Money and Banking MCQ Quiz 4

Question 1: The banks are required to maintain a certain ratio between their cash in hand and total assets. This is called __________.

(A) SBR (Statutory Bank Ratio)

(B) SLR (Statutory Liquidity Ratio)

(C) CBR (Central Bank Reserve)

(D) CLR (Central Liquidity Reserve)

Question 2: Capital Account convertibility of Indian Rupee implies ___________.

(A) that the Indian Rupee can be exchanged by the authorised dealer to travel

(B) that the Indian Rupee can be exchanged for any major currency for the purpose of trade in goods and services

(C) that the Indian Rupees can be exchanged for any the purpose of trading financial assets

(D) None of the above

Question 3: Consider the following statements.
Full convertibility of the rupee may mean

1. Its free float with any of the international currencies.
2. Its direct exchange with any other international currency at any prescribed place inside and outside the country.
   
3. It acts just like any other international currency.
   

Which of these statements are correct? 

(A) 1 and 2

(B) 1 and 3

(C) 2 and 3

(D) 1, 2 and 3

Question 4: Convertibility of the Rupee as it exists at present means ___________.

(A) Rupee is convertible into foreign currencies for all types of transactions

(B) Rupee is convertible into foreign currencies for trade transactions only

(C) Rupee is convertible into foreign currencies for all current transactions only

(D) Rupee is convertible into foreign currencies for capital transactions only

Question 5: Which one of the following is not a nationalised bank?

(A) Bank of Baroda

(B) Canara Bank

(C) ICICI Bank

(D) Punjab National Bank

Question 6:Which one of the following is a private bank? 

(A) Allahabad Bank

(B) Punjab and Sind Bank

(C) Punjab Bank

(D) Punjab National Bank

Question 7: Which one of the following is not the function of Regional Rural Banks? 

(A) To provide credit to small and marginal farmers

(B) To provide credit to common people in rural area

(C)To supplement Scheduled Commercial Banks

(D) To take over the functions of Agricultural Refinance Corporation of India

Question 8:In India, regional rural banks were established in the year __________.

(A) 1976

(B) 1975

(C) 1980

(D) 1982

Question 9: Consider the following.

1. Regional Rural Banks
   
2. Lead Bank Plan
   
3. NABARD
   
4. State Bank of India

The correct chronological sequence of establishing of these banks is

(A) 4, 3, 1, 2

(B) 4, 2, 1, 3

(C) 2, 3, 4, 1

(D) 2, 1, 4, 3

Question 10:Which of the following systems of Note-issue is followed by RBI?

(A) Proportional Reserve System

(B) Minimum Reserve System

(C) Fixed Fiduciary System

(D) None of the above

Question 11: Scheduled bank is a bank which is __________.

(A) Nationalised

(B) Not Nationalised

(C) Based in foreign country

(D) Included in the second schedule of RBI

Question 12: Coins are minted in India at __________.

(A) Delhi, Mumbai and Kolkata

(B) Delhi, Kolkata and Hyderabad

(C) Mumbai, Delhi and Bengaluru

(D) Mumbai, Kolkata and Hyderabad

Question 13: Money Multiplier in India is defined as ___________.

Question 14: Paper currency was first started in India in __________.

(A) 1861

(B) 1542

(C) 1601

(D) 1880

Question 15:Consider the following statements..

1. Gorewal Committee recommendation led to the establishment of State Bank of India.
2. 14 banks were nationalised on July 19, 1969.

Which of the statement(s) given above is/are correct?

(A) Only 1

(B) Only 2

(C) Both 1 and 2

(D) Neither 1 nor 2

Question 16: The Prevention of Money Laundering Act came into force in India during __________.

(A) 1998

(B) 1999

(C) 2001

(D) 2005

Question 17: As in December 2017, Indian government’s holding in which of the following banks was maximum?

(A) Central Bank of India

(B) United Bank of India

(C) Bank of India

(D) State Bank of India

Question 18: With reference to the governance of public sector banking in India, consider the following statements.

1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
   
2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.
   

Which of the statement(s) given above is/are correct?

(A) Only 1

(B) Only 2

(C) Both 1 and 2

(D) Neither 1 nor 2

Question 19: Which one of the following statements correctly describes the meaning of legal tender money?

(A) The money which is tendered in courts of law to defray the fee of legal cases

(B) The money which a creditor is under compulsion to accept in settlement of his claims

(C) The bank money in the form of cheques, drafts, bills of exchange etc.

(D) The metallic money in circulation in a country

Question 20: Consider the following statements.

1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
   
2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
   
3. Treasury bills offer are issued at a discount from the par value.
   

Which of the statement(s) given above is/are correct?

(A) Only 1 and 2

(B) Only 3

(C) Only 2 and 3

(D) 1, 2 and 3

Question 21: Consider the following statements.

1. Capital Adequacy Ratio (CAR) is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur, if the accountholders fail to repay dues.
   
2. CAR is decided by each individual bank.
   

Which of the statements given above is/are correct?

(A) Only 1

(B) Only 2

(C) Both 1 and 2

(D) Neither 1 nor 2

Question 22: Which one of the following best describes the term ‘Merchant Discount Rate’ sometimes seen in news?

(A) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank

(B) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services

(C) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards

(D) The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards

Question 23:

• 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.
  

In the context of the above two statements, select the correct answer from the codes given below.

(A) Both (A) and (R) are true and (R) is the correct explanation of (A)

(B) Both (A) and (R) are true,but (R) is not the correct explanation of (A)

(C) (A) is true, but (R) is false

(D) (A) is false, but (R) is true

Question 24: Match List-I with List-II and select the correct answer using the codes given below the lists.

Code