduled Banks

b) Regional Rural Banks

c) Industrial Development Bank of India

d) Foreign Banks

2. As per the provision of Section 29 of the Banking Regulation Act, every banking company isrequired to prepare its final accounts, viz, Profit & Loss a/c and Balance Sheet in the firmsprescribed in;a) The second Schedule to the RBI Act 1934

b) The third Schedule to the Banking Regulation Act 1949

c) Table A to the Companies Act, 1956


3. A bank incorporated in India cannot open an office (place of business) outside India withoutobtaining prior permission of;a) Reserve Bank of India

b) Ministry of External Affairs, Government of India

c) India Bank’s Association


4. For setting up new private sector bank’

a) The promoter’s contribution shall be 25% if capital does not exceed Rs.100 crore and 20% ifcapital exceeds of Rs.100 crore.

b) NRI participation in the primary equity of a new bank shall not exceed 40%

c) The shares of the bank should be listed on stock exchange

d) All of the above

5. As per guidelines of Reserve Bank of India, a new private sector bank;

a) Shall be subject to prudential norms in regard to income recognition, asset classification andprovisioning, capital adequacy etc

b) Shall have to observe priority sector lending targets as applicable to other domestic banks

c) will be required to open rural and semi-urban branches

d) All of the above

6. A Bank providing all types of financial products is called

a) Universal Bank

b) Nationalized Bank

c) Public sector bank


7. Universal Bank is also called

a) Super Financial Hub

b) Banking Mall

c) Banking Super Shoppe

d) All of these

8. The advantage of a universal bank is

a) bank can cross-sell its products

b) bank earns both fee based and non-fee based income

c) Saves valuable time/ travel to the customer

d) Speedy delivery of products to the customer

e) All of these

f) None of these

9. What is the underlying, for issue of a participatory note:

a) It is an investment made by FII

b) It is some security listed on some Indian stock exchange

c) It is some participation certificate on risk basis

d) It is contract note between the FII and the SEBI

10. The valid of loan amount under retail lending , normally is in the range of:

a) Rs. 10 lac to Rs. 10 cr

b) Rs. 5 lac to Rs. 5 cr

c) Rs. 10 lac to Rs. 1 cr

d) Rs. 0.20 lac to Rs. 1 cr

11. A new private sector bank;

a) will be subject to the directive, instructions, India

b) will be governed by the provisions of RBI Act, 1934, Banking Regulation Act, 1949 and otherrelevant statutes.

c) would be governed by existing branch licensing policy whereby banks could open branchesincluding at urban. Metro centers without prior approval of RBI once capital adequacy andprudential accounting norms are satisfied

d) All of the above

12. As per guidelines issued by RBI on 3rd January 2001;

a) The minimum paid up capital requirement of a newly set up private sector bank should be atleast Rs.200 crore and the same should be raised to Rs.300 crore within three years ofcommencement of business

b) Minimum capital adequacy ratio should be at 10% on continuous basis from thecommencement of business


d) Both (a) and (b)

13. RBI has given freedom to banks to;

a) convert non viable branches into satellite office on certain conditions

b) provide locker facilities at the extension counters

c) close down loss incurring branches in Urban/ metro centers and loss incurring branchesexcluding RRBs, after mutual consultation

d) All of the above

14. The main thrust of the branch licensing policy is;

a) To provide freedom to banks to rationalize the structure of their branches

b) To given an opportunity to the banks to open as many branches as they wish


d) Both a) and b)

15. The Narsimham Committee recommended that;

a) Priority sector should be redefined to compromise the small marginal farmer, the tiny sectorof industries small industries, rural artisans and other weaker sections

b) The target for the redefined priority sector should be fixed at 10% of aggregate credit,subject to a review periodically.



16. A Depository Receipt {DR) is a negotiable financial instrument traded in a local stockexchange but represents a security issued in another country

(True/ False)

17. ADR stands for

a) American Depository Receipt

b) American Drawing Rights

c) Central and State Governments

d) None of these

18. ADRs are listed in New York Stock Exchange (NYSE) and NASDAQ.

a) True

b) False

19. Global Depository Receipt (GDR) is commonly listed;

a) All over the Globe

b) Bombay Stock Exchange

c) European Stock Exchange


20. Providing banking facilities to the poor people of the society for mutual benefit of poorpersons as well as banks, is called;

a) Financial literacy

b) Financial inclusion

c) Narrow banking

d) Universal banking

21. The term super financial hub in the context of banking, is called:

a) Universal banking

b) Narrow banking

c) International banking

d) Wholesale banking

22. No progress has been made in respect of the following recommendation of the NarsimhamCommittee;

a) Changes in Rural Credit Delivery System

b) Recruitment Policy

c) Top Bank Appointment

d) All of the above

23. As per the recommendations of Narsimham Committee, the Government passed an Actduring August 1993 providing for;

a) Creation of recovery tribunals for loan accounts with outstanding balances of Rs.10 lac ormore

b) Creation of an Asset Reconstruction Fund to take over bad debts of the banks on discount

c) Restructuring of the banking system by creating more private sector banks

d) Phased reduction of statutory pre-emption

24. The following capital market reforms have been initiated;

a) Office of Controller of Capital Issue (CCI) has been abolished and SEBI has preparedcomprehensive rules and regulations for inventor protection

b) National Stock Exchange has been set up providing a nationwide screen based trading andelectronic clearing and settlement system

c) Private Sector Mutual Funds have been allowed to operate and Foreign Institutional Investor(FIIs) have been allowed to invest in capital market subject to SEBI guidelines

d) All of the above

25. During Dec 1995 RBI modified its branch licensing policy by putting following newconditions;

a) Banks should have a three year profitability record

b) NPA level should be below 15%

c) Its capital adequacy ratio should not be less than 8% with a minimum owned funsrequirement of Rs.100 crore

d) All of the above

Key

1.c 2.b 3.a 4.d 5.d 6.a 7.d 8.e 9.b 10.d 11.d 12.d 13.d

14.d 15.c 16.a 17.a 18.a 19.c 20.b 21.a 22.d 23.a 24.d 25.d

1. P.S. banks signed the MOU with RBI for the first time with the objective of accountability andperformance as a result of Government insistence as a pre-condition for contributing Rs.5,700crore as additional capital during the year;

a) 1991-92

b) 1992-93

c) 1993-94

d) 1994-95

2. Participatory Notes (PN) are like contract notes issued by Foreign Institutional Investors (FII)to entities that want to invest in Indian stock market but do not wish to be registered with SEBI

a) True

b) False

3. Which of the following is true of Participatory Notes?

a) The underlying security against these notes would be listed or proposed to be listedsecurities on any Indian stock exchange

b) These are issued to investors abroad except to Indian National, Persons of Indian Origin andOCBs

c) The details of the investor will not be revealed

d) All of these

e) None of these

4. Which of the following has the least NPAs in the retail segment?

a) Housing loans

b) Auto loans

c) Personal loans

d) Credit cards

5. Which of the following is not part of international banking services:

a) Opening of EEFC account for a company

b) Issuing letter of credit for import of capital goods

c) Extending pre-shipment credit to an exporter


6. Providing banking facilities to the poor people of the society for mutual benefit of poorpersons as well as banks is called:

a) Financial literacy

b) Financial inclusion

c) Narrow banking

d) Universal banking

7. A high level committee under the chairmanship of Shri M.Narsimham was appointed inAugust 1991 to;

a) Examine all aspects relating to the structure, organization, functions and procedures of the

financial system

b) Review and suggest the ways and means to increase profitability of public sector banks


d) Both (a) and (b)

8. Narsimham Committee’s main recommendations include;

a) Adoption of uniform accounting practices particularly in respect of income recognition andprovisioning against doubtful debts

b) Minimum 4% capital adequacy ratio to risk weighted assets by March 1993

c) Imparting transparency to bank balance sheets and full disclosures in them

d) all of the above

9. Which of the following is not a recommendation made by Narsimham Committee on thefinancial system?

a) Restructuring of the banking system so as to have 3 or 4 large banks with could becomeinternational

character, 8 to 10 national banks with a network of branches throughout the country engaged inuniversal banking.

b) Abolition of branch licensing and leaving the matter of opening or closing of branches to theconcerned bank

c) Liberalizing the policy with regard to allowing foreign banks to open office in India asbranches or subsidiaries

d) All of the above

10. The Narsimham Committee recommendations include;

a) Deregulation of interest rates to as to reflect emerging market conditions.

b) Setting up of special tribunals to speed up the process of recovery of loans

c) Setting up one or more rural banking subsidiaries by public sector banks

d) All of the above

11. In view of recommendations of Narsimham Committee, RBI has directed that;

a) All banks with international presence should achieve the capital adequacy norm of 8 percentby the end of March 1994.

b) Other banks to achieve capital adequacy norm of 4% by the end of March 1993 and 8% bythe end of March 1996.

c) Both the above

d) All banks to achieve CAR 10% with immediate effect

12. Which of the following is true in respect of IDRs (Indian Depository Receipts) ?

a) IDRs are similar to ADRs/ GDRs in the international markets

b) Companies incorporated abroad can mobilize resources in India by issuing IDRs in rupees

c) Indian investors can subscribe to them

d) Min capital and reserves of the company: US $ 100m and average turnover in the 3 financialyears: $ 500m

e) All of these

13. When an Indian company issues ADR, the institutions involved in the process are

a) Depository Bank abroad

b) Custodian bank in India

c) Brokerage house in USA

d) Brokerage house in India

e) All of these

14. Capital Market is a market for

a) Long Term Debt

b) Equity

c) Both a and b

15. The primary market, within the capital market, comprises––– market and –––– market:

a) public issue market, secondary issue market

b) public issue market, private placement market

c) private placement market, secondary issue market

d) equity share market, preference share market

16. The transaction process of an exchange from a mutually owned association to theshareholders owned company, is called:

a) Mutualisation

b) demutualisation

c) decorporatisation


17. The Narsimham Committee recommended that;

a) SLR should be reduced to 25% and CRR to 10% over a time period so that the funds ofbanks are deployed by then in more remunerative loan assets.

b) SLR should be reduced to 10% and CRR to 25% over a time period so that funds of banksare deployed by them in more remunerative loan assets

c) SLR should be reduced to 25% and CRR to 10% over a time period so that funds of banksare deployed by them to increase their investments in Government securities

d) SLR should be reduced to 25% and CRR to 10% over a time period so that funds of banksare deployed by them in increase their capital adequacy.

18. RBI has proposed to invoke penalty clauses against those nationalized banks which fail tomeet the targets committed in the MOU. These include;

a) Hike in CRR/ SLR

b) Invoking suitable penalty within BR Act

c) Withdrawal of refinance, access to money market, fresh funds for recapitalization

d) All of the above

19. The world over most of the supervisory authorities has adopted the following as the basis ofassessment of capital adequacy;

a) Risk Assets Ratio System

b) Return or Capital System

c) Average yield on Assets System

d) Net Profit

20. The Committee on Banking Regulation and Supervisory Practices which released theagreed frame-work on international convergence of capital measures and capital standards inJuly 1988 is popularly known as;a) Cooks Committee

b) Vaz Committee

c) Basic Committee

d) Jilani Committee

21. The committee adopted weighted risk assets approach which assigns weights to;a) On-balance sheet exposure of a bank

b) Off-balance sheet exposure of a bank

c) Both the above

d) Net profit of the bank

22. Capital Market is divided into

a) Primary Market

b) Secondary Market

c) Both a and b

23. IN the primary market, securities are offered by corporates to the public for subscription forthe purpose of raising debt of capital;(True/ False)

24. The issue of shares in the primary market is subject to:

a) Fulfillment of pre-issue guide lines of SEBI

b) Compliance with Companies Act

c) SEBI approval

d) a and b

e) All the above

25. What is the advantage of demutualized stock exchange over the mutual stock exchange:

a) the ownership is different from trading interest

b) the management is different from ownership and trading

c) the trading is different from the ownership and management

d) all the above

Key

1.c 2.a 3.d 4.a 5.d 6.b 7.d 8.d 9.d 10.d 11.c 12.e 13.e

14.c 15.b 16.b 17.a 18.d 19.a 20.c 21.c 22.c 23.a 24.e 25.d

1. The maximum shareholding of a stock exchange can be held by a single investor, isrestricted to:

a) 2%

b) 5%

c) 10%

d) 15%

2. The basic objective behind the committee work on capital convergence is that;

a) The new frame work should serve to strengthen the soundness and stability of the bankingsystem

b) The frame work should be fair and have a high degree of consistency in its application

c) Both the above


3. The Targets set to be achieved by the banks under MOU are;

a) Reduction in NPA, expenses; Average Cost of Deposits/ Borrowings.

b) Improvement in Staff Productivity, Interest Spread, Average Yield on CRR and SLR; Rate ofReturn on Advances

c) Up gradation of Technology at Branches/ Offices

d) All of the above

4. A per the MOU, in terms of the indicators, the Public Sector Banks have to spell out policiesin the following area;

a) Liability Management

b) Investment Management

c) Credit Policies and Recovery Management

d) All of the above

5. The Banks are required to constitute high power liability management committees comprisingtop executives to determine suitable policies for;

a) Each liability product such as demand deposits savings, term deposits and CODs.

b) Liabilities denominated in foreign exchange

c) Monitoring ratio yield elastic and inelastic liabilities in the total liabilities as also supplystatement of use of call money borrowings

d) All of the above

6. The banks shall have to state their lending policies. These would include;

a) Exposure limits and eligible borrowers

b) Documentation standards, maturity and pricing policy

c) Write off and review procedures

d) All of the above

7. Issue of securities in the primary market can be

a) Public Issue

b) Private Placement

c) Both

8. Secondary market refers to a market where the securities are traded after being initially tothe public and/ or listed in the Stock Exchange

(True/ False)

9. Secondary Market

a) Provides an efficient platform for trading of securities and price discovery for investors

b) Guides the corporate management decisions for the issuer

c) Facilitates banks to offer online trading to its customer

d) All of these

10. Which of the following is not a characteristics of an equity share:

a) it is called ordinary share also

b) it represents complete ownership of the company.

c) The holder undertakes entrepreneurial risk associated with a business venture

d) It provides voting right to the holder

11. Which of the following is not a characteristics of preference share:

a) Holders get voting rights similar to an equity shareholder

b) Owners get a fixed dividend

c) Owners get the dividend in preference over the equity shareholders

d) In case of liquidation of the company, they get preference for return of capital

12. As per the MOU the banks will have to develop a plan to improve position against all NPAsabove;

a) Rs.10 lac

b) Rs.50 lac

c) Rs.100 lac

d) Rs.500 lac

13. The basic committee has defined capital in two Tiers (Tier-l and Tier-ll). Tier-l capital isknown as;

a) Net Capital

b) Gross Capital

c) Working Capital

d) Core Capital

14. Tier-ll capital contains elements that are;a) Most permanent and readily available

b) Less permanent or less readily available


d) Of temporary nature

15. Tier-l capital would mean;

a) Paid up capital

b) Statutory reserves and other disclosed free reserves

c) Capital reserves representing surplus arising out of sale proceeds of assets

d) All of the above

16. Tier-ll capital consist of;

a) Undisclosed reserves and cumulative perpetual preferences shares

b) General provisions, loss reserves and revaluations reserves

c) Subordinated debt, hybrid debt capital instrument

d) All of the above

17. How many Stock Exchanges are there in India (July’08’):

a) 2

b) 4

c) 22

18. While stock exchange operates under auction concept, Over the Counter Exchange of IndiaOTCEI Operates under dealer market concept:

(True/ False)

19. What is Corporatization of Stock Exchange?

a) Converting them from non-corporate to corporate structure

b) Converting them from corporate to non-corporate structure

c) Handing over to a corporate

20. Which of the following is not a characteristics of a bonus shares/bonus issue:

a) It is called capitalization of reserves

b) These are issued to shareholders without charging any price

c) These are issued out of accumulated reserves of a company

d) These cannot be issued out of share premium reserves

21. The term ‘security receipt’ represents which of the following:

a) The receipt issued by a company for having received the security deposit for a contract

b) Where a company receives a receipt for deposit of security for various purchases

c) The receipt issued by a securitization/reconstruction company in the process of securitizationof financial assets

d) The receipt issued by a public company for the money receipt pending allotment of shares.

22. As per RBI stipulations the risk weighted assets ratio of 8% was to be achieved as early aspossible and in case by;

a) 31st March 1995 for those banks which have branches abroad

b) 31st March 1993 for foreign banks

c) 31st March 1996 for all other banks

d) All of the above

23. RBI during July 1996 laid down strict prudential norms for those banks that failed to attainthe 8% capital adequacy target before 31st March 1996. One of the major conditions as ameasure of prudence is;

a) Complete curb on capital expenditure

b) Complete ban on fresh recruitment

c) Strict control over further growth in risk weighted assets

d) All of the above

24. A per RBI stipulation, the total of Tier-ll elements will be limited to maximum of ------- % oftotal of Tier-l elements for the purpose of compliance with the banks.

a) 50%

b) 100%

c) 200%

d) 75%

25. Banks that fail to fulfil minimum requirements will;

a) have to face the implications of foreign banks refusing to honor letters of credit issued tothem

b) Not be able to attract funds from the PSUs as the department of public enterprise hasforbidden them to place funds in banks that do not achieve the prudential norms

c) Either (a) or (b)

d) Both (a) and (b)

Key

1.b 2.c 3.a 4.d 5.d 6.d 7.c 8.a 9.d 10.b 11.a 12.c 13.d

14.b 15.d 16.d 17.c 18.a 19.a 20.d 21.c 22.d 23.b 24.d 25.c

1. What do you mean be Money Market?

a) A place where money is sold and bought

b) It is nothing but a place where two currencies are exchanged

c) Money market is a market for short term financial assets generally up to the tenure of 12months) that are close substitutes of money

d) All of the above

2. What is Demutualization?

a) Transition from a ‘mutually owned’ associated to a ‘shareholders-owned company

b) Transforming the legal structure of an exchange from a mutual form to a businesscorporation form

c) Ownership, management and the trading rights at the exchange are segregated from oneanother

d) Any of these

3. Stock broker is

a) A member of the recognized stock exchange

b) Registered with SEBI

c) Both of these

4. The financial product dealt in secondary market is;

a) Equity shares

b) Preference shares

c) Debentures

d) Government securities

e) Bond

f) Commercial Paper

g) Treasury Bills

h) All the above

5. Government securities are issued for a maximum period of ----------

a) 1 year

b) 3 years

c) 10 years

d) 30 years

6. The negotiable certificate evidencing indebtedness is called:

a) Debenture

b) Bond

c) Ordinary share

d) Preference share

7. In the secondary market, the trading of the coupon bonds is at–––– based on the market rateof interest:

a) expected yield

b) expected maturity value

c) yield to maturity

d) the current market price

8. What is the limit for funds to be transacted in call money market?

a) One day

b) Twelve Hours

c) Morning 6 o’clock to Evening 6 o’clock

d) Over night basis

9. Under Notice Money Market, funds are transacted for the period ranging;

a) 1 day to 3 days

b) 2 days to 14 days

c) 15 days to 45 days

d) No such limit

10. What is the minimum period before which certificate of deposits is not transferable?

a) No such minimum period, certificates of deposits can be transferred at any time before itsmaturity

b) 15 days from the date of issue

c) 3 months from the date of issue

d) 15 days prior to maturity

11. Which is not true of Zero Coupon Bonds?

a) Issued at a discount and repaid face value

b) Interest is paid at regular intervals

c) The buy receives only one payment on maturity

12. Corporate Debt Securities are compulsorily listed on stock exchange:

(True/ False)

13. Corporate Debt Securities are issued in Demat form only

a) True

b) False

14. The holder of the –––– bond gets the equity shares on redemption of the bond:

a) coupon bond

b) zero coupon bond

c) convertible bond

d) preference bond

15. The commercial paper has the following features:a) It is unsecured instrument

b) It can be issued by rated companies, financial institutions and banks

c) It is issued to raise short term funds

d) It is issued at a discount to the face value

16. A commercial paper refers to;a) An unsecured money market instrument issued in the form of promissory note

b) A paper issued by commercial organizations

c) A letter issued by scheduled commercial banks for seeking refinance from NABARD


17. Commercial paper can be issued by;a) Corporate

b) All India Financial Institutions that have been permitted to raise short term resources underthe umbrella limit fixed by RBI

c) Primary dealers

d) All of the above

18. Commercial paper is;

a) Fully secured instrument

b) Un served money market instrument

c) Party secured paper

d) All of the above

19. Commercial paper is issued for the period of;

a) 46 days

b) 7days to one years

c) Not exceeding 3 years

d) Not exceeding 5 years

20. Commercial paper is issued for a minimum amount of Rs. --------- lakh and in multiple ofRs. -------- lakh to a single investor.

a) Rs.5 lakh, Rs.5 lakh

b) Rs.5 lakh, Rs.1 lakh

c) Rs.100 lakh, Rs.1 lakh

d) Rs.10 lakh, Rs.10 lakh

21. STT relating to a stock exchange transactions stands for

a) Securities Transaction Tax

b) Sales Tax Turnover

c) Short Telegraphic Transfer

22. Rolling Settlement refers to Settlement of trades executed based on net obligations:

(True /False)

23. Pay-in-day and Pay-out-day are terms used in

a) Salary payments

b) Settlement Cycle in a stock exchange transactions

c) Last and first day of a month

24. In case of failure of delivery by seller of the stock, the stock exchange purchase therequisite quantity in auction and gives it to the buyer:

a) True

b) False

25. AS per the regulatory requirements specified by SEBI, the debt securities (which one iscorrect):

a) Must be listed on a stock exchange if issued by way of a public issue

b) The debit securities must carry credit rating from any rating agency

c) Unlisted companies cannot get their debt securities listed on a stock exchange

d) Privately placed debt securities issued by a public company cannot be listed on a stockexchange

Key

1.c 2.d 3.c 4.h 5.d 6.b 7.c 8.d 9.b 10.a 11.b 12.a 13.a

14.c 15.b 16.a 17.d 18.b 19.b 20.a 21.a 22.a 23.b 24.a 25.a

1. Corporate Debt Securities are not rated by a rating agency:

a) True

b) False

2. When the brokers make payment or delivery of securities to the exchange, it is called:

a) pay-in day

b) pay-out day

c) settlement day

d) squaring day

3. For issuing commercial paper, the eligible participate has to obtain minimum credit rating;

a) P-2 of CRISIL

b) Credit rating. Which is equivalent to P-2 of CRISIL, from ICRA or CARE

c) No rating required

d) Any of (a) and (b)

4. Who can make investment in a commercial paper?

a) Individuals

b) Corporate bodies registered or incorporated in India and unincorporated bodies

c) Non Resident Indians NRI) and Foreign Institutional Investor (FIIs)

d) All of the above

5. Which of the following statements regard to commercial paper is INCORRECT?

a) Commercial papers are money market related instruments

b) Commercial papers are traded in the secondary market

c) Commercial papers attract stamp duty under the provisions of India Stamp Act

d) All of the above

6. Effective from 10.10.2000, a company intends to issue commercial paper must satisfy thefollowing condition(s);

a) The tangible net work of the company should not be less than Rs.4 crore as per the latestaudited balance sheet

b) The company has been sanctioned working capital limits by the bank s) or financialinstitutions

c) The borrowal account of the company should be classified as a standard Asset by thefinancing bank/ financial institutions

d) All of the above

7. In terms of present directives;

a) a bank can issue certificates of deposit up to 25% of its deposit base.

b) Banks are free to issue certificates of deposits for any amount, as per their requirement

c) Prior permission for Reserve Bank of India is required to issue certificates of deposits

d) All of the above

8. Securities Lending Scheme refers to

a) Lending of idle security by an investor to the clearing corporation in a stock exchange forearning a return

b) Loan by a commercial bank against securities

c) A priority sector advance by a Bank

9. Public issues are classified into Initial Public Offerings (IPO) and Further Public Offerings{FPO}

a) True

b) False

10. In the security lending and borrowing scheme:

a) the investors can lend their surplus securities to the clearing corporation and earn income

b) the investors can borrow securities from brokers

c) the brokers can borrow and lend the securities to each other

d) all the above

11. When an already listed company issued fresh securities to the public is called:

a) rights offering

b) further public offering

c) bonus offering

d) initial public offering

12. The private placement of shares by a company:

a) is regulated u/s 85 of Companies Act

b) is type of rights issue or bonus issue

c) is an offer of new shares to a select group of investors

d) all the above

13. Treasury Bill means;

a) A bill drawn on a treasury

b) An instrument is used by the Central Government for short term borrowings

c) A bill drawn by any authority by sitting I treasury office

d) A bill drawn by Member of Parliament

14. Treasury Bill is;

a) Negotiable security

b) Non- negotiable security

c) No security at all

d) Quasi negotiable security

15. Who issues treasury bills?

a) Reserve Bank of India as the agent of the Central Government.

b) Any government department of State and Central

c) Any Commercial Bank

d) All of the above

16. The treasury bills are issued at a;

a) Discount

b) Premium

c) Both (a) and (b)

d) Face Value

17. Who can acquire the treasury bills?

a) Public

b) State Government

c) Scheduled Commercial Banks

(d) All (a) to (c)

18. Which of the following statement is not true?

a) Rights Issue (R) is issue of additional shares to existing shareholders

b) Shares under Rights Issue are issued free of cost

c) Private placement of shares is to a select group of persons

d) A qualified Institutional Placement (QIP) is private placement of shares to QualifiedInstitutional Buyers {QIB}

19. Offer document means

a) Prospectus in a public issue

b) Offer for sale in a rights issue

c) Letter of Offer in a rights issue

d) All of these

20. What is true of a ‘Red Herring Prospectus’?

a) It is a prospectus which does not have details of either the price or number of shares beingoffered or the amount of issue

b) It can be filed for a FPO with ROC without a price band

c) In case of Book-Building issue, the price is known only on completion of the bidding process

d) All of these

e) None of these

21. Which of the following is SEBI’s eligibility norm for issue of rights issue by a listedcompany?

a) The company should have paid up capital of Rs. 2 cr

b) the company should be listed for 5 years at least

c) the company should not have made losses

d) there are no eligibility norms

22. A company having observation letter of SEBI on the basis of offer document filed by thecompany with SEBI, has to go for public issue with in a period of :

a) 1 month

b) 2 months

c) 3 months

d) 15 weeks

23. Which are the various instruments in the Indian Money Market?

a) Call money and sort notice money instruments

b) Interbank term deposits/ loans

c) Treasury bills

d) All of the above

24. Certificate to deposit refers to;

a) A certificate issued by Reserve Bank of India, stating the amount of deposit held by a bank

b) A certificate issued by Regional Rural Bank of its depositors

c) A negotiable money market instrument, issued in dematerialized format or as a usancepromissory note for funds deposited at bank or other eligible financial institutions for a specifictime period


25. How much is the minimum amount for issuance of certificate of deposits?

a) It should not be less than Rs.1 lakh and in multiples of Rs.1 lakh thereafter

b) Rupees 1Crore and in multiple of Rs.10 lakh, thereafter

c) Rupees 10 lakh

d) Non minimum stipulated answer

Key

1.b 2.a 3.d 4.d 5.d 6.d 7.b 8.a 9.a 10.a 11.b 12.c 13.b

14.a 15.a 16.a 17.b 18.b 19.d 20.d 21.d 22.c 23.d 24.c 25.d

1. Certificate of deposit can be subscribed by;

a) Individuals

b) Corporate companies

c) Trusts, funds, associations etc

d) (a) and (b)

2. Certificate of deposit is issued for a period of;

a) 15 days to 12 months

b) Over night

c) 15 days to 240 months

d) 60 months

3. Retail Investor is a person who bids for share of the value of :

a) More than Rs.1lakh

b) Up to Rs.2lakh

c) Less than Rs.50,000

4. SEBI permits ‘cut-off’ price in a book buildings process only to

a) Retail individual investors

b) Non-Resident Indians

c) Large corporate

5. The offer document filed by a company with SEBI includes:

a) The prospectus in case of a public issue

b) offer for sale in case of rights issue

c) letter of offer in case of right issue

d) all the above

6. Which of the following is not disclosed in the red-herring prospectus:

a) The price of the share

b) the no. of shares

c) the lower and upper price band

d) All the above

7. The Commercial Banking System in India comprises of;

a) Scheduled and Non-Scheduled Banks

b) Nationalized banks and Private sector banks

c) Regional Rural Banks, Cooperative Banks

d) Land Development Banks

8. Scheduled Bank refers to a bank;

a) Authorized by Central Government to transact government business

b) Registered with Ministry of Finance Government of India

c) Which is included in the second schedule of the Reserve Bank of India Act 1934

d) Incorporated as a cooperative society

9. Before a bank is included in the second scheduled of the RBI Act, it must fulfil the followingconditions;

a) Paid up capital and reserves of the Bank should not be less than Rs.5 lakh

b) It must satisfy the Reserve Bank of India that its affairs are not being conducted in a mannerdetrimental to the interest of the depositors

c) It must be a State Cooperative Bank or a Company as defined in the Companies Act, 1956or an institution notified by the Central Government in this behalf or a corporation or a companyincorporated by or under any law in force any place outside India

d) All of the above

10. Financial system plays an important role in the growth and development of economy in thefollowing manner;

a)Acting as an effective national payment system

b) It helps the flow of funds from the surplus sectors of the economy to the deficit and needysector of the economy

c) Efficient and speedy allocation of resources

d) All of the above

11. What are the two important functions of Bank?

a) Accepting deposits

b) Lending monies and/ or investment of funds

c) Recruitment of sub-staff

d) (a) and (b)

12. SEBI is established with the objective of;

a) Promoting and developing securities market

b) Protect the interest of investors

c) Both of these

13. What is the ceiling for FIIs for investment in the capital of stock exchanges?

a) 10%

b) 25%

c) 40

d) 49%

14. What is the ceiling beyond which no single investor can hold stake in a stock exchangeeither directly or indirectly.

a) 1%

b) 5%

c) 10%

d) None of these

15. In a book built public, issue the ratio of allocation between the retail investors,non-institutional investors and qualified institutional buyers is:

a) 15:35:50

b) 35:15:50

c) 50:35:15

d) 50:35:15

16. The book running lead manager in a public issue means:

a) The registrar to the issue

b) the lead manager to the issue

c) the merchant banker to the issue

d) the specialized company engaged in maintaining books in a public issue

17. Social control on banks was introduced in the year.

a) 1974

b) 1950

c) 1967

d) 1975

18. Banks were nationalized first time on;

a) 19th July 1969

b) 15th April 1980

c) 15th August 1947

d) 2nd October 1947

19. Which of the following were considered to be compelling reasons for Bank Nationalization?

a) Concentration of wealth and economic power in the bands of industrialists and businessmen.

b) Branch expansion was confined to urban areas and rural areas were being neglected

c)Sectors like agriculture, small scale industries and the other deserving sectors were outsidethe purview of bank lending operations

d) All of the above

20. Enumerate the main functions of a banker as per Banking Regulation Act, 1949;

a) Accepting deposit of money

b) Advancing of loans

c) Issuance of letters of credit

d) All of these

21. The Banking Regulation Act, 1949, consists of;

a) 50 sections

b) 142 sections

c) 56 sections

d) 100 sections

22. Coupon rate means;

a) rate of dividend payable on the share of a company

b) the rate of interest payable on a government security

c) Dividend declared by a mutual fund

d) None of these

23. Which of the following is not a debt instrument;

a) Debentures

b) Bonds

c) Fixed deposits

d) Preference Shares

24. In a T+O settlement basis, settlement will take place;

a) on the next day

b) on the same day

c) on the next working day

d) None of these

25. The safety net offer can be made by a company to:

a) individual investors only

b) Only resident original investors

c) investors with maximum of 1000 shares

d) All the above

Key

1.d 2.a 3.b 4.a 5.d 6.a 7.a 8.c 9.d 10.d 11.d 12.c 13.d

14.b 15.b 16.c 17.c 18.a 19.d 20.d 21.c 22.b 23.d 24.b 25.d

1. Book Building is a process where in an opportunity is provided to the market to discover theprice for securities

a) True

b) False

2. In a book building issue, which of the following term relating to price, does match:

a) the price band- the range of price with in which the issue will be made

b) floor price – the price at which the share shall be actually issued

c) cut off price- the minimum price below which the share wii not be issued

d) all the above

3. The Banking Regulation Act, 1949 applies to the following categories of banks?

a) Nationalised Banks

b) Non-Nationalised Banks

c) Co-operative Banks

d) All of these

4. The Commercial Banks have recently introduced the following activities;

a) Mutual Fund

b) Investment Counseling

c) Taxation Advisory Services

d) all of these

5. For opening new branches, banks need to be compiled with the following conditions;

a) Capital adequacy ratio CAR) should be at least 8%

b) Minimum net owed funds Rs.100 crore

c) Gross NPA not to exceed 15%

d) All of the above

6. The Banking Regulation Act, 1949, does not apply to;

a) Nationalised banks

b) State Bank of India and its subsidiaries

c) Foreign Banks having branches in India

d) Primary Agricultural Credit Societies and Co-operative Land Mortgage Banks

7. A Bank incorporated in India cannot open an office outside India without obtaining priorapproval of;

a) Government of India


c) Exim Bank

d) Joint Director of Foreign Trade

8. Within ---------- days/ months of the date of observation letter issued by SEBI regarding anoffer document filed by a company, the company has to open its issue

a) 21 days

b) 1 month

c) 3 months

d) None of these

9. What is the price band allowed by SEBI in case of public issue of shares?

a) 10%

b) 20%

c) 30%

d) None of these

10. SEBI has the authority to inspect the books of an already listed company or a companyintending to get listed where:

a) SEBI has reasonable ground to believe that the company is indulging in insider trading

b) SEBI has reasonable ground to believe that the company is indulging in fraudulent practice

c) SEBI reasonable ground to believe that the company is indulging in unfair practice

d) all the above

11. Which has the authority to suspend trading of the securities of a particular company at astock exchange:

a) SEBI

b) Central Govt.

c) RBI

d) All the above

12. The Provisions of Section 21 of the Banking Regulation Act, 1949 empowers Reserve Bankof India to;

a) Inspect the banking companies

b) To regulate CRR & LSR

c) Control advances by banking companies

d) All of the above

13. Section 26 of the Banking Regulation Act, 1949, requires every banking company to submitan annual return to the Reserve Bank of India, in respect of;

a) All accounts in India which have not been operated up on for ten years and above

b) Details of deposits and advances

c) advances to weaker sections of the society

d) Dividend payment made

14. As per the provision of Section 12 of the Banking Regulation Act, 1949,the minimum ratiobetween authorized, subscribed and paid capital of a banking company should be;

a) 4:2:1

b) 1:1:1

c) 2:1:1

d) 2:2:1

15. Under the Provisions of Sections 35 (b) (ii) of the Banking Regulation Act, 1949, inspectionof branches of Indian banks situated abroad is to be carried out by;


b) Exim Bank

c) Ministry of External Affairs

d) All of these

16. Section 29 of the Banking Regulation Act, 1949, stipulates that every banking company hasto prepare its final accounts i.e. Profit and Loss Account and Balance Sheet, in the formsprescribed in;

a) The third Schedule to the Banking Regulation Act, 1949

b) The second Schedule of the Reserve Bank to India Act, 1934

c) The second schedule to the Companies Act, 1956

d) The third schedule to the Negotiable Instrument Act, 1881

17. What are Mutual Funds?

a) It is a trust that pools money from many small investors and invests the same in stocks,bonds short-term money-market instruments

b) The small investors who are unable to have access to such market can earn a good returnon their investments through Mutual Funds

c) Both a and b

d) None of these

18. What is the role of Mutual Funds?

a) To bring stability to the financial system and efficiency of resource allocation

b) It is a linkage among various financial segments such as savings, capital market and thecorporate sector

c) They provide much needed impetus to the money market and stock market in addition todirect and indirect support to the corporate sector

d) All of these

e) None of these

19. What are the advantages of Mutual Funds?

a) Professional manager research, select and monitor the performance of the securities

b) The Funds make diversified investments spreading their investments across a wide range ofcompanies and industry sectors that will help lower risk if a company or sector fails

c) It offers ready liquidity to the investors who can come out of the fund in time by redeemingtheir investments in mutual funds

d) All of these

e) None of these

20. Which of the following cannot be included in the qualified institutional buyers (QIBs):

a) scheduled commercial banks and financial institutions

b) mutual funds and provident funds

c) FIIs registered with SEBI or Venture capital fund registered with SEBI


21. Which of the following need not have registration with SEBI:

a) underwrites

b) retail investors

c) qualified institutional buyers

d) portfolio managers

22. In terms of Section 17 of the Banking Regulation Act, 1949, every banking company isrequired to transfer each year to a reserve fund a sum equivalent to not less than;

a) 20% of gross profit

b) 20% of profit before dividends

c) 5% of gross profit

d) 10% of profit after interest, tax and dividend

23. The cash reserve requirements for non-scheduled banks are laid down in;

a) Section 41 (1) of the Reserve Bank of India

b) Section 41 (1) of the Negotiable Instruments Act, 1881.

c) Section 41 (1) of the Banking Regulation Act,1949


24. Cash Reserve Ratio is maintained in the form of;

a) Government Securities

b) Balance with Reserve Bank of India

c) Balance with State Bank of India

d) All of the above

25. RBI is empowered to prescribe Cash Reserve Ratio ranging between;

a) 5% to 20% of net demand and time liabilities

b) 3% to 15% of net demand and time liabilities

c) 3% to 40% of net demand and time liabilities

d) all of the above

Key

1.a 2.a 3.d 4.d 5.d 6.d 7.b 8.c 9.b 10.d 11.a 12.c 13.a

14.a 15.a 16.a 17.c 18.d 19.d 20.d 21.b 22.b 23.d 24.b 25.b

1. Statutory Liquidity Ratio means;

a) The maximum percentage of demand and time liabilities up to which bank can extend theadvances

b) Maintenance of liquid assets by banks in the form of cash, gold and unencumberedapproved securities equal to not less than 25% of the total demand and time deposit liabilitiesunder the provisions of section 24 of Banking Regulation Act.

c) To keep liquid cash


2. What are different types of Scheme offered by Mutual Funds?

a) Open-ended schemes in which investor can make his investments at any time and redeemhis investments at his will. The units are re-purchased by the fund at a fixed price as decided bythe Fund

b) Close-ended scheme allows an investor to invest during a specific period; also he canredeem his investments only during a specified period as decided by the Fund

c) Income fund is to maximize the current income of investors in the form of interest or dividend

d) Growth fund is an investment avenue in stocks which may not pay a regular dividend buthave the potential for large capital gains over a period of time

e) Balanced fund is a mixture of industrial stocks and bonds with a view to embrace modest riskof investment and secure reasonable rate of return

f) Sector fund may specialize in a particular industry segment such as technology or consumerproducts stocks

g) All of these

3. What are Money Market Funds?

a) They have relatively low risks compared to most other investments

b) By law they can invest in only certain high-quality short-term investments issued by thegovernment

c) The returns for such funds are generally lower than for either bond or stock funds

d) Inflation risk can be a potential concern for investor of such funds

e) Money Market Funds are invested in short-term liquid assets like Certificate of Deposit orCommercial Paper

f) All of these

g) None of these

4. Which of the following statements is not true;

a) A Mutual Fund is set up as trust, with Sponsors, trustees, Asset Management Companies(AMC) and custodians

b) The Trustees are vested with the general power of superintendence and direction of theAMC

c) Two thirds of the directions must be associated with the sponsors

d) AMC need not have independent directors

e) The performance of the mutual funds is denoted by the Net Asset Value {NAV} f) NAV is to be disclosed at regular intervals

5. In case of need, SEBI can attach the bank accounts of intermediary a person associated withsecurities market, for a maximum period of:

a) one week

b) one month

c) one year

d) no time limit

6. A mutual fund is a mechanism (which one is not correct):

a) To pool resources from the public by issuing units

b) To invest the funds so pooled as per objectives

c) To invest the funds so pooled as per disclosed in the offer document

d) None of these

7. The reduction in the Statutory Liquidity Ratio be the Reserve Bank of India;

a) Will improve the resources of banks

b) will augment the resources of Scheduled Commercial Banks

c) will not effect the liquidity position


8. Under the powers derived from Section 20, 21 and 21A of the Reserve Bank of India Act,1934;

a) The Reserve Bank manages the public debt and issues new loans on behalf of the Centraland State Government

b) The Reserve Bank provides refinance to NABARD in respect of agricultural advances

c) The Reserve Bank regulates flow of credit to the economy by variations I the StatutoryLiquidity Requirement and Cash Reserve Ratio.

d) All of the above

9. In period of boom, which leads to economic instability Reserve Bank resorts to;

a) Sale first class securities in its precession in the market to reduce the supply of money as ameasure of open market operations

b) Buying of approved securities in the market as a measure of open market operations

c) Like in the bank rate as a measure of open market operations


10. The public debt offices function under the control of;



c) Public Debt Ministry

d) a) and b)

11. Which of the following statements are CORRECT?

a) In India foreign exchange regulation are administered by Reserve Bank of India

b) Reserve Bank of India maintain the external value of Rupee

c) Reserve Bank of India does not deal in foreign exchanges directly with the public

d) All of the above

12. An open ended scheme is one that is available for subscription and repurchase on acontinuous basis

a) True

b) False

13. A Growth/ Equity oriented scheme

a) Aims to provide capital appreciation over medium to long term period

b) Invests a major portion of its funds in equities

c) Has higher risks

d) All of these

14. A income/ Debt oriented scheme

a) Aims to provide regular and steady income to investors

b) Generally invests in fixed income securities

c) Has low risk compared to equities

d) Does not provide much capital appreciation

e) All of these

15. For protection of investors of mutual funds, who formulates the policies and regulates themutual funds to protect the interest of investors?

a) Company Law Board

b) Insurance Regulatory and Development authority



16. The responsibility to make investment in various types of securities for a mutual fund lieswith which of the following :

a) Sponsor

b) Trustee

c) Asset management company

d) Custodians

17. Reserve Bank of India is;

a) An extension wings of Ministry of Finance, Government of India

b) A body corporate having perpetual succession and a common seal

c) An institution owned by Indian Bank’s Association

d) A private sector company

18. Authorised, subscribed and paid up share capital Reserve Bank of India is;

a) Rs.5000 crore

b) Rs.5 crore

c) Rs.50 crore

d) Rs.100 crore

19. The term ‘Ways and Means’ advances refers to;

a) The temporary advance made to the government by its bankers to bridge the internalbetween expenditure and the flow of receipt of revenue

b) The advance given by the banks to the poorest of the society

c) Lending made under PMRY scheme

d) All of the above

20. The Reserve Bank of India is also called the lender of the last resort to ScheduledCommercial Banks because;

a) RBI meets directly or indirectly all the reasonable demands for financial accommodationssubject to terms and conditions of the discount ratio policy of RBI

b) They are not able to get facilities from other banks


d) They are able to get facilities from sector banks

21. Balanced plans

a) are used to provide both growth and regular income

b) invest in both equities and fixed income securities

c) are affected by fluctuations in share prices

d) are less volatile (in terms of NAV) compared to pure equity funds

e) All of these

22. Money Market or Liquid funds

a) Aim to provide easy liquidity, preservation of capital and ensure moderate income

b) invest exclusively in safer short term investments

c) Returns are relative lower than other funds

d) All of these

23. As per regulation of SEBI –––- directors or trustees of a mutual fund should beindependent:

a) 33%

b) 1/2

c) 2/3rd

d) 75%

24. As per SEBI guidelines, a person engaged in the marketing and selling of mutual fundsproducts is required to pass a certification test and obtain a registration no. from:

a) AMFI

b) SEBI

c) NSE or BSE

d) IIBF

25. RBI has given freedom to banks to;

a) Convert their non-viable rural branches into satellite offices on certain conditions

b) Provision of locker facilities at the extension counters.

c) Closing of loss making branches in urban/ metro centres and loss making branches at ruralcenters served by two Commercial Bank branches excluding RRBs. After mutual consent

d) All of the above

Key

1.b 2.g 3.f 4.d 5.b 6.b 7.b 8.a 9.a 10.b 11.d 12.a 13.d

14.e 15.d 16.c 17.b 18.b 19.a 20.a 21.e 22.d 23.c 24.a 25.d

1. Which bank is the banker to the Central Government?

a) Central Bank of India


c) Punjab National Bank

d) All of these

2. In terms of Section 19 of the RBI Act, 1934, the RBI has been prohibited from;

a) Making loans or advances

b) Drawing or accepting bills payable otherwise than on demand

c) Allowing interest on deposits or current accounts

d) All of the above

3. Introduction of rating methodology for banks was introduced by RBI on the lines of;

a) IRAC

b) ALM

c) CAMEL

d) CMA

4. Scheduled banks are required to keep cash reserves with Reserve Bank of India, in terms of;

a) Section 42 (i) of the RBI Act, 1934

b) Section 24 of the Banking Regulation Act, 1949

c) Section 42 of the Negotiable Instruments Act 1881


5. Which of the following fall under the qualitative methods of credit control adopted by ReserveBank of India?

a) Selective Credit Control

b) Moral Suasion

c) Credit Authorisation Scheme

d) All of these

6. Gilt funds invest in risk free Government securities:

a) True

b) False

7. Index funds:

a) Replicate the portfolio of a particular index

b) Invest in securities in the same weightage comprising an index

c) Tend to rise or fall in movement in index

d) All of these

8. Sector specific funds invest in the securities of only those sectors or industries as specified inthe offer document :

(True/ False)

9. Which of the following is not a feature of an open ended scheme of a mutual fund:

a) Plan is available for subscription on a continuous basis

b) The repurchase facility is made available by the fund on a continuous basis

c) The scheme has a fixed maturity period

d) The key feature of such scheme is the liquidity

10. In a close ended mutual fund scheme, as per SEBI guidelines, the fund must offer existroute to the investor in which of the following form:

a) Only repurchase of units

b) Only listing of the units at a stock exchange

c) The fund may offer both

d) The investor does not get any exist facility unless the scheme is closed

11. The term ‘Moral Suasion’ refers to;

a) The Banker’s duty of secrecy as regards the affairs and accounts of his customers

b) Moral duty of a borrower to deal with only one bank

c) The advice given by Reserve Banks to banks/ financial institutions in the matter of theirlending and other operations with the objective that they might implement or follow


12. ‘Currency if India’ refers to;

a) One rupee notes only

b) One rupee notes and coins

c) Banks notes issued by Reserve Bank of India i.e., Rs.2, Rs.5, Rs.10, Rs.20, Rs.50, Rs.100,Rs.500, and Rs.1000.

d) One rupee notes and coins and bank notes issued by Reserve Bank of India

13. Which of the following is the sole authority for issuance of currency in India?

a) Controller of Currency

b) Government of India


d) None of these

14. 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

15. One rupee note bears the signature of;

a) Secretary, Ministry of Finance, Government of India

b) Dy. Governor of Reserve Banks of India

c) President of India

d) Vice-President of India

16. Any person engaged in marketing and selling of mutual fund products has to pass theexamination conducted by

a) SEBI

b) Association of Mutual Funds of India {AMFI)

c) RBI

17. Firms and corporate marketing mutual fund products have to obtain registration from AMFI:

a) True

b) False

18. A mutual fund is set up as a

a) Trust

b) company

c) No separate legal status than that of the sponsor

d) None of these

19. Which out of the following, is the aim of income fund schemes of a mutual fund:

a) To provide regular income and appreciation of capital

b) To provide appreciation of capital

c) To provide regular income

d) To provide maximum income

20. To provide regular income and growth of investment, the balance fund schemes invest in:

a) govt. securities

b) equity of companies

c) Debentures of companies

d) Equity and debt instruments

21. Bank notes are issued under the signature of;

a) Dy. Governor of Reserve Banks of India

b) Governor of Reserve Banks of India

c) Chairman and Managing Director of Reserve Banks of India

d) Any authorized official of RBI

22. The currency notes issued by RBI have a cent percent cover in;

a) Approved assets

b) Gold

c) Foreign exchange

d) Trustee securities

23. The approved assets against which currency note are issued by RBI, comprise of;

a) Gold coin and bullion and rupee coin

b) Foreign securities and rupee securities of Government of India of any maturity.

c) Bills of exchange and promissory notes payable in India which are eligible for purchase byRBI

d) All of the above

24. The Board for Financial Supervision has been constituted by the Reserve Bank of Indiaunder the Reserve Bank of India Board for Financial Supervision) Regulations, 1994 on 16thNovember 1994. The main objective of board is;

a) Strengthening supervision and surveillance over the financial system

b) Providing sharper focus to supervisory policy and skills



25. A new department; viz Department of Supervision has been set up by Reserve Bank ofIndia w.e.f. 22.12.1993. The above department has taken over;

a) The work relating to the supervision of Commercial Banks from the department of BankingOperations and Development.

b) The supervision work of Ministry of Finance

c) The work of supervision of Development Bank in India

d) The work of supervision of foreign banks

Key

1.a 2.d 3.c 4.a 5.d 6.a 7.d 8.a 9.c 10.c 11.c 12.d 13.c

14.b 15.a 16.b 17.a 18.a 19.c 20.d 21.b 22.a 23.d 24.c 25.

1. The funds collected by a mutual fund is managed through investments in securities by

a) SEBI

b) Sponsor of the Trust

c) Trust

d) Asset Management Company

2. A Fund of Funds is a scheme that invests primarily

a) in the money market

b) in the other schemes of the same mutual fund or other mutual funds

c) in the billion market

d) None of these

3. A person engaged in the marketing/ selling of mutual fund products is required to obtain aregistration number from

a) AMFI

b) SEBI

c) NSE

d) None of these

4. Which of the following is not a feature of an index fund:

a) The investment replicate the portfolio of a particular index

b) The investment of the scheme is in the same weightage comprising the index.

c) The NAV of the scheme would fall or rise exactly in accordance with fall or rise of the index


5. In case of ––––– the investment primarily is in other schemes of the same mutual fund orother mutual funds:

a) Assured returns funds

b) Fund of funds

c) Master funds

d) Index funds

6. RBI has permitted banks to open, without its prior approval, specialized branches per centereach in the category of;

a) Industrial Finance

b) NRI Branches

c) Treasury Branches

d) All of the above

7. Which of the following guidelines have been issued by Reserve Bank of India based on therecommendation of Narsimham Committee in regard to branch licensing policy?

a) Banks may relocate branches, open specialized branches, spin of business at otherlocations, set up controlling officers/ administrative units and also establish extension countries.

b) Banks may close down branches other than in rural areas as well as to swap unremunerativebranches or those in remote areas

c) Banks which attain the revised capital adequacy norms and prudential accounting standardswill be given freedom to set up new branch offices

d) All of the above

8. Demand liabilities means;

a) Liabilities which are payable within one year from the date of balance sheet

b) liabilities which must be met on demand

c) Current and saving deposits


9. As per Section 5 (1) of the Banking Regulation Act, 1949, time liabilities means;

a) Time deposits

b) liabilities payable after a specified time

c) Liabilities which are not demand liabilities


10. Which is the authority in India for effecting changes in the Cash Reserve Ratio andStatutory Liquidity Ratio?

a) Government of India


c) Indian Banks Association

d) CRR and SLR Associations

11. The first insurance company was set up at Kolkata in India in

a) 1948

b) 1956

c) 1818

12. The Insurance sector was opened up in India in the year

a) 2000

b) 2008

c) 2002

13. As at 31 Mar 08, there are ----------- life and -------- non-life insurance companies in India

a) 11 and 12

b) 23 and 23

c) 2 and 4

14. The entry level capital requirement for an insurance company in India is :

a) Rs. 1 cr

b) Rs. 10 cr

c) Rs. 25 cr

d) Rs. 100 cr

15. Which of the following regulates the insurance business in India:

a) LIC of India

b) ECGC

c) SEBI


16. Bank rate means;

a) The rate of interest charged by the bank on advances

b) The rate of interest paid by banks on the deposits

c) The standard rate at which the Reserve Bank of India is prepared to buy or to rediscounteligible bills of exchange or other commercial papers of Commercial Banks


17. To restrict expansion of credit, the Reserve Bank;

a) Raises the bank rate

b) Reduce the bank rate

c) Freezes the bank rate


18. When Reserve Bank intends to increase credit by the banking system, it;

a) Reduces the bank rate

b) Raises the bank rate

c) Freezes the bank rate

d) None of these

19. Bank rate policy, open market operations variable reserve requirements and statutoryliquidity requirements as measures of credit control are classified as;

a) Quantitative methods

b) Qualitative methods

c) Weighted average methods


20.The Board for Financial Supervision has a term of;

a) One year

b) Two Years

c) Ten years

d) No time limit

21. The specialized insurance company in India is

a) Agricultural Insurance Company

b) Export Credit Guarantee Corporation

c) Both a and b

22. The Insurance Regulatory and Development Authority (IRDA), the regulator for insuranceindustry in India has its headquarters at:

a) Mumbai

b) Delhi

c) Hyderabad

d) Bangalore

23. Insurance business could be:

a) Life Insurance

b) Fire Insurance

c) Marine Insurance

d) Miscellaneous Insurance

e) Any of these

24. Insurance business is divided into:

a) 3 classes i.e. life insurance, fire insurance, misc.insurance

b) 2 classes i.e. life insurance, fire insurance

c) 4 classes i.e. life insurance, fire insurance, misc.insurance and marine insurance

d) 4 classes i.e. life insurance, fire insurance, general insurance, misc.insurance

25. The main Acts that regulate the insurance business are:

a) Insurance Act and IRDA Act

b) Life Insurance Act and IRDA Act

c) Insurance Act, IRDA Act and Indian Contract Act

d) General insurance Act, IRDA Act and Indian Contract Act

Key

1.d 2.b 3.a 4.c 5.b 6.d 7.d 8.d 9.c 10.b 11.c 12.a 13.b

14.d 15.d 16.c 17.a 18.a 19.d 20.b 21.c 22.c 23.e 24.c 25.a

1. The Board will exercise integrated supervision over;

a) Commercial Banks

b) Financial Institutions

c) Non-Banking Financial Intermediaries and other para-banking financial institutions

d) All of the above

2. Which of the following would fall under the category of retail banking?

a) Personal loans to individuals

b) Vehicle loan

c) Home loans

d) All of the above

3. Retail Banking refers to;

a) Provision of the basic services of a bank to the individuals.

b) Credit facilities provided to retail traders, departmental shares etc.

c) Collection and payment of large number of dividend warrants, interest warrants and refundorders

d) Salary distribution of a large organization

4. What are the various segments of Retail Banking?

a) Deposit products i.e., convenient deposit scheme such as fixed deposit, Auto-sweep schemeetc)

b) Loan products i.e., loan for conveyance, loan for housing, education and personal loans etc)

c) Value added services i.e., free collection of out station cheques, issue of free ATM/ Debit/Credit Cards)

d) All of the above

5. The various channels for delivery of retail banking are;

a) Through Branch Banking

b) Through Internet Banking

c) Through Mobile Banking

d) All of the above

6. The primary legislation that deals with insurance business in India is;

a) Insurance Act, 1938

b) IRDA Act, 1999

c) Both

7. The popular life insurance product is :

a) Endowment policy

b) Life policy

c) Term policy

d) All of these

8. Tariff rates for some of the general insurance products is laid down by tariff AdvisoryCommittee (TAC) :

(True/ False)

9. The tariff of insurance are prescribed generally by:

a) IRDA

b) Insurance companies themselves

c) general insurance companies for general insurance and life insurance companies for lifeinsurance


10. Under a contract of insurance, the payment is made of the insured amount on which of thefollowing dates (which one is not correct):

a) the date of maturity

b) specified dates at periodical intervals

c) death, in case it happen earlier than date of maturity

d) death only, in all the cases.

11. Which of the following does not come in the purview of Retail Banking?

a) Advances to traders

b) Advances to small scale units

c) Financing of weaker sections of the society

d) Loan syndicate

12. Which of the following constitutes a point of Retail Banking?

a) Bank branches situated in residential colonics

b) Bank branches situated in large shopping complex, multiplexes etc.

c) Bank branches in college campuses

d) All of the above

13. Retail loan consists of;

a) Consumer credit for specific purpose

b) Credit for general purpose



14. The term ‘Retail Banking’ means;

a) Providing services to individuals

b) Focusing on individuals needs for different kinds of financial services

c) In an integrated manner

d) All of the above

15. Whole Sale Banking refers to the borrowing and lending funds of;

a) Government departments or agencies

b) Other banks

c) Large domestic and international companies

d) All of the above

16. A contract of insurance is a contract of :

a) Uberrimae fides

b) Bona fide

c) Ultra vires

17. All Life Insurance products are offered after a medical examination:

a) True

b) False

18. ‘Bonus’ is declared on

a) With profit policy

b) Without profit policy

c) None of these

19. In case of with profit life insurance policies, the disclosed by the insurance if any:

a) is paid as it accrues

b) is added to the policy value and paid along with contracted amount

c) is not paid at all . Adjustment is made in premium payments

d) is credited to the bank account of the policy holder at the end of each year

20. Which of the following is not correct regarding group insurance:

a) there is low cost insurance cover

b) the insurance policy saves administrative cost of the policy

c) the group selection is aimed at forming a group which will show nominal rate of mortality


21. Which of the following would not fall under the category of Whole Sale Banking?

a) Credit facilities for Rupee on lac and above to industries and trading firms

b) Personal loans/ Consumer loans to the individual

c) Loan syndication

d) a) and b)

22. As on 31.03.04, the retail portfolio constitutes of --------- percent of total outstandingadvances, in the Indian context.

a) 25

b) 10

c) 21.5

d) 40

23. Home loans are granted;

a) For construction of residential houses

b) For repairing of existing residential house

c) For renovation of residential houses

d) All of the above

24. In house loans, the prime security for the loan is generally;

a) House property for which loan is granted

b) Personal guarantee of the borrower

c) Other property of the Borrower

d) Personal guarantee of third party

25. The quantum of loan under Home loan is decided on the basis of;

a) Income of the borrower

b) Cost of the property/ Cost of construction

c) Repaying capacity of the person

d) All of the above

Key

1.d 2.d 3.a 4.d 5.d 6.c 7.d 8.a 9.d 10.d 11.d 12.d 13.c

14.d 15.d 16.a 17.b 18.a 19.b 20.c 21.a 22.c 23.d 24.a 25.d

1. The advantage of life insurance is

a) Aid to thrift

b) Liquidity

c) Tax relief

d) All of these

e) None of these

2. Keyman Insurance provides life cover to:

a) Key person in the company

b) Number of person under a ‘Master Policy’

c) Person holding the key of the factory premises

3. Insurance Institute of India is engaged in

a) Deciding the premium for insurance policies

b) Conducting qualifying examination for the agents and staff

c) Publish training materials for the agents

d) b and c

e) All of these

4. Insurance Ombudsman is empowered to redress customer grievances of :

a) Any type of insurance up to Rs.20lakhs

b) Any type of insurance up to Rs.10lakhs

c) Insurance on personal lives only up to Rs.10lakhs

d) Insurance on personal lives only up to Rs.20lakhs

5. As per Insurance Ombudsman scheme, the Ombudsman is empowered to redress customergrievances where the insured amount is:

a) up to Rs. 1 lac

b) less than Rs. 5 lac

c) up to Rs. 10 lac

d) less than Rs. 20 lac

6. What type of function is carried by the banks under bancassurance:

a) the banks develop their own insurance products and sell to their customers

b) the banks develop their own insurance products and sell through of other companies

c) The banks distribute insurance products of other companies to their customers as agents

d) The banks distribute insurance products of other companies to their customers as agentswith ‘with-risk’ or ‘with-out’ risk features

7. Which of the following is CORRECT statement in respect of debit card?

a) Debit card facility is provided for those having savings bank account/ current account/ fixeddeposit accounts of individuals, firms and corporate

b) This facility is not extended to cash credit/ loan account holders

c) Debit card is issued to all the persons who visit the branch

d) (a) and (b) above

8. Sources of funds which do not appear in the balance sheet and consequently not owned bythe entity are known as;

a) Off balance sheet business

b) Current assets

c) Contingent liabilities

d) All of the above

9. Which of the following is an example of off balance sheet finance?

a) Accommodation Bill

b) WCTL

c) Financial Loans

d) Intangible Assets

10. Which is the CORRECT statement in regard to off balance sheet finance?

a) It represents the time liabilities

b) It represents the funds invested in subsidiary/ holding companies.

c) It represent the claims not admitted as debits

d) As there is not capital outlay, there is no reduction in working control.

11. What is International Banking?

a) Providing variety of financial services to the customers who are living outside their homecountry

b) Providing of financial services to the customers who are living in home country

c) Banking between two countries

d) All of the above

12. Contribution of insurance funds to India’s GDP is around

a) Less than 1%

b) Between 2-3%

c) Between 3-5%

d) Above 5%

13. What is Banc assurance?

a) It is the distribution of insurance products through bank’s network

b) It offers a financial package to the customers that can fulfill both banking and insuranceneeds at the same time

c) Both of these

d) None of these

14. What are the benefits of Banc assurance to banks and insurance companies?

a) It increases return on assets through fee-based income thereby covering the operatingexpenses for better profits

b) Banks which offer retail loans can protect themselves by selling life insurance policies to theirretail borrowers

c) Selling of insurance products requires face to face interaction with the customers which ispossible due to large network of branches of banks

d) It is easy for insurance companies to market their products through banking networksthereby reducing selling expenses

e) All of these

f) None of these

15. Which of the following is the advantage of bancassurane business to banks (which onecannot be included):

a) improved customer retention and overall customer satisfaction

b) higher employee productivity

c) means of earning risk free non-interest income


16. The objective of creation of IRDA is:

a) to facilitate opening of insurance companies for increasing insurance business

b) to regulate and develop insurance business

c) to develop insurance products so that all the insurance companies adopt them on a uniformpattern

d) all the above

17. Which of the following the role functions of capital market?

a) Mobilization of savings acceleration of capital formation raising long term capital

b) Promotion on industrial growth

c) Ready and continuous market for proper channelization of funds

d) All of the above

18. Capital market can be divided into;

a) Industrial securities market

b) Gilt edged market

c) Personal securities market

d) Both (a) and (b)

19. Which of the following are the takers of funds in capital market?

a) Private sector manufacturing industries

b) Government for economic development

c) Individuals

(d) a) and (b)

20. Which of the following are the suppliers of funds in capital market?

a) Individual savers

b) Corporate savings

c) Banks

d) All of these

21. Capital market is described as market for;

a) Short term funds

b) Medium and long term funds

c) Both (a) and (b)

d) All of the above

22. The various models of Banc assurance are

a) Corporate agency model

b) Distribution alliance model

c) Joint venture model

d) Merger of a bank with an insurer

e) Build or buy own insurance

f) All of these

23. The primary legislation (s) dealing with insurance business is/ are

a) Insurance Act, 1938

b) IRDA Act, 1999

c) Both of these

24. What is the minimum capital prescribed for setting up an insurance company in India?

a) Rs.100cr

b) Rs.200cr

c) Rs.300cr

d) Rs.500cr

25. In factoring , the factor makes payment to the seller firm on the basis of :

a) transfer of the sales function from the seller to the factor

b) assignment of receivables arising on account of domestic or export sale

c) hypothecation of book debts arising on account of domestic sales

d) all the above

Key

1.d 2.a 3.d 4.d 5.d 6.c 7.d 8.d 9.c 10.d 11.a 12.b 13.c

14.e 15.d 16.b 17.d 18.d 19.d 20.d 21.b 22.f 23.c 24.a 25.b

1. The without recourse factoring means:

a) where the factor is not responsible for the loss ot the seller on account of his actions

b) where the factor assumes the risk of default in payment by the buyer

c) where the risk of default in payment by the buyer is that of the seller

d) where all the risk associated with the factoring is that of the buyer

2. Capital Market refers to all the facilities and institutional arrangements for;

a) Borrowing

b) Lending

c) Medium and Long term Funds

d) All of these

3. The instruments of capital market are;

a) Equity shares, preference shares, non-voting equity shares

b) Debentures i.e. convertible, non-convertible, zero coupon bonds etc)

c) Company fixed deposits

d) All of the above

4. The term ‘Mutual Funds’ refers to;

a) The business of acquisition holding, management, trading or disposal of securities,participation certificates or any other instruments, income or growth participation business andunit trust scheme.

b) Fund created by Commercial banks for trading in shares

c) Fund created by an enterprise to meet out super annuation liability of the enterprises.


5. The main functions of mutual funds are;

a) Collection of funds from an eager of investor

b) Investment of funds so collected in capital markets

c) Holding investment in trust and to diversify the risk in the investment, proper management ofportfolio with an object to optimize the returns.

d) All of the above

6. An open ended fund means;

a) The fund exists for perpetuity. There is no ceiling on the amount to be collected or raised.

b) Investors are assured of dividends, capital appreciation and safety of their investments

c) A repurchase facility close to net asset value NAV) makes it better than close ended fund.

d) All of the above

7. Factoring is

a) A service that is concerned with the financial and collection of account receivables indomestic or international trade

b) An ongoing arrangement between the client and the factor (e.g: a Bank) where invoicesraised on open accounts sales of goods and services are assigned to the factor

c) A long term relationship between the client and the factor d) The client sells the invoices tothe factor at a discount

e) The factor may or may not accept the incumbent credit risk

f) All of these

8. Factoring could be;

a) With recourse

b) Non-recourse

c) Both a and b

9. The maximum debt period normally permitted in factoring is 150 days inclusive of a graceperiod of 60 days:

(True/ False)

10. The charges for factoring will consist of

a) Finance charges

b) Service charges

c) Both a and b

11. The with-recourse factoring means:

a) where the factor is not responsible for the loss to the seller on account of his actions

b) where the factor assumes the risk of default in payment by the buyer

c) where the risk of default in payment by the buyer is that of the seller

d) where all the risk associated with the factoring is that of the buyer

12. To be eligible for factoring facility, the seller’s eligibility criteria normally relates to:

a) minimum track record of certain years of existence in business

b) consistence profitability

c) positive minimum net worth

d) all the above

13. Mutual funds are vehicles for collective investment that pool the savings of many investorsfor;

a) Investment in securities, according to stated objective and the profits are shared equallyamong its participants in proportion to their holdings.

b) It brings together the investors who have surplus money to invest corporate entities whoneed the money to their projects

c) The fund collects the money from the members and invests them in diversified portfolio offinancial assets.

d) All of the above

14. A mutual fund collects money from the members and invests them in diversified portfolio offinancial assets with a view to;

a) Reducing risks

b) Maximizing returns and capital appreciation

c) Distribute the gains to its members

d) All of the above

15. In India, Unit Trust of India (UTI) came into existence in 1964 and pioneered the concept of‘Units’. However, the first Mutual Fund Scheme was launched in 1986 and known as;

a) Master Plus

b) Master Gain

c) Master Share

d) Master Unit

16. Which one of the following is the reason for the success of mutual fund?

a) Mutual Fund Scheme offers to every investor security, steady growth, regular income andeasy liquidity.

b) A small investor gets the professional expertise of the Fund Managers of the MF

c) It carries Tax Breaks and this benefit is passed on the investor

d) All of the above

17. The individual investor can claim tax exception for both principal amount and income fromthese units under;

a) Sec.80 L of Income Tax Act

b) Sec.88 of the I.T Act

c) Sec.80 E of the I.T. Act


18. The advantage of factoring is

a) It replaces high cost market credit

b) Enables purchase on cash basis for a availing cash discounts

c) The customer gets instant finance against each invoice

d) Low margin and improved cash flow

e) The customer gets large credit/ grace period

f) Each invoice is followed up for payment by the factor on the due date

g) MIS reports and sales ledger administration is totally taken care by the factor

h) Factoring accelerates receivable turnover, improver operating cycle

i) Results in higher sales, Profits and Rol

j) All of these

19. Forfaiting is:

a) A means of finance (credit) an exporter avails from an intermediary called the forfeiteragainst the export receivables without the obligation to repay the credit

b) It is used in an international trade transaction

c) A highly effective sales tool to improve cash flow and eliminate risk for the exporter

d) All of these

20. The advantages of forfeiting is

a) It provides 100% financing

b) Improves cash flow of the exporter

c) Saves administrative cost

d) Increases trade opportunity

e) Enable the exporter to avoid various risks

f) All of these

21. Off Balance Sheet items in the books of a bank

a) are those items which are contingent

b) that are not included in the balance sheet as on the date of the balances sheet

c) are to be disclosed as’ Notes on Accounts’

d) All of these

22. Which of the following is correct regarding the no. of factors:

a) in domestic factoring, 1 factor is involved and in international factoring 2 factors are involved

b) in domestic factoring, 2 factors are involved and in international factoring 1 factor is involved

c) in domestic factoring and international factors 2 factors are involved

d) in domestic factoring and international factor involved

23. Under the forfaiting, which is most commonly forfeited debt instrument:

a) bill of exchange and promissory notes

b) promissory notes and debentures

c) bills receivables

d) all the above

23. A close ended fund means;

a) The corpus is of fixed size with a definite redemption period

b) Listing on stock exchanges provides easy liquidity

c) The market price is always below the Net Asset Value

d) All of the above

24. Which of the following is the first Commercial Bank who had launched a mutual fund?


b) Canara Bank

c) Indian Bank

d) Bank of India

25. SEBI has issued guidelines in respect of mutual fund. The same of the guidelines are;

a) Mutual Fund should be constituted as TRUST under the Indian Trusts Act and at least twooutside trustee should be on board.

b) Mutual Fund’s business should be authorized by SEBI and it should be operated only by theseparately established Asset Management Company (AMC)

c) AMC shall have a minimum net worth of Rs.10 crore and at least 50% of the members ontheir board should be independent

d) All of the above

Key

1.b 2.d 3.d 4.a 5.d 6.d 7.f 8.c 9.a 10.c 11.c 12.d 13.d

14.d 15.c 16.d 17.d 18.j 19.d 20.f 21.d 22.a 23.d 24.a 25.d

1. On 1st February 1964, India’s first mutual fund came into existence as a statutorycorporation, is;

a) Unit Trust of India

b) SBI Mutual Fund

c) Can Bank Mutual Fund

d) None of these

2. Which of the following statements about mutual funds is CORRECT?

a) Distribution of any income in advance on a monthly basis or otherwise is not permitted.

b) Mutual funds are listed in stock exchange

c) Lock in period for repurchase of units should not be more than 36 months.

d) All of the above

3. The charge created by seller of goods in favour of factor while availing finance underFactoring is

a) Hypothecation of goods

b) Assignment of debt

c) No charge is created

d) None of these

4. The Forfaiter can recover the trade receivables discounted by him form ----------- if the bill isnot paid on the due date by the importer

a) exporter’s bank

b) importer’s bank

c) importer

d) exporter

5. The person on whose behalf a guarantee is given is referred to as

a) Principal debtor

b) Guarantor

c) Beneficiary

d) Principal

6. Under forfaiting, the exporter is able to transfer which of the following risk:

a) interest rate risk

b) currency risk

c) credit risk and political risk

d) all the above

7. If contingent liability (say letter of credit) crystallizes, it is reflected in the balance sheet of abank:

a) in the main part of their balance sheet as an asset

b) in the ‘notes to the balance sheet’

c) amount in the main part of the balance sheet and explanation in the notes on accounts

d) in the main balance sheet as a liability

8. Net Asset Value {NAV} of a scheme is a number which basically represents the value of Rs. per units as on a particular date of the assets of the fund less liabilities and outstandingexpenses. It is represented as;

a) Assets of the Fund – Liabilities + outstanding Expenses

Number of Fund Units

b) Assets of the Fund +Liabilities+ Outstanding Expenses


c) Assets of the Fund – Liabilities –Outstanding Expenses



9. An off share fund is;

a) A Fund established outside the country

b) A mutual fund which is situated at sea shore

c) A fund meant for development of oceans and sea shores


10. The term ‘load factor’ refers to;

a) A charge levied by mutual fund from the unit holders at the time of entry or exit from themutual fund

b) Overall load on the mutual fund


d) Charge on staying with fund

11. Leasing is a contract between lesser and lessee;

a) For use of specific asset

b) For a pre determined period by the lessee

c) On a payment of specified lease rent to the lessor.

d) All of the above

12. How many types of lease are in practice?

a) Financial lease

b) Operating lease

c) Housing lease

d) Both (a) and (b)

13. guarantee given be a bank on behalf of the purchaser, undertaking to pay the supplier thecost of machine in instalments spread over a few years is

a) Performance guarantee

b) Financial guarantee

c) Deferred payment guarantee

d) None of these

14. Which of the following is a derivative?

a) Forward Contract

b) Forward Rate Agreement

c) Interest Rate Swap

d) None of these

e) All of these

15. How many Factors are involved generally in forfeiting or international factoring?

a) 1

b) 2

c) 3

d) None of these

16. Which of the following is an off- balance sheet item:

a) overdraft limit sanctioned to a firm

b) bid bond

c) credit balance in the overdraft account

d) all the above

17. If the bank guarantee is issued by a bank in lieu of customer’s requirement to deposit acash security or earnest money, it is a:

a) financial guarantee

b) performance guarantee

c) deferred payment guarantee

d) any of the above


a) The entry of Mutual Funds into call money market as a lender has helped to stabilize theinterest rates in this highly volatile market

b) In a depressed market the MFs can steady the market due to their absorbing capacity

c) MF’s help to cahannelize the saving in productive lines by providing the much – needed longterm finance to the industries for assets formation modernization and expansion.

d) All of the above

19. For launching any new scheme by an MF;

a) Prior permission of RBI is required

b) Prior permission of RBI is not required

c) RBI has no control as ME

d) Permission from Government of India

20. Mutual Fund invests the funds collected under the scheme in various capital marketinstruments except;

a) Government and other Trustee Securities

b) Underwriting, bill discounting, portfolio/ fund management activities

c) Shares debentures of public limited companies

d) Bonds of public sector undertakings

21. Mutual Fund should not undertake;

a) Direct or indirect lending.

b) Investment of over 1.5% of a scheme’s funds in a particular industry

c) Short sales/ purchases of securities

d) All of the above

22. Mutual Fund Scheme have been allowed to mention an indicative return for schemes forfixed income securities. This will subject to the following;

a) The return be based on the current yields of instruments which may change from time totime, depending upon the interest rates prevailing in the market, RBI policy and other relevantfactors

b) In case a portfolio of securities is disclosed it should also be mentioned that such portfolio ispurely illustrative and the scheme does not assure that it should maintain this portfolio.

c) The return mentioned are only indicative and not assured. The actual return will be based onthe actual NAV which may go up or down depending on the market conditions.

d) All of the above

23. Forfaiting providing finance against export receivables to the exporter

a) with recourse basis

b) without recourse basis

c) either a or b

d) both a and b

24. ‘Without recourse’ means that

a) the forfaiter cannot recover the moneys from the exporter

b) the forfaiter cannot recover the moneys from the importer

c) the fortaiter can recover the moneys from the exporter

25. Forfaiting provides ------------ % finance to exporters against receivables

a) 100%

b) 90%

c) 80%

d) 70%

Key

1.a 2.d 3.b 4.d 5.a 6.d 7.a 8.a 9.a 10.a 11.d 12.d 13.c

14.e 15.b 16.b 17.a 18.d 19.a 20.b 21.d 22.d 23.b 24.a 25.a

1. Which of the following risks can be avoided by the exporter availing finance throughforfeiting?

a) interest-rate risk

b) currency risk

c) credit risk

d) political risk

e) All of these

2. In forfaiting, the forfaiter provides the service on a:

a) recourse basis only

b) on non recourse basis

c) on recourse and non-recourse both

d) at the discretion of the forfaiter

3. Which of the following parties in a bank guarantee are properly named:

a) the borrower on whose behalf the guarantee is issued –beneficiary

b) the party in whose favour the guarantee has been issued-applicant

c) the bank that has issued the bank guarantee –surety


4. The advantages of leasing are;

a) It is a cent percent finance. It is better than term loan where the borrower has to contribute amargin

b) The leased assets as well as leased obligations do not reflect in the balance sheet of thelessee and as such it does not disturb the debt equity ration.

c) Leasing allows the lessee, the use of the asset acquired at today’s cost be making paymentin future out of future earnings

d) All of the above

5. In a lease finance both lessor and lessee are entitled for tax benefits because;

a) The lessor, as owner of asset, claims depreciation in computing his total taxable income

b) For lessee, the lease rent is deductible and item of business expenditure


d) All of the above

6. A financial lease is spread into;

a) Primary period during which the lessor recovers the cost of the asset and interest thereon,which is formally five years in the case of equipment lease.

b) Secondary period which follows the primary period, during this period the lease is continuedon payment of every normal rent.

c) Both the above

d) Neither (a) nor (b)

7. The features of operating lease are;

a) The lessor undertakes to maintain the asset.

b) The lease contract is usually of lower terms and revocable

c) The lease period is much less compared to the life of the asset

d) All of the above

8. Banks are permitted to undertake financing of equipment leasing purchase and factoring;

a) Through separately established subsidiaries

b) Through a separate department of the Bank

c) Only through selected branches

d) All of the above

9. Minimum number of parties in a guarantee transaction is

a) one

b) two

c) three

d) None of these

10. A firm contract between a bank and its customer for purchase of a specified quantity of astated foreign currency at an agreed rate of exchange on a future specified date is

a) Forward Contract

b) Futures

c) Letter of credit in foreign currency

d) None of these

11. Irrevocable letter of credit means

a) A letter of credit that cannot be cancelled

b) A letter of credit that can be cancelled by the opening bank any time

c) A letter of credit that cannot be amended/ cancelled without the consent of the beneficiary

d) A letter of credit that can be cancelled at the applicant’s request

12. A revolving letter of credit is:

a) available for a fixed period

b) the limit can be utilized a number of times again and again as agreed between the buyer andthe seller

c) The amount of any bill negotiated by the negotiating bank will automatically get reinstated upto the limit mentioned in the LC once the bill is paid

d) All of these

13. If a claim is not made by the beneficiary during the claim period mentioned in theguarantee:

a) the bank is absolved of its liability

b) the bank remains liable for unlimited period

c) the claim can be made within the prescribed period of limitation under Limitation Act 1963

d) The claim can be made maximum within 2 years.

14. A party on whose request the opening bank issues the letter of credit is called:

a) beneficiary

b) applicant

c) supplier

d) seller

15. Under lease finance business;

a) The component representing the replacement cost of the assets should be carried to thebalance sheet in the form of provision for depreciation

b) During the primary lease period full depreciation should be provided

c) Banks should follow prudential accounting standards

d) All of the above

16. In the case of financing of equipment leasing, hire purchase and factoring;

a) Bank’s exposure to each of these activities should not exceed ten percent of their totaladvances

b) Banks should maintain a balanced portfolio of these activities

c) Charge towards interest component alone should be taken to profit and loss a/c

d) All of the above

17. SEBI Securities & Exchange Board of India) was constituted by Government of India in1998 and was accorded statutory power under;

a) SEBI Act 1988

b) SEBI Act 1992

c) Banking regulation Act 1949

d) Negotiable Instrument Act 1881.

18. The following are main objectives of the SEBI;

a) To protect interest of investors

b) To promote the development of security market

c) To regulate the security market

d) All of the above

19. Which of the following are the actions introduced by the SEBI?

a) Allotment of shares only if minimum 90% subscription is received from the public

b) Refund of application money in case of non-allotment within 90 days

c) Publication of quarterly results

d) All of the above

20. Credit risk of a Bank is attributed to

a) Its lending activities

b) Its borrowing activities

c) Its investments

21. Credit risk arises when

a) Interest is not paid when due

b) Instalments are not paid on due dates

c) In case of a demand loan, when not paid on demand .

d) All the above

22. Credit risk does not arise in non-fund based lending such as Guarantees and Letters Credit

a) True

b) False

23. The bank that issues the LC undertakes to (which one is more appropriate):

a) make payment to the beneficiary

b) pay to the beneficiary, whether it is able to recover from applicant or not ,against thedocuments

c) pay to the beneficiary, whether it is able to recover from applicant or not

d) pay to the beneficiary, whether it is able to recover from applicant or not , against thedocuments mentioned in the LC

24. The bank that makes payment to the beneficiary on receipt of documents as per terms ofLC is called:

a) confirming bank

b) advising bank

c) opening bank

d) negotiating

25. Which of the following actions have been taken by SEBI?

a) Inter depository transactions between CDSL and NSDL through on line connectivity.

b) Introduction of code of conduct for listed entities and regulated firms under then InsiderTrading Regulations.

c) Implementation of scheme to enable individuals and companies to disclose the irregularitiesin reporting of acquisition of shares under the SEBI (SAST) Regulations 1997.

d) All of the above

Key

1.e 2.b 3.c 4.d 5.c 6.c 7.d 8.d 9.c 10.a 11.c 12.d 13.c

14.b 15.d 16.d 17.b 18.d 19.d 20.a 21.d 22.b 23.d 24.d 25.d

1. The management of SEBI consists of;

a) Chairman and two members.

b) Chairman and five members

c) Chairman only

d) Chairman and four directors


a) Electronic Data Filing and Retrieval System (EDFRS) was made operational in July 2002.

b) Benchmarking was made compulsory for debt oriented and balanced funds for providingobjective analysis of the performance of the mutual fund scheme.

c) Rationalization of depository charges for investors

d) All of the above

3. The form ‘AMFI’ stands for;

a) All Manufacturers Federation of India

b) Association of Mutual Funds in India

c) Association of Marine and Fire Insurance Company

d) Association of Monetary and Financial Institutions.

4. AMFI Association of Mutual Funds in (India);

a) was incorporated as a non-profit organization, on 22nd August 1995.

b) is the apex body of registered Asset Management Companies of India

c) functions under the guidance and supervision of a Board of Directors.

d) All of the above

5. Credit risk arises for a Bank only in transactions related to lending, but not in transactionsrelated to treasury products or trading of securities

a) True

b) False

6. Management of credit risk involves risk

a) Identification

b) measurement

c) Monitoring and control

d) mitigation

e) All the above

7. Credit Risk Management organizational set up in a Bank consists of :

a) The Board of Directors

b) The Risk Management Committee

c) The Credit Policy Committee

d) Credit Risk Management

e) All the above

8. Framing policies and procedures for sanction and disbursement of credit limits is theresponsibility of

a) The risk management committee

b) Credit risk management department

c) credit policy committee

9. The bank that gives guarantee of the opening bank to make the payment, if the openingbank fails to pay, is called:

a) confirming bank

b) advising bank

c) opening bank

d) negotiating bank

10. Which of the following banks is called the negotiating bank:

a) the bank that verifies the apparent authenticity of LC

b) the bank that makes the payment to the beneficiary on receipt of document as mentioned inLC

c) the bank that guarantees the payment to the beneficiary in case the opening bank does notpay

d) the bank that purchases the documents at a discount, if these are not drawn as per terms ofLC

11. AMFI was established with the following objectives;

a) To define and maintain high professional and ethical standards in all areas of operation ofmutual fund industry

b) To recommend and promote best business practices and code of conduct to be followed bymembers and others engaged in the activities of mutual fund and asset management.

c) To interact with SEBI and to represent to SEBI on all matters concerning the mutual fundindustries

d) (a) to (c) above

12. Name various committee set up by AMFI in order to achieve its objective;

a) Committee valuation

b) Committee of best practices

c) Committee on Risk System for Mutual Funds

d) All of the above

13. Insurance business can be divided into;

a) Life Insurance

b) General Insurance

c) Fire Insurance

d) (a) and (b)

14. The main objectives of a Life Insurance Company are;

a) To spread Life Insurance widely and to provide insurable persons adequate financial price/cost.

b) Mobilization of people’s savings by making insurance linked savings adequately attractive

c) Act as trustees of the insured in their individual and collective capacities

d) All of the above

15. The main objective of a General Insurance Company are;

a) To provide financial security to all segments of the security

b) By offering insurance products and services

c) At affordable cost

d) All of the above

16. Enforcement, monitoring and compliance of risk parameters and prudential limits set bycredit policy committee is the responsibility of

a) The risk management committee

b) The credit risk management department

17. Market risk is the risk of :

a) Adverse movement of price of a security (price risk)

b) Reduced liquidity in the market for a specified security (asset liquidity risk)

c) Risk of poor market liquidity (market liquidity risk)

d) All the above

18. A bank is holding 100,000 shares of a company with the value of Rs.100, 00,000/-.Suddenly the bank finds that the price of the company’s shares has come down by Rs.10, 00per share and the company’s shares are also not traded well in the market. The bank is nowfacing

a) Price risk

b) asset liquidity risk

c) Market liquidity risk

d) a and b

e) a and c

19. The liability of a confirming bank is:

a) similar to the advising bank

b) similar to the negotiating bank

c) similar to the opening bank

d) to pay even when the documents are not as per terms of LC

20. The LC that can be cancelled or amended by the opening bank is called:

a) revolving LC

b) revocable LC

c) irrevocable

d) standby LC

21. Which of the following are operating as life insurers in India?

a) Life Insurance Corporation of India.

b) HDFC Standard Life Insurance Co. Ltd.

c) Max New York Life Insurance Co. Ltd.

d) All of the above

22. Which of the following statements are CORRECT in respect of insurance business in India?

a) Motor Vehicle insurance is compulsory

b) Tariff advisory Committee (TAC) lays down tariff rate for some of the general insuranceproducts

c) Insurance is a federal subject

d) All of the above

23. Insurance business in India is regulated by;

a) Life Insurance Corporation of India


c) Insurance Regulation and Development Authority {IRDA}.

d) SEBI

24. Insurance Regulatory and Development Authority;

a) is a society registered under the Societies Regulation Act.

b) is a company registered under the companies Act 1956

c) is a NGO

d) was constituted by an act of parliament under the IRDA Act 1999.

25. Insurance business in India is primarily dealt by following legislation;

a) Insurance Act, 1938.

b) Life insurance Act, 1889

c) Insurance Regulatory & Development Authority Act, 1999

d) (a) and( c)

Key

1.b 2.d 3.b 4.d 5.b 6.e 7.e 8.c 9.a 10.b 11.d 12.d 13.d

14.d 15.d 16.b 17.d 18.d 19.c 20.b 21.d 22.d 23.c 24.d 25.d

1. Credit risk arises on account of

a) Default of issuer/ borrower

b) migration of credit rating

c) any one of the above

2. Market risk management organization in a bank consists of

a) the Board of Directors

b) the Risk management Committee

c) the asset Liability management Committee(ALCO)

d) ALM support group/market risk group

e) The Middle Office

f) All the above together

3. Setting guidelines for market risk management and reporting and setting up prudential limitsand its periodical review is the responsibility of

a) Board of Directors

b) Asset/ Liability Management Committee

c) ALM Support group

d) Risk Management Committee

4. Asset Liability Management Committee is not responsible for balance sheet management

a) True

b) False

5. If the documents submitted by the beneficiary of an LC are not as per terms of LC, as perUCPDC:

a) these can be accepted by the negotiating bank

b) these can be accepted by the negotiating bank for confirmation of the applicant

c) these cannot be accepted by the negotiating bank

d) these can be accepted by negotiating bank subject to consent of the opening bank

6. In a letter of credit there is a provision of repeated negotiation of documents subject topayment of previously negotiated document by the applicant. It is called:

a) transferable LC

b) green clause LC

c) red clause LC

d) revolving LC

7. Which of the following forms the part of general Insurance business?

a) Fire Insurance

b) Cattle Insurance

c) Crop Insurance

d) All of these

8. Which of the following are private sector life insurer in India?

a) Life Insurance Corporation of India.

b) Tata AIG Life Insurance Co. Ltd

c) HDFC standard Life Insurance Co. Ltd

d) (b) and (c)

9. What are the functions of IRDA?

a) IRDA has the power to specify the code of conduct for surveyors and loss assessors.

b) IRDA has power to regulate investment of funds by insurance companies

c) IRDA has power to supervise the functioning of Tariff Advisory Committee.

d) All of the above

10. Banc assurance means;

a) Distribution of Insurance policies both life and non-life by banks as corporate agents throughtheir branches

b) Assurance given by banks to its customers

c) Life policy issued to the bank on the life of their staff

d) Assurance given to bank by general insurance companies for insuring assets of the bank

11. factoring is;

a) A means of financing traders and manufacturers by taking over their receivables

b) A means of providing post shipment finance to exporters

c) A type of agriculture financing


12. Operational; Risk is present in all types of activities of a Bank and it is also changing innature

a) True

b) False

13. Operational Risk is the risk of loss arising due to failed

a) internal processes

b) people

c) systems

d) external events

e) all the above

14. As Banks respond to the needs of competition, Systems and Procedures and humanadaptation to changes create Operational Risks:

a) True

b) False

15. The period of transaction that is covered by a deferred payment guarantee is generally:

a) between 6 months to 3 years

b) between 6 months to 7 years

c) between 3 years to 7 years

d) between 1 year to 5 years

16. Normally, what is the amount of advance payment made by the buyer to the seller, beforeissue of the guarantee:

a) 15-20%

b) 10-15%

c) 10-20%

d) 5-10%

17. The following benefits are offered by factoring services;

a) Quick realization of receivables resulting in improved cash flow

b) Improvement in return on capital without giving up equity or control

c) Possibility of losses due to bad debts are eliminated.

d) all of the above

18. While undertaking factoring services, banks should;

a) Extend factoring services only for genuine trade transactions

b) Carefully assess the working capital requirement of the clients taking into account the billspurchased.

c) Take care to ensure that he client should not be over financial through factoring services.

d) all of the above

19. RBI has directed banks that;

a) They shall not directly undertake the business of factoring

b) They may set up separate subsidiaries for factoring business

c) They may invest in factoring companies jointly with other banks with prior approval ofReserve Bank of India.

d) all of the above

20. Banks are permitted to set up first venture companies for undertaking insurance businesswith risk participation, subject to;

a) Their net worth should be at least Rs.500 crore

b) Net profit for last three continuous years

c) CRAR should not be less than 10%

d) all of the above

21. For acting as composite corporate agent, banks are required to obtain prior approval from;

a) IRDA

b) Government of India

c) No prior approval

d) LIC of India

22. Banks have to provide capital for operational risks under

a) Asset Liability Management norms

b) BASEL 1 capital accord

c) BASEL II norms


23. The third consultative paper of BASEL II has recommended for classification of operationalrisk as event based

a) True

b) False

24. BASEL II document provides a guideline in the matter of operational risk managementpractices by way of certain principles that should govern the process. This is called as SoundPractices of Management of Operational Risks. This contains 10 principles

a) True

b) False

25. A forward exchange contract is a contract between the bank and ––– for ––– of specifiedquantity of foreign currency:

a) bank, sale only

b) bank, purchase only

c) customer, sale only

d) customer, sale or purchase

Key

1.c 2.f 3.d 4.b 5.c 6.d 7.d 8.d 9.d 10.a 11.a 12.a 13.e

14.a 15.c 16.b 17.d 18.d 19.d 20.d 21.a 22.c 23.a 24.a 25.d

1. At organizational level in each bank, the overall responsibility of risk management isassigned to:

a) Risk Management Organisation

b) Risk Management Committee

c) Board of Directors

e) Risk Management Sub-committee of Board of Directors

2. Bancassurance helps the bank to build synergies between insurance, business anddistribution of insurance products, because;

a) Customers of bank have more trust in bank/ branch than a private agent.

b) Bank have wide network of branches.

c) bank branches have ready customers requiring financial products/ services.

d) All of the above

3. Pick the CORRECT statement from the following statements in respect of entry of banks intoinsurance sector;

a) All banks entering into insurance business have to obtain prior approval from Reserve Bankof India.

b) Banks to ensure that risks involved in insurance business do not get transferred to the bank.

c) There should be ‘arms length’ relationship between the bank and insurance outfit.

d) (a) and (c)

4. Factoring was introduced in India during 1991 on the recommendations of;

a) P.D Ojha committee

b) Tandon Committee

c) Kalyan Sundarama Committee

d) Chore Committee

5. The advantages of factoring are;

a) Entire sales practically become cash sales to the seller.

b) Money blocked with sundry debtors become available for business.

c) Working capital management becomes efficient.

d) All of the above

6. What is Securitization?

a) It is process under which number of long term loans are packed together and then distributedor liquidated to various investors having liquid funds in the form of the coupons, pass throughcertificates PTC(s) or through special purpose vehicles SPV(s) of the organization with theprovision that the inflow of cash through recoveries will be distributed pro-rata to couponlenders.

b) It is another name of collateral security obtained for any loan

c) It is a special type of security

d) All of the above

7. The prescribed capital requirements under BASEL II are subject to adherence to achievingquality standard in controlling and managing operational risks

a) True

b) False

8. Each Bank should have an Operational Risk Management Policy duly approved by theBoard, which should cover

a) operational risk management structure

b) roles and responsibilities

c) Operational risk management processes

d) operational risk assessment methodologies

e) All the above

9. Basel capital accord is a :

a) Law

b) an agreement between Basel committee members

c) a set of minimum capital requirements for banks

10. The capital requirement under Basel Accord was linked to

a) total assets of the banks

b) total annual earnings

c) credit exposure

d) All the above

11. The process of credit grading in a bank comprised of which of the following (which one isnot correct):

a) assessment of credit quality

b) identification of problem loans

c) assignment of risk ratings

d) evaluation of portfolio quality

12. Credit risk may take which of the following form:

a) default of principal or interest in a central govt. guaranteed loan

b) crystallization of liability under a letter of credit

c) securities settlement not being affected by the other bank

d) all the above

13. Which of the following cannot be categorized as part of the market risk:

a) liquidity risk

b) legal risk

c) foreign exchange risk

d) interest rate risk

14. In India, securitization companies and asset reconstruction companies are regulated by theprovisions of;

a) Defence of India Rules, 1950.

b) The Securitization and Reconstruction of Financial Assets and Enforcement of securityInterest Act, 2002.

c) The Banking Regulation Act, 1949.

d) Negotiable Instrument Act, 1881.

15. A Securitization or a Reconstruction company has to obtain a certificates of registration,before commencement of business, from;


b) Registrar of Companies

c) SEBI

d) All of these

16. A securitization company or Reconstruction company;

a) May deploy and surplus available with it only in Government securities and deposits withScheduled Commercial Banks in terms of policy framed by its Board of Directors.

b) shall nor raise money by way of deposits.

c) shall not invest out of its owned funds in land and building, however this restriction will notapply to funds borrowed as also to owned fund in excess of the minimum prescribed..

d) All of the above

17. Securitization against movable asset is known as;

a) Moveable securitization

b) Securitization backed by assets

c) Securitization backed by mortgage.

d) Pass through certificates

18. Securitization backed by mortgage relates to;

a) Immovable Assets

b) Moveable Assets

c) Special; Vehicles

d) All of these

19. The structure of Basel II frame work is based on

a) minimum capital requirement

b) supervisory review process

c) market discipline

d) all the above

20. Under Basel Accord, bank assets are classified under one of the risk categories based onthe parameters of :

a) counterparty

b) collateral

c) maturity

d) all the above

21. Under Basel Accord banks were required to hold capital equal to

a) 9%

b) 12%

c) 8% of the risk weighted assets

22. The amendment made to Basel Accord in the year 1998 required the banks to providecapital to cover

a) operational risk

b) market risk

c) reputation risk

d) legal risk

23. Basle Committee on Banking Supervision recommendations relate to:

a) provisions against non-performing loans

b) credit risk management

c) maintenance of adequate capital

d) principles of effective deposit insurance

24. If there is possibility of loss due to some breakdown in the internal controls of a bank, this iscalled:

a) market risk

b) technology risk

c) systemic risk

d) operational risk

25. Basel II is based on the following three pillars. Which of these does match:

a) Pillar – 1 : credit risk

b) Pillar -2 Supervisory Review

c) Pillar -3 Operational risk

d) All the above

Key

1.b 2.d 3.d 4.c 5.d 6.a 7.a 8.e 9.c 10.c 11.d 12.d 13.b

14.b 15.a 16.d 17.b 18.a 19.d 20.d 21.c 22.b 23.c 24.d 25.b

1. Choose the CORRECT statement;

a) Securitization means acquisition of financial assets by any securitization company or.reconstruction company from any originator

b) Securitization company means any company formed and redefined under the CompaniesAct, 1956 for the purpose of securitization.

c) Reconstruction company means a company formed and registered under the Company Act,1956 for the purpose of asset reconstruction.

d) All of the above

2. Reserve Bank of India’s functions are classified into;

a) Supervisory and Regulatory

b) Promotional and Developmental

c) Refinance Activities.

d) All of the above

3. Minimum Bank Rate is;

a) 3% b) 4% c) 5%


4. Sec. ------------- of RBI Act, 1934 gives sole power to RBI to issue currency notes;

a) 10

b) 18

c) 22

d) 26

5. In a Garnishee order, the banker on whom garnishee order served is;

a) Judgement Debtor’s Creditor

b) Judgement Creditor’s Creditor

c) Judgement Creditor’s Debtor

d) Judgement Debtor’s Debtor.

6. The major objective of Basel accord is to ensure that:

a) Supervision of the banks by the regulator is a adequate

b) no foreign bank establishment escapes supervision

c) both the above


7. The need for revision of Basel I accord was felt, because

a) Credit risk assessment under Basel I was not risk sensitive enough

b) It promoted financial decision making on the basis of regulatory constraints rather than onthe basis of economic opportunities

c) It did not recognize the role of credit mitigants

d) All the above

8. The revised frame work of Basel Ii was released on the 26th of June;

a) 2002

b) 2003

c) 2004

d) 2005

9. The implementation of Pillar 3 requirements is focused on:

a) maintenance of adequate capital

b) disclosure of relevant information in the balance sheet regarding capital adequacy

c) making the banks more responsive to the market conditions

d) all the above

10. AS per Basel II, the Tier 2 capital amount

a) can be equal to 50% of Tier III

b) can be maximum 100% of Tier I

c) can be maximum 50% of Tier I

d) can be maximum 100% of capital amount

11. As per Basel 2 recommendations, the amount of general provisions and general loan lossreserves should not exceed:

a) 55% of the Tier II

b) 2% of capital fund

c) 1.25% of risk weighted assets

d) 55% of risk weighted assets

12. Sec. of Ni Act, 1881 extend protection to the;

a) Paying Banker

b) Collecting Banker

c) Advising Banker

d) Issuing Banker

13. Hypothecation is applicable in the case of;

a) Movable Goods

b) Immovable Property

c) Book Debts

d) Corporate Guarantee

14. A cheque is dated 12/05/05. The due date is;

a) 12/08/05

b) 14/09/05

c) 12/11/05

d) None of these

15. Charge created on LIC policy is;

a) Hypothecation

b) Pledge

c) Assignment

d) Mortgage

16. Your bank grants working capital finance to ABC & Co., a partnership firm, againsthypothecation of inventory. The charge is to be registered with the Register of Companieswithin;

a) 30 days from the date of advance

b) 30 days from the date of hypothecation agreement

c) 30 days from the date of sanction of loan


17. A strategic alliance is

a) A formal and ‘mutually agreed to’ commercial collaboration between companies

b) an arrangement where the partners pool, exchange or integrate specific business resourcesfor mutual gain, but retain separate identity

c) an arrangement where two or more organizations bring different capabilities into thearrangement

d) equity based or non-equity based

e) All of these

18. Alliance enables

a) Market growth

b) Broader business systems

c) Links the core competencies of each of the partners

d) Ability to bring together complementary skills

e) All of these

19. ‘Not all alliance succeeds. Almost one in two fails’.

a) True

b) False

20. Merger is :

a) an amalgamation of two companies, where one company survives with its name and theother loses its corporate existence

b) an arrangement where all the assets and liabilities of the merging company get transferred tothe surviving company

c) Both a and b

21. Which of the following is not part of Tier 1 capital under Basel 2 Recommendations:

a) paid up capital and reserves of the bank

b) innovative perpetual debt instruments

c) cumulative non-convertible preference shares

d) Perpetual non-cumulative preference shares

22. Which of the following is part of Tier 2 capital under Besel 2 recommendations:

a) General reserves of the bank

b) investment fluctuation reserve

c) general provision and loan loss reserve

d) Perpetual non-cumulative preference shares

23. Which one of the following is not barred by law limitation?

a) Pledge

b) Hypothecation

c) Banker’s Lien

d) Guarantee

24. The term ‘Credit Management’ covers;

a) Capital Adequacy Norms

b) Risk Management including Asset/ Liability Management

c) Credit Appraisal- Decision and review of loans and advances

d) All of the above

25. Bank/s assets are classified into standard assets, sub standard assets, doubtful assets andloss assets, based on the recommendation of -------------- committee:

a) Rangarajan

b) Narsimham

c) Ghosh

d) Tondon

Key

1.d 2.d 3.d 4.c 5.d 6.c 7.d 8.c 9.b 10.b 11.c 12.b 13.a

14.d 15.c 16.d 17.e 18.e 19.a 20.c 21.c 22.c 23.c 24.d 25.b

1. The time taken to convert cash in to raw materials, semi finished goods and into cash isknown as;

a) Trade cycle

b) Cash cycle

c) Operating cycle

d) Revolving cycle

2. A company which pools money for investors and invests in stock, bond, shares is called;

a) A Bank

b) An Insurance Company

c) Banc assurance

d) Mutual Fund

3. The objectives of merger is:

a) Diversify the area of activities; achieve optimum size of business

b) Improve profitability

c) Achieve economic of scale

d) Grow without any gestation period

e) Acquire assets at lower than the market price

f) All of these

4. The disadvantage of a merger could be:

a) Dilution of market competition

b) Abuse of market power

c) Higher concentration

d) Potential for systemic risk

e) All of these

5. Mergers could be classified under:

a) Horizontal mergers

b) Vertical mergers

c) Concentric mergers

d) Conglomerate mergers

e) Any of these

6. Acquisition or take-over is:

a) Acquiring a controlling stake in the ownership of a company by another entity

b) Possible by a hostile takeover

c) Possible by consent of the existing owner

d) Any of these

7. The hybrid debt capital instruments under Tier 2 capital, do not have the characteristics of:

a) these are unsecured

b) these are not redeemable at the initiative of the holder

c) the servicing of interest or dividend cannot be deferred

d) these are available for meeting losses to the bank

8. How many key principles are there for supervisory review, as per Besel 2 recommendations?

a) 2 principles

b) 3 principles

c) 4 principles

d) 5 principles

9. Bancassurance is;

a) An insurance scheme to insure bank deposits

b) An insurance scheme to insure bank advances

c) A composite financial; service offering both bank and insurance product.

d) A bank deposit scheme exclusively for employees of insurance companies.

10. John and James are friends aged 14 and 15 respectively. They want to open a joint accountin your bank. You will;

a) allow them to open joint account to be operated jointly.

b) allow them o open a joint account with operating instructions Either or survivor.

c) Allow them to open a joint account with operating instructions Former or Survivor.

d) Allow them to open a joint account with operating instructions Any one or Survivor

11. Mr. Atmaram as director of Ltd company expired. Bank received a cheque signed by Mr.Atmaram as director of the Ltd Company. The Bank;

a) can honour the cheque only after obtaining confirmation from other directors.

b) can honour the cheque.

c) cannot honour the cheque

d) The company should issue a stop payment

12. Tele Banking service is based on;

a) Virtual Banking

b) Online Banking

c) Voice Processing

d) Core Banking

13. In a securitization deal, the role of Special Purpose Vehicle (SPV) is;

a) To acquire large Non Performing Loans (NPA)

b) To acquire such loans from a bank or financial institutions

c) To acquire such loans for an transfer price with or without resource

d) To manage the acquired loans for the purpose of realization or holds them as investment tillmaturity

14. Consolidation is:

a) Combining of two existing companies into a new company

b) Both the existing companies lose their identity

c) New entity is created with the same name or a new name

d) All of these

15. Which of these are the advantages of consolidation for Indian banks?

a) banks can acquire new capabilities

b) banks can acquire new technologies and products

c) operating costs will come down through consolidation of resources

d) banks can enter into new markets immediately

e) all of these

16. What are the three Cs that are now essential for the banking system in India?

a) Competition

b) Consolidation

c) Convergence

d) All of these

17. CIBIL is promoted by:

a) SBI

b) HDFC

c) Dun & Bradstreet

d) Trans Union International Inc

e) All of these

18. Which of the following statements is correct:

a) Pillar 1 is to complement the Pillar 2 and Pillar 3

b) Pillar 2 is to complement the Pillar 1 and Pillar 3

c) Pillar 3 is to complement the Pillar 1and Pillar 2

d) all the above are to complement each other.

19. The Basel Committee on Banking Supervision was constituted by:

a) Governors of Central Banks of European countries

b) Governors of Central Banks of group of 10 countries

c) Governor of Federal Reserve of USA

d) Governor of Federal Reserve of USA and governor of Bank of England

20. CIBIL:

a) is a composite credit bureau

b) Caters to both commercial and consumer segments

c) Maintains a central database, collates and disseminates to members on demand

d) All of these

21. The set of codes called “The Fair Practices Code for Lenders’ is:

a) Finalized by the working group on Lender’s Liability laws constituted by the Govt. of India

b) Implemented from Nov 1,2003

c) To be adopted by all banks

d) All of these

22. If a bank has adopted the Code of Bank’s Commitment to Customers and has become amember of BCSBI, which of the following is not applicable to it?

a) Bankers ‘Fair Practice’ Code

b) Fair Practice Code for Credit Card Operations

c) Model Code for Collection of Dues and Repossession of Security

d) All of these

23. Securitization is a process of acquiring the loans classified as;

a) Book debts

b) Performing debts

c) Bad debts

d) Non Performing debts

24. The minimum percentage of priority sector advances to be maintained by foreign banks inIndia;

a) 40% of NDTL

b) 18% of NDTL

c) 32% of NDTL

d) 60% of NDTL

25. Loan for fish rearing is covered under priority sector as --------------- advances.

a) Direct agriculture

b) Indirect agriculture

c) Self Employment Scheme

d) Allied to indirect agriculture

Key

1.c 2.d 3.f 4.e 5.e 6.d 7.c 8.c 9.c 10.a 11.b 12.c 13.d

14.d 15.e 16.d 17.e 18.c 19.b 20.d 21.d 22.d 23.d 24.c 25.a

1. Cash budget is a statement of;

a) Cash-Non Cash Funds

b) Cash receipt and cash payments

c) Another name for cash flow


2. In Bank’s parlance, credit risk in lending is;

a) Default of the banker to maintain CRR

b) Default of the banker to maintain SLR

c) Default of the banker to release credit to the customer

d) Default of the customer to repay the loan

3. As per basel 2 recommendations, the subordinated term debt are restricted to:

a) 50% of the Tier I capital

b) 25% of the Tier I capital

c) 50% of the Tier II capital

d) 50% of the capital fund

4. In a situation of strategic alliance,

a) the alliance partners merge with each other

b) remain separate entities

c) one of the alliance partners, acquires the other

d) any of the above

5. Banking Ombudsman

a) is appointed by the RBI

b) is a Grievance redressal mechanism available to a customer in case the complaint ordeficiency in banking services is not addressed by the bank within 30 days of the complaint

c) Both a & b

6. Banking Codes and Standards Board of India /BCSBI is

a) Established on the recommendations of RBI Committee on procedures and PerformanceAudit of Public Enterprises

b) an independent banking industry watchdog

c) set up to ensure that the consumer gets what he has been promised by the banks

d) All of these

7. The main function of BCSBI is to ensure adherence to the ‘Code of Banks’ Commitment toCustomers (CBCC) issued by banks who are voluntary members of BCSBI.

a) True

b) False

8. Members banks of BCBSI should

a) appoint a Code Compliance Officer (CCO) at each controlling office

b) have a help desk/ helpline at the branch

c) display at each branch the name of CCO

d) Display name and address of the banking ombudsman

e) All of these

9. The apex institution which handles refinance for agriculture and rural development is called;

a) RBI

b) SIDBI

c) NABARD

d) SEBI

10. Long Form Audit Report (LFAR) is prepared and submitted by;

a) RBI inspectors

b) Internal inspectors

c) Statutory Auditors

d) Concurrent Auditors

11. As per FIMMDA’s guidelines, the mid office is responsible for;

a) Dealing activities

b) Risk management

c) Reconciliation

d) Confirmation of deals

12. Interest is calculated on actual/365 days basis in respect of the following products, exceptone;

a) Call Money

b) Notice Money

c) Term Money

d) GOI Dated Securities

13. FIMMDA’s general principles and procedures are applicable to;

a) Fixed Income Markets

b) Money Market

c) Derivative Markets

d) All of the above

14. Which of the following situations represents the merger:

a) combining of two companies into single company, where one survives with its name and theother loses the corporate entity.

b) combining of two companies into single company, where new entity emerges and both theexisting companies lose the corporate entity.

c) combining to two companies, where both survive with their name

d) any of the above

15. Which of the following factors motivate the merger between 2 companies:

a) diversification of activities

b) improved profitability

c) improve economies of scale

d) all the above

16. A customer can approach the Banking Ombudsman directly in case of non-adherence ofthe bank to CBCC (Code of Bank’s Commitment to Customers) without first approaching theCCO

a) True

b) False

17. Which is the first credit information Bureau that was set up in India?

a) CRISIL

b) CCIL

c) CIBIL

d) None of these

18. Which committee recommended setting up of the Banking Codes and Standards Board ofIndia?

a) Talwar Committee

b) Goiporia committee

c) Committee on Procedures and Performance Audit of Public Services headed by SS Tarapore, former Deputy Governor, RBI

d) None of these

19. The main functions of BCSBI are:

a) to ensure that its member banks adhere to the Code of Bank’s commitment to customers

b) to set up minimum standards of banking practices for banks to follow when they are dealingwith individual customer

c) to provide protection to the individual customers d) to generate awareness in thecommon man about his rights as a consumer of banking services

e) all of these

20. Your bank customer XYZ Ltd., enjoys a CC limit of Rs.1, 00, 00,000/-. The CC Accountshows a credit balance of Rs.10, 205/-. The relation between your bank and XYZ Ltd is.

a) Debtor/ Creditor

b) Creditor/ Debtor

c) Bailor/ Bailee

d) Bailee/ Bailor

21. The right of set-off is;

a) Customer’s right

b) Customer’s obligation

c) Banker’s right

d) Banker’s discretion

22. Which of the following forms of business are permissible under BR Act?

a) Borrowing

b) Issuance of letters of credit

c) Buying and selling of bullion

d) All of the above

23. A co-operative bank operating in different states are regulated by;a) State Co-operative Societies Act


c) Multi Unit Co-operative Societies Act

d) Banking Laws applicable to co-operative societies

24. In respect or Regional Rural Banks, the share holding pattern is;a) Central Government 50% State Government 35%, Sponsoring Bank 15%.

b) Central Government 50% State Government 15%, Sponsoring Bank 35%.

c) Central Government 15% State Government 35%, Sponsoring Bank 50%.

d) Central Government 35% State Government 50%, Sponsoring Bank 15%.

25. When there is merger between 2 companies/banks, where one of them may be the actualor potential supplier of goods or services to the other , it is called––– merger

a) conglomerate merger

b) concentric merger

c) horizontal merger

d) vertical merger

Key1.b 2.d 3.a 4.b 5.c 6.d 7.a 8.e 9.c 10.c 11.b 12.d 13.d

14.a 15.d 16.b 17.c 18.c 19.e 20.a 21.d 22.d 23.c 24.b 25.d

.

1. Which of the 3 mid-sized banks had entered into a strategic alliance in the year 2006:a) Corporation Bank, Vijaya Bank and Punjab & Sind Bank

b) Corporation Bank, Vijaya Bank and Oriental Bank

of Commerce

c) Corporation Bank, Indian Bank, Oriental Bank of Commerce

d) Indian Bank, UCO Bank and Oriental Bank of Commerce

2. Banking ombudsman is a complaint redressal mechanism for individuals whereas BCSBI isthe industry watchdog to oversee compliance with the Code of Bank’s Commitment tocustomers

a) True

b) False

3. The consumer credit bureau of CIBIL covers credit availed by -------------

a) Individuals

b) Proprietary concerns

c) Private and Public Limited Companies

d) Banks

4. Money market is so called, because,

a) money is the commodity traded in the market

b) It involves raising of long term money and investing in long term uses

c) it involves raising and deploying short term resources

d) a &c


5. Law of limitation is not applicable in respect of;

a) Advance against pledge of shares.

b) CC granted against hypothecation of inventory.

c) Term loan secured by mortgage of Plant& Machinery.

d) Bank Term Deposit.

6. A bank in India wants to undertake capital market activities, it should;

a) Obtain special license from AMFI

b) Obtain special license from FIMMDA.

c) Both a) and b)

d) Register with SEBI.

7. FIMMDA stands for;

a) Foreign Exchange Markets and Derivative Markets

b) Fixed Income Market, Money Markets and Derivative Markets.

c) Fixed Income Markets and Derivative Market


8. The capital adequacy ratio is;

a) 6%

b) 8%

c) 9%

d) 10%

9. Except one of the following, others are known as Non Fund based facilities;

a) Letters of Credit

b) Bank Guarantees.

c) Co-acceptance of Bills

d) Trust Receipt

10. The major promoters of CIBIL are (which one is not correct):

a) SBI and HDFC


c) Trans Union International Inc

d) Dun & Bradstreet information services India

11. The individual customers are covered by––– of the CIBIL:

a) retail credit bureau

b) consumer credit bureau

c) personal credit bureau

d) commercial credit bureau

12. Short term, from Money Market angle, refers to maturity of funds not exceeding

a) 1month

b) 3 months

c) 6months

d) 1 year

13. Inter Bank Money market is

a) call money market

b) notice money market

c) term money market

d) all the above


14. Call money refers to placement of funds repayable:

a) on demand

b) in a week’s time from the date of demand

c) after two working days from the date of demand

d) the next working day

e) none of the above

15. Cash Reserve Ratio {CRR} is a tool used in monetary policy to :

a) deepen the money market

b) restrict the member of players in the market

c) control the interest rate

d) restrict the liquidity in the market


16. FIMMDA’s guidelines cover the following products, except one;

a) Call money

b) Cross Currency Interest Rate Swaps.

c) Commercial Paper.

d) Certificate of Deposit

17. Except one of the following others are public sector banks;

a) State Bank of Hyderabad

b) Central Bank of India

c) Regional Rural Bank, Sponsored by a Nationalised Bank

d) HDFC Bank.

18. A banker’s is expected to honour the cheques within the specified banking hours as persection of NI Act, 1881;

a) 22

b) 25

c) 31

d) 65

19. Which of the following statements in the context of Tier ll capital fund components does notmatch?

a) Revaluation reserves – to be taken at a discount of 55% while including I Tier ll.

b) General provision and reserves – to be taken maximum to the extent of 1.25% of total riskweighted assets.

c) Funds raised through debt capital instruments having a combination of equity and debt arepart of upper Tier ll

d) Subordinated debt with initial maturity of less than 5 years and residual maturity of less than1 year only can be included in Tier ll.

20. What is the objective of securitization of financial assets?

a) To enable the banks in speedy recovery of bad loans

b) To sell the securities without intervention of the court, only of loan goes bad.

c) To acquire assets and then sell the same profit.

d) Recycling or funds and reduce concentration risk.

21. CIBIL maintains a central database of information relating to borrower which:

a) it collects from market

b) it collects through newspaper reports

c) it receives from banks

d) it receives form Reserve Bank

22. The fair practices code for lenders:

a) casts responsibility on banks to provide proper information to customers

b) is a code specifying the obligations of banks towards the borrowers

c) is a code specifying the obligations of banks towards the depositors

d) is a code specifying the obligations of banks towards the borrower and depositors

23. The transaction done on any day in the call money market reflect:

a) strength of the Banks

b) size of the market

c) speed of the transactions

d) Liquidity of the system


24. Treasury Bills are for maturities of

a) 91 days

b) 364 days

c) 182 days

d) All of these

25. Commercial Paper is a short term debt market paper. It is issued by:

a) Banks

b) RBI

c) High net work individuals

d) Corporate

c) All the above

Key

1.c 2.a 3.a 4.d 5.d 6.d 7.b 8.c 9.d 10.b 11.b 12.d 13.d

14.d 15.d 16.b 17.d 18.d 19.d 20.d 21.c 22.b 23.d 24.d 25.d

1. The minimum and maximum maturity for a commercial paper is :

a) 15days and one year

b) 30 days and six months

c) 15 days and six months

d) 7 days and one year


2. Beyond the minimum amount of Rs.1lac for a CD. It can be issued in the multiple of;

a) Rs.10 lac

b) Rs.5 lac

c) Rs..1 lac

d) Rs.0.5 lac

3. In call and notice money, a bank can lend maximum --------- of its capital fund on a particularday during a fortnight;

a) 150%

b) 100%

c) 50%

d) 25%

4. Take-out financing can be undertaken by banks only if the following condition is classified;

a) Other institution agrees for securitization of the loan.

b) Other institution agrees to take out the loan when project reaches certain previously definedstages

c) RBI gives permission for the same

d) b) and c)

5. Under the rating system called CAMELS, the term ‘M’ stands for which of the following?

a) Management of assets and liabilities.

b) Management of Non- performing assets

c) Management of human resources

d) Management effectiveness.

6. In call and notice money, a bank can lend maximum --------- of its capital fund on a fortnightlyaverage basis;

a) 150%

b) 100%

c) 50%

d) 25%

7. If loan application up to Rs. 2 lac is rejected by the bank:

a) the borrower cannot apply for a loan to that bank again

b) the main reasons of rejection should conveyed in writing

c) the borrower cannot apply for a loan to any other bank again

d) all the above

8. The code of bank’s commitment to customers, to be followed by banks;

a) are the instructions issued by RBI that sets the minimum standards of banking practices forbanks to follow while dealing with individual customers

b) sets the normal standards of banking practices for banks to follow while dealing withindividual customers

c) sets the minimum standards of banking practices for banks to follow while dealing withindividual customers

d) sets the highest standards of banking practices for banks to follow while dealing withindividual customers

9. The issue of commercial paper is governed by

a) guidelines of RBI and market practices prescribed by FIMMDA

b) guidelines of SEBI and market practices prescribed by FIMMDA

c) guidelines of RBI and rules of FEDAI

d) guidelines of RBI and best practices of IBA


10. The issuers of commercial paper prefer the same as a substitute for working capitalbecause:

a) it relives them of the routines applicable for cash credit advance from a bank

b) it is easy to raise

c) interest rates are lower than the PLR related interest changed by the Banks

d) it is unsecured borrowing

e) all of these

11. Banks tend to invests in commercial paper as

a) credit risk is relatively low

b) risk is limited to a short period

c) yield on CP is higher than the inter-bank money market deal

d) since CP is trade able instrument, there is no liquidity risk

e) all the above

12. Which of the following is true of commercial paper?

a) minimum amount of CP is Rs.5.00lacs

b) issuer should have a minimum credit rating of P2

c) it is the form a usance promissory note

d) it is issued at a discount to face value

e) it is a negotiable instrument

f) all the above

13. In order to obtain cash for its credit sales, the duly and accepted domestic sale invoices areassigned by the seller in favour of a 3rd party. Such purchase of receivables by the 3rd partywith or without recourse is called;

a) Securitization

b) Factoring

c) Bills discounting

d) Fortaiting

14. The term plastic money relates to which of the following;

a) Credit card

b) ATM card

c) Plastic sheet notes

d) All these

15. In order to obtain cash for its credit sales, the duly accepted domestic sale invoices areassigned by the seller in favour of a 3rd party. Such purchase of receivable by the said 3rdparty with or without recourse is called;

a) Securitization

b) Factoring

c) Bills discounting

d) Fortaiting

16. A firm of brokers purchases certain shares at Bombay Stock Exchange and sells similarnumber of shares of the same company at National Stock Exchange to take benefits of smallprice differential prevailing at the time of the transaction. This is known as;

a) Swap transaction

b) Forward trading

c) Option trading

d) Arbitrage transaction

17. A ------------ is a type of transferable financial instrument traded on a local stock exchange ofa country but represents a security issued by a foreign publicly listed company;

a) Depository receipt

b) Derivative

c) Option

d) Participatory notes

18. The ‘bankers fair practice code was brought in 2004 by:


b) Indian Banks’ Association

c) Banking Codes and Standards Board of India

d) Govt. of India

19. If bank is member of BCSBI and adopts the code of bank’s commitment to customer, whichof the following codes will not be applicable on that bank:

a) IBA’s Fair Practice Code

b) IBA’s Fair Practice Code for Credit card operations

c) IBA’s Fair Model Code for collection of dues and re-possession of security

d) all the above

20. Certificate of Deposits can be issued by

a) corporates

b) non-banking finance companies

c) Banks

d) All the above

21. Which of the following is a feature of Certificate of Deposit?

a) issued only by Banks

b) minimum amount of CD is Rs.1,00 lac

c) maturity period of CD 7days to 1 year

d) CD is negotiable

e) CD attracts stamp duty

f) All the above

22. Securities market consist of

a) primary market

b) secondary market

c) both the above

23. The primary dealers in government securities market operate in

a) only secondary market

b) only primary market

c) both the markets

24. The committee that recommended that each party. Such purchase of receivables by the3rd bank should nominate a senior level bank officer as Compliance Officer, who should ensurethat work is being carried out in the bank in accordance with system/ procedures and RBI/government guidelines.

a) Khusro Committee

b) Ghosh Committee

c) Gupta Committee

d) N.L Mitra Committee

25. What is an Indian Depository Receipt?

a) A deposit account with a public sector bank.

b) A depository account with any of depositories in India.

c) An instrument in the form of depository receipt created by an Indian depository againstunderlying equity shares of the issuing company.

d) An instrument in the form of deposit receipt issued by Indian depositories.

Key

1.d 2.c 3.c 4.b 5.d 6.d 7.b 8.c 9.a 10.e 11.e 12.f 13.b

14.a 15.b 16.d 17.a 18.b 19.d 20.c 21.f 22.c 23.a 24.b 25.c

1. Where the securitization exposure is undertaken by an originator, the minimum retention bythe originators will be ------------ percent of the pool of assets being securitized;

a) 5%

b) 10%

c) 15%

d) 20%

2. Under financial inclusion the use of business correspondents and business facilities, thedistance between the place of business correspondents can be which one is wrong);

a) Metro- 10km

b) Urban- 30km

c) Semi urban- 30km

d) Rural- 30km

3. Banks are required to install least ---------- ATM as talking ATMs, with Braille keypads;

a) 10%

b) 20%

c) 25%

d) 33.3%

4. When Repo rate is increased by RBI, it leads to;

a) Reduction of cost of borrowers on loans from banks.

b) Increase in cost of loans to borrowers from banks

c) Reduction in cost of borrowing by banks from RBI.

d) Increase in cost of borrowing by banks from

5. The reforms in the financial services sector were initiated in India on recommendations of :

a) Rangarajan Committee

b) Narasimham committee

c) Narhari Committee

d) Parekh Committee

6. The liquidity adjustment facility relates to:

a) temporary loans by RBI to central govt.

b) sale of govt. securities by RBI

c) short term loans by RBI to banks

d) Overdraft facility to State govt.

7. The information regarding commercial papers issued is available on:

a) SEBI website

b) website of CIBIL

c) website of RBI

d) website of Clearing Corporation of India

8. Primary market issue consists of non-Government debt paper mostly by way of privateplacement:

a) True

b) False

9. Primary money market issues are subscribed by

a) dealing room

b) share department

c) credit department

d) investment department


10. Which of the following is essential for placing funds in primary issues of securities?

a) appraisal of credit risk

b) thorough examination of issue terms

c) Documentation for a secured debt

d) all the above

11. Board for financial supervision provides directions on:

a) Regulatory policies

b) Supervisory practices

c) Both a & b

d) None of these

12. Who can participate in the Call/ Notice money market?

a) all banks, PDs and MFs

b) all banks, PDs and Corporates

c) only banks/ PDs

e) None of these

13. When RBI offers liquidity adjustment facility to banks this leads to;

i) Improvement in the liquidity position of banks.

ii) Increase in their capacity to lend

iii) Increase in their deposits

iv) Improvement in income of banks by more lending

a) i) to iv) all

b) i), ii) and iii)

c) i), ii) and iv)

d) ii), iii) and iv)

14. Mobile Banking services can be offered by banks to;

a) Customers of the bank

b) Holders of debt cards

c) Holders of credit cards

d) Any of these

15. Which of the following guidelines are not applicable of Mobile Banking services?

a) KYC guidelines

b) Anti-money laundering guidelines

c) Combating terrorism financing guidelines


16. The objective of introduction of Post-shipment Export Credit in Foreign Currency (PCFC)during Nov 1993 was to:

a) increase the flow of credit for exports

b) enable exports to access funds at internationally competitive rates

c) help exports to cover the foreign currency fluctuation risk

d) all the above

17. While liberalizing the current account transactions in 1994, India accepted:

a) Article VIII of Articles of Agreement of IMF

b) Article V of Charter of IMF

c) Clause V of IBRD Charter

d) IMF prescription on current account transactions

18. Which of the following are allows participation in the call/notice money in India:

a) rated companies

b) financial institutions

c) banks and primary dealers

d) banks only

19. The objective of which of the following Act is to facilitate external trade and payment andpromote orderly development and maintenance of forex markets in India:

a) Foreign Exchange Regulation Act

b) Foreign Contributions Act

c) Prevention of Money Laundering Act


20. Resident individuals are now free to remit in a financial year for any current or capitalaccount transaction or a combination of both up to?

a) US $ 25000

b) US $ 50000

c) US $ 1,00,000

d) US $ 2,00,000

21. The institution of Primary Dealers has been introduced

a) to develop Government Securities Market

b) to deal both in Primary and Secondary market for government securities

c) to play an effective role as market makers for governmentsecurities and to minimize volatility

in their prices

d) all of these

22. Gilt-edged securities mean:

a) Government securities

b) Shares of blue-chip companies

c) Shares/ other securities of public sector

d) none of these

Key

1.b 2.a 3.d 4.c 5.b 6.c 7.c 8.a 9.d 10.d 11.c 12.c 13.c

14.d 15.d 16.b 17.a 18.c 19.d 20.d 21.d 22.a

1. which of the following cannot be included in the...

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