GK/MCQ: Banking and Trade

1.Bank rate implies the rate of interest

A) Paid by the Reserve Bank of India on the deposits of commercial banks.
B) Charges by banks on loans and advances
C) Payable on bonds
D) At which the Reserve Bank of India discounts the Bills of exchange.

... Answer is D)

2.The banks are required to maintain a certain ratio between their cash in hand and total assets. This is called.

A) Cash Reserve Ratio (CRR)
B) Statutory Bank Rate (SBR)
C) Statutory Liquidity Ratio (SLR)
D) Central Liquid Reserve (CLR)

... Answer is C)

3.The sum of which of the following constitutes broad money in India?

A) Currency with the public
B) Demand deposits with banks
C) Time deposits with banks
D) Other deposits with RBI

... Answer is C)
Narrow Money (M1)= currency with the public + demand deposits with the Banking system + other deposits with the RBI. M2= M1 + saving deposits of post office saving banks. Broad Money (M3)= M1 + time deposits with the banking system. M4= M3 + all deposits with Post-office saving banks (excluding National saving Certificate)

4. The accounting year of the Reserve Bank of India is:

A) January- December
B) April- March
C) July- June
D) October- September

... Answer is C)
RBI follows July to June as a financial year because the RBI as a regulator and supervisor looks into the books of the banks. then analyses and prepares its statutory document called as the Annual Report.

5.Hawala trtansactions relate to payments:

A) Received in rupees against the overseas currencies and vice versa without going through the official channels
B) Reveived for sale/transfer of shares without going through the established stock exchange.
C) Received as commission for services rendered to overseas investors/buyers/sellers in assisting them to get over the red tape and/ or in getting preferential treatment.
D) Made to political parties or to individuals for meeting election expenses.

... Answer is A)

6.Which vof the following ports of India handles the highest tonnage of import cargo?

A) Calcutta
B) Kandla
C) Mumbai
D) Visakhapatnam

... Answer is D)

7.Assertion (A): Devaluation of a currency may promote export. Reason (R): Price of the country's products in the international market may fall due to devaluation.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

8. A rise in 'SENSEX' means.

A) A rise in the prices of shares of all the companies registered with the Bombay Stock Exchange.
B) A rise in the prices of shares of all the companies registered with the National Stock Exchange
C) An overall rise in the prices of shares of a group of campanies registered with the Bombay Stock Exchange.
D) A rise in the prices of shares of all the companies belonging to a group of companies registered with the Bombay Stock Exchange.

... Answer is C)

9.Which one of the following statements is correct? Fiscal Responsibility and Budget Management Act (FRBMA) concerns about:

A) Fiscal deficit only
B) Revenue deficit only
C) Both fiscal deficit and revenue deficit.
D) Neither fiscal deficit nor revenue deficit.

... Answer is C)

10. Assertion (A): The rate of growth of India's exports has shown an appreciable increase after 1991. Reason (R): The Government of India has resorted to devaluation.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

11.Debenture holders of a company are its-----

A) Shareholders
B) Debtors
C) Directors
D) Creditors

... Answer is D)

12.The National Housing Bank was set up in India as a wholly-owned subsidiary of which one of following?

A) State Bank of India
B) Reserve Bank of India
C) Axis Bank
D) Life Insurence Corporation of India

... Answer is B)
National Housing Bank was set up on 9th July 1988 under the National Housing Bank Act, 1987.

13. A great deal of Foreign Direct Investment (FDI) to India comes from Mauritius than from many major and mature economics like UK and France. Why?

A) India has preference for certain countries as regards receiving FDI
B) India has double taxation avoidance agreement with Mauritius.
C) Most citizens of Mauritius have ethnic identity with India and so they feel secure to invest in India.
D) Impending dangers of global climatic change prompt Mauritius to make huge investment in India.

... Answer is B)

14. The SEZ Act, 2005 which came into effect in February 2006, has certain objectives. In this context, consider the following: 1. Development of infrastructure facilities. 2. Promotion of investment from foreign sources. 3. Promotion of exports of servoces only. Which of the above are the objectives of this Act?

A) 1 and 2 only
B) 3 only
C) 2 and 3 only
D) 1,2 and 3

... Answer is A)

15.Assertion (A): Fiscal defict is greater than budgetary deficit. Reason (R): Fiscal deficit is the borrowing from the Reserve Bank of India plus other liabilities of the government to meet its expenditure.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

16.When the Reserve Bank of India announces an increase of the Cash Reserve Ratio, what does it mean?

A) The commercial bank will have less money to lend.
B) The Reserve Bank of India will have less money to lend.
C) The Union government will have less money to lend.
D) The commercial bank will have more money to lend.

... Answer is A)

17.In India, which of the following have the highest share in the disbursement of credit to agriculture and allied activities?

A) Commercial Banks
B) Cooperative Banks
C) Regional Rural Bank
D) Microfinance Institutions

... Answer is A)

18.The lowering the Bank Rate by the Reserve Bank of India leads to:

A) more liquidity in the market
B) less liquidity in the market
C) no change in the liquidity in the market
D) mobilisation of more deposits by commercial banks.

... Answer is A)

19.Assertion (A): Balance of Payments represents a better picture of country economic transactions with the rest of the world than balance of Trade. Reason (R): Balance of Payment takes into account the exchange of both visible and invisible items whereas balance of trade does not.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

20.The basic aim of Lead Bank Scheme is that:

A) Big banks should try to open offices in each district
B) There should be stiff competition among the various nationalized banks.
C) Individual banks should adopt particular districts for intensive development.
D) All the banks should make intensive efforts to mobilize deposits.

... Answer is C)