Chapter:

90+ Indian Banking System and Capital Market Solved MCQs

in Indian Economy

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Bachelor of Arts (BA) , Bachelor of Arts in Economics (BA Economics) , Union Public Service Commission (UPSC) .

Chapters

Take a Test

51.	Which of the following is called a 'banker's cheque' ? [CDS 2002]
A.	Demand draft
B.	Debit card
C.	Pay order
D.	Fixed deposit
Answer» A. Demand draft

52.	Bouncing of cheques has become an offence. What is the punishment for the same:
A.	6 months imprisonment
B.	1year imprisonment
C.	2 years imprisonment
D.	3 years imprisonment
Answer» A. 6 months imprisonment

53.	The difference between a bank and a non-banking financial institution (NBFI) is that: [IAS 1994]
A.	a bank interacts directly with customers while an NBFI interacts with banks and governments
B.	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
C.	a bank deals with both internal and international customers while an NBFI is mainly concerned with the finances of foreign companies
D.	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
Answer» B. 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

54.	The main function of the Exim Bank is:
A.	to help RBI in the regulation of foreign exchange
B.	to prevent unlicensed transaction
C.	to promote exports and curtail imports
D.	to conserve foreign exchange
Answer» C. to promote exports and curtail imports

55.	The main difference between shares and debentures is :
A.	debentures can only be issued after shares
B.	shareholders receive dividend on shares whereas debenture holders receive interest on debentures
C.	debentures can be partly converted into shares whereas shares cannot be converted into debentures
D.	shareholders are the owners of the company whereas debenture holders are the creditors of the company
Answer» D. shareholders are the owners of the company whereas debenture holders are the creditors of the company

56.	In which year, some more commercial banks (in addition to the first lot of 14) were nationalised in India?
A.	1976
B.	1979
C.	1980
D.	1982
Answer» C. 1980

57.	Open market operations of a Central Bank are sale and purchase of:
A.	foreign currencies
B.	corporate securities
C.	trade bills
D.	government securities
Answer» C. trade bills

58.	To prevent recurrence of scams in Indian Capital Market, the Government has assigned regulatory powers to: [IAS 1995]
A.	RBI
B.	SBI
C.	SEBI
D.	ICICI
Answer» C. SEBI

59.	The place where bankers meet and settle their mutual claims and accounts is known as : [Bank PO 1993]
A.	treasury
B.	clearing House
C.	collection Centre
D.	dumping Ground
Answer» B. clearing House

60.	The Imperial Bank of India, after nationalisation was given the name of:
A.	Reserve Bank of India
B.	Bank of India
C.	State Bank of India
D.	Indian Overseas Bank
Answer» C. State Bank of India

61.	Regional Rural Banks are designed to work in which of the following ideals? [IAS 1988]
A.	Work on basics of commercial banks
B.	Help the targetted groups
C.	Keep lending rates lower than cooperative institutions
D.	Work on innovative and adaptive ideals
Answer» B. Help the targetted groups

62.	If the cash-reserve ratio is lowered by the Central bank, what will be its effect on credit creation?
A.	Decrease
B.	Increase
C.	No change
D.	None of these
Answer» B. Increase

63.	Which of the following is not an asset held by commercial banks?
A.	Bills of exchange
B.	Current account deposits
C.	Credit balances with the Reserve Bank
D.	Money lent at short notice
Answer» B. Current account deposits

64.	The primary objective of Unit Trust of India is:
A.	to assist the industries in financial difficulties
B.	to diffuse the benefit of development among the masses
C.	to accumulate funds for public investment expenditure
D.	to promote the investment habit among those who have not been able to diversify investment risk
Answer» D. to promote the investment habit among those who have not been able to diversify investment risk

65.	Which of the following is now a punishable offence by a Bank Account holder ? [Bank PO 1990]
A.	If a cheque is not crossed
B.	If a post-dated cheque is issued
C.	If a cheque drawn by him is dishonoured for insufficiency of funds in his account
D.	Issuing a cheque without signature
Answer» C. If a cheque drawn by him is dishonoured for insufficiency of funds in his account

66.	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
A.	1 and 3
B.	1, 2 and 3
C.	1, 2 and 4
D.	1, 2, 3 and 4
Answer» D. 1, 2, 3 and 4

67.	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
A.	1, 2 and 3
B.	2, 3 and 4
C.	1, 3 and4
D.	1, 2 and 4
Answer» B. 2, 3 and 4

68.	Which of the following constitute short-term sources of finance for small scale industries? 1. Private money lenders 2. Loans by commercial banks 3. Credit Guarantee schemes 4. National Small Industries Corporation
A.	1, 2 and 3
B.	1 only
C.	1, 2 and 4
D.	1, 2, 3 and 4
Answer» A. 1, 2 and 3

69.	Which of the following provides the largest part of the demand for loanable funds in India?
A.	Farmers
B.	Private-house purchasers
C.	Corporate businesses
D.	Hire-purchase borrowers
Answer» C. Corporate businesses

70.	A crossed cheque is one, which can be encashed only: [IFS 1991]
A.	by the drawee
B.	through a bank,
C.	at the State Bank of India
D.	after it has been transferred to another person
Answer» B. through a bank,

71.	Which one of the following Indian banks is not a nationalized bank? [IAS 2006]
A.	Corporation Bank
B.	Dena Bank
C.	Federal bank
D.	Vijaya Bank
Answer» C. Federal bank

72.	Which of the following is not an affiliate of the Reserve Bank of India?
A.	Unit Trust of India
B.	The Industrial Development Bank of India
C.	Agricultural Refinance Corporation
D.	Deposit Insurance Corporation
Answer» A. Unit Trust of India

73.	The basic regulatory authority for mutual funds and stock markets lies with the:
A.	Government of India
B.	Reserve Bank of India
C.	Securities and Exchange Board of India
D.	Stock Exchanges
Answer» C. Securities and Exchange Board of India

74.	What is the difference between Debentures and Equity?
A.	Debentures are sealed bonds acknowledging that money has been borrowed; equity is a shareholder's share voting rights in proportion to his shareholding
B.	An equity shareholder cannot withdraw his amount whereas debentures can be withdrawn by taking back the amount
C.	Equity shareholding is more risky, compared to debentures which are bound to return good interest on the principal
D.	Both debenture and equity holders have the right of voting irrespective of the proportion of holdings but debentures are of lower value than equity
Answer» A. Debentures are sealed bonds acknowledging that money has been borrowed; equity is a shareholder's share voting rights in proportion to his shareholding

75.	Which of the following organisations in India is mainly' working to meet the credit needs of all types of agricultural and rural development activities?
A.	FCI
B.	IDBI
C.	NABARD
D.	ICAR
Answer» C. NABARD

90+ Indian Banking System and Capital Market Solved MCQs

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

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

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

The main function of the Exim Bank is:

The main difference between shares and debentures is :

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

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

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

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

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

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

If the cash-reserve ratio is lowered by the Central bank, what will be its effect on credit creation?

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

The primary objective of Unit Trust of India is:

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

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

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

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

Which of the following provides the largest part of the demand for loanable funds in India?

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

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

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

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

What is the difference between Debentures and Equity?

Which of the following organisations in India is mainly' working to meet the credit needs of all types of agricultural and rural development activities?

Which of the following combinations is correct? [IFS 1989]

Which one of the following Public Sector banks' emblem figures a dog and the words 'faithful, friendly' in it ? [CDS 2010]

Which one of the following statements is not correct? [CDS 2009]

Which bank gives long term loan to farmers?

In 1921, the Presidency Banks of Bengal, Madras and Bombay were nationalised to give birth to:

The oldest stock exchange of India is :

Consider the following statements: 1. ICICI Bank is the largest private sector bank in India. 2. Postal life Insurance is the oldest life insurance organization in India. Which of the statements give above is/are correct? [IAS 2005]

The National Housing Bank was set up in India as a wholly-owned subsidiary of which one of the following? [IAS 2007]

In some parts of India, farmers face acute distress because of heavy burden of debt from non-institutional renders. Who can be called a non-institutional lender? [RBI Grade B Officer 2011]

Which of the following organisations prepare rural credit plans on annual basis for all districts in India, which in turn form the base for annual credit plans of all rural financial institutions? [RBI Grade B Officer 2011]

The RBI has regional offices at various places. At which of the following places it does not have an office? [RBI Grade B Officer 2011]

Basel Committee has given its recommendations on which of the following aspects of banking operations? [RBI Grade B Officer 2011]

Who amongst the following has never held post of the Governor of the RBI? [RBI Grade B Officer 2011]

'Sub Prime Lending' is a term applied to the loans made to ___ [Punjab & 5indh Bank 2011]

As per the reports published- in various journals and newspapers the 'small borrowers' in rural areas still prefer to take informal route for their credit needs. Which of the following is the 'informal route' of credit in financial sector? [Punjab & Sindh Bank 2011]

Who amongst the following was never a Governor of the RBI ? [SBI Associates Clerk 2011]

In the world of commodity exchanges-the' concept of "A standard contract to buy or sell a specified commodity at a certain date in future and at a market driven price" – is known as [UBI PO 2010]

Stock Exchanges play, role in an economy which may be termed as [UBI PO 2010]

Which one of the following is not a feature of Limited Liability Partnership firm? [IAS 2010]

Which of the following statements is/are correct? 1. NIFTY is based upon 50 firms in India. 2. NIFTY is governed and regulated by the Reserve Bank of India. 3. NIFTY does not trade in mutual funds Select the correct answer using the code given below: [CDS 2012]

Private Sector Mutual Funds in India were permitted in [UP PCS 2011]

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

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

Consider the following statements:
1. ICICI Bank is the largest private sector bank in India.
2. Postal life Insurance is the oldest life insurance organization in India.
Which of the statements give above is/are correct? [IAS 2005]

Which of the following statements is/are correct?
1. NIFTY is based upon 50 firms in India.
2. NIFTY is governed and regulated by the Reserve Bank of India.
3. NIFTY does not trade in mutual funds
Select the correct answer using the code given below: [CDS 2012]

76.	Which of the following combinations is correct? [IFS 1989]
A.	NABARD-Industrial Loans
B.	IDBI-Short term loans
C.	RBI-Long term finance
D.	RRB-Agricultural finance
Answer» D. RRB-Agricultural finance

77.	Which one of the following Public Sector banks' emblem figures a dog and the words 'faithful, friendly' in it ? [CDS 2010]
A.	Punjab National Bank
B.	Syndicate Bank
C.	Oriental Bank of Commerce
D.	State Bank of India
Answer» B. Syndicate Bank

78.	Which one of the following statements is not correct? [CDS 2009]
A.	The National Association of Securities Dealers Automated Quotations known as NASDAQ, is an American stock exchange
B.	Nikkei is the stock market index for the Tokyo Stock Exchange
C.	S and P CNX Nifty is the index for 50 large companies on the Bombay Stock Exchange
D.	Hang Seng Indexes record daily changes of the largest companies of the Hong Kong stock market
Answer» C. S and P CNX Nifty is the index for 50 large companies on the Bombay Stock Exchange

79.	Which bank gives long term loan to farmers?
A.	NABARD
B.	Land Development Bank
C.	SBI
D.	Rural banks
Answer» B. Land Development Bank

80.	Consider the following statements: 1. life Insurance Corporation of India is the oldest insurance company in India. 2. National Insurance Company limited was nationalized in the year 1972 and made a subsidiary of General Insurance Corporation of India. 3. Headquarters of United India Insurance Company limited are located at Chennai. Which of the statements given above are correct? [lAS2006)
A.	1, 2 and 3
B.	1 and 2, only
C.	2 and 3, only
D.	1 and 3, only
Answer» C. 2 and 3, only

82.	The oldest stock exchange of India is :
A.	Bombay Stock Exchange
B.	Ahmedabad Stock Exchange
C.	Bangalore Stock Exchange
D.	Hyderabad Stock Exchange
Answer» A. Bombay Stock Exchange

83.	Consider the following statements: 1. ICICI Bank is the largest private sector bank in India. 2. Postal life Insurance is the oldest life insurance organization in India. Which of the statements give above is/are correct? [IAS 2005]
A.	1 only
B.	2 only
C.	Both 1 and 2
D.	Neither 1 nor 2
Answer» D. Neither 1 nor 2

85.	In some parts of India, farmers face acute distress because of heavy burden of debt from non-institutional renders. Who can be called a non-institutional lender? [RBI Grade B Officer 2011]
A.	Small Banks
B.	Grameen Banks
C.	Credit Cooperative Societies
D.	Money Lenders
Answer» D. Money Lenders

86.	Which of the following organisations prepare rural credit plans on annual basis for all districts in India, which in turn form the base for annual credit plans of all rural financial institutions? [RBI Grade B Officer 2011]
A.	SIDBI
B.	NABARD
C.	RBI
D.	Indian Bank's Association
Answer» B. NABARD

87.	The RBI has regional offices at various places. At which of the following places it does not have an office? [RBI Grade B Officer 2011]
A.	Kota
B.	Nagpur
C.	Lucknow
D.	Panaji
Answer» A. Kota