PRINCIPLES OF BANKING Sample Questions and Answers

Multiple Choice

Question 1
Which of the following instruments is used by public to directly lend to the Government? (a) Bank Deposits (b) Public Provident Fund (c) T-Bills (d) Certificates of Deposit

Answer 1: b

Question 2

Inter-bank call money refers to borrowing among banks for (a) Overnight (b) Two days (b) More than 14 days (c) Less than 14 days

Answer 2: a

Question 3
Certificates of Deposits have to be of a minimum value of (a) Rupees 1 lakh (b) Rupees 10 lakh (c) Rupees 25 lakh (d) Rupees 1 crore

Answer 3: a

Question 4
Commercial paper can be issued (a) By all corporates (b) By all corporates with net worth of at least Rs. 10 crores (c) By all corporates with net worth of at least Rs. 5 crores (d) Can be issued only by banks

Answer 4: c

Question 5
Commercial Bills market is a part of (a) Organised money market (b) Unorganised money market (c) Stock market (d) None of the above

Answer 5: a

Question 6

Which of the following statements is not true? (a) Call money market deals with overnight loans (b) As special cases, few FIs like LIC, UTI can borrow in the call money market (c) Call loans are made on a clean basis (d) Is a part of organised money market
Answer 6: b

Question 7
A scheduled commercial bank is one: (a) Which is included in the Second Schedule of the RBI Act 1934 (b) Which is included in the Banking Regulation Act, 1949 (c) Both (a) and (b) (d) None of the above

Answer 7: a

Question 8
Indigenous bankers are regulated by (a) Reserve Bank of India (b) Ministry of Finance (c) Registrar of Co-operative Societies (d) None of the above

Answer 8: d

Question 9
a) b) c) d)

What is the current SLR requirements of banks? 40% of the deposits 25% of the deposits 31% of the deposits None of the Above
Answer 9: d

Question 10
a) b) c) d)

What is the CRR currently prescribed by RBI ? 5.5% 6.0% 6.5% 7.0%
Answer 10: c

Question 11
a) b) c) d)

What is the stipulated share of the priority sector in the net bank credit? 35% 20% 40% 45%

Answer 11: c

Question 12

Mutual funds are regulated by

(a) Association of Mutual Funds of India (AMFI) (b) Securities and Exchange Board of India (SEBI) (c) Reserve Bank of India (d) None of the above
Answer 12: b

Question 13

A growth fund is
(a) One in which the money is invested in equities (b) One in which the money is invested in government bonds (c) One in which the money is invested equally in equity and bonds (d) Money is invested only in money market instruments
Answer 13: a

Question 14
ARCIL is an example of (a) A financial institution (b) A mutual fund (c) An asset management company set up to acquire NPAs of banks (d) A discount and financing house
Answer 14: c