Indian Banking System and Capital Market Set 2 MCQs

Q1 | Which of the following best defines the term 'Letter of Credit' as used frequently inbank transactions? [SBI PO 1991]

An order from a bank to another bank abroad authorising the payment of a particular amount to a person named in the letter

An unconditional undertaking given by a bank ensuring the payment of a particular amount to the drawee at a given date

Letter by a bank to a person stating the terms and conditions of the loan sanctioned to him by the bank

Statement showing outstanding"- deposits and credits of a bank for a particular period

Q2 | In India, the bank NABARD does not provide refinance to : [CDS 2002]

Scheduled Commercial Banks

Regional Rural Banks

Export-Import Banks

State Land Development Banks

Q3 | Which of the following is called a 'banker's cheque' ? [CDS 2002]

Demand draft

Debit card

Pay order

Fixed deposit

Q4 | Bouncing of cheques has become an offence. What is the punishment for the same:

6 months imprisonment

1year imprisonment

2 years imprisonment

3 years imprisonment

Q5 | The difference between a bank and a non-banking financial institution (NBFI) is that: [IAS 1994]

a bank interacts directly with customers while an NBFI interacts with banks and governments

a bank indulges in a number of activities relating to finance with a range of customers, while an NBFI is , mainly concerned with the term loan needs of large enterprises

a bank deals with both internal and international customers while an NBFI is mainly concerned with the finances of foreign companies

a bank's main interest is to help in business transactions and saving/investment activities while an NBFl's main interest is in the stabilisation of the currency

Q6 | The main function of the Exim Bank is:

to help RBI in the regulation of foreign exchange

to prevent unlicensed transaction

to promote exports and curtail imports

to conserve foreign exchange

Q7 | The main difference between shares and debentures is :

debentures can only be issued after shares

shareholders receive dividend on shares whereas debenture holders receive interest on debentures

debentures can be partly converted into shares whereas shares cannot be converted into debentures

shareholders are the owners of the company whereas debenture holders are the creditors of the company

Q8 | In which year, some more commercial banks (in addition to the first lot of 14) werenationalised in India?

1976

1979

1980

1982

Q9 | Open market operations of a Central Bank are sale and purchase of:

foreign currencies

corporate securities

trade bills

government securities

Q10 | To prevent recurrence of scams in Indian Capital Market, the Government has assignedregulatory powers to: [IAS 1995]

RBI

SBI

SEBI

ICICI

Q11 | The place where bankers meet and settle their mutual claims and accounts is known as : [Bank PO 1993]

treasury

clearing House

collection Centre

dumping Ground

Q12 | The Imperial Bank of India, after nationalisation was given the name of:

Reserve Bank of India

Bank of India

State Bank of India

Indian Overseas Bank

Q13 | Regional Rural Banks are designed to work in which of the following ideals? [IAS 1988]

Work on basics of commercial banks

Help the targetted groups

Keep lending rates lower than cooperative institutions

Work on innovative and adaptive ideals

Q14 | If the cash-reserve ratio is lowered by the Central bank, what will be its effect oncredit creation?

Decrease

Increase

No change

None of these

Q15 | Which of the following is not an asset held by commercial banks?

Bills of exchange

Current account deposits

Credit balances with the Reserve Bank

Money lent at short notice

Q16 | The primary objective of Unit Trust of India is:

to assist the industries in financial difficulties

to diffuse the benefit of development among the masses

to accumulate funds for public investment expenditure

to promote the investment habit among those who have not been able to diversify investment risk

Q17 | Which of the following is now a punishable offence by a Bank Account holder ? [BankPO 1990]

If a cheque is not crossed

If a post-dated cheque is issued

If a cheque drawn by him is dishonoured for insufficiency of funds in his account

Issuing a cheque without signature

Q18 | Which of the following are the functions of the Central Bank of India? [Railways 1992] 1. Regulation of currency and flow of credit system 2. Maintaining exchange value of rupee 3. Formulating monetary policy of India 4. Supervisory powers over the indigenous bankers and leasing companies

1 and 3

1, 2 and 3

1, 2 and 4

1, 2, 3 and 4

Q19 | Which of the following are under the purview of Industrial Development Bank of India? 1. Unit Trust of India 2. Life Insurance Corporation of India 3. Export-Import Bank 4. State Finance Corporation of India

1, 2 and 3

2, 3 and 4

1, 3 and4

1, 2 and 4

Q20 | Which of the following constitute short-term sources of finance for small scaleindustries? 1. Private money lenders 2. Loans by commercial banks 3. Credit Guarantee schemes 4. National Small Industries Corporation

1, 2 and 3

1 only

1, 2 and 4

1, 2, 3 and 4

Q21 | Which of the following provides the largest part of the demand for loanable funds inIndia?

Farmers

Private-house purchasers

Corporate businesses

Hire-purchase borrowers

Q22 | A crossed cheque is one, which can be encashed only: [IFS 1991]

by the drawee

through a bank,

at the State Bank of India

after it has been transferred to another person

Q23 | Which one of the following Indian banks is not a nationalized bank? [IAS 2006]

Corporation Bank

Dena Bank

Federal bank

Vijaya Bank

Q24 | Which of the following is not an affiliate of the Reserve Bank of India?

Unit Trust of India

The Industrial Development Bank of India

Agricultural Refinance Corporation

Deposit Insurance Corporation

Q25 | The basic regulatory authority for mutual funds and stock markets lies with the:

Government of India

Reserve Bank of India

Securities and Exchange Board of India

Stock Exchanges