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Banking Awareness / Financial Awareness Questions and Answers

1. Under section 42(1) of Reserve Bank of India Act, 1934, all Scheduled Banks are required to maintain with Reserve Bank of India a Cash Reserve Ratio (CRR) of ______ of Net Demand and Time Liabilities (NDTL).
a) 4%
b) 10%
c) 12%
d) 15%
e) None

2. Why all commercial banks have to maintain with the Reserve Bank of India, effective from the fortnight beginning November 26, 2016 an incremental CRR of 100 percent on the increase in NDTL between September 16, 2016 and
November 11, 2016 ?
a) Introduction of Rs.2000 Note
b) After the withdrawal of legal tender status of Rs. 500/- and Rs. 1000/- denominations of bank notes
c) Introduction of Rs.10 coin
d) Introduction of Rs.5 coin
e) None of these
3. The banks are advised that they may continue to allow their existing customers to withdraw cash from their accounts upto Rs.24,000/- per week. It includes which of the following ?
a) Promissory notes
b) withdrawals from ATMs
c) Cheques
d) Demand Drafts
e) None
4. QPM is structured around a small New Keynesian open-economy framework. Which of the following is correct in this context?
a) QPM based on ‘Forecasting and Policy Analysis System’ to provide support for FIT in India.
b) RBI adopted flexible inflation targeting (FIT) framework with the amendment of the RBI Act in May 2016 with an emphasis on a strong nominal anchor for monetary policy
c) FIT framework, also known as an Inflation Forecast Targeting framework, reliable medium-term forecasts and knowledge of how policy actions will affect the goal variables of inflation and output becomes crucial for successful implementation of monetary policy
d) All the above 
e) None of these
5. Government of India vide their Notification No. 2652 dated November 8, 2016 have withdrawn the Legal Tender status of Rs. 500 and Rs. 1,000 denominations of banknotes of the Mahatma Gandhi Series issued by the Reserve Bank of India till November 8, 2016. What is the meaning of ‘legal tender status’?
a) Can be used only in Courts
b) Can be used to purchase judicial stamps
c) Legal tender is the national currency, such as paper money and coins, that is declared by law to be valid payment for debts and financial obligations
d) Can be used in Ships
e) None of these

6. Reserve Bank of India issued new Rs. 500 denomination banknotes in Mahatma Gandhi (New) Series with which inset English letter in both the number panels, bearing the signature of
Dr. Urjit R. Patel, Governor, Reserve Bank of India, the year of printing ‘2016’ and Swachh Bharat Logo printed on the reverse of the Banknote.
a) E
b) B
c) C
d) A
e) D

7. Although, India’s current foreign exchange reserve levels are adequate, it is important to examine the availability of various other foreign currency asset substitutes. Which of the following come under this?
a) Sovereign wealth funds,
b) Currency swaps
c) IMF’s contingency funds to augment its foreign exchange reserves position
d) All the above
e) None of these
8. What is ‘social banking’ phase?
a) The institutionof the branch licensing policy, the priority sector lending policy and administered rates of interest in lending to priority sectors were a part of this broader approach, which is often described in the literature as the phase of social banking in India
b) Giving loans to large scale industries
c) Giving loans to state governments
d) Giving loans to central government
e) None of these

9. Since the nationalisation of banks, India has followed which approach to its banking policy to ensure adequate flow of credit to regions, sectors of the economy and sections of the population that had remained underserved by the banking system?
a) supply led approach
b) demand led approach
c) behaviour approach
d) psychological approach
e) None of these

10. The PMJDY aims to provide universal access to banking services to all house- holds including which of the following?
a) savings deposits with a small overdraft,
b) micro-health
c) accidental insurance
d) debit card facilities
e) All the above

11. Banking policy in India can, thus, be divided intohow many broad phases?
a) The phase following bank nationalisation (1969 to 1991),
b) Phase of banking sector liberalisation (1991 to 2005)
c) Finally, the phase of financial inclusion (2005 onwards)
d) All the above 3 phases
e) None of the above

12. Originally, weaker sections included which of the following?
a) small and marginal farmers (having less than 5 acres of landholdings),.
b) land less labourers
c) beneficiaries under the Differential Rate
of Interest (DRI) scheme
d) tenant farmers and backward social groups
e) All the above

13. Micro-finance was introduced in which year to reach bank credit to the poor, particularly poor women, organised into SHGs with the intermediation of non governmental and non-bank players?
a) 1992
b) 1995
c) 1996
d) 1980
e) None

14. The Differential Rate of Interest (DRI) scheme which was introduced in which year aimed at providing bank credit at a subsidised rate of 4 percent per annum to poor borrowers?
b) 1969
c) 1980
d) 1991
e) None

15. In 2006, the central government introduced which scheme the to provide subsidised (direct) agricultural credit to farmers with relatively small credit needs (of up to Rs. 3,00,000) ?
a) Interest Subvention Scheme
b) KCC
c) GCC
d) DRI
e) None of these

16. GCCs were originally aimed at providing revolving credit of up to Rs.25,000 and were aimed at catering to the consumption credit needs of borrowers in rural and semi-urban areas. The scheme was evidently focused on small borrowers. However, in 2013 the credit ceiling was removed and these cards were defined as means to provide non-farm entrepreneurial credit to rural and semi- urban borrowers. In the abbreviation GCC, the letter G stands for what?
a) Group
b) General (GCC : General Credit Card )
c) Good
d) Great
e) None of these

17. Women had a share of how much of the bank credit given under SBAs in 2015; the remaining 81 per cent was taken up by men?
a) About 19 percent
b) 25%
c) 40%
d) 50%
e) None of these

18. SBAs (at present, with a credit limit of up to Rs.200,000) figured with a share of about 77 percent in banks’ loan accounts in 2015 but their share in total amount of bank credit was close to 8 percent. In the abbreviation SBAs, the letter S stands for what?
a) Small (SBAs: Small Borrowal Accounts)
b) Sick
c) Smooth
d) Smart
e) Sales

19. What is ‘Private Placement’?
a) A ‘private placement’ of securities is an offering of securities that is not a ‘public offering’. In general, private placement is defined as issuance of securities to less than 50 persons
b) Providing jobs
c) Offering Shares in IPO
d) Bonus Issue
e) None of these

20. While the concept of Structural Fiscal Balance (SFB) is not new to the literature, it has attracted global attention significantly in the last few years so as to assess nations’ fiscal policy that could be deemed independent cycles of which of the following?
a) output,
b) asset
c) commodity prices
d) All the above
e) None of these

21. Who started LCR ?
a) the Basel Committee on Banking Supervision (BCBS) initiated the Liquidity Coverage Ratio (LCR) in an effort to strengthen the liquidity framework of the financial systems of the world.
b) World Bank
c) IMF
d) ADB
e) NDB

22. ‘Qualitative Credit Controls’ also called as what?
a) Bank Rate
b) ‘Selective Credit Control’ instruments work through regulation of margin requirement, credit rationing, regulation of consumer credit and direct action.
c) CRR
d) SLR
e) None of these

23. ‘Quantitative Credit Controls’ (or traditional method) include which of the following?
a) banks rate policy,
b) open market operations and
c) variable reserve ratio
d) All the above
e) None of these

24. When the Reserve Bank introduced selective credit control for the first time in the context of multiplication of banks’ advances?
a) 1969
b) in May 1956
c) 1949
d) 1980
e) None of these

25. The credit authorisation scheme as an instrument of credit control was introduced in November 1965 for which purpose?
a) to align credit policies closely with the Five Year Plans
b) to control inflation
c) fordemonetisation
d) for devaluation
e) None of these

26. The idea that ‘shadow banking’ should be regulated is of recent origin in most of the countries and has found credence in the aftermath of the global financial crisis when the role of shadow banks was brought in sharp focus. Shadow banking normally relating to which business?
a) NBFCs
b) Share market
c) Bullion market
d) Textile market
e) None of these

27. Which provisions in RBI Act, 1934 regulated the deposit acceptance activities of Non-Banking Companies has been in existence since mid-sixties?
a) Chapter I
b) Chapter III B
c) Chapter II
d) Chapter IV
e) None

28. SLR rate = ?
a) Inflation rate
b)[liquid assets / (demand + time liabilities)] × 100%.
c) Cash Reserve Ratio
d) Bank rate
e) None of these

29. On April 2012, India became the first BRIC member to join CGAP.It is a the policy research centre housed at the World Bank dedicated to improving financial access for the world’s poor. In the abbreviation CGAP, the letter C stands for what?
a) Consultative (CGAP: Consultative Group to Assist the Poor)
b) Cross
c) Close
d) Clean
e) Clever

30. Preamble of the Reserve Bank of India (RBI) Act 1934 gives importance to which of the following?
a) ‘to use the currency system to the country’s advantage and with a view to securing monetary stability
b) Supply of money
c) Printing of currency notes
d) Minting of coins
e) None of these

31. The limit of semi-closed PPIs issued with minimum details has been enhanced to. _______ from the existing Rs. 10,000/-. The total value of reloads during any given month has also been enhanced to Rs. 20,000/-.
a) RS.2,400/-
b) Rs. 20,000/-
c) Rs.2,000/-
d) Rs.1,000/-
e) None

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