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150+ Financial Institutions and Markets Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Economics (CBCS) .

Chapters

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Chapter: Central Banks - RBI
1.

The Reserve Bank of India was established on

A. April 1, 1935
B. July 12, 1982
C. May 26, 2006
D. September 30, 2005
Answer» A. April 1, 1935
discuss
2.

On which commission’s recommendations; Reserve Bank of India was established?

A. Chamberlain Commission
B. Hilton Young Commission
C. Keynes Commission
D. None of the above
Answer» B. Hilton Young Commission
discuss
3.

Which among the following is incorrect?

A. RBI is the Bank of Issue
B. RBI acts as Banker to the Government
C. RBI is Banker's Bank
D. RBI does not regulate the flow of credit
Answer» D. RBI does not regulate the flow of credit
discuss
4.

Which of the following is true about the restrictions on RBI?
(i) It is not to compete with the commercial banks.
(ii) It is not allowed to pay interest on its deposits.
(iii) It cannot engage directly or indirectly in trade.
(iv) It cannot acquire or advice loans against immovable property.
(v) It is prohibited from purchasing its own shares or the shares of any other bank or any company or granting loans on such security.

A. only (i),(ii),(iii), and (iv
B. only (v
C. all the above
D. none of the above
Answer» C. all the above
discuss
5.

Which of the following is not the work of RBI?

A. Bank of the banks
B. Credit controller
C. Custodian of foreign currency
D. Allocating funds directly to the farmers for agricultural development
Answer» D. Allocating funds directly to the farmers for agricultural development
discuss
6.

Which of the following words is not used in Monetary Policy?

A. Cash reserve ratio
B. Repo Rate
C. Bank rate
D. Blue chip
Answer» D. Blue chip
discuss
7.

For issuing / printing currency notes, the RBI has adopted a system –

A. Minimum Reserve System
B. Fixed fiduciary system.
C. Maximum limit system
D. Proportional reserve system.
Answer» A. Minimum Reserve System
discuss
8.

Central Bank is a

A. Commercial Bank
B. Exchange bank
C. Apex bank.
D. Scheduled bank.
Answer» C. Apex bank.
discuss
9.

Central Bank is an institution which is

A. Privately owned
B. State owned
C. Internationally owned
D. Jointly owned by state and private.
Answer» B. State owned
discuss
10.

The methods of credit control used by RBI includes
(i) Open market operation
(ii) Changes in CRR and SLR
(iii) Selective credit control
(iv) Changes in SLR

A. (i), (ii) and (iii
B. (ii), (iii) and (iv
C. (i), (iii) and (iv
D. (i), (ii), (iii) and (iv
Answer» D. (i), (ii), (iii) and (iv
discuss
11.

The full form of EMI used in the banking sector is

A. Easy Monthly Installment
B. Equal Monthly Investment
C. Equated Monthly Installment
D. Equated Mortgage Investment.
Answer» C. Equated Monthly Installment
discuss
12.

Bank rate is decided by

A. Reserve Bank of India
B. Govt. of India
C. State Bank of India
D. Securities and Exchange Board of India (SEBI
Answer» A. Reserve Bank of India
discuss
13.

The reserves held by the Commercial Banks over and above the statutory minimum with the RBI are called

A. Cash reserves
B. Deposit reserves
C. Excess reserves
D. Momentary reserves.
Answer» C. Excess reserves
discuss
14.

Banking in India is controlled by

A. Union Finance Commission
B. Union Ministry of Finance
C. Union Ministry of Commerce
D. Reserve Bank of India
Answer» D. Reserve Bank of India
discuss
15.

Which of the following is not the function of Reserve Bank of India?

A. Acting as banker to the Government.
B. Keeping foreign Exchange Reserve.
C. Regulating credit in the country.
D. Issuing of one rupee notes and coins.
Answer» D. Issuing of one rupee notes and coins.
discuss
16.

The objectives of monetary policy is / are

A. Price Stability
B. Economic growth
C. Increase import of luxury goods
D. Both (a) and (b
Answer» D. Both (a) and (b
discuss
17.

Bank rate is defined as

A. Rate of interest charged by commercial banks from borrowers
B. Rate of interest allowed by commercial banks on demand deposits.
C. Rate of interest allowed by commercial banks on time deposits.
D. Rate which RBI purchases or rediscount bills of exchange of commercial banks.
Answer» D. Rate which RBI purchases or rediscount bills of exchange of commercial banks.
discuss
18.

The Reserve Bank of India was nationalized in

A. 1st January 1949.
B. 1st April, 1935
C. 1st May, 1947
D. 1st June, 1949
Answer» A. 1st January 1949.
discuss
19.

The Governor of RBI is appointed by

A. Board of Directors
B. Central Government
C. Finance Minister
D. None of the above
Answer» B. Central Government
discuss
20.

The chairman of the Central Board of RBI is

A. Governor
B. Deputy Governor.
C. Finance Minister, Govt. of India
D. Prime Minister
Answer» A. Governor
discuss
21.

Which of the following is true about the functions performed by RBI -
(i) It is the Bank of Issue
(ii) It acts as banker to the Government
(iii) It is the banker of other banks
(iv) It regulates the flow of credit

A. Both (i) and (ii
B. Both (iii) and (iv
C. All the Above
D. None of the above
Answer» C. All the Above
discuss
22.

Which of the following is true about the objectives of RBI trying to achieve-
(i) Price Stability
(ii) Reduce deficit
(iii) Encourage export
(iv) Growth

A. Both (i) and (ii
B. Both (iii) and (iv
C. All the Above
D. None of the above
Answer» C. All the Above
discuss
23.

The custodian of India’s foreign exchange reserve is

A. State Bank of India (SBI
B. Reserve Bank of India (RBI
C. International Monetary Fund (IMF
D. World Bank
Answer» B. Reserve Bank of India (RBI
discuss
24.

Which of the following is true about the functions of RBI-

A. Export finance
B. Agriculture finance
C. Collecting data and publication
D. Exchange management and control
Answer» C. Collecting data and publication
discuss
25.

Which of the following is true that RBI as a banker to the government
(i) Maintaining and operating deposit accounts of Central and State Governments.
(ii) Receipt and collection of payments to the Central and State Governments.
(iii) Making payments on behalf of Central and state Governments.
(iv) Providing ways and means advances to the Central and State Governments.

A. Both (i) and (ii
B. Both (iii) and (iv
C. All the Above
D. None of the above
Answer» C. All the Above
discuss
26.

Which of the following coins is not issued by the RBI ?

A. Re. 1
B. Rs. 2
C. Rs. 5
D. Rs. 10
Answer» A. Re. 1
discuss
27.

RBI has withdrawn the circulation of coins in the denomination of 1 paise, 2 paise, 3 paise, 5 paise, 10 paise, 20 paise and 25 paise in which year ?

A. 2010
B. 2011
C. 2012
D. 2013
Answer» B. 2011
discuss
28.

Which of the following is/ are the Quantitative Instrument of RBI ?

A. CRR
B. SLR
C. All of the above
D. None of above
Answer» C. All of the above
discuss
29.

Which among the following would not help RBI to control the inflation in the country ?

A. Increase in Reserve Ratio Requirements
B. Increase in Bank Rate
C. Purchase of securities in open market
D. Increase in Repo Rate
Answer» D. Increase in Repo Rate
discuss
30.

What would be the impact on cash reserves of the commercial banks if RBI conducts the sale of securities?

A. Decrease
B. Increase
C. Either increase or decrease
D. Remains contant
Answer» A. Decrease
discuss
31.

Which of the following works as the agent of RBI while it has no own offices ?

A. IMF
B. SBI
C. GOI
D. Ministry of Finance
Answer» B. SBI
discuss
32.

Which of the followong Governors of RBI also served as the Finance Minister of India ?

A. Pranav Mukherjee
B. Amitabha Ghosh
C. Sir Benegal Rama Rao
D. Dr. Manmohan Singh
Answer» D. Dr. Manmohan Singh
discuss
33.

Which of the following statements is/are not true ?

A. RBI is the Bank of Issue.
B. RBI acts as the Banker of the Government.
C. RBI is known as the Banker's Bank.
D. RBI does not regulate the credit flow.
Answer» D. RBI does not regulate the credit flow.
discuss
34.

Which is not a function of RBI ?

A. Holding cash reserves of all commercial banks and make available financial accommodation to them.
B. Assuming responsibility of all banking operations of the government.
C. Assuming the responsibility of the statistical analysis of data related to macro economy of India .
D. Assuming the responsibility to meet directly or indirectly all reasonable demands for the accommodation.
Answer» C. Assuming the responsibility of the statistical analysis of data related to macro economy of India .
discuss
35.

To control inflation and tackle the problem of exchange liquidity due to foreign exchange inflows, the RBI

A. Sells government securities.
B. Purchase securities
C. Decrease bank rate.
D. Raise interest rate.
Answer» A. Sells government securities.
discuss
36.

Ways and Means advanced by RBI refers to

A. Meeting temporary mismatches between receipts and expenditure.
B. Providing short term loans for consumption expenditure.
C. Buying goods from abro
Answer» A. Meeting temporary mismatches between receipts and expenditure.
discuss
37.

The commercial banks were required to keep some percentages of their time deposits and their demand deposits with the RBI in the form of reserves is known as

A. Statutory Liquidity ratio
B. Cash reserve ratio
C. Moral suasion
D. Open market operation
Answer» B. Cash reserve ratio
discuss
38.

Decreasing percentage of statutory liquidity ratio by RBI

A. Increase the volume credits at the hands of commercial banks.
B. Reduce inflation.
C. Decrease the volume credit at the hands of commercial banks.
D. Raise the interest rate charged by the commercial banks.
Answer» A. Increase the volume credits at the hands of commercial banks.
discuss
39.

If the RBI wants to control the speculation on the price of essential commodities, adopted a measure known as

A. Open market Operations.
B. Credit monitoring Arrangement
C. Selective credit control
D. Moral suasion.
Answer» C. Selective credit control
discuss
40.

The RBI’s function of Banker to Government implies

A. Issue of currency
B. Buys and sells government securities
C. Manages public debt by issuing government loans
D. Sells treasury bills on behalf of government
Answer» C. Manages public debt by issuing government loans
discuss
Chapter: Money and Commercial Banking
41.

Which of the following is a commercial bank?

A. State Bank of India
B. Unit Trust of India (UTI
C. IDBI
D. NABARD
Answer» A. State Bank of India
discuss
42.

Which one of the following is near money?

A. Treasury Bills
B. Bills of Exchange
C. Bonds and Debentures
D. All of the above
Answer» D. All of the above
discuss
43.

In July 1969, 14 major Indian scheduled banks were nationalised and 6 more banks were nationalised in

A. April 1980
B. May 1980
C. April 1981
D. May 1981
Answer» A. April 1980
discuss
44.

The liabilities of a bank are

A. Advance and loans
B. Time deposits and shares
C. Cash with reserve ratio
D. Bonds and debentures of share holders
Answer» B. Time deposits and shares
discuss
45.

The recent conversion of Financial Institutions into Commercial Banks or Non-Banking Finance Companies (NBFCs) under the regulatory aspect of RBI was suggested by

A. Narasimham Committee
B. Ministry of Company Affairs
C. Ministry of Finance
D. None of the above
Answer» A. Narasimham Committee
discuss
46.

Which property the paper money does not possess

A. Acceptability
B. Divisibility
C. Duality
D. Portability
Answer» C. Duality
discuss
47.

Rupee is a coin

A. Full Value
B. Token money
C. Credit money
D. Convertible
Answer» B. Token money
discuss
48.

Which one of the following is not included in the function of money

A. Make demand and supply
B. Store of value
C. Medium of exchange
D. Measure of value
Answer» A. Make demand and supply
discuss
49.

Convertible money means

A. It can buy means
B. Government can give gold against it
C. Illegal money
D. Low value of money
Answer» B. Government can give gold against it
discuss
50.

Commercial banks create

A. Credit money
B. Token money
C. Legal money
D. Do not create money
Answer» A. Credit money
discuss

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