Banking Awareness Quiz Set – 43

Hello Aspirants. Welcome to Banking Awareness Quiz in AffairsCloud.com. Here we are creating quiz covering important questions which are common for all the bank exams and other competitive exams.

1. It is the ability of commercial banks to increase their deposits by expanding their loans and advances.
   A. Capital Expansion
   B. Capital Creation
   C. Credit Expansion
   D. Credit Creation
   

   Answer & Explanation

   D. Credit Creation
   Explanation:The creation of credit or deposits is one of the most important functions of commercial banks. Like other corporations, banks aim at earning profits. For this purpose, they accept cash in demand deposits and advance loans on credit to customers.
   
   
2. The first bank in India to obtain license for Internet Banking from Reserve Bank of India was
   A. Oriental Bank of Commerce
   B. State Bank India
   C. Punjab National Bank
   D. Syndicate Bank
   

   Answer & Explanation

   C. Punjab National Bank
   Explanation:The main difference between Mobile Banking and Internet Banking is that
   Mobile banking can be operated from any mobile, even the most basic one (through SMS). In smartphones mobile banking can be operated through gprs and/or sms. Fund transferred(NEFT) through mobile banking takes less time(as you do not have to register the beneficiary). Where as internet banking needs internet connection. Unlike mobile banking it can be operated through computers also. To transfer funds through net banking you have to register the beneficiary which takes some time ranging 2 to 12 working hrs.
   
   
3. To fight with raising inflation RBI has to
   A. Increase reserve ratios
   B. Sell government securities
   C. Increase bank rate
   D. All of the above
   

   Answer & Explanation

   D. All of the above
   Explanation:Inflation is Sustained increase in level of prices over time for goods and services (food, health care, cost of education etc.). Each unit of currency buying comparatively fewer goods and services. Decrease in supply for goods and services. Following could be the driving force –
   • Industrial disputes
   • Shortage of factories and production
   • Natural calamities
   
   
4. One among the following is NOT a subsidiary of RBI and that is
   A. National Housing Bank
   B. NABARD
   C. Bharatiya Reserve Bank Note Mudran Private Limited(BRBNMPL)
   D. None of these
   

   Answer & Explanation

   D. None of these
   Explanation:Subsidiaries of RBI
   National Housing Bank (NHB)
   Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
   National Bank for Agriculture and Rural Development (NABARD)
   Deposit Insurance and Credit Guarantee Corporation (DICGC)
   
   
   
5. FATCA stands for
   A. Foreign Account Tax Compliance Act
   B. Foreign Account Trade Company Act
   C. Financial Account Tax Compliance Act
   D. Fiscal Account Tax Compliance Act
   

   Answer & Explanation

   A. Foreign Account Tax Compliance Act
   Explanation:Foreign Account Tax Compliance Act (FATCA) is intended to detect and deter the evasion of US tax by US persons who hide money outside the US. FATCA creates greater transparency by strengthening information reporting and compliance by providing rules around the processes of documenting, reporting and withholding on a payee.
   
   
6. The following index used as the key measure of inflation in India
   A. Interest rate that bank offers on the deposits
   B. Wholesale Price Index(WPI)
   C. Consumer Price Index(CPI)
   D. Sensex and Nifty
   

   Answer & Explanation

   C. Consumer Price Index(CPI)
   Explanation:Consumer price index (CPI) measures changes in the price level of a market basket of consumer goods and services purchased by households.
   
   
7. R stands for _______ in CDR.
   A. Ratio
   B. Restructuring
   C. Reserve
   D. Regulation
   

   Answer & Explanation

   B. Restructuring
   Explanation:Corporate Debt Restructuring (CDR) mechanism is a mechanism under which financial institutions and banks come together to restructure the debt of companies facing financial difficulties due to internal or external factors, in order to provide timely support to such companies.
   
   
8. SARFAESI Act 2002 is mainly related to _________
   A. Regulation of foreign exchange
   B. Fixation of interest rates
   C. Recovery of bad loans
   D. Acquisition of small banks
   

   Answer & Explanation

   C. Recovery of bad loans
   Explanation:The full form of SARFAESI Act as we know is Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Banks utilize this act as an effective tool for bad loans ( NPA) recovery. It is possible where non-performing assets are backed by securities charged to the Bank by way of hypothecation or mortgage or assignment. Upon loan default, banks can seize the securities (except agricultural land) without intervention of the court.
   
   
9. Decrease of the bank rate by RBI leads to ________.
   A. Mobilization of more deposits by commercial banks
   B. Less liquidity in the market
   C. More liquidity in the market
   D. No change in the liquidity in the market
   

   Answer & Explanation

   C. More liquidity in the market
   Explanation:Bank Rate is a Penal rate and has been merged with the Marginal Standing Facility rate(MSF), which is generally kept at 1% more than the Repo Rate by the RBI(India). MSF is the amount of Cash that a Scheduled bank can borrow from the RBI by pledging its reserves even though it is below the SLR(Statutory Liquidity Ratio),but at a penal rate.
   
   
10. Which of the following is or are the right(s) of a customer towards his banker?
    A. To sue the banker for not maintaining the secrecy of his account
    B. To receive a statement of his account from a banker
    C. To sue the bank for any loss and damages
    D. All mentioned above
    

    Answer & Explanation

    D. All mentioned above
    Explanation:A banker has certain rights also. Following are the major rights that a banker can exercise on his customer.
    • Right of Lien
    • Right of set-off
    • Automatic right of set off
    • Right of Appropriation
    • Right to charge interest
    • Right to charge service charges