MCQ Money and Financial System

MCQ Money and Financial System:- In this post, we will help you in MCQ (Multiple Choice Question) Money and Financial System with Solution Chapter wise this post will help you a lot in the examination. This post is for B.com 3rd year Student This post can benefit more students. and this post amiable in all mcq with chapter wise. available in all chapter.

Notes Here All Chapter For Money and Financial System

Bcom Money and Financial System Notes Question Paper

1. Money: Definition, Functions and Importance

1, Direct exchange of one commodity for another is termed AS:

(a) Measure of value

(b) Barter (✓)

(d) None of these

2, Meaning of Exchange is:

(a) Doing business

(b) Purchasing goods

(c) Transfer of wealth (✓)

(d) All these

3, Which of the following is a demerit of barter system?

(a) Want of double coincidence (✓)

(b) Absence of money circulation

(d) Scarcity of goods

4, The term money has been derived from the Latin Word:

(a) Moneta (✓)

(b) Peconja

(d) Menoty

5, Theory of evolution of money was propounded by:

(a) Prof. Crowther (✓)

(b) Prof. Spalding

(d) None of these

6, Theory of spontaneous growth of money was propounded by:

(a) Prof. Marshall

(b) Prof. Spalding (✓)

(d) None of these

7, “Money is what money does”, this definition was given by:

(a) Hartley Withers (✓)

(b) Robbins

(d) Friedman

8, “Anything which is declared by the state as money becomes money”, this definition was given by:

(a) Thomas

(b) Hartley Withers

(e) Knapp (✓)

(d) Coulborn

9, “Money may be defined as the means of valuation and payment,” this definition was given by:

(a) Coulborn (✓)

(b) Knapp

(d) None of these

10, “Money is one thing that have general acceptability”, this definition was given by:

(a) Seligman (✓)

(b) Crowther

(d) Kent

11, “Anything that is generally acceptable as a means of exchange and as the same time as a measure and store of value”, this definition was given by:

(a) Seligman

(b) Crowther (✓)

(d) Kent

12, According to conventional approach, money includes:

(a) Currency

(b) Demand Deposit

(c) Currency + Demand Deposits (✓)

(d) None of above

13, According to Chicago Approach, money includes:

(a) Currency+Demand Deposits

(b) Currency+ Demand Deposits+Time Deposits (✓)

(d) None of above

14, Which of the following is a characteristic of money?

(a) General Acceptability

(b) Medium of Exchange

(d) All these (✓)

15, Which of the following is not correct about money?

(a) Money is a veil (✓)

(b) Money is not a veil

(d) Liquid Asset

16, Medium of exchange is the following function of money:

(a) Primary (✓)

(b) Secondary

(d) All these

17, Money has been considered as primary invention of man, this statement is given by:

(a) Seligman

(b) Knapp

(d) Crowther (✓)

18, Which of the following is a function of money?

(a) Medium of exchange

(b) Store of value

(d) All these (✓)

19, Which of the following is the function of money, according to Hartley Withers?

(a) Medium of exchange

(b) Stantard of deferred payment

(d) All of the above (✓)

20, Something which is freely used and generally accepted as: a medium of exchange and as a unit of account is called:

(a) Money (✓)

(b) Capital

(d) Wealth

21, Consider the following:

Scarcity
Homogeneity
Durability
Divisibility

Which of the above are the essential qualities of a good money material?

(a) 1 and 2

(b) 1, 2 and 3

(c) 2, 3 and 4 (✓)

(d) 1, 2, 3 and 4

22, Medium of exchange and measure of value, both are the constituents of:

(a) Primary functions of money (✓)

(b) Contingent functions of money

(d) None of above

23, Consider the following:

Store of value
Measure of value
Transfer of value
Standard of deferred payments

Which of the above are the secondary functions of money?

(a) 1, 2 and 3

(b) 1, 3 and 4 (✓)

(d) All of these

24, Consider the following:

Basis of credit
Distributor of collective production
Helps in the maximization of utility
Guarantor of solvency

Which of the above are contingent functions of money?

(a) 1, 2 and 4

(b) 2, 3 and 4

(d) 1, 2, 3 and 4 (✓)

25, Money performs its contingent functions normally in:

(a) Underdeveloped countries

(b) Developing countries

(e) Both (a) and (b)

(d) Developed countries (✓)

26, Some assets which are very much liquid though not as much as money itself is called:

(a) Near money (✓)

(b) Dear money

(d) Fiat money

27, A Financial bill which does not arises in connection with genuine commercial transaction is called:

(a) Commercial bill

(b) Banker’s bill (✓)

(d) None of these

28, Promises by the government to pay a fixed sum of money at a prescribed date generally three months ahead, are called:

(a) Treasury bills (✓)

(b) Government bill

(d) Non-commercial bills

29, Exchange bills, treasury bills, bonds, debentures are the examples of:

(a) Fiat money

(b) Near money (✓)

(d) None of these

30, Wealth that has physical existence and is required either for its own sake or for its contribution to production is called:

(a) Physical wealth

(b) Capital wealth

(c) Real wealth (✓)

(d) Capital assets

31, Which of the following would not be termed “Near Money”?

(a) Bills of

(b) ₹ 1000 notes (✓)

(d) Debentures

32, Choose the incorrect statement: Asset demand for money is that it:

(a) Is held as an asset

(b) Is held as transactions are unforeseen and unexpected

(c) Is convenient for holding and also certain in terms of value (✓)

(d) Becomes significant during war

33, With the use of currency:

(a) Velocity of money increases (✓)

(b) National Income increases

(d) Inflation occurs

34, Primary functions of money includes:

(a) Medium of Exchange

(b) Measure of value

(d) Both (a) and (b) (✓)

35, Which of the following is not secondary function of money?

(a) Standard of deferred payments

(b) Store of value

(d) Basis of credit creation (✓)

36, Which of the following is a contingent function of money?

(a) Distribution of National Income

(b) Basis of credit creation

(d) All above (✓)

37, Who classified the functions of money into static and dynamic functions?

(a) Paul Einzing (✓)

(b) Knapp

(d) Marshall

38, Which of the following is static function of money?

(a) Medium of exchange

(b) Transfer of value

(d) All above (✓)

39, Which of the following is dynamic function of money?

(a) Full utilization of resources

(b) Facilitates deficit financing

(d) All above (✓)

40, Who among the following did not attach much significance to the role of money?

(a) Adam Smith

(b) J.S. Mill

(d) All of these (✓)

41, The……… are of the opionion that money plays a significant role in increasing the level of income and employment.

(a) Adam Smith

(b) Pigou

(d) Friedman (✓)

42, “Money is such a path which is used for transporting entire output of the district to the market, but which in itself produces nothing”, this statement is given by:

(a) Adam Smith (✓)

(b) Mill

(d) None of these

43, “Money is a wrapper in which things come to you”, this statement is given by:

(a) Pigou (✓)

(b) Keynes

(d) Mill

44, “Modern economic life which is founded on specialization would not be possible without money”, who remarked this?

(a) Friedman

(b) Benham (✓)

(d) Pigou

45, “Money is the Pivot around which the whole economic science clusters”, this statement is given by:

(a) Marshall (✓)

(b) Pigou

(d) Prof. Dey

46, In which economic system, money plays a vital role?

(a) Capitalist Economy

(b) Socialism

(d) All of these (✓)

47, Money plays a important role in:

(a) Economic fields

(b) Social fields

(d) All of these (✓)

48, “Lack of money is the root of all evils,” who said this?

(a) Bernard Shaw (✓)

(b) Robertson

(d) Mill

49, “Money is a good servent but bad master,” this statement is given by:

(a) Robertson (✓)

(b) Mill

(d) Marshall

50, Economic evil of money is:

(a) Instability of value

(b) Over capitalisation

(d) All of the above (✓)

51, Which of the following is social evil of money?

(a) Problem of black money

(b) Unequal distribution of wealth

(d) Encourage Materialism (✓)

52, In which of the following economic system sovereignty of the consumer become possible?

(a) Capitalism (✓)

(b) Socialism

(d) None of these

53, Near money is….. than money:

(a) More liquid

(b) Less liquid (✓)

(d) None of these

54, Quality of good money

(a) Acceptability

(b) Durability

(d) All these (✓)

55, Currency includes:

(a) Metallic coins

(b) Notes

(d) Both (a) and (b) (✓)

56, The money whose intrinsic value is not equal is its face value, is termed as:

(a) Commodity Money

(b) Representative Money (✓)

(d) None of these

57, Paper money is an example of:

(a) Commodity money

(b) Representative money (✓)

(d) None of these

58, Fiat money is also termed as:

(a) Convertible money

(b) Inconvertible money (✓)

(d) None of these

59, Legal Tender Money includes:

(a) One-rupee coin

(b) Paper currency notes

(d) Both (a) and (b) (✓)

60, Optional money includes:

(a) Cheques

(b) Drafts

(e) Bills of Exchange

(d) All of these (✓)

61, The coins whose face value is more than intrinsic value termed as:

(a) Standard coins

(b) Token coins (✓)

(d) None of these

62, Gresham law is applicable to:

(a) Public expenditure

(b) Banks

(d) Money (✓)

63, The qualities of a good money are:

(a) General acceptability

(b) Portability

(d) All of these (✓)

64, As economy grows, the relative importance of credit money:

(a) Increases (✓)

(b) Decreases

(d) None of these

65, Money which is a source of many blessings to mankind, becomes also, unless we control it, a source of perils and confusion.” Who has given this view point?

(a) Crowther

(b) Robertson (✓)

(d) None of these

66, Which is the most convenient medium of exchange?

(a) Currency (✓)

(b) Deposit money

(d) None of these

67, Concept of inside money was introduced by:

(a) Gurley R. Show (✓)

(b) R. Solow

(d) Sweezy

68, What is the correct sequence of following developments?

Barter system
Plastic money
Paper money
Gold standard
Credit money

(a) 1, 4, 3, 5, 2

(b) 1, 3, 5, 4, 2

(d) 5, 3, 4, 2, 1

69, Inconvertible paper money which circulates in the country, under extraordinary circumstances on the command of the State is called:

(a) Imposed money

(b) Fiat money (✓)

(d) Fiat currency

70, None-legal tender money like cheques, bank drafts, hundies, bills of exchange, etc. are called:

(a) Optional money (✓)

(b) Near money

(d) Liquid-money

2. Concept of Money Supply

71, Which of the following is not “currency with public”?

(a) Notes in circulation

(b) Circulation of small coins

(d) Cash in hand with banks (✓)

72, Choose the odd combination in the following:

(a) Currency Money, Bank Money (✓)

(b) Legal Tender Money, Currency Money

(d) Common Money, Currency Money

73, Choose the item excluded from money supply:

(a) Coins and currency notes held by commmercial banks (✓)

(b) Coins and currency in circulation

(d) Deposits with SBI

74, Which of the following constitute the reserve on which demand deposits of the public are supported?

(a) Coins and currency in circulation

(b) Cash held by Government and SBI (✓)

(d) other deposits with RBI

75, If M1 is the money supply in the country, indicate which of the following forms a part of it?

(a) Time deposits with banks

(b) Post office savings and bank deposits

(c) Deposit money with the public (✓)

(d) All of the above

76, “Money stock” includes:

(a) Post office savings bank deposits

(b) Time deposits with bank

(d) All of the above (✓)

77, Currency held by public + net demand deposits of banks + other deposits of RBI is equal to:

(a) M1 (✓)

(b) M2

(d) M4

78, The form of money ‘M’ consists of:

(a) M₁ and net time deposits of banks

(b) M2 and total deposits with the post office savings organisation

(c) M₁ and post office savings deposits (✓)

(d) None of the above

79, M₁ + Net time deposits of banks, is referred to as:

(a) M₂

(b) M3 (✓)

(d) None of these

80, Which of the following would be a correct expression for “M4” form of money?

(a) M3 + Total deposits with Post-office savings organisation (✓)

(b) M₂ + Net time deposits of organisation banks

(d) M₁ + M2 + Net time deposits of banks

81, The Reserve Bank presently provides estimates of the supply of money in terms of:

(a) M₁

(b) M₂

(d) M₁, M2, M3 and M4 (✓)

82, Which form of money has the highest degree of liquidity?

(a) M₁ (✓)

(b) M₂

(d) M4

83, Arrange all the four concepts of money M₁, M2, M3 and M4, in the ascending order in terms of liquidity.

(a) M₁, M2 Mi and M4

(b) M₁, M2, Ms and M4

(d) M4, M₁, M2, and M₁ (✓)

84, Two measures of money supply, generally known narrow and broad measures repectively, are:

(a) M2 and M3

(b) M₁ and M2

(c) M1 and M3 (✓)

(d) M2 and M4

85, The appropriate nominal stock of money is determined by:

(a) Private real demand for money

(b) Price level decision of the government

(c) Both (a) and (b) (✓)

(d) RBI’s decision on the total money supply

86, Narrow definition of money supply is:

(a) M₁ (✓)

(b) M₂

(d) M4

87, Broad definition of money supply is:

(a) M₁

(b) M2

(c) M3 (✓)

(d) M4

88, Which types of money definition is frequently used by policy makers?

(a) M₁ and M2

(b) M2 and M3

(c) M1 and M3 (✓)

(d) M2 and M4

89, Money supply is a:

(a) Flow concept

(b) Stock concept (✓)

(d) None of these

90, Hoarding of money leads to:

(a) Decrease in money supply (✓)

(b) Increase in money supply

(d) None of the above

91, Increase in money supply will lead to:

(a) Cost push inflation

(b) Demand pull inflation (✓)

(d) None of these

92, The most liquid definition of money includes:

Currency notes and coins held by public
Net time deposit with commercial banks
Net demand deposit with bank
None of the above

Select the answer from given code:

(a) 1+2

(b) 1+3 (✓)

(d) 1+4

93, When the supply of Money decreases, the Price commodities:

(a) Increases

(b) Decreases (✓)

(d) No change

94, Increase in money supply will most likely:

(a) Raise interest rate

(b) Decrease interest rate (✓)

(d) None of these

95, In reality, money supply is:

(a) Exogenous

(b) Endogenous

(c) Both (a) and (b) (✓)

(d) None of these

96, Keynes assumed money:

(a) Exogenous (✓)

(b) Endogenous

(d) None of these

97, Which of the following is included in the total supply of high powered money?

(a) Currency

(b) Required reserves

(d) All of these (✓)

98, If M= the money supply, H = the supply of high powered money, then ∆M/∆R is called:

(a) Incremental money multiplier (✓)

(b) Incremental supply multiplier

(d) None of the above

99, High powered money is controlled by:

(a) Public

(b) Government (✓)

(d) All of these

100, Following components are included in High Powered Money:

(a) Currency with the public

(b) Cash reserve with the Bank

(d) Above all (✓)

101, High Powered Money is also termed as:

(a) Reserve Money

(b) Base Money

(d) Both (a) and (b) (✓)

102, Common to both M₁ and H are:

(a) C and OD (✓)

(b) C and R

(d) C and BD

103, When supply of money is defined for a particular moments of time, then it will be?

(a) Monetanist concept

(b) Flow concept

(c) Stock concept (✓)

(d) None of these

104, As per the definition of RBI currency notes and coins with the public is included in:

(a) M1

(b) M2

(d) All of these (✓)

105, Sources for supply of money in India are:

(a) 2

(b) 3

(c) 5 (✓)

(d) 8

106, Which of the following includes deposits in the supply of money?

(a) Shicago Community Approach (✓)

(b) Traditional Approach

(d) None of the above

107, Value of Money multiplier (m) is:

(a) M/H (✓)

(b) H/M

(d) None of these

108, High powered money affect supply of money in:

(a) Direct Proportion (✓)

(b) Inversely

(d) None of these

109, Formula for High Power Money is:

(a) C+DD+OD

(b) C+R+OD (✓)

(d) None

110, If the cash reserve of the banks are ₹10 crores and credit multiplier is 10 then the final increase in demand deposits will be:

(a) ₹50 crores

(b) ₹100 crores (✓)

(d) ₹20 crores

111, Supply of money in India is influenced by:

(a) Government

(b) Bank and commercial sector

(d) All of these (✓)

112, Which of the following does not include in the currency with the public?

(a) Notes in circulation

(b) Rupee coins

(d) Cash with the banks (✓)

113, The Ma concept of money is relatively…… than M1 concept.

(a) Less liquid (✓)

(b) More liquid

(d) None of these

114, If high powered money increases by 10% then money supply will increase by:

(a) 10%

(b) More than 10% (✓)

(d) None of these

115, Increase in monetary deficit will lead to increase in:

(a) Money demand

(b) High Powered money (✓)

(d) Export

16, Rate of Increase in money supply is high in India because of:

(a) High rate of interest

(b) High deficit (✓)

(d) None of these

117, The reserve money or the high powered money is produced by the………..

(a) Reserve Bank of India

(b) Government of India

(c) Both (a) and (b) (✓)

(d) None of these

118, The reserve money held by the public and banks includes:

(a) Currency held by the public

(b) Cash reserves of banks

(d) All these (✓)

3. Finance Meaning, Types and Importance

119, Finance is related to:

(a) Money

(b) Monetary Resources (✓)

(d) Loans

120, Finance is science and art of earning and expending of money”. This is said by:

(a) Haward

(b) Hastings (✓)

(d) None of these

121, Capital required to run day to day functioning is called:

(a) Institutional Finance

(b) Business Finance

(c) Working Capital (✓)

(d) Public Finance

122, Elements of finance on the basis of managerial aspect are:

(a) Expending of funds

(b) Raising of funds

(d) All of these (✓)

123, Which of the following does not include in the self financing?

(a) Own capital

(b) Business surplus

(d) Institutional Finance (✓)

124, Internal source of financing is:

(a) Retained earnings (✓)

(b) Preference shares

(d) Institutional financing

125, Which of the following financing?

(a) Loan from commercial banks

(b) Term Deposits

(d) Portfolio Investment (✓)

126, The fund collected by selling………… is a good source of financing.

(a) Debentures

(b) Equity shares (✓)

(d) Deferred shares

127, Deferred shares are bought by the………..

(a) Public

(b) Management

(c) Promoters (✓)

(d) Government

128, Commercial and co-operative banking mainly provide:

(a) Short-term funds (✓)

(b) Medium-term funds

(d) All of these

129, Non-banking financial companies can accept deposits from the public for:

(a) More than three years

(b) Upto three years (✓)

(d) Upto five years

130, Non-institutional financial sources include:

(a) Money lender

(b) Indigenous bankers

(d) All these (✓)

131, External source of finance include:

(a) Foreign loan

(b) Foreign grants

(d) All these (✓)

132, Foreign Direct Investment is made by:

(a) Purchasing shares and debentures of the domestic company

(b) Establishing companies by Foreign Investors (✓)

(d) All above

133, In FDI, full ownership and management remains in the hands of:

(a) Domestic company

(b) Foreign Investors (✓)

(d) RBI

134, In the portfolio investment, foreign investors:

(a) Purchase shares/debentures of domestic company (✓)

(b) Establish companies in other countries

(d) All above

135, In portfolio investment, management and control remains with:

(a) Domestic company (✓)

(b) Foreign company

(d) None of these

136, Tied loans are provided for:

(a) A given project

(b) For buying goods from given country

(c) Both (a) and (b) (✓)

(d) Any project

137, Which of the following is not an international institution?

(a) Asian Development

(b) International Finance Corporation

(d) IDBI (✓)

138, Requirement of finance on the basis of time may be divided into categories.

(a) 2

(b) 5

(c) 3 (✓)

(d) 4

139, The period of long-term finance is:

(a) More than three or five years

(b) More than five or seven years (✓)

(d) None of the above

140, Which type of finance is required for purchasing fixed assets?

(a) Medium-term finance

(b) Long-term finance (✓)

(d) All of these

141, Which type of finance is required for replacement of machinery and equipment?

(a) Medium-term finance (✓)

(b) Long-term finance

(c)Short-term finance

(d) All of these

142, The period of medium-term finance is:

(a) One to five or seven years (✓)

(b) Three to five years

(d) None of the above

143, Finance mainly depends on the:

(a) Volume of savings

(b) Mobilisation of savings

(c) Both (a) and (b) (✓)

(d) None of these

144, Investment made for providing facilities like eduction, health care, training etc. are termed as:

(a) Capital Formation

(b) Human Capital Formation (✓)

(d) None of the above

145, Tertiary sector includes:

(a) Trade

(b) Banking

(d) All these (✓)

146, is not International Finance:

(a) Business Finance (✓)

(b) Government International Finance

(d) Finance from International Institutions

4. Financial System

147, Financial system includes:

(a) Financial institutions

(b) Financial markets

(d) All of these (✓)

148, Function of financial system is:

(a) To provide a mechanism for transformation of savings investments

(b) To serve as a link between savers and investors

(d) All the above (✓)

149, Components of Financial Institutions are:

(a) Regulatory Institution.

(b) Financial Intermediaries

(d) None of these

150, Primary securities include:

(a) Bills

(b) Bonds

(d) All of these (✓)

151, Secondary Securities include:

(a) Notes and coins issued by RBI

(b) Bank deposits

(d) All the above (✓)

152, IDBI bonds is a:

(a) Primary security

(b) Secondary security (✓)

(d) None of these

153, Debenture holders are entitted to get:

(a) Dividend

(b) Interest at a specified rate (✓)

(d) None of these

154, Debenture holders are:

(a) Debtors of the company

(b) Creditors of the company

(c) Loan providers (✓)

(d) None of these

155, Preference Shares have the priority to:

(a) Payment of dividend out of profits

(b) Repayment of capital in case of liquidation

(c) Both (a) and (b) (✓)

(d) None of these

156, Preference shareholders are entitled to get:

(a) Dividend

(b) Interest

(c) Dividend at fixed rate (✓)

(d) None of these

157, Preference shares must be redeemed within:

(a) 5 years

(b) 10 years (✓)

(d) 15 years

158, Equity shareholders are the:

(a) Debtors of the company

(b) Creditors of the company

(c) Owner of the company (✓)

(d) Loan providers

159, Which of the following has the right to participate in the management?

(a) Equity shareholders (✓)

(b) Preference shareholders

(d) All of these

160, Rate of dividend on equity shares is:

(a) Fixed

(b) Not fixed

(d) Both above (b) and (c) (✓)

161, The equity shareholders have:

(a) Preferences of dividend

(b) Residual claims on income (✓)

(d) None of these

162, Debt Equity Swaps are:

(a) Convertible debentures (✓)

(b) Inconvertible debentures

(d) None of these

163, Money market deals in:

(a) Short-term claims (✓)

(b) Long-term claims

(d) None of these

164, Money market includes:

(a) Treasury-bill market

(b) Call-money market

(d) All of these (✓)

165, “Money market is the centre of dealings mainly of short. term character in monetary assets.” This is defined by:

(a) Reserve Bank of India (✓)

(b) Crowther

(d) None of these

166, Organised sector of money market includes:

(a) Reserve Bank of India

(b) Commercial Banks

(d) All of these (✓)

167, The major function of financial system in any economy is:

(a) Mobilization of savings

(b) Provision of liquidity

(d) All of the above (✓)

168, Unorganised sector of money market includes:

(a) Indigenous Bankers

(b) Money Lenders

(d) All of these (✓)

169, Which of the following is not a part of money market?

(a) Commercial Banks

(b) Unorganised Sector

(c) Stock Exchange (✓)

(d) Co-operative Banks

170, Financial instrument of money market is:

(a) Treasury Bills

(b) Promissory Notes

(d) All of these (✓)

171, Which of the following is not a financial instrument of money market?

(a) Government Securities (✓)

(b) Bills of Exchange

(d) Certificates of Deposits

172, Apex Institution in money market is:

(a) SBI

(b) RBI (✓)

(d) ICICI

173, Money markey does not include:

(a) Short-term Government Bills

(b) Security Market (✓)

(d) Trade Bill Market

174, For short-term loan, the market is known as:

(a) Short-notice credit market

(b) Money market (✓)

(d) Discount market

175, The bill on which acceptance is not required is known as:

(a) Treasury Bills (✓)

(b) Exchange Bills

(d) None of these

176, To fulfill the requirement of SLR of commercial bank, the helping market is known as:

(a) Discount market (✓)

(b) Bill market

(d) None of these

177, In India, commercial paper was started in:

(a) 1950

(b) 1951

(d) None of these

178, In India Certificate of Deposits was started in:

(a) 1950

(b) 1951

(d) 1974

179, The most volatile part of the organised money market is

(a) Gilt edged market

(b) Commercial bill market

(c) Call money market (✓)

(d) Bond market

180, The duration of treasury bills is:

(a) 14 days to 364 days (✓)

(b) 1 day to 364 days

(d) 10 years and above

181, Inter-Bank Participation Certificate (IBPCs) issued in India for:

(a) 90 days

(b) 91-180 days (✓)

(d) 14 days

182, Inter-bank lending and borrowing takes place in:

(a) Capital market

(b) Money market

(d) Call money market (✓)

183, Which is not a credit note?

(a) Promissory Note

(b) Bank Draft

(d) Insurance Policy (✓)

184, How many days are added to the due date of bills of exchange?

(a) 3 days (✓)

(b) 4 days

(d) 6 days

185, Writer of the bills of exchange is:

(a) Creditor (✓)

(b) Debtor

(d) Owner

186, Which of the following is essential for secured payment through cheque?

(a) Crossing of cheque (✓)

(b) Endorsement of cheque

(d) None of these

187, The capital market deals in long-term funds, both debt and equity”. This is defined by:

(a) RBI

(b) Prof. Dougal (✓)

(d) None of these

188, Old shares are bought and sold in:

(a) Primary Market

(b) Secondary Market (✓)

(d) None of these

189, New shares are bought and sold in:

(a) Primary Market (✓)

(b) Secondary Market

(d) None of these

190, Securities are purchased/sold in capital market:

(a) Short-term

(b) Long-term (✓)

(d) None of these

191, Which of the following is an instrument of capital market?

(a) Government Securities (✓)

(b) Trade Bills (MM)

(d) Promissory Note M.M

192, Which one of the following is not a part of Capital Market?

(a) Gilt edged security market

(b) Old capital market

(d) Commercial paper market (✓)

193, Old issue market is known as:

(a) Stock Exchange (✓)

(b) Primary Market

(d) None of these

194, In India paper less trading was started by:

(a) NSDL

(b) CDSL

(c) Both (a) and (b) (✓)

(d) UTI

195, Which one of the following is wrong?

(a) Indian capital market is controlled by Capital Issue Controller (✓)

(b) SEBI got legal position in 1992

(d) None of the above

196, Gilt edged market deals with:

(a) Currency notes

(b) Gold

(d) Government Securities (✓)

197, Capital market includes:

(a) Stock-market

(b) Government bond market

(d) All of these (✓)

198, Non-banking financial institutions are:

(a) Life Insurance Corporation

(b) Unit Trust of India

(d) All of the above (✓)

199, Financial institutions which buy primary securities and sell secondary securities are termed as:

(a) Non-banking financial intermediaries (✓)

(b) Banking financial intermediaries

(d) None of the above

200, Which of the following is not a part of financial institutions?

(a) Banking Intermediaries.

(b) Non-banking Intermediaries

(d) Organised Market (✓)

201, Financial intermediaries………. the primary securities.

(a) Buy (✓)

(b) Sell

(d) None of these

202, Financial intermediaries intermediate between:

(a) Government and Banks

(b) Businessmen and Banks

(c) Final lenders and borrowers (✓)

(d) None of the above

203, Which of the following is not a Non-banking Financial Institution?

(a) UTI

(b) GIC

(d) Commercial Banks (✓)

204, Capital market of India is regulated by:

(a) Government

(b) RBI

(d) Both (b) and (c) (✓)

205, SEBI was established in:

(a) 1988 (✓)

(b) 1992

(d) 1989

206, SEBI was converted into a statutory institution in:

(a) 1992 (✓)

(b) 1988

(d) 1998

207, IRDA was established in:

(a) 1992

(b) 1990 (✓)

(d) 1991

208, Full name of SEBI is:

(a) Securities and Exchange Board of India (✓)

(b) Securities and Earning Board of India

(d) None of the above

209, Headquarter of IRDA is at:

(a) Mumbai

(b) Delhi

(d) Hyderabad (✓)

210, Headquarter of SEBI is at:

(a) Delhi

(b) Mumbai (✓)

(d) Hyderabad

211, Financial institutions:

(a) Promote savings

(b) Mobilise savings

(d) All the above (✓)

212, Which of the following is incorrect?

(a) Capital markets provides long-term funds

(b) Primary markets are meant for new issue

(d) LIC is a banking financial intermediaries (✓)

213, Most important source of finance in the past for large scale industries has been:

(a) Public investment/deposits

(b) Shares/Debentures issued in Capital market (✓)

(d) Foreign financial institutions

5. Bank: Definition and Functions

214, The term Bank was derived from the Italian word:

(a) Banco

(b) Bancus

(d) All above (✓)

215, The beginning of modern bank was assumed in:

(a) 17 century (✓)

(b) 16 century

(d) 19 century

216, In India, bank was first established in:

(a) 1806 (✓)

(b) 1809

(d) 1820

217, In India, name of first established bank was:

(a) Bank of England

(b) Bank of Bengal (✓)

(d) None of these

218, In India, first commercial bank was established in:

(a) 1806

(b) 1881 (✓)

(d) 1820

219, Which of the following is first commercial bank of India?

(s) Bank of Bengal

(b) Avadh Commercial Bank (✓)

(d) None of these

220, Banking system was started in India:

(a) In 18 century

(b) In 19 century (✓)

(d) In 16 century

221, “Bank is a manufacturer of credit and a machine for facilitating exchanges”, this definition is given by:

(a) Crowther

(b) Horace White (✓)

(d) A.G. Hart

222, “The business of banking may be briefly defined as dealing in money and instruments of credit”, this is defined by:

(a) Kenneth Machenzie (✓)

(b) Horace White

(d) A.G. Hart

223, Commercial Bank in India are governed by the:

(a) Banking Regulation Act (✓)

(b) Reserve Bank of India Act

(d) Negotiable Instrument Act

224, The primary function of a commercial bank is:

(a) Lending

(b) Providing subsidiary services

(d) Accepting deposits and lendings (✓)

225, Which of the following are banking functions of a commercial bank?

(a) Financing foreign trade

(b) Clearing cheques

(d) All of these

226, The functions of a bank which include collection of cheques, bills, promissory notes, interest payments, sale of stock and securities are called:

(a) Agency functions (✓)

(b) Banking functions

d) None of these

227, Consider the following:

(1) Collection and distribution of information

(2) Issuing letters of credit

(3) Underwriting loan raised by Government

(4) Collection of cheques

Which of the above are included in the general utility services of commercial banks?

(a) 1, 2 and 3 (✓)

(b) 1, 2, 3 and 4

(d) 1, 3 and 4

228, Which one of the following is not the function of a Commercial Bank?

(a) Providing Loans

(b) Accepting Deposits

(c) Controlling Credit (✓)

(d) Creation of Credit

229, Which one of the following statement is correct?

(a) Commercial bank keep liquidity of their funds (✓)

(b) Crossed Cheques are paid in cash

(d) Foreign Exchange Banks do not deal in banking functions

230, In India Limited Liability bank was established in:

(a) 1806

(b) 1813

(d) 1860 (✓)

231, In which account Cheques facilities is not provided by the bank:

(a) Fixed deposits Accounts (✓)

(b) Current Account

(d) None of these

232, Banks earn interest on:

(a) Deposits

(b) Loans (✓)

(d) Bills of exchange

233, The function of Commercial Bank is:

(a) Accepting Deposits

(b) Discounting the exchange bills

(d) All of these (✓)

234, Under overdraft facilities banks:

(a) Charge interest at lower rate

(b) High rate of interest is paid on deposits

(c) On withdrawing amount more than the deposit amount, interest is charged from the customer (✓)

(d) None of the above

235, The main soruces of supply of funds to a commercial banks is:

(a) Deposits from public (✓)

(b) Borrowing from RBI

(d) Borrowing from the money market

236, Types of loans are:

(a) Cash credit

(b) Overdraft

(d) All above (✓)

237, In case of Cash credit, interest:

(a) Has to be paid on the amount which actually has withdrawn

(b) On the amount which has been accepted

(c) On high rate on amount actually taken and on the whole of loan accepted (✓)

(d) None of the above

238, Main difference between overdraft and cash credit is:

(a) Overdraft is a temporary arrangement and Cash Credit a fixed one

(b) Overdraft and Cash Credit is the same things

(d) None of the above

239, Which one of the following is not the function Commercial Bank?

(a) Issue of travellers cheque

(b) Creation of Credit (✓)

(d) None of these

240, While issuing bill of exchange, banks earn through:

(a) Interest

(b) Dividend

(c) Discount (✓)

(d) None of these

241, ATM facility provides:

(a) Loans

(b) Liquidity (✓)

(d) None of these

242, Highest rate of interest is paid on:

(a) Savings Account

(b) Current Account

(c) Fixed Deposits Account (✓)

(d) None of these

243, Which of the following in not a source of bank funds?

(a) Share capital

(b) Deposits

(d) Overdraft (✓)

244, Interest is not paid by bank on:

(a) Savings A/C

(b) Fixed Deposit A/C

(c) Current A/C (✓)

(d) Recurring Deposit A/C

245, Banks are regulated by:

(a) SEBI

(b) RBI (✓)

(d) Registrar of Companies

246, Allahabad Bank was established in:

(a) 1806

(b) 1865 (✓)

(d) 1894

247, Punjab National Bank was established in:

(a) 1806

(b) 1865

(d) 1894 (✓)

248, Imperial Bank of India was established in:

(a) 1865

(b) 1881

(d) 1921 (✓)

249, Which bank is functioning as a Central Bank of India?

(a) Reserve Bank of India (✓)

(b) State Bank of India

(d) All of these

250, Which banking system is followed in India?

(a) Branch Banking (✓)

(b) Unit Banking

(d) All of these

251, The banks which perform general banking functions are termed as:

(a) Co-operative Banks

(b) Commercial Banks (✓)

(d) None of these

252, Commercial banks are established generally in the form of:

(a) Partnership

(b) Joint Stock Company (✓)

(d) None of these

253, Amount deposited for a fixed period in the bank account is termed as:

(a) Demand Liability

(b) Time Liability (✓)

(d) None of these

254, The bank which is included in the second schedule Reserve Bank is termed as:

(a) Scheduled Bank (✓)

(b) Public Bank

(d) Non-scheduled Bank

255, Scheduled Bank must have a paid up capital and reserves of an aggregate value of:

(a) At least ₹50 lakhs

(b) At least ₹5 lakhs

(c) At least ₹5 crore (✓)

(d) None of these

256, Scheduled bank must be a:

(a) Corporated firm (✓)

(b) Partnership firm

(d) None of these

257, Reserve Bank has no specific control on:

(a) Scheduled Bank

(b) Non-scheduled Banks (✓)

(d) None of these

258, Those banks of which the total capital is less than ₹5 crore. termed as:

(a) Scheduled Banks

(b) Non-scheduled Bank (✓)

(d) None of these

6. Structure of Commercial Banking in India

259, Imperial Bank of India was established in:

(a) 1921 (✓)

(b) 1955

(d) 1911

260, Which bank was nationalised to create State Bank of India?

(a) Bank of Baroda

(b) Indian Bank

(c) Imperial Bank (✓)

(d) None of these

261, State Bank of India was established in:

(a) 1921

(b) 1955 (✓)

(d) None of these

262, At present number of subsidiaries banks of State Bank India is:

(a) 5 (✓)

(b) 7

(d) 8

263, Which of the following is not apex banking institution?

(a) Reserve Bank of India

(b) NABARD

(d) State Bank of India (✓)

264, Permission to set up a new bank is given by:

(a) SEBI

(b) RBI (✓)

(d) High Court

265, Major Commercial Banks of India were nationalised first in :

(a) 1969 (✓)

(b) 1970

(d) 1972

266, How many Commercial Banks were nationalised in 1969:

(a) 19

(b) 17

(d) 14 (✓)

267, How many banks were nationalised in 1980:

(a) 5

(b) 6 (✓)

(d) 8

268, At persent, total number of nationalised banks are:

(a) 20

(b) 18

(c) 19 (✓)

(d) 28

269, Which is not a nationalised bank operating in India?

(a) Punjab National Bank

(b) Central Bank of India

(c) ICICI Ltd. (✓)

(d) Bank of India

270, Match Unit I and II and select correct answer using code given below:

Unit-I

(A) Raghuam Rajan Committee

(B) Mehrotra Committee

Unit-II

(1) Insurance

(2) Capital Market

(3) Banks

(a) A B C (2, 1, 3)

(b) A B C (3, 2, 1)

(c) A B C (3, 1, 2) (✓)

(d) A B C (1, 2, 3)

271, Number of public sector Commercial Banks in India is:

(a) 26

(b) 25 (✓)

(d) 32

272, Dena Bank is a:

(a) Government bank

(b) Nationalised bank

(d) Foreign bank (✓)

273, The Jammu and Kashmir Bank is a:

(a) Government bank

(b) Nationalised bank

(c) Private bank (✓)

(d) Foreign bank

274, City bank is a:

(a) Government bank

(b) Nationalised bank

(d) Foreign bank (✓)

275, The Central Banking institution of India is:

(a) Central Bank of India

(b) Reserve Bank of India (✓)

(d) Union Bank of India

276, The leader of the Indian money market is:

(a) Government of India

(b) Ministry of Finance

(d) Reserve Bank of India (✓)

277, The Head Office of the State Bank of India is located at:

(a) New Delhi

(b) Kolkatta

(c) Mumbai (✓)

(d) Chennai

278, When did nationalisation of banks take place in India first?

(a) 1969 (✓)

(b) 1970

(d) 1960

279, In 1969, those banks, were nationalised, the total deposits of which:

(a) ₹ 50 crore or more (✓)

(b)₹ 5 crore or more

(d) None of these

280, En 1980, those banks of which were:

(a) ₹50 crore or more

(b) ₹200 crore or more (✓)

(d) None of these

281, State Bank of India is a:

(a) Nationalised Bank

(b) Public Sector Bank (✓)

(d) None of these

282, State Bank of India works under the control of:

(a) Government (✓)

(b) Shareholders

(d) RBI

283, Which of the following acts as a representative of Reserve Bank of India?

(a) PNB

(b) SBI Group (✓)

(d) Bank of India

284, Which of the following Act regulate the Commercial Bank in India:

(a) Indian Companies Act

(b) Banking Regulation Act, 1949 (✓)

(d) None of the above

285, State Bank of India was establised under the:

(a) Banking Regulation Act, 1949

(b) Indian Companies Act, 1956

(c) State Bank of India Act, 1955 (✓)

(d) None of the above

286, SBI Acts as a:

(a) Government Banker

(b) Agent of the RBI

(d) All these(✓)

287, Which of the following is not a private sector bank?

(a) HDFC Bank Ltd.

(b) ICICI Banks Ltd.

(c) Overseas Bank (✓)

(d) Axis Bank Ltd.

288, Head Office of foreign bank is located in:

(a) Domestic country

(b) Foreign Country (✓)

(d) None of these

289, Foreign banks do:

(a) Financing of foreign trade

(b) Financing of internal trade

(d) All these (✓)

290, Which of the following is a foreign bank?

(a) Axis Bank Ltd.

(b) Yes Bank Ltd.

(d) Standard Chartered Bank (✓)

291, Origin of Branch banking was assumed from:

(a) America

(b) England (✓)

(d) Germany

292, Branch Banking is also termed as:

(a) Centralised system

(b) Decentralised system (✓)

(d) None of these

293, Origin of Unit Banking was assumed from:

(a) England

(b) America (✓)

(d) Japan Aslan

294, When was the name of ‘Banking Companies Act’ into ‘Banking Regulation Act’:

(a) 1949

(b) 1956

(d) 1988

295, SBI was established on the recommendation of the:

(a) Rural Credit Survey Committee (✓)

(b) Rural Credit and Investment Committee

(d) None of the above

7. Balance Sheet of

296, Balance sheet of a bank shows:

(a) Deposits and borrowings of a bank

(b) Assets and Liabilities of a bank (✓)

(d) None of the above

297, Which one of the following is the liability of a bank?

(a) Deposit amount (✓)

(b) Advances

(d) Purchased + Discounted Bills

258, The main source of getting finance of banks is:

(a) Share capital (✓)

(b) Deposit Amount

(d) All of these

299, Sources of funds in banks are:

(a) Share Capital

(b) Reserve Fund

(d) All of these (✓)

300, Which of the following is an asset of a bank?

(a) Time Deposit

(b) Demand Deposit

(d) Advances (✓)

301, Which of the following is liability for a bank?

(a) Gold in safe custody

(b) Share capital (✓)

(d) Loans

302, Balance sheet of a bank shows:

(a) Profit of a bank

(b) Cash of a bank

(c) Real financial position of a bank (✓)

(b) None of the above

303, According to which section of Banking Regulation Act, 1949 it is mandatory to prepare Balance Sheet for a Bank?

(a) Section 29 (✓)

(b) Section 30

(d) Section 28

304, It is mandatory for a bank to publish Balance Sheet on the last day of:

(a) 31st March

(b) 31st December

(c) June (✓)

(d) None of these

305, The creditors which are not included in the Balance Sheet are called:

(a) Bills Payable

(b) Contingent Liabilities (✓)

(d) None of these

306, The part of capital which is paid by public is known as:

(a) Authorised Capital

(b) Issued Capital

(c) Paid-up Capital (✓)

(d) None of these

307, According to Banking Regulation Act, 1949, a bank prepare its balance sheet on the:

(a) Form A (✓)

(b) Form B

(d) Form D

308, According to which section of Banking Regulation Act, audit of balance sheet of a bank is compulsory:

(a) Section 29

(b) Section 30 (✓)

(d) Section 28

309, Schedule 1 of the balance sheet of a bank shows:

(a) Capital (✓)

(b) Reserve and Surplus

(d) Borrowings

310, Schedule 2 of the balance sheet of a bank shows:

(a) Capital

(b) Reserves and Surplus (✓)

(d) Borrowings

311, Schedule 3 of the balance sheet of a bank shows:

(a) Capital

(b) Reserve and surplus

(c) Deposits (✓)

(d) Borrowings

312, Borrowings of banks are shown in the schedule number:

(a) 3

(b) 4 (✓)

(d) 6

313, Schedule number 6 of balance sheet of a bank shows:

(a) Cash and balances with Reserve Bank of India (✓)

(b) Money at call and short notice

(d) Advances

314, Schedule 7 of the balance sheet of a bank shows:

(a) Cash and balance with Reserve Bank of India

(b) Money at call and short notice (✓)

(d) Advances

315, Schedule 8 of the balance sheet of a bank shows:

(a) Cash and balance with Reserve Bank of India

(b) Money at call and short notice

(c) Investments (✓)

(d) Advances

316, Schedule 9 of the balance sheet of a bank shows:

(a) Cash and balance with Reserve Bank of India

(b) Money at call and short notice

(d) Advances (✓)

317, In which schedule, fixed assets of a bank are shown:

(a) Schedule 10 (✓)

(b) Schedule 11

(d) Schedule 12

318, In which schedule, contingent liabilities of a bank shown in the balance sheet:

(a) Schedule 10

(b) Schedule 12 (✓)

(d) None of these

319, Which of the following is not a liability of a bank?

(a) Capital

(b) Deposits

(d) Advances (✓)

320, Which of the following is not an asset of a bank?

(a) Money at call and short notice

(b) Fixed Assets

(d) Deposits (✓)

321, It is mandatory for each bank to transfer…………… of current year’s net profit in the statutory reserve fund.

(a) 25%

(b) 10%

(c) 20% (✓)

(d) 15%

322, Meaning of non-banking Assets is:

(a) Assets used in the ordinary business of bank

(b) Assets pledged by customers for loans (✓)

(d) None of these

323, The non-banking assets must be sold within……….. from the date of acquiring.

(a) 5 years

(b) 3 years

(d) 7 years (✓)

324, Profitless investment of a bank is:

(a) Discounting of Bills

(b) Money at call and short notice

(c) Cash reserve (✓)

(d) None of these

325, Which of the following is a profitable investment for a bank:

(a) Investment in building

(b) Discounting of bills (✓)

(d) None of these

326, Significance of Balance Sheet of a bank is because it:

(a) Provides estimate of progress

(b) Creates confidence among people

(d) All above (✓)

327, Portfolio management of the bank refer to the distribution of funds among:

(a) Liquidity and Security

(b) Loans and Other Assets

(d) All of these (✓)

328, Investment policy of bank must follow the principle of:

(a) Liquidity

(b) Safety

(d) All of these (✓)

329, Liquid assets of the banks does not include:

(a) Treasury Bills

(b) Cash reserves with the Central Bank

(d) Advances (✓)

330, A bank should make a balance between:

(a) Safety and Profitability

(b) Profitability and Liquidity

(d) None of the above

331, Increased liquidity always implies:

(a) Reduced profitability (✓)

(b) More profits

(c)Reduced safety

(d) None of these

332, Consider the following:

Bills purchased and discounted
Share capital and reserves
Deposits
Borrowings from other banks

Which of the above are included in liabilities of banks?

(a) 1 and 2

(b) 1,2 and 3

(c) 2, 3 and 4 (✓)

(d) 1, 2, 3 and 4

333, Which of the following is not true about “deposits from the public” in banks?

(a) They constitute the Reserve Fund (✓)

(b) They are liabilities for the bank as they are returnable to the owners

(d) They are the biggest proportion of bank’s working funds

334, As a banker, what consideration would determine acquisition of assets?

(a) Distribution in a way that maximises profit for the shareholders

(b) Availability of adequate cash

(d) All of the above (✓)

335, The major portion of funds with the banks are:

(a) Capital reserves

(b) Individual savings

(c) Deposits (✓)

(d) Fluctuating

336, A bank aims at:

(a) Maintaining high liquidity

(b) High profit earnings

(c) Balancing liquidity and profitability (✓)

(d) Low liquidity as money earns no profit

337, A bank with a large proportion of demand deposits may have to:

(a) Maintain more capital stocks

(b) Maintain a more liquid assets portfolio (✓)

(d) Invest in real estate

338, Total cash in the bank and balance with Reserve Bank, balances in current account with other bank and investment in government and other approved securities owners borrowings from RBI, SBI and IDBI constitute:

(a) Liquidity ratio

(b) Cash reserve ratio

(c) Net liquidity (✓)

(d) Cash balance

8. Regional Rural Banks

239, Regional Rural Banks was established first in:

(a) 1975 (✓)

(b) 1977

(d) 1964

340, How many RRBs were established in 1975?

(a) 2

(b) 4

(d) 5 (✓)

341, Regional Rural Banks are sponsored by:

(a) Government

(b) RBI

(c) Commmercial Bank (✓)

(d) None of these

342, Generally a Regional Rural Bank covers a:

(a) District (✓)

(b) State

(d) None of these

313, Authorised capital of RRBs is:

(a) ₹ 1 Crore

(b) ₹ 5 crores (✓)

(d) ₹ 50 lakh

344, Paid-up capital of RRBs is:

(a) ₹1 Crore (✓)

(b) ₹5 Crore

(d) ₹25 Lakh

345, RRBs work under the guidance of:

(a) NABARD

(b) Parent Commercial Bank

(c) Both (a) and (b) (✓)

(d) None of these

346, RRBs provide credit and other facilities to the:

(a) Small and marginal farmers

(b) Agricultural labourers

(d) All above (✓)

347, Government, State Government and Sponsor Bank in the proportion of:

(a) 50:15:35

(b) 60:20:20 (✓)

(d) None of these

348, Which of the following provide the re-finance facility to RRBs:

(a) Sponsor Bank

(b) NABARD (✓)

(d) None of these

349, RRBs are established on the principle of:

(a) Locally based

(b) Rural oriented

(d) All of these (✓)

350, RRBs have the status of:

(a) Scheduled Bank (✓)

(b) Non-scheduled Bank

(d) None of these

351, How many RRBs was in working at the end of June, 2006?

(a) 194

(b) 196 (✓)

(d) 82

352, RRBs get refinance facility at:

(a) Bank rate

(b) 2% below the bank rate (✓)

(d) None of these

353, RRBs have been promoted by:

(a) Commercial Banks (✓)

(b) Non-banking finance companies

(d) None of the above

354, SARFAESI Act, 2002 is related with:

(a) Commercial Bank

(b) Co-operative Bank

(c) Regional Rural Banks (✓)

(d) None of these

355, Report of Kelker Committee on the working of RRBs was submitted in:

(a) 1986 (✓)

(b) 1984

(d) 2001

356, For restructuring of RRBs, appointed by the RBI:

(a) Kelker Committee

(b) M.C. Bhandari Committee (✓)

(d) None of the above

357, Recapitalisation process for RRBs was started in:

(a) 1991-92

(b) 1993-94 (✓)

(d) 2004

358, The recommendation of not merging regional rural banks with promoter banks was given by:

(a) Narasimham Committee

(b) A.K. Khusroo Committee (✓)

(d) None of these

359, What is NABARD?

(a) Poverty eradication programme

(b) Social security plan

(c) Bank (✓)

(d) None of these

360, Long-term finance to agriculture is provided by:

(a) Land Development Bank (✓)

(b) Commercial Bank

(d) State Co-operative Bank

361, The main function of NABARD is:

(a) Providing loans to Primary Credit Societies

(b) Loan to Land Development Bank

(d) To provide re-finance facilities to all (✓)

362, Which of the financial institution is not included in Institutional Credit?

(a) Co-operative Society

(b) Commercial Banks

(c) Indigenous Bankers (✓)

(d) Industrial Development Bank of India

363, Which one of the following pair is correctly matched?

(a) Regional Rural Bank: Sponsored by Commercial Banks (✓)

(b) Lead Banks: Sponsored by the RBI

(d) Apex Co-operative Bank: Sponsored by the Asian Development Bank

9. Co-operative Banking in India

364, The beginning of the history of Agricultural Co-operative Bank was in:

(a) 1906

(b) 1912

(d) 1920

365, Apex institution of co-operative bank is:

(a) Primary Co-operative Societies

(b) Central Co-operative Bank

(c) State Co-operative Bank (✓)

(d) None of the above

366, Structure of co-operative credit in India is:

(a) Pyramidical (✓)

(b) Horizontal

(d) None of these

367, Which of the following, Co-operative Credit Bank is not included in three tier structure:

(a) State Co-operative Bank

(b) Central Co-operative Bank

(d) Regional Rural Bank (✓)

368, When were the primary agricultural co-operative credit societies were establised in India:?

(a) 1947

(b) 1904 (✓)

(d) 1941

369, Central Co-operative Bank is situated at:

(a) Centre

(b) State

(c) District (✓)

(d) None of these

370, District Co-operative Bank was established in:

(a) 1910

(b) 1933 (✓)

(d) 1912

371, In every state, the number of state co-operative Bank is:

(a) 1 (✓)

(b) 21

(d) 4

372, The Co-opertative Societies Act was passed in India in:

(a) 1910

(b) 1904

(d) 1933

373, Every member of the co-operative society has the right:

(a) To Cast only one vote (✓)

(b) To Cast vote on the number of shares held by him

(d) None of the above

374, Co-operative societies has to retain……. of their profit as reserve fund:

(a) 20%

(b) 10%

(c) 25% (✓)

(d) 30%

375, All Co-operative Credit Societies in India by:

(a) Reserve Bank of India (✓)

(b) NABARD

(d) None of these

376, Registration of credit co-operative societies is:

(a) Compulsory (✓)

(b) Voluntary

(d) None of these

377, Liability of co-operative societies member’ is:

(a) Limited

(b) Unlimited (✓)

(d) None of these

378, Which committee recommended the establishment State Co-operative Bank?

(a) Maclagen Committee (✓)

(b) Kelker Committee

(d) None of these

379, NABARD was established on:

(a) July 1982 (✓)

(b) June 1984

(d) June 1992

380, The authorised capital of NABARD is presently:

(a) ₹ 1,000 crore

(b) ₹ 5,000 crore (✓)

(d) None of these

381, Function of NABARD is:

(a) Refinance of Agriculture Credit

(b) Agent of Government and Reserve Bank

(d) All above (✓)

10. Process of Credit Creation

382, A primary deposit is created when

(a) Lends money to the public

(b) Lends money to the Government

(c) Accepts money from the public (✓)

(d) Invests money on shares

383, The deposits arising as a result of funds deposited by customers are called:

(a) Uncreated deposits

(b) Passively created deposits (✓)

(d) Dead deposits

384, Banks as a whole are able to support a volume of deposits which is multiple of the cash reserves they hold. This phenomenon is known as:

(a) Multiple contraction of deposits

(b) Multiple effect of deposits

(c) Multiple expansion of deposits (✓)

(d) None of the above.

385, The extent of credit expansion by the banking system can be found out by the formula:

(a) Excess reserve / Cash reserve

(b) Excess reserve / Legal reserve ratio (✓)

(d) Excess reserve ratio × Legal reserve ratio

886, Primary deposits is otherwise known as:

(a) Cash deposit (✓)

(b) Created deposit

(d) Current deposit

387, Credit creation depends upon:

(a) Ratio of cash reserves to deposits (✓)

(b) Ratio of deposits to cash reserves

(d) Ratio of deposits to long-term government bonds

388, Deposits multiplier (K) is:

(a) Reverse of cash reserve ratio (✓)

(b) Reverse of liquidity ratio

(d) Rate of interest applicable for short-term loans and advances

389, Deposits creation can be calculated by:

(a) Money supply change multiplied by cash reserve ratio

(b) Additional cash multiplied by deposits multiplier (✓)

(d) Additional cash multiplied by ratio of cash reserves to deposit

890, During periods of depression commercial banks:

(a) Will expand credit

(b) Will not expand credit (✓)

(d) Will be compelled by central bank more

391, A commercial bank’s capacity of credit creation depends mainly on:

(a) Increase in the cash reserve (AR)

(b) The cash reserve ratio (r)

(c) Both (a) and (b) (✓)

(d) The amount of excess reserves

392, If bank have to hold a large percentage of deposits in the form of cash, the total amount of deposits that can be created will be:

(a) Same

(b) Much more

(c) Less (✓)

(d) Zero

393, Secondary deposits refer to:

(a) Term deposits

(b) Recurring deposits

(d) Deposits created through lending (✓)

394, “Cash Drain” refers to:

(a) Desire of depositor to withdraw cash (✓)

(b) Flow of cash out of the economy

(d) Increase in demand for money

395, Which of the following do not limit the bank’s capacity to create deposits?

(a) Proportion of deposits kept with the banks

(b) Amount of cash drain

(d) Preventing consumption expenditure in the economy (✓)

396, Banks are required to maintain a percentage of their deposits in the form of balances with RBI. This is called:

(a) Cash ratio

(b) Liquidity ratio

(c) Legal reserve requirement (✓)

(d) Credit balance

397, An increase in reserve ratio has an effect that leads to:

(a) Expansionary credit.

(b) Contracting credit (✓)

(d) Increase in supply of money

398, An increase in the {time deposit / demand deposit} will lead to:

(a) An increase in Bank credit (✓)

(b) A decrease in Bank credit

(d) None of the above

399, Full form of CRR is:

(a) Cash Reserve Ratio (✓)

(b) Cash Reserve Rate

(d) Capital Reserve Ratio

400, Cash reserve with Central Banks is called:

(a) Statutory Liquidity Ratio

(b) Cash Reserve Ratio (✓)

(d) Debt Ratio

401, During the period of depression, credit creation is:

(a) Less (✓)

(b) More

(d) None of these

402, Bank credit is a credit from:

(a) Its share capital

(b) Its liabilities

(d) Cash deposits (✓)

403, Higher the reserve ratio:

(a) Lower will be deposit multiplier (✓)

(b) Higher will be deposit multiplier

(d) None of the above

404, In comparison to deposit multiplier, bank credit multiplier is:

(a) Lower (✓)

(b) Higher

(d) Indeterminates

405, Increase in bank credit leads to:

(a) Cost push inflation

(b) Demand pull inflation (✓)

(d) None of these

406, Increase in bank credit leads to:

(a) Decrease in money supply

(b) Increase in money supply (✓)

(d) None of these

407, On whom optimum capacity is dependent in credit creation?

(a) Number of banks

(b) Monetary Institution or Central Bank

(d) All of the above (✓)

408, By decreasing cash reserve ratio, bank’s power of credit creation will:

(a) Increase (✓)

(b) Decrease

(d) None of these

409, On which of the following, power of credit creation depends on:

(a) Credit deposits

(b) Cash deposits

(d) All of these (✓)

410, Which of the following statement is correct?

(a) Credit money creates new deposits

(b) Banks creates credit actually to

(d) All of the above (✓)

411, According to Walter Leaf and Canon, the function of credit creation is done by:

(a) Depositors (✓)

(b) Banks

(d) None of these

412, In the process of credit creation, the following are included:

(a) Depositors and Debtors

(b) Monetary Institution and Central Bank

(d) All of above (✓)

413, Bank credit creation capacity is affected by:

(a) Monetary Policy

(b) Demand of Public

(d) All of these (✓)

414, Credit creation is done by:

(a) Commercial Banks (✓)

(b) Reserve Bank of India

(d) Co-operative Credit Societies

415, The Cash Reserve Ratio is determined by:

(a) Free play of market forces

(b) Commercial Bank

(c) Monetary Authority (✓)

(d) None of these

416, “Loan creates deposits”, who said this:

(a) Hartley Withers (✓)

(b) G.N. Halm

(d) None of these

417, The creation of derivative deposits is indentical with what is commonly called the creation of credit.” This is defined by:

(a) Hartley Withers.

(b) G.N.Halm (✓)

(d) None of these

418, Derivative deposits is the result of:

(a) Primary deposits (✓)

(b) Investments

(d) None of these

419, Banks expand their secondary deposits through:

(a) Loans

(b) Advances

(d) All of these (✓)

420, Cash Reserve Ratio will be equal to:

(a) Primary Deposits / Total Deposits (✓)

(b) Primary Deposits × K

(d) None of these

421, In order to increase the money supply, the banking system must have:

(a) Required reserves

(b) Issue of new currency

(d) Excess reserves (✓)

422, Assumption of credit creation is:

(a) All bank strictly maintain Cash Reserve Ratio

(b) All the depositors will not withdraw their funds at the time

(d) All of the above (✓)

11. Development Banks

423, Development Banks provide:

(a) Long-term finance

(b) Medium-term finance

(d) Both (a) and (b) (✓)

424, Development Banks:

(a) Accept deposits from the public

(b) Do not accept deposits from the public (✓)

(d) None of the above

425, Development bank’s chief distinguishing role is:

(a) The promotion of economic development

(b) Provision of risk-capital

(d) All of the above (✓)

426, A Development bank is that bank which gives priority to development objective”, who said this:

(a) Dr. Desai

(b) William Diamond (✓)

(d) None of these

427, Development banking approach has been:

(a) Security oriented

(b) Project oriented (✓)

(d) None of these

428, Development banks mainly provide finance to:

(a) Agriculture

(b) Industries (✓)

(d) None of these

429, Which one was established first for providing industrial finance out of the following:

(a) IDBI

(b) IFCI (✓)

(d) ICICI

430, Which one of the following is incorrect?

(a) Exim Bank-for export and import

(b) RBI Banker’s Bank

(d) FCI-Financial Institution of commercial institution (✓)

431, Which of the following commercial banks have worked as banks in India earlier:

(a) HDFC Bank and ICICI Bank (✓)

(b) IDBI Bank and ICICI Bank

(d) Union Bank and HDFC Bank

432, Industrial Finance Corporation of India was established in:

(a) 1948 (✓)

(b) 1945

(d) None of these

483, IFCI provides loans for a maximum period of:

(a) 15 years

(b) 20 years

(c) 25 years (✓)

(d) None of these

434, Initially, the paid-up capital of IFCI was:

(a) ₹ 5 crore (✓)

(b) ₹ 50 crore

(d) None of these

435, At present, the authorised capital of IFCI is:

(a) ₹ 500 crore

(b) ₹ 1,000 crore (✓)

(d) None of these

436, State Finance Corporation Act was passed in:

(a) 1951 (✓)

(b) 1950

(d) 1964

437, In which state, State Finance Corporation was established first:

(a) Punjab (✓)

(b) Uttar Pradesh

(d) West Bengal

438, At present, the number of State Finance Corporation is:

(a) 20

(b) 18 (✓)

(d) 15

439, Authorised capital of State Finance Corporation should not be less than:

(a) ₹ 5 crore (✓)

(b) ₹ 100 crore

(d) ₹1,000 crore

440, Industrial Development Bank of India (IDBI) was established in:

(a) July 1948

(b) July 1951

(c) July 1964 (✓)

(d) July 1955

441, The IDBI was converted into full fledged commercial bank on:

(a) July 2001

(b) October, 2004 (✓)

(d) None of these

442, ICICI was established in:

(a) 1″ January, 1948

(b) March, 1950

(d) 5th January, 1955 (✓)

443, The authorised capital of Industrial Development Bank is:

(a) 400 crores

(b) 1,250 crores (✓)

(d) 800 crores

444, Industrial Investment Bank of India was established in:

(a) 1955

(b) 1948

(d) 1971 (✓)

445, In which year IIBI was converted into IRBI?

(a) 1975

(b) 1985 (✓)

(d) 1987

446, The IRBI was reconstitued into IIBIL in the year:

(a) 1987

(b) 1997 (✓)

(d) 1999

447, At present, authorised capital of IIBIL is:

(a) 200 crore

(b) 1,000 crore (✓)

(d) 5,000 crore

448, Headquarter of IIBIL is situated at:

(a) Mumbai

(b) Kolkatta (✓)

(d) Chennai

449, Small Industries Development Bank of India (SIDBI) was established in:

(a) 1990 (✓)

(b) 1995

(d) 1992

450, Headquarter of SIDBI is situated at:

(a) Mumbai

(b) Kolkatta

(c) Lucknow (✓)

(d) Delhi

451, National Housing Bank (NHB) was established in:

(a) July, 1964

(b) January, 1955

(c) July, 1988 (✓)

(d) None of these

452, Apex institution for the purpose of Industrial Finance is:

(a) RBI

(b) IFCI

(c) IDBI (✓)

(d) UTI

453, Which of the following committee give recommendation on Development Banks:

(a) Narasimham Committee (✓)

(b) Kelker Committee

(d) None of these

454, Life Insurance corporation of India was established in:

(a) April, 1955

(b) March, 1958

(c) September 1956 (✓)

(d) None of these

455, The central office of LIC is located in:

(a) Delhi

(b) Mumbai (✓)

(d) None of these

456, What is the correct sequence of following event:

Establishment of EXIM Bank
Establishment of IDBI
Establishment of IFCI
Establishment of SIDBI

Select the correct answer for the code given below:

(a) 3 2 1 4 (✓)

(b) 1 2 3 4

(d) 4 3 2 1

457, General Insurance corporation of India was established in:

(a) November, 1972

(b) January 1973 (✓)

(d) None of these

458, When did UTI start its working in India?

(a) 1st February, 1964

(b) 1st April, 1964

(c) 1st July, 1964 (✓)

(d) 1st November, 1964

459, Exim Bank was established on:

(a) 1 July, 1982

(b) 1 January, 1982 (✓)

(d) None of these

460, Long-term loan is given by:

(a) State Bank of India

(b) Industrial Development Bank of India (✓)

(d) Indian Bank

12. Unregulated Credit Market in India

461, Which of the following is not a feature of unregulated credit market?

(a) No effective control of Reserve Bank

(b) Dominance of money lenders and Indigenous bankers

(c) Definite laws of credit market (✓)

(d) Close relations between lender and borrower

462, The main function of money lender is:

(a) Providing short-term loans (✓)

(b) Accepting deposits

(d) All the above

463, The function of indigenous banker is:

(a) Accepting Deposits

(b) Providing loans

(d) All of these (✓)

464, Which one of the following statement is wrong?

(a) Money lenders provide loans out of their own funds

(b) Money lenders charge high rate of interest

(c) Discounting facilities should be provided to indigenous bankers by commercial banks. It was suggested by Banking Commission 1972

(d) Reserve Bank has restricted indigenous bankers (✓)

465, Which of the following is not NBFC?

(a) Rural Banks (✓)

(b) Mutual Banks

(d) Chit funds

466, Indigenous bankers provide loan facilities to:

(a) Farmers

(b) Traders

(d) All of these (✓)

467, In which year RBI made control on NBFC?

(a) 1961

(b) 1962

(d) 1964

468, Main credit instrument of unregulated credit market is:

(a) Bills of exchange

(b) Promissory Notes

(c) Hundies (✓)

(b) All of these

469, Mode of advancing loans of indigenous bankers is:

(a) Complicated

(b) Simple (✓)

(d) None of these

470, Which of the following is demerit of unregulated credit market?

(a) Mainpulation of accounts

(b) Exorbitant rate of interest

(d) All of the above (✓)

471, Main component of unregulated credit market is:

(a) NBFCs

(b) Money Lenders

(d) All of these (✓)

472, Which of the following is correct about money-lenders?

(a) They do buiness in hundies

(b) They accept deposits.

(c) They adopt fraudulent practices to deprive the farmer of his land (✓)

(d) None of the above

473, Which of the following is not a function of Indigenous?

(a) Accepting Deposits

(b) Provding Loans

(d) Refinance facility (✓)

474, Money lenders provide loans for the purpose of:

(a) Production

(b) Consumption

(d) All of these (✓)

475, Money lenders provide loans at the security of:

(a) Land

(b) Ornaments

(d) All of these (✓)

13. Reserve Bank of India

476, Reserve Bank of India was established in:

(a) 1st April 1935 (✓)

(b) 1st August 1950

(d) 26th January 1949

477, RBI was nationalised in:

(a) 1935

(b) 1956

(d) 1951

478, Head Office of RBI is situated in:

(a) Delhi

(b) Mumbai (✓)

(d) Kokatta

479, Which of the following bank performed central banking functions before establishment of RBI?

(a) State Bank of India

(b) Bank of India

(d) Imperial Bank (✓)

480, Name of Central Bank of India is:

(a) Reserve Bank of Bank (✓)

(b) Imperial Bank

(d) None of these

481, Reserve Bank Act was passed in:

(a) 1935

(b) 1934 (✓)

(d) None of these

482, How many members are there in the Board of Director of the RBI?

(a) 5

(b) 10

(c) 20 (✓)

(d) 7

483, Which of the following function is not performed by RBI?

(a) Issue of Notes

(b) Banker to the Government

(c) Payment of interest on deposits (✓)

(d) Lender of the last resort

484, Which of the following function can be performed by RBI?

(a) Carry on a business

(b) Purchase of fixed assets for Government

(c) Arrangement of Foreign Exchange (✓)

(d) Providing credit to Industrialists

485, Capital at the time of establishment of Reserve Bank was:

(a) ₹ 50 crore

(b) ₹ 5 crore (✓)

(d) None of these

486, Consider the following:

Power to issue notes
To act as banker’s bank
To act as a bank to the government
To act as a bank to the public

Which of the above are functions of the central bank?

(a) 1 and 2

(b) 1, 2 and 4

(c) 1, 2 and 3 (✓)

(d) 1, 2, 3 and 4

487, R.B.I. is governed by the:

(a) Banking Company Regulation Act.

(b) RBI Act 1934 (✓)

(d) None of the above

488, One rupee currency notes of India is issued by:

(a) The Ministry of Finance, Government of India (✓)

(b) The Reserve Bank of India

(d) Concerned State Government

489, Interest rates given by banks on deposits by:

(a) The market

(b) The RBI forces

(d) The individual banks (✓)

490, In India Monopoly of Note Issue is in the hands of:

(a) Central Bank of India

(b) State Bank of India

(c) Reserve Bank of India (✓)

(d) None of these

491, Reserve Bank of India was started as a bank owned by:

(a) Private Individuals

(b) Central Government (✓)

(d) None of the above

492, Credit control function is done by the following bank

(a) Industrial development Bank of India

(b) Reserve Bank of India (✓)

(d) None of the above

493, Which of the following methods is not a quantitative credit control method?

(a) Open market operation

(b) Bank rate

(d) Direct action (✓)

194, Rationing of credit is a:

(a) Quantitative credit control method

(b) Selective credit control method (✓)

(d) None of the above

495, RBI has promoted:

(a) National Housing Bank

(b) National Bank for Agriculture and Rural Development

(d) All of the above (✓)

496, Which one of the following is a quantitative weapon of credit control?

(a) Variable Reserve ratio (✓)

(b) Direct action

(d) Moral suasion

497, Which one of the following is a qualitative weapon credit control?

(a) Bank Rate

(b) Variable Reserve ratio

(c) Moral Suasion (✓)

(d) None of the these

498, At present, the Governor of the R.B.I. is:

(a) Raghu Ram Rajan (✓)

(b) M. Gopalkrishnan

(d) None of these slatkais Dej

499, Which of the following system possesses great elasticity?

(a) Minimum reserve system (✓)

(b) Proportional reserve system

(d) None of the above

500, For controlling deflation, RBI would:

(a) Increase bank rate

(b) Reduce bank rate

(d) None of these

501, “Bank Rate” is not

(a) Rate of interest provided against short-term deposits (✓)

(b) Rate at which commercial banks get accommodation from the RBI

(d) A determinant of lending rates of commercial bank

502, Bank rate is ineffective if:

(a) Commercial bank have large resources (✓)

(b) Commercial banks have limited resources

(d) Commercial bank are privately owned

503, Which of the following is incorrect with regard to open market operations?

(a) Refer to buying and selling of securities and bills in the money market

(b) Influence credit operation of commercial banks

(c) Influence to bank rate as a determinant of money supply (✓)

(d) Affect country’s economy and business activity

504, “Credit rationing”, is a method of controlling regulating:

(a) Credit to show increased liabilities

(b) Credit so as to build liquidity

(c) The purpose for which credit is granted by commercial banks (✓)

(d) None of the above

505, Selective controls’ operate best in:

(a) Deflationary conditions

(b) Depression

(c) Inflationary conditions (✓)

(d) Unemployment conditions

506, Choose the correct statement regarding ‘selective controls”:

(a) Can control all forms of credit

(b) Can control bank credit (✓)

(d) None of the above

507, Which of the following is not a form of selective or qualitative control?

(a) Essential and non-essential uses of credit are distinguished

(b) Only non-essential uses are brought under the scope of central bank controls

(c) Open market operations (✓)

(d) None of these

508, Which of the following is not a credit control instrument?

(a) Tax rate modification (✓)

(b) Open market operation

(d) Bank rate

509, Bank rate’ was also known as:

(a) Clearing rate

(b) Interest rate

(c) Discount rate (✓)

(d) Lending rate

510, A fall in bank rate leads to:

(a) Lowering of lending rates of commercial banks

(b) Expansion of bank credit

(d) Both (a) and (b) (✓)

511, The impact of cost of bank credit on the decisions to hold stocks can be quite severe if:

(a) There is a slight fall in lending rate

(b) Rise in lending rate is low

(c) Rise in lending rate is steep (✓)

(d) There is steep fall in lending rate

512, Bank borrows more from RBI when:

(a) Net liquidity ratio rises

(b) Net liquidity ratio falls (✓)

(d) Cash reserve ratio falls

513, By raising the minimun net liquidity ratio for the purpose of borrowing, the banks may be induced to:

(a) Lend more to commercial sector

(b) Utilise less of deposits

(c) Lend less to commercial sector (✓)

(d) None of the above

514, Open Market Operations involve:

(a) Sale of government shares

(b) Purchase of government bonds

(c) Sale and purchase of securities by central bank (✓)

(d) Transaction in the share market

515, When central bank buys securities, bank reserves:

(a) Expand (✓)

(b) Contract

(d) Have no bearing with the change

516, Open market operations do not play the role of an instrument of credit to a large extent in our country because:

(a) Government securities market in India is very broad based

(b) Government securities market in India is very narrow (✓)

(d) None of these

517, As a bank borrow more from the Reserve Bank of India, its net liquidity ratio:

(a) Drops (✓)

(b) Remain same

(d) None of these

518, Which of the following is the method for selective credit controls?

(a) Regulation of margin requirements

(b) Regulation of consumer credit

(d) All of the above (✓)

519, If rationing of credit is done with reference to the total amount, it is a:

(a) Qualitative control

(b) Quantitative control (✓)

(d) Both (a) and (b)

520, Which of the following cannot be used as an instrument to neutralise open market operations?

(a) Keep low reserves

(b) Keep high reserves (✓)

(d) Replenish cash

521, Which bank issue note of 7 500 in India:

(a) Commercial Banks

(b) State Bank of India

(c) Reserve Bank of India (✓)

(d) None of these

522, Coin of one repee in India is minted by:

(a) Government of India (✓)

(b) State Bank of India

(d) Commercial Bank

523, For issuing notes, which of the following system Reserve Bank of India?

(a) Minimum and Proportionate Reserve System

(b) Minimum Reserve System (✓)

(d) None of the above

524, When Central Bank wants to increase credit, it should:

(a) Increase bank rate

(b) Sale of Government securities in market

(c) Decrease in bank rate (✓)

(d) Increase in CRR

525, Purchase of Government securities by Reserve Bank will:

(a) Increase quantity of money (✓)

(b) Decrease quantity of money

(d) Decrease Government expenditure

526, As compared to prevailing interest rates, bank rate is:

(a) Lesser (✓)

(b) Higher

(d) None of these

527, Due to increase in statutory liquidity ratio, credit is:

(a) Increased

(b) Decreased (✓)

(d) None of these

528, Cash Reserves are kept with:

(a) State Bank of India

(b) Reserve Bank of India (✓)

(d) None of these

529, Statutory Reserves are kept with:

(a) State Bank of India

(b) Reserve Bank of India

(c) Scheduled/Commercial Bank (✓)

(d) None of these

530, Margin requirement is high in case of

(a) Agriculture

(b) Export

(d) Speculative activities (✓)

531, Rationing of credit takes place when

(a) Demand for credit is zero

(b) Demend for credit is higher than supply (✓)

(d) None of the above

532, Which of the following is an instrument of selective credit control?

(a) Bank rate policy

(b) Margin money requirement (✓)

(d) All of above

533, Which of the following are method of credit control?

(a) Bank rate policy

(b) Margin money requirement

(d) All of above (✓)

534, For priority sectors, margin money is kept

(a) High

(b) Low (✓)

(d) None of above

535, For speculators, margin money is kept,

(a) High (✓)

(b) Low

(d) None of the above

536, Margin requirement is an example of

(a) Quantitative credit control

(b) Selective cerdit control (✓)

(d) None of the above

537, Flow of credit to specific purpose is controlled by:

(a) Quantitative credit control

(b) Selective credit control (✓)

(d) None of the above

538, Buying and selling of securities central Bank is called

(a) Closed market operations

(b) Open market operations (✓)

(d) None of above

539, In case should RBI wants to increase rate of interest, then it should

(a) Sell securities (✓)

(b) Buy securities

(d) None of these

540, Open market is not successful in India because:

(a) Saving is low

(b) Investment is low

(c) Bill market is underdeveloped (✓)

(d) Export is low

541, Which instrument of monetary policy is used frequently by RBI?

(a) Discount Policy

(b) Reserve Requirements (✓)

(d) Margin requirements

542, Cash reserve with Central Bank is called:

(a) Statutory Liquidity Ratio

(b) Cash Reserve Ratio (✓)

(d) Debt Ratio

543, Investment of commercial bank in approved securities required under:

(a) Statutory Liquidity Ratio (✓)

(b) Cash Reserve Ratio

(d) Debt Ratio

544, Who is incharge of custody of foreign exchange?

(a) Finance Ministry

(b) Commerce Ministry

(o) Reserve Bank of India (✓)

(d) None of above

545, Bank rate is decided by:

(a) RBI (✓)

(b) Commercial Bank

(d) None of these

546, Cash Reserve Ratio is determined by:

(a) RBI (✓)

(b) Commercial

(d) None of these

547, Which is acceptable to under SLR?

(a) Shares

(b) Debentures

(c) Treasury Bills (✓)

(d) None of these

548, Credit policy is formulated by:

(a) Finance Ministry

(b) Government

(c) RBI (✓)

(d) Commercial Bank

549, Rate at which RBI gives loan to commercial bank is called:

(a) Credit rate

(b) Loan rate

(c) Bank rate (✓)

(d) Discount rate

14. Monetary Policy

550, Monetary Policy is Formulated by:

(a) RBI (✓)

(b) SEBI

(d) All of these

551, Open market operation is a part of:

(a) Credit policy

(b) Income policy

(d) Monetary policy (✓)

552, In the monetary policy, measures are taken to:

(a) Control the quantity of credit

(b) Control the cost of credit money

(d) All of above (✓)

553, In the narrow sense, monetary policy means:

(a) Credit control policy of Reserve Bank (✓)

(b) Issuing notes policy

(d) None of the above

554, Monetary policy includes:

(a) Monetary measures to control

(b) Non-monetary measures to control credit

(c) Both (a) and (b) (✓)

(d) None of the above

555, Objective of monetary policy in India is:

(a) Rapid economic development

(b) Price stability

(d) All of the above (✓)

556, Monetary measures to reduce inflation include:

(a) Bank rate

(b) Cash Reserve Ratio

(d) All of these (✓)

557, Inflation leads to

(a) Equitable distribution of income

(b) Inequitable distribution of income (✓)

(d) None of the above

558, Which of the following is limitation of monetary policy in India?

(a) Large non-menetized area

(b) Lack of organised and developed money market

(d) All of above

559, Monetary policy proves less effective where

(a) Proportion of credit money is small in circulation (✓)

(b) Proportion of credit money is large in circulation

(d) None of the above

568, Which of the following is prerequisite implementation of monetary policy:

(a) Organised and developed money market

(b) Presence of independent price mechanism

(d) All of above (✓)

561, Low interest rate policy induces:

(a) Trade and industry (✓)

(b) Decreases investment

(d) None of above

562, Which of the following are anti-inflationary measures?

(a) Reduction in the volume of legal tender money

(b) Reduction in the volume of bank deposits

(d) All of the above (✓)

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MCQ Money and Financial System

1. Money: Definition, Functions and Importance

2. Concept of Money Supply

3. Finance Meaning, Types and Importance

4. Financial System

5. Bank: Definition and Functions

6. Structure of Commercial Banking in India

7. Balance Sheet of

8. Regional Rural Banks

9. Co-operative Banking in India

10. Process of Credit Creation

11. Development Banks

12. Unregulated Credit Market in India

13. Reserve Bank of India

14. Monetary Policy

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