Banking and Financial Awareness for IBPS/BOM Exams

Q1. As per the reports published in various journals and newspapers the ‘small borrowers’ in rural areas still prefer to take informal route for their credit needs. Which of the following is the ‘informal route’ of credit in financial sector?
(a) Credit cards
(b) Loan against gold from financial institute
(c) Debit cards
(d) Money lender
(e) None of the above

Q2. What is meant by ‘Underwriting’ the term frequently used in financial sector?
(a) Under valuation of the assets
(b) The Act of taking on a risk
(c) Giving a Guarantee that a loan will not become a bad loan
(d) All of the above
(e) None of the above


Q3. As we have noticed many banks of Indian origin are opening offices/branches in foreign countries. Why is this trend emerging at a very fast pace?
I. These Banks wish to provide banking facilities to foreigners as banking facilities are not plenty in many foreign countries. India wants to take an advantage of the situation.
II. These banks wish to help Indian firms to acquire funds at internationally competitive rates.
III. These banks wish to promote trade and investment between India and other countries.
(a) Only I
(b) Only II
(c) Only III
(d) Only II and III
(e) None of the above

Q4. Many economists, bankers and researchers in India often advocate that banks should equip themselves for new challenges. These challenges are in which of the following shapes/forms?
I. As India economy is getting increasingly integrated with the rest of the world the demand of the Corporate banking is likely to change in terms of size, composition of services and also the quality.
II. The growing foreign trade in India will have to be financed by the local banks.
III. Foreigners are habitual of the comforts provided by the technology. India has to do a lot in this reference.
(a) Only I is correct
(b) Only II is correct
(c) Only III is correct
(d) All of the above
(e) None of the above


Q5. Which of the following is not a banking/finance related term?
(a) Credit warp
(b) EMI
(c) Held to Maturity
(d) Diffusion
(e) None of the above

Q6. (The figures in this questions are imaginary). We suppose that Cash Reserve Ratio (CRR) in country’s economy is 10%. The banking system wish a cash deposits of Rs. 1000 Crore, creates total deposits of Rs. 10,000 Crores. The Reserve Bank wishes that bank should create more deposits. Which among the following step will be taken by the Reserve Bank?
(a) It will lower the Cash Reserve Ratio
(b) It will raise the Cash Reserve Ratio
(c) It will increase the Margin Requirements
(d) It will start selling Government Securities
(e) None of the above

Q7. Many a times we read in the newspapers that RBI takes certain steps to curb the menace of Inflation. In this context, which among the following will not help RBI in controlling the inflation in the country?
(a) An increase in the Bank Rate
(b) An increase in the Reserve Ratio Requirements
(c) A purchase of securities in the open market
(d) Rationing of the credit
(e) None of the above

Q8. We suppose that Reserve Bank of India would like to increase the cash Reserves of the commercial banks. Which among the following would be most appropriate action of the RBI to achieve this aim?
(a) RBI would release gold form its reserves
(b) RBI would raise the reserve ratio
(c) RBI would buy the bonds in the open market
(d) RBI will stop the transactions which involve the bills of exchange
(e) None of the above

Q9. Commercial banks are the largest category of financial intermediaries; others include?
(a) Life-insurance companies
(b) Pension funds
(c) Savings and loan institutions
(d) All of the above
(e) None of the above

Q10. In India nation income is estimated by?
(a) Finance Commission
(b) Central Statistical Organisation
(c) Planning Commission
(d) Finance Ministry
(e) None of the above

Q11. RBI recently proposed a new post in the rank of Deputy Governor (along with the 4 Deputy Governors). Which one is that post? 
(a) Chief Executive Officer (CEO)
(b) Chief Operating Officer (COO)
(c) Chief Finance Officer (CFO)
(d) CEO and Managing Director (CMD)
(e) None of the above

Q12. Which one of the following rates is not decided by RBI? 
(a) Repo rate
(b) Base rate
(c) Bank rate
(d) Marginal Standing Facility (MSF) rate
(e) None of the above


Q13. Which of the following bank is generally not considered as Commercial bank? 
(a) Public Sector Bank
(b) Private Sector Bank
(c) Development Bank
(d) Foreign Bank
(e) None of the above

Q14. Which of the followings are Development Banks of India? 
(a) Industrial Finance Corporation of India (IFCI)
(b) State Finance Corporations (SFCs)
(c) Small Industries Development Bank of India (SIDBI)
(d) All of the above
(e) None of the above

Q15. Which bank are Public Sector Banks of India? 
(a) More than 50 % stake held by government
(b) 50 % stake held by government
(c) Less than 50 % stake held by government
(d) All of the above
(e) None of the above