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Banking Related

The document provides a comprehensive list of banking abbreviations and their meanings, covering various aspects of banking operations and terminology. It includes acronyms related to financial systems, payment methods, and regulatory frameworks. Additionally, it outlines topics related to banking awareness, such as types of accounts, loans, and monetary policy.

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Banking Related

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Banking Awareness Topic Wise - Banking Abbreviations

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Banking Awareness Topic Wise - Banking Abbreviations

Acronym Abbreviation
ACS Automated Clearing System
ADR American Depository Receipt
AEPS Aadhar Enabled Payment System
AFS Annual Financial Statement
AIF Alternative Investment Fund
ALCO Asset Liability Committee
ALM Asset Liability Management
ALM Asset Liability Management
AMFI Association of Mutual Funds in India
ANBC Adjusted Net Bank Credit
APBS Aadhar Payment Bridge System
ARC Asset Reconstruction Companies
ASBA Application Supported by Blocked Amount
ATM Automated Teller Machine
BBPS Bharat Bill Payment System
BCBS Basel Committee on Banking Supervision
BCSBI Banking Codes and Standards Board of India
BHIM Bharat Interface for Money
BIS Bank of International Settlements
BOP Balance of Payments
BPLR Benchmark Prime Lending Rate
BRBNM PL Bharatiya Reserve Bank Note Mudran Private Limited
BSBDA Basic Savings Bank Deposit Account
CAD Capital Account Deficit
CAD Current Account Deficit
CAGR Compound Annual Growth Rate
CAR Capital Adequacy Ratio
CARE Credit Analysis and Research Ltd
CASA Current Account Saving Account
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Banking Awareness Topic Wise - Banking Abbreviations

CBLO Collateralized Bank Lending Obligations

CBS Core Banking Solutions
CCEA Cabinet Committee on Economic Affairs
CCF Credit Conversion Factor
CCL Cash Credit Limit
CCL Cash Credit Limit
CDR Corporate Debt Restructuring
CDS Credit Default Swap
CEPA Comprehensive Economic partnership Agreement
CEPA Comprehensive Economic Partnership Agreement
CIBIL Credit Information Bureau of India Ltd
CIDR Central Identities Data Repository
CII Confederation of Indian Industries
CMIS Currency Management Information System
CPI Consumer Price Index
CPI Consumer Price Index
CRAR Capital to Risk- Weighted Assets Ratio
CRILC Central Repository of Information on Large Credits
CRIS Comparative Rating Index of Sovereign
CRISIL Credit Rating Information Services of India Ltd
CRR Cash Reserve Ratio
CSR Corporate Social Responsibility
CSR Corporate Social Responsibility
CTS Cheque Truncation System
CVV Card Verification Value
CVV Card Verification Value
DEAF Depositor Education and Awareness Fund
DICGC Deposit Insurance and Credit Guarantee Corporation of India
DII Domestic Institutional Investor
DNS Domain Name System
DPG Deferred Payment Guarantee
DPN Demand Promissory Note

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Banking Awareness Topic Wise - Banking Abbreviations

DRAT Debt Recovery Appellate Tribunal

DRI Differential Rate of Interest
DRI Differential Rate of Interest
DRI Deferential Rate of Interest
DSCR Debt Service Coverage Ratio
DTAA Double Taxation Avoidance Agreement
ECB External Commercial Borrowings
ECGC Export Credit Guarantee Corporation
ECR Export Credit Refinance
ECS Electronic Clearing System
EDI Electronic Data Interchange
EDP Entrepreneurship Development Programme
EEFC Exchange Earners Foreign Currency
EFSF European Financial Stability Facility
EFTPOS Electronic Funds Transfer at Point of Sale
ELSS Equity Linked Savings Scheme
EMI Equated Monthly Installment
EPOS Electronic Point of Sale
EPS Earnings Per Share
ETF Exchange Traded Fund
FCA Foreign Currency Assets
FCCB Foreign Currency Convertible Bond
FCNRA Foreign Currency Non Resident Account
FCNRD Foreign Currency Non-Repatriable Deposit
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act
FERA Foreign Exchange Regulation Act
FICCI Federation of Indian Chambers of Commerce and Industry
FII Foreign Institutional Investor
FIMMDA Fixed Income Money Markets and Derivatives Association
FINO Financial Inclusion Network Operation
FIPB Foreign Investment Promotion Board

FIPB Foreign Investment Promotion Board

FPI Foreign Portfolio Investment
FPI Foreign Portfolio Investment
FPO Follow on Public Offer
FRA Forward Rate Agreement
FRBM Fiscal Responsibility Budget Management Act
FRBMA Fiscal Responsibility and Budget Management Act
FRN Floating Rate Note
FSLRC Financial Sector Legislative Reforms Commission
GAAR General Anti Avoidance Rule
GFD Gross Fiscal Deficit
GIRO Government Internal Revenue Order
GMS Gold Monetization Scheme
GNFV Gross Negative Fair Value
HCE Host Card Emulation
IBA Indian Banks Association
IBRD International Bank for Reconstruction and Development
ICAAP Internal Capital Adequacy Assessment Process
ICRA Indian Credit Rating Agency
ICRA Investment Information and Credit Rating Agency of India Limited
IDRBT Institute for Development and Research of Banking
IEPF Investors Education and Protection Fund
IFSC Indian Financial System Code
IIB International Investment Bank
IIP Index of Industrial Production
IMPS Immediate Mobile Payment Service
IMT Instant Money Transfer
INFINET Indian Financial Network
IPO Initial Public Offering
IRBI Industrial Reconstruction Bank of India
IRO Interest Rate Options
ISCI International Standard Industrial Classification

KCC Kisan Credit Card

KVP Kisan Vikas Patra
KYC Know Your Customer
LAF Liquidity Adjustment Facility
LAMPS Large Sized Adivasi Multipurpose Societies
LCR Liquidity Coverage Ratio
LIBOR London Interbank Offered Rate
LRS Liberalised Remittance Scheme
LTCG Long Term Capital Gains
MAMP Minimum Average Maturity Period
MCLR Marginal Cost of Lending Rate
MFI Micro Finance Institutions
MIBOR Mumbai Interbank Offered Rate
MICR Magnetic Ink Character Recognition
MSF Marginal Standing Facility
MSS Market Stabilisation Scheme
MUDRA Micro Units Development and Refinance Agency
NABARD National Bank for Agriculture and Rural Development
NACH National Automated Clearing House
NAS National Accounts Statistics
NBFC Non Banking Finance Companies
NDS Negotiated Dealing System
NDTL Net Demand Time Liabilities
NEFT National Electronic Funds Transfer
NFA No Frills Account
NFS National Financial Switch
NPA Non-Performing Assets
NPCI National Payments Corporation of India
NPS National Pension Scheme
NPV Net Present Value
NRE Non Resident External Account
NRO Non Resident Ordinary Account

OLTAS Online Tax Accounting System

OMO Open Market Operations
OTCEI Over the Counter Exchange of India
OTCEI Over the Counter Exchange of India
P- Notes Participatory Notes
P2P Peer to Peer
PACS Primary Agricultural Credit Societies
PCA Prompt Corrective Action
PCR Public Credit registry
PFRDA Pension Fund Regulatory Development Authority
PGS Payment Gateway System
PIN Personal Identification Number
PIO Persons of Indian Origin
PIS Portfolio Investment Scheme
POA Power of Attorney
PPF Public Provident Fund
PPIs Prepaid Payment Instruments
PPP Public Private Partnership
PPP Purchasing Power Parity
PRSF Partial Risk Sharing Facility
PRSF Partial Risk Sharing Facility
RDBMS Relational Database Management System
RDDBFI Recovery of Debt due to Banks and Financial Institutions
RIDF Rural Infrastructure Development Fund
RLA Recoveries of Loans & Advances
ROA Return on Investment
RTGS Real Time Gross Settlement
RWA Risk Weighted Assets
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
SARFAESI Interest Act
SDR Special Drawing Rights
SFMS Structured Financial Messaging Services
SGB Sovereign Gold Bond
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Banking Awareness Topic Wise - Banking Abbreviations

SHG Self Help Group

SIFI Systematically Important Financial Intermediaries
SIP Systematic Investment Plans
SIPS Systematically Important Payment System
SLR Statuatory Liquidity Ratio
SMERA SME Rating Agency of India Limited
SMILE SIDBI Make in India Loan for small Enterprises
SPNS Shared Payment Network System
SPNS Shared Payment Network System
STRIPS Separate Trading of Registered Interest and Principal of Securities
SWIFT Society for Worldwide Interbank Financial Telecommunication
TDS Tax Deducted at Source
TIN Tax Identification Network
UEBA Universal Electronic Bank Account
UIDAI Unique Identification Authority of India
UPI Unified Payments Interface
UPIN Unique Property Identification Number
USSD Unstructured Supplementary Services Date
UTI Unit Trust of India
VCF Venture Capital Fund
VPA Virtual Payment Address
WCTL Working Capital Term Loan
WCTL Working Capital Term Loan
WMA Ways and Means Advances
WPI Wholesale Price Index
YTM Yield To Maturity

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THE COMPLETE – STATIC BANKING AWARENESS

THE COMPLETE STATIC BANKING AWARENESS

S.NO Content Page

Number

1. Introduction 11

1. Bank and its operations

2. Assets and liabilities

3. Net Interest Margin

2. Types of Accounts and Nomination 12

1. Savings Account

2. Current Account

3. CASA Ratio

4. Inactive / Dormant Account

5. Fixed Deposit

6. Recurring Deposit

7. Bulk Deposit

8. Nomination facility

3. Financial Inclusion and Banking ombudsman 15

1. No-Frill Account

2. BSBDA Account

3. PMJDY Account

4. Small Account

5. Banking Ombudsman

6. Types of Risks in banking

4. KYC, ATM services, and its Types 18

1. KYC

2. ATM Services

3. Types of ATM

a) Onsite/Offsite ATM

b) White label ATM

c) Brown label ATM

d) Green Label ATM

e) Orange Label ATM

f) Yellow Label ATM

g) Pink Label ATM

h) Biometric ATM

5. NRI Accounts and Codes used for Payment facilities 21

1. Classification (Tier 1 - Tier 6)

2. NRI

3. Bank Accounts for NRIs

4. NRO(Rupee Account)

5. NRE Account

6. FRNR(B) Account

7. LIBOR/DTAA

8. SNRR Account

9. Other Account

6. Payment Types 23

1. Standing Instruction

2. Debit Card/Credit Card

3. Visa and Mastercard

4. NPCI and Its Operations

5. Payments and Settlements Systems

a) UPI(Unified Payment Interface)

b) BHIM(Bharat Interface for Money)

c) IFSC Code

d) NEFT Code

e) RTGS Code

f) IMPS

g) SWIFT Code

6. Currency Notes and their dimensions

7. PoS Terminals

7. Negotiable Instruments 29

1. Negotiable Instrument Act, 1881

2. Bill Of Exchange

3. Promissory Note

4. Cheque

5. Associated with cheque

6. MICR Code On Cheque

7. Types Crossing

8. Demand draft/cheque

9. CTS – 2010

8. Concept Of Loans and Advances 33

1. Loans and Advances

2. Index for loans

i) BPLR

ii) Base Rate

iii) MCLR

iv) External Bench Mark Rate( Repo Rate)

3. The Exception Category

4. DRI

5. Other exemptions

i) Crop loan

ii) Rupee export credit advances

6. ALMC(Asset Liability Management Committee)

7. Reverse Mortgage Loan

8. Secured Loan

9. Unsecured Loan

10. Term Loan / Revolving Credit

9. Types of Lending 36

1. Overdraft/Cash credit Account

2. Fixed and floating interest rate

3. EMI

4. Moratorium and Amortization

5. Collateral Security

6. Lessor and Lessee

7. Bailor and Bailee

10. Priority Sector Lending 39

1. Priority Sector Lending

2. Agriculture

3. MSME

4. Export Credit

5. Education

6. Housing

7. Social Infrastructure

8. Renewable Energy

9. Others

10. PLSC(Priority Sector Lending Certificates)

11. NPA and its resolution 42

1. NPA

2. Substandard Assets

3. Doubtful Assets

4. Loss Assets

5. The action was taken by the bank against the NPA

6. JLF

7. SDR

8. CDR

9. DRT

10. ARC(SARFAESI ACT)

11. Petition in Court Law

12. Criminal cases against wilful defaulters

12. Monetary policy and RBI regulation 45

1. Money flows in the banking systems

2. Reserve ratio

i) CRR

ii) SLR

3. Policy rate

i) Repo rate

ii) Reverse repo rate

iii) MSF

iv) Bank rate

4. Open Marketing Operations(OMO)

5. Quantitative Credit Controls

6. Qualitative Credit Controls

7. Disinvestments

8. Privatization

9. Fund based Support

10. Non-Fund based Support

i) Performance Guarantee

ii) Letter of credit

13. BASEL Norms 50

14. Types of money 52

1. Dear Money

2. Barren Money

3. Hot Money

4. Hard Currency

5. Fiat Money

15. Types of Banking 53

1.Branch Banking

2.Para Banking

3.Universal Banking

4. Narrow Banking

5. Shadow Banking

6. Unit Banking

7. Retail Banking

8. Wholesale Banking

9. Virtual Banking

10. Chain Banking

11. Offshore Banking

12. Green Banking

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THE COMPLETE – STATIC BANKING AWARENESS

13. Merchant Banking

14. Neo Banking

16. Institutions 55

1. RBI (Reserve Bank of India)

2. BRBNMPL

3. DICGC

4. RRB

5. NABARD

6. Refinance/Direct finance

7. Lead Bank Scheme

8. Service Area Approach

9. Co-operative banks

10. MUDRA

17. Differentiated banks 61

1. NBFC

2. Payment banks and small finance banks

18. History of Banking & Mergers and Banks 65

19. Financial Market 67

1. Money Market

i)Treasury bills

ii)Commercial Paper

iii)Certificate of deposit

iv)Cash Management bills

2. Capital Market

i) Equity

ii) Debentures

20. FDI & FPI 70

21. Terminologies 71

22. Abbreviations 78

23. Schemes Related to Banking 85

Topic - 1: Introduction

1. Bank and its operations

 A bank is a financial institution that accepts deposits from the public and creates Lending.
 RBI is the sole regulator for the banking sector in India.
2. Assets and liabilities
Assets: (yield / income)
 Lending activities are the best way to earn income for banks. Personal loans, corporate
loans, mortgage loans, and housing loans will fetch a higher interest rate for the bank.
Liabilities: (cost fund )

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THE COMPLETE – STATIC BANKING AWARENESS
 Deposits with the banks are liabilities for the banks. Because banks have to give
the interest rate for the respective amount deposited by the customer.
3. Net Interest Margin
 Net interest margin is a gap between Assets and Liability. For example banks charges 9% interest rate
for loans. And it gives 4% interest for the deposits that lie with the banks. Now 9% - 4% = 5% will
be the profit for the banks. The 5% is a net interest margin for the banks.
 Net Interest Margin (NIM) is an important parameter for the survival of any banking system.
 At present, some new generation private sector banks along with SBI can achieve +3% NIM, which is
the benchmark for profitable banking operations.
But most of the public sector banks are struggling with NIMs of 2.2 to 2.7%. Hence these banks
are not able to achieve desired levels of profitability.
 To get high net interest margin banks should reduce the cost of funds.

Topic - 2: Types of Accounts and Nomination

1. Savings Account
 It is especially for individuals and small businesses. It creates savings habits for people in the country.
 Saving Account eligible for Resident Indians above 18 years age (for 10 to 18 years age group
account is allowed with some restrictions and for persons below 10 years, minor account with the
guardian is to be opened)
 Saving Accounts Interest rates vary from 3.5% to 6% (Most banks offer 3.5% at present)
 Regular monthly payments through ECS are allowed for payment of house loans, personal loans,
etc…(Electronic Clearing Service)
 No tax is payable on interest earned on saving bank account up to Rs.40,000 per year i.e. interest
income up to Rs.40,000/- is exempted from income tax
 From 1st April 2020, the interest is calculated daily
 The minimum balance varies from bank to bank. Normally Rs.500/- (without cheque book). Rs.1000/-
(With cheque book)
2. Current Account
 Firms and companies are eligible to open a current account
 Meant for businesses men, to run businesses
 Normally firms/companies/trusts/associations of persons can open a current Account that carries no
interest on deposits.
 Banks will charge service charges to account holders.
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THE COMPLETE – STATIC BANKING AWARENESS
 Savings and Current Accounts are called demand deposits. We can withdraw money at any time
3. CASA Ratio
 CASA ratio is the ratio of the deposits in the form of current and savings accounts to the total
deposits.

 CASA Ratio should be more than 40% for banks.

4. Inactive /Dormant Account

 If a customer has a current or a savings bank account and has not done any transactions through
it for more than 12 months, then it will be classified as an inactive account.
 And if you don’t do any transactions from a bank account for 24 months, then it will be
classified as a dormant account.
 Such deposits unclaimed for more than 10 years are to be transferred to RBI. Now, RBI will use
this amount for the DEAF(Depositor Education Awareness Fund) Scheme to educate the depositors.

5. Fixed Deposit
 The account can be operated for a tenure ranging from 7 days to 10 years
 If the deposits are Rs.2crore or more, they come under the bulk deposits and interest rates may vary
further
 Interest will be paid at the contracted rate for the agreed period
 A loan facility is available for up to 90% of the outstanding principal and accrued interest, generally
Moreover, Tax Deduction at Source (TDS) will be ensured by the bank, if the interest income is more
than Rs.40,000/- in a financial year

 Once the tax is deducted, banks will give form no. 16 A to the depositor to show in their IT returns.
 If the depositor does not come into the bracket of Income Tax purview, he can deposit form no. 15G
or 15H (for senior citizens) to avoid ‘TDS’ by the

bank.
 Interest rates should not be based on the quantum of Money.
 Interest rates should be based on Tenure only.
6. Recurring Deposit
 Most of the features are like fixed deposits
 It is a monthly deposit with the bank for an agreed period
 Interest is credited on the accumulated balance at regular intervals
 These are designed to induce small savers to save regularly
 The maximum period is normally 120 months (10 years)
7. Bulk Deposit
 Deposits of Rs.2crore and above constitute bulk deposits
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THE COMPLETE – STATIC BANKING AWARENESS
 Interest rates vary based on the quantum of deposit
 High-interest rates, so the cost of funds is high
 Normally these deposits are obtained from High Net-worth individuals
8. Nomination facility
 Banking Companies (Nomination) Rules 1985 permit banks to pay dues to the nominee in
the event of death of depositor(s) Without asking for succession certificate, Without verifying claims
of legal heirs
 The nomination facility is normally available for Savings, Fixed, and Recurring deposit accounts
 For Current account deposits, it is available only in a few cases
 It is advisable to record ‘nominee’ for any bank transaction
 Nominee means “A person who is proposed or formally entered as the recipient of a grant or award”

Topic -3: Financial Inclusion and Banking ombudsman

1. No-Frill Account(Nov 2005)

 It is a zero-balance account. No other facilities are available.
 In August 2012, all the ‘No-Frills’ accounts converted to Basic Savings Bank Deposit Accounts
(BSBDAs)
2. BSBDA Account
 The facility of ATM cum debit card at free of cost.
 No limit on the number of times for depositing the amounts.
 Only four withdrawals per month at the branch or ATMs.
 Banks can decide about the price structure, if more than the above facilities are required KYC norms
are to be followed.
 However, if proper KYC norms are not satisfied, then the account should be treated as a “BSBDA –
SMALL ACCOUNT”.
 Customers can have only one BSBDA in one bank
3. PMJDY Account
 No minimum balance.
 Interest on deposit.
 Accident insurance covers Rs.2,00000/- to all the account holders.
 Life Insurance cover of Rs.30,000/- to all the account holders(However, the Govt.
stated that this is applicable for the accounts opened up to 26th Jan 2015)

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THE COMPLETE – STATIC BANKING AWARENESS
 After satisfactory operation of the account for 6 months, the overdraft facility of
Rs.10,000/- to one member of the family (Preferably, the lady of the household)
 Rupay card free of cost
 Age Limit- 18 to 65 years.

4. Small Account
 When the customer is not able to satisfy KYC norms. This account has several
restrictions.
 The aggregate of all deposits shall not exceed Rs.1 lakh per annum
 The aggregate of all withdrawals and transfers in a month shall not exceed Rs.10,000/-
 The maximum balance at any point in time shall not exceed Rs.50,000/-
 However, small accounts are valid for 12 months initially, which may be extended
by another 12 months, if the person provides proof of having applied for an Officially Valid
Document (OVD).

5. Banking Ombudsman
 A senior official appointed by RBI to redress customer complaints against deficiency in
certain banking services.
 Under section 35A of the Banking Regulation Act 1949
 The Banking Ombudsman Scheme was first introduced in 1995.
 The current scheme became operative from 1st January 2006
 At present, 22 banking ombudsmen are being operated mostly in state capitals.
 All scheduled commercial banks (including RRB, and cooperative banks) are covered
 Customers can complain against
 Non-payment or inordinate delay in payment of cheques, drafts, bills, etc…
 Also, RBI has later included the facility for net banking, digital transactions,
mobile banking, Debit card, Credit card, ATM-related, etc…
HOW TO COMPLAIN?
 First, we should approach the bank for any grievances.
 If the grievance is not settled by the bank within 30 days (If not replied / rejection by bank/reply
does not satisfy the customer), then we can approach the Banking Ombudsman within 1 year.
 Complaints can be lodged on plain paper or by sending e-mail requests.
 No charges involved.
 The maximum limit of the award is Rs.20 lakhs. (Rs 1 lakh in case of credit card-related complaints)
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THE COMPLETE – STATIC BANKING AWARENESS
 If a customer is not satisfied, either of the parties can approach the appellate authority within 30
days. The appellate authority is vested with a deputy governor of RBI.
6. Types of Risks in Banking
Financial Risk:
 Financial Risk develops from the business transactions done by the Banks which are exposed to
potential Loss.
Market Risk:
 Market Risk is a type of risk in which losses in on- or off-balance sheet positions arising from
movement in market prices. Market risk is the most prominent for banks present in investment
banking.
Credit Risk:
 Credit Risk is the potential that a bank borrower/counter party fails to meet the obligations on agreed
terms. There is always scope for the borrower to default from his commitments for one or the other
reason resulting in the crystallization of credit risk to the bank. Credit risk is inherent to the business of
lending funds to the operations linked closely to market risk variables
Interest Rate Risk:
 Interest Rate Risk is the type of risk that arises due to fluctuation in interest rate. Changes in interest
rate affect earnings, the value of assets, liability off-balance sheet items, and cash flow. The earnings
side involves analyzing the impact of changes in interest rates on accrual or reported earnings in the
near term.
Liquidity Risk:
 This kind of Risk arises due to the inability of the bank to meet its obligations when any asset may not
be realized into cash. Also, we can say that it is a mismatch of assets and liabilities. Liquidity is the
ability to efficiently accommodate deposits as also reduce liabilities and fund the loan growth and
possible funding of the off-balance sheet claims.
Operational Risk:
 This risk arises due to the failure of day-to-day activities, systems, or people. It includes both internal
and external frauds like failures related to policies, laws, regulations, documentation, or any
technological risks. It is defined as any risk that is not categorized as market or credit risk, which is the
risk of loss arising from inadequate or failed internal processes, people, systems, or external events.
Capital Risk:
 This type of risk arises when the capital comes under risk partially or the whole in some cases
emergencies.

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THE COMPLETE – STATIC BANKING AWARENESS
Foreign Exchange Risk:
 Forex risk is the risk that a bank may suffer loss as a result of adverse exchange rate movement during
a period in which it has an open position, either spot or forward, or both in the same foreign currency.
Systemic Risk:
 Systemic risk refers to the risk of a breakdown of an entire system rather than simply the failure of
individual parts. In a financial context, it denotes the risk of a cascading failure in the financial sector,
caused by linkages within the financial system, resulting in a severe economic downturn
Reputational risk

 Reputational risk implies the public’s loss of confidence in a bank due to a negative perception or
image that could be created with/without any evidence of wrongdoing by the bank.
 Reputational value is often measured in terms of brand value.

The reputational risk could stem from:

The inability of the bank to honor government/regulatory commitments

Nonobservance of the code of conduct under corporate governance
Mismanagement/Manipulation of customer records
• Ineffective customer service/after-sales services

Topic - 4: KYC, ATM services, and their Types

1. KYC(Know Your Customer)

 This is a customer identification process, before the opening of accounts
 This involves ‘identity” and “address”
 To prevent banks from being used (intentionally / unintentionally ) for money laundering
 RBI issued guidelines to banks under section 35A of the Banking Regulation Act
1949 and rule 7 of the money laundering rules 2005 to prevent banks from misuse
It involves (i) “Legal Name Verification”
(ii) “Correct Permanent Address”
 KYC is to be verified periodically, the schedule is given separately for customers
Classified as
i) Low Risk
ii) Medium Risk
iii) High Risk

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THE COMPLETE – STATIC BANKING AWARENESS
PERIODICAL VERIFICATION OF KYC
 Periodical verification of KYC is done by banks as per the following schedule
Low-risk customers →once in 10 years
Medium-risk customers → once in 8 years
High-risk customers → once in 2 years
 If the person is not able to provide KYC Documents (OVD) to the bank, he can still open a
bank account, which is known as a small account.
Officially Valid Documents required for KYC:
• Passport Driving Licence
• Voters' Identity Card
• PAN Card
• Aadhaar Card issued by UIDAI
• NREGA Card
• Letter from the National Population Register containing details of name and address

2. ATM Services
 It is the facility of accessing the account for dispensing cash and carrying out financial and non-
financial transactions without the need to visit their bank branches.
RBI GUIDELINES ON SERVICE AT ATMs:

 Banks should resolve within 7 working days of the complaint

 If not, banks should pay Rs.100/- per day for delays beyond 7 days
(But the customer should complain within 30 days of the transaction)

 If a customer is not satisfied, one can approach the banking ombudsman.

3. Types of ATM

4. Onsite/Offsite ATM
 Onsite ATMs are atm within the bank premises.
5. White label ATM
 RBI permitted NBFCs/FIs to establish ATMs with their brand name
 These are known as White Label ATMs
 Tata Communications Payment Solutions (TCPS), a wholly-owned subsidiary of Tata
Communications launched the first white label ATM (WLA).
Ex : Indicash,India One

6. Brown label ATM

 Brown label' ATMs are those Automated Teller Machines where hardware and the lease of
the ATM are owned by a service provider, but cash management and connectivity to banking
networks are provided by a sponsor bank whose brand is used on the ATM.
7. Green Label ATM
 ATM is provided for Agricultural Transaction
8. Orange Label ATM
 It is Provided for Share Transactions
9. Yellow Label ATM
 These are Provided for E-commerce
10. Pink Label ATM
 Such ATMs are monitored by guards who ensure that only women access these ATMs. The sole
purpose of such ATMs is to mitigate the problem of women standing in long queues of ATM
11. Biometric ATM

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THE COMPLETE – STATIC BANKING AWARENESS
 ATMs use security features like fingerprint scanners and eye scanners for the customer to access their
bank details.

Topic - 5: NRI Accounts and Payment facilities

1. Classification (Tier 1 - Tier 6)

CLASSIFICATION POPULATION
OF CENTRES

Tier 1 1,00,000 and above

Tier 2 50,000 to 99,999

Tier 3 20,000 to 49,999

Tier 4 10,000 to 19,999

Tier 5 5,000 to 9,999

Tier 6 Less than 5000

2. NRI(Non Resident Indian)

 An Indian citizen, who resides outside India and holds an Indian Passport
3. Bank Accounts for NRIs
 NRO account(Non-Resident Ordinary rupee/account)
 NRE account(Non-Resident External rupee account)
 FCNR(B) account(Foreign Currency Non-Resident (Bank) account)
4. NRO Account(Non-Resident Ordinary Rupee Account)
 Account will be in Indian rupees and with banks authorized by RBI.
 Can be opened jointly with resident Indian

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THE COMPLETE – STATIC BANKING AWARENESS
 If a citizen becomes an NRI, his existing account becomes an NRO account
 Can be in the form of SA / CA / RD / FD
 Income tax will be deducted as per the rules
 There is a limit on the repatriation of funds. (Maximum of $ 1 million per year)
5. NRE Account(Non-Resident External Rupee Account)
 Account will be in Indian rupees and with banks authorized by RBI.
 Can be opened as a joint account with another NRI.
 The amount to be deposited in this account is earned on foreign land only.
 Can be in the form of SA / CA / RD / FD
 The minimum tenure of term deposits will be 1 year.
 No income tax will be deducted in India.
 Fully repatriable to foreign countries.
6. FRNR(B) Account(Foreign Currency Non-Resident (Bank account)
 Only fixed deposit accounts can be opened with banks authorized by RBI.
 Minimum term 1 year and maximum term 5 years.
 Can be maintained in approved foreign currencies.
 No income tax will be deducted in India.
 Fully repatriable to foreign countries.
7. LIBOR/DTAA

LIBOR DTAA

It is London Interbank Offered Rate It is a Double Taxation Avoidance

Agreement

It is an agreement between two countries to

It is the primary benchmark, for short-term avoid taxation of the same income in both
interest rates around the world countries.

Many financial institutions set their interest For availing of the DTAA benefit, the NRI
rates relative to it. has to submit a “Tax Residency Certificate”
(TRC) to the bank annually.

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THE COMPLETE – STATIC BANKING AWARENESS
8. SNRR Account (External Commercial Borrowing)
 Any person residing outside India. Having a business can open (an SNRR account) with an authorized
dealer to put through bonafide transactions in the rupee which are conformity.
9. Other Accounts:

Nostro Account:

• These accounts are held by Indian Banks in foreign Banks in foreign currency.
• For example- Indian Bank has an account in Bank of America in dollars.
Vostro Account:

• These accounts are held by foreign banks in India in Indian Rupees.

• Example: Bank of America has an account in Indian Bank in Indian Rupees.
DEMAT Account:

• DEMAT stands for Dematerialised Accounts.

• These accounts are used to transact shares in electronic format.
Dormant Account:

• A Dormant Account is a banking term that refers to an account of a customer who was without any activity
for two years other than posting interest.
Escrow Account:

• It is the temporary pass of an account held by third parties during the transaction between two parties.
GILT Account:

• These accounts are maintained by investors with the Primary dealers for holding their Government securities
and Treasury bills in the Demat form.

Topic - 6: Payment Types

1. Standing Instruction
 It is an instruction/order a bank account holder gives to his/her bank to pay a set of the amount at
regular bank intervals to another account.
 Ex: Salary payments, payments of bills, electricity bills, repayment of the loan, inter-account transfer
of funds

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THE COMPLETE – STATIC BANKING AWARENESS
2. Debit Card/Credit Card
 Both are plastic cards, that work on some financial platforms like Visa, MasterCard, RuPay
 They are the instruments to facilitate financial transactions, without the need for carrying cash.
 Liquidity is assured on a 24x7 basis.
Credit Card Debit Card
Eligibility Criteria Need to be fulfilled No Criteria
Maximum Limit Determined on Credit score, Less than savings or current
Credit history, etc. account balance to which the
card is linked
Interest Charged or levied on the amount Paid to you on the account
utilized balance
Debt Instrument Yes No
Utilization Summary Monthly Credit statement Monthly Bank Statement

3. Visa and Mastercard

 VISA (Visa International Service Association) and MasterCard are Payment processing institutions
and several financial institutions use these platforms to facilitate services through Debit cards and
Credit cards and for other electronic transactions across the world.
 Both VISA and MASTERCARD are accepted at several merchant outlets.
 NPCI DEVELOPED RUPAY PLATFORM (Developed by India)
4. NPCI and Its Operations
 It is the National Payments Corporation of India.
 It is incorporated in December 2008 (Under section 25 of the Companies Act)
 Authorized capital→Rs.300crores
 Paid-up capital→Rs.100crores
Products of NPCI:
1. National Financial Switch(NFS)
2. Automated Clearing House
3. Immediate Payment Service
4. Cheque Truncation System
5. Aadhar Payment Bridge System
6. Rupay Card
5. Payments and Settlements System

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THE COMPLETE – STATIC BANKING AWARENESS
UPI(Unified Payment Interface)
 Unified Payments Interface (UPI) is an instant payment system developed by the National
Payments Corporation of India (NPCI), an RBI-regulated entity.
 UPI is built over the IMPS infrastructure and allows you to instantly transfer money between any two
parties' bank accounts.
 A Virtual Payment Address (VPA) is a unique identifier that you can use to send and receive money
on UPI.
 Although the transaction limit per UPI transaction is ₹1 lakh, the upper limit depends on bank-to-bank.
 The transaction limit per day for UPI transactions is ₹1 Lakh.
 The maximum number of UPI transactions is limited to 20.
 [#UPI Chalega] is a campaign by NPCI to promote the UPI payment system.
 NPCI, National Payment Corporation of India is trying to drive up the digital payment system through
this campaign. (Google pay and Phone pe are promoting UPI effectively)

BHIM(Bharat Interface money)

 Bharat Interface for Money (BHIM) is a payments app that facilitates simple and quick transactions
using the Unified Payments Interface. It allows you to make direct bank payments to any bank account
on UPI with the help of a UPI ID and PIN. In another case, you can scan a QR code with the BHIM
app to transfer money.

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THE COMPLETE – STATIC BANKING AWARENESS
 The BHIM app was developed by the National Payments Corporation of India (NPCI). It was
launched by the Prime Minister of India, Narendra Modi on 30 December 2016 to realize a digitally
empowered society.
 BHIM is a UPI-based payment interface that allows real-time fund transfer using a single identity like
your mobile number or name.
 Currently, it is available in 20 languages, i.e., Hindi, English, Tamil, Telugu, Malayalam, Bengali,
Odia, Kannada, Punjabi, Assamese, Urdu, Marathi, Gujarati, Haryanvi, Bhojpuri, Konkani, Manipuri,
Khasi and Mizo.
 Dial *99# to avail features of BHIM without internet on any mobile phone.
 A user can send up to Rs.40,000 per transaction and a maximum of Rs.40,000 per day for one
bank account.
 This limit is available per bank account linked on BHIM.
 There is no limit to the amount of money you can receive via BHIM.

IFSC Code

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THE COMPLETE – STATIC BANKING AWARENESS
 It is the Indian Financial System Code.
 It is an alpha-numeric code that identifies any branch under the NEFT system
 IFSC code is a must for NEFT and RTGS transactions
 It is 11 digit code

4 Alpha Characters 0 Last 6digits


 The First 4 characters represent the bank name
 Fifth digit buffer
 The last six digits represent the bank branch
NEFT Code
 It is a nationwide payment system facilitating one-to-one funds transfer.
 No limit for minimum or maximum amount of transfer. ( However, for amounts of Rs.2 Lakh and
above, RTGS is used.)
 It works on the system of STP - Straight Through Processing
 To promote digital transactions, the Reserve Bank of India (RBI) has allowed the round-the-clock
(24×7) transactions facility under the National Electronic Funds Transfer (NEFT) system to customers
on all days including weekends and holidays from December 16, 2019
 NEFT Operates on 48 half and hourly basis.
 No Charge for NEFT Transaction as per RBI's latest guidelines
RTGS Code
 Real-time gross settlement (RTGS) refers to a funds transfer system that allows for the instantaneous
transfer of money and/or securities.
 RGTS is the continuous process of settling payments on an individual order basis without netting
debits with credits across the books of a central bank
 Real-Time Gross Settlement System (RTGS), used for large value transactions, is now available
round-the-clock (24x7) from December 2020.
 Earlier, RTGS was available for customers from 7.00 am to 6.00 pm on all working days of the week,
except the second and fourth Saturdays of every month.
 Minimum Limit- 2 lakh, Maximum Limit- No
IMPS Mode

 IMPS stands for Immediate Payment Service in Indian banking system terminologies.
 The major feature of IMPS is that it is available at all times for usage.

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THE COMPLETE – STATIC BANKING AWARENESS
 It transfers funds instantly and is a great banking platform in case of emergencies.
 The transaction charges of this platform are also very nominal and the transfer limit is also
considerable, approximately Rupees 5 lakhs per day.
 Moreover, IMPS is available on mobile too which makes it super-convenient

SWIFT Code

 SWIFT stands for Society for Worldwide Interbank Financial Telecommunication

 SWIFT Code is a standard format of Bank Identifier code.
 This code is used particularly for interbank transfer of money between banks & the majority of
FOREX-related messages are sent to correspondent banks abroad with the help of the SWIFT code.
 SWIFT Code consists of 8 or 11 characters when the code is 8 digits, it refers to the primary office.
4 digits – Bank code
2 digits – Country code
2 digits – Location code
3 digits – Branch code (optional)
 On November 14, 2019, India, China and Russia have partnered together to explore an alternative to
the SWIFT (Society for Worldwide Interbank Financial Telecommunication) payment mechanism
in-order to smoothen the trade with countries that face American sanctions
 As India doesn’t have its own domestic financial payments system, it is the plan to link the Central
Bank of Russia’s platform with a service that is under development.
6. Currency Notes and their dimensions:

Currency Notes Dimensions Base Colour Motif(image)

1 Rupee Note 97mm X 63 mm Pink Green Sagar Samrat

10 Rupee Note 63 mmX123 mm Chocolate Brown Sun Temple(odisha)

20 Rupee Note 63 mmX147 mm Greenish Yellow Ellora Caves

(maharashtra)

50 Rupee Note 66 mmX135 mm Fluorescent Blue Hampi with Chariot

(Karnataka)

100 Rupee Note 66 mmX142 mm Lavender Rani Ki vav

(Gujarat)

200 Rupee Note 66 mmX146 mm Bright Yellow Sanchi Stupa

(Madhya Pradesh)

500 Rupee Note 66 mmX150 mm Stone Grey Red Fort(Delhi)

2000 Rupee Note 66 mmX166 mm Magenta Mangalyaan

7. POS Terminal(POINT OF SALE TERMINALS)

 It is a terminal at a store, where customers make purchases using a debit card/credit card / prepaid
card.
 The card needs to be swiped and the data embedded in the card is electronically validated and gets
authorized if it is in order.
 It is the payment gateway of the merchant acquirer.
 The merchant establishment is required to hold an operative account with the acquirer bank to
avail of this service.
 POS terminals are a good source of “Non-Interest Income” for banks

Topic - 7: Negotiable Instruments

1. Negotiable Instrument Act, 1881

 These are written documents.
 Transferable from one person to another merely by delivery in case of “bearer instrument” and
transferable by endorsement in case of “order instrument”.

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THE COMPLETE – STATIC BANKING AWARENESS
 The owner is the “bonafide holder for value”.
2. Bill of Exchange
 It must be in writing and duly signed by its drawer.
 It should contain an order to pay.
 The parties to the transaction must be certain.
 A bill of exchange is used in transactions about goods as well as services. It is signed by a party who
owes money (called the payer) and given to a party entitled to receive money (called the payee or
seller), and thus, this could be used for fulfilling the contract for payment.
3. Promissory Note
 A promissory note is an unconditional commitment made in writing and signed by a debtor to make
payment to a specified person or the order within a specified period.
 It is always in writing. No verbal promise is accepted.
 It is drawn for a specified duration for a specified sum of money.

4. Cheque
 A cheque is a negotiable instrument. It contains an unconditional order to pay a certain sum of
money.
 It contains instructions in writing given by the account holder to his bank for payment of money from
his account. There is a statutory obligation on the part of a banker to make the payment if,
 It is drawn by the drawer.
 It is drawn upon a specified banker.
 It is payable on demand to a specific person or his order or the bearer of the instrument. The cheque
should be properly dated.
 It should be signed by the maker/drawer
 There are three parties in the cheque transaction
Drawer
Drawee
Payee
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THE COMPLETE – STATIC BANKING AWARENESS
 If it is a self-cheque, the payee will be the drawer only.
CHEQUE ISSUED TO ANOTHER PERSON

5. Associated with cheque

Order cheque ------>A cheque payable to a particular person or his order.
Bearer cheque ------->A cheque payable to a person who ever bears.
Blank cheque ------->Except signature, all other columns are blank.
Stale cheque ------->Which is more than three months old.
Mutilated cheque ---->The cheque is torn into two or more pieces.
Post-dated cheque----->A cheque that bears a date later than the date of issue.
Open cheque ---->Cheque which has not been crossed.
Crossed cheque ----->Cheque which carries two parallel transverse lines across the face of the
cheque.
6. MICR Code On Cheque
 It is Magnetic Ink Character Recognition (MICR).
 It is a 9-digit code.
 First three digits … city/district
 Next three digits … name of the bank
 Last three digits … location of branch/branch name

0 5 9 7 3 1 0 5 2

MUMBAI ICICI Rohit Nagar Branch

7. Crossing of Cheque

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THE COMPLETE – STATIC BANKING AWARENESS
 This is to prevent the possibility of the cheque falling into the hands of wrong or unauthorized parties.
Hence crossing is required.
 If a cheque is crossed directly to the bank not to pay across the counter in cash but should be paid to
the account holder only
Types of Crossing of Cheque:

 General Crossing – cheque bears across its face an addition of two parallel transverse lines.

 Special Crossing – cheque bears across its face an addition of the banker’s name.

 Restrictive Crossing – It directs the collecting banker that he needs to credit the amount of the
cheque only to the account of the payee.

 Non-Negotiable Crossing – It is when the words ‘Not Negotiable’ are written between the two parallel
transverse lines.

Endorsement of Cheque:

Endorsement means a signature of the holder (An individual who has lawfully received possession) made with the
object of transferring the document. The signature & message on the back of a cheque to either cash it, deposit it or
hand over the rights of the cheque to someone else.

8. Demand draft/ cheque

 It is a Bill of Exchange drawn by a bank on another bank or by itself to its other branch to pay to the
third party.
 It is not mentioned in the Negotiable Instruments Act.
 Due to its nature, it is classified under the Bill of Exchange.
 Demand drafts along with cheques are commonly used by the customers of banks.

CHEQUE
DEMAND DRAFT

The drawer is an individual account The drawer is normally a scheduled bank

holder

No certainty of payment Payment is certain

The drawer can stop it by issuing an No one can stop it

order

Defined in NI Act, 1881 Not defined in NI Act, 1881

9. CTS - 2010
 It is Cheque Truncation System – 2010
 Truncation is the process of stopping the flow of the physical cheque.
 The physical instrument will be truncated at some point en route to the drawee branch and it will be
verified digitally.
 Hence the need to move the cheque physically will be eliminated.

Topic - 8: Concept of Loans and Advances

1. Loans and Advances

 Loans and advances are given by banks for various purposes such as
i) Home loans
ii) Personal loans
iii) Car loans
iv) Loans against securities
v) Agriculture loan
vi) Corporate loans
vii) Mortgage loans
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THE COMPLETE – STATIC BANKING AWARENESS
2. Index for loans
i) BPLR(2003)
 It is a BenchmarkPrimeLendingRate.It is not transparent. It resulted in one borrower getting a loan at
lower interest than the other.
 RBI constituted a working group under the Chairmanship of Shri Deepak Mohanty to review the
rate.
 The committee suggested changes to make credit pricing more transparent and submitted a
report in October 2009.
Hence, the Base rate came into effect.
ii) Base Rate(2009)
 “It is the interest rate below which scheduled commercial banks will lend no loans to its customers”
 Now all categories of loans are priced regarding base rate only, except for some exemptions.
The main components of calculating this base rate were :
1. Cost of funds
2. Operating expenses to run the banks
3. Profit
4. Negative carry on CRR and SLR
 So as you see, REPO RATE is not considered when calculating the base rate. So any cut or decrease
in repo rate by RBI was not being forwarded by the banks to their customers
iii) MCLR(2016)
 MCLR stands for Marginal Cost of Funds based Lending Rate which was introduced on 1st April
2016. It is aimed to help borrowers avail several kinds of advances including home loans.
 MCLR replaced the base rate to benefit borrowers by cutting down the actual lending rates.
 The marginal cost of the Lending Rate consists of the following components.
1. The marginal cost of funds
2. Negative carry on account of CRR
3. Operating costs
4. Tenor premium
iv) External BenchMark Rate( Repo Rate)(2019)

 The Reserve Bank had constituted an Internal Study Group (ISG) to examine various aspects of
the marginal cost of the funds-based lending rate (MCLR) system.
 The ISG observed that internal benchmarks such as the Base rate/MCLR have not delivered
effective transmission of monetary policy.
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THE COMPLETE – STATIC BANKING AWARENESS
 Rbi has announced that all new floating rate personal or retail loans and floating rate loans to
Micro and Small Enterprises extended by banks from October 1, 2019, shall be linked to external
benchmarks.
 Once in 3 months banks have to change their external benchmark rate effectively.
3. The Exception Category

1. Loans granted under the DRI (Differential Rate of Interest) scheme.

2. Loans to own employees of the bank, including retired employees.

3. Loans to depositors of the bank against their deposits.

4. DRI
 Differential Rate of Interest (DRI) is a lending program launched by GOI in 1972.
 All the Scheduled Commercial Banks (except RRBs) have to lend 1% of the total advances of the
previous year to the “poorest among the poor”
 The interest rate will be 4% per annum.
 It is the need-based financial assistance to those who intend to take up any productive activity.
Groups covered are SCs/STs, Adivasis engaged in agricultural operations, physically
handicapped, orphanages, women's homes, etc.
5. Other exemptions
i) Crop loan
 In case of crop loans up to Rs 3 lakh.
 Interest rates are as specified by the Govt. of India
 Interest subvention is given by Govt. of India to banks.
ii) Rupee export credit advances
 In the case of rupee export credit advances.
 Interest rates can be below the base rate to the extent of interest subvention available.
6. ALMC(Asset Liability Management Committee)
 When the period base rate was effective, the Base rate was to be reviewed at least once a quarter
with the approval of the Board or Asset Liability Management Committee (ALMC) as per the bank’s
practice.
 Banks should convey the change in base rates to the general public through appropriate channels.
 Banks can choose fixed or floating rates.
 Banks are free to determine service charges for any type of transaction.

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THE COMPLETE – STATIC BANKING AWARENESS
7. Reverse Mortgage Loan
 It is primarily intended for senior citizens (60+ age).
 Married couples are also eligible. One should be (60+age) and the other should not be below 55 years
of age.
 House owned by the senior citizen will be mortgaged to the bank/lender and the lender will pay money
to the senior citizen monthly or on agreed terms.
 The maximum period is 20 years normally.
 After the borrower‘s death, the loan will be repaid through the sale of property and any surplus
will be paid to the heirs.
8. Secured loan
 A secured loan is a loan where the borrower pledges an asset as collateral for the loan
 Some property as collateral
 The lender will have a lien over that property
 Interest rates will be less
Ex: Vehicle loan, Home loan
9. Unsecured loan
 An unsecured loan is one in which the borrower does not have to pledge any collateral/ security/
guarantor to secure it.
 No collateral
 Risky from the lender's point of view
 Given based on the credit worthiness of the borrower
 Also called a signature loan
 The interest rate will be high
Ex: Personal Loan
10. Term Loan/ Revolving Credit
 Revolving credit is a line of credit where the customer pays a commitment fee and is then allowed to
use the funds when they are needed. It is usually used for operating purposes, fluctuating each month
depending on the customer's current cash flow needs.
 Resolving lines of credit can be taken out by both corporations and individual

Topic - 9: Types of Lending

1. Overdraft/Cash credit Account

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THE COMPLETE – STATIC BANKING AWARENESS
 A borrower can withdraw funds as and when needed, up to the credit limit given by the banker.
 The borrower can repay the amount as per the terms and conditions, and the interest will be charged
over the amount borrowed only.
 (If the credit limit is Rs.30 lakhs, and the borrower withdraws only Rs. 15 lakhs, he is required to pay
interest only for Rs.15 lakhs up to the date of repayment)

 It gives flexibility to the borrower.

 Differences between these two accounts:
 The distinction between an Overdraft and a Cash Credit is like security.
 When the advance is secured by the pledge/hypothecation of goods or products, it is treated as a
Cash Credit Account.
2. Fixed and floating interest rate

FIXED INTEREST FLOATING INTEREST

Interest is fixed for the whole tenure of the It is normally fixed as an effective
loan period (15 to 20 years) Rate + Certain %

Normally, interest will be slightly higher than As the effective changes quite frequently, the
the floating interest as it is difficult to floating interest rate changes
analyze the economic situation for the entire
loan period.

The fixed interest rate will be slightly higher Normally, banks vary the repayment period by
than the floating interest keeping the EMI constant.

3. EMI
 It is an Equated Monthly Installment.

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THE COMPLETE – STATIC BANKING AWARENESS
 It is the fixed amount paid by the borrower to the lender on the specified date every month.
 EMI is normally constant.
 It includes both interest and principal.
 The schedule indicating the components of principal and interest is known as the Amortization
Schedule.
 Amortization means spreading payments over multiple periods.
4. Moratorium and Amortization
 The moratorium period means the period one will not be required to pay back the loan. Normally
known as the grace period given by the banks.
 For example, there is the situation of a flood, a genuine reason for the loss of business.

 This gives an illustration of Amortization/Moratorium.

5. Collateral Security
 Fixed property or other assets the borrower offers to the lender to secure a loan.
 Since the lender can recoup losses in case the borrower fails to repay, the interest rates will be
less in comparison to unsecured loans.
 Hence, the interest rates on personal loans, and interest rates on the balances of credit card
transactions beyond the grace period are more because of no collateral security.
 If there is no collateral security, the loan is known as an unsecured loan or signature loan

6. Lessor and Lessee

 The lessor / Landlord is the rightful owner of the property.
 By making onetime/periodic payments, the Lessee got the right to use it.
 The lease agreement is for a specified period only.

7. Bailor and Bailee

 Bailment is the contractual transfer of possession of an asset or property for a specific objective
 Ownership lies with the Bailor
 Bailee cannot use the property
 Bailee is responsible for safe keeping and eventual return

Topic - 10: Priority Sector Lending

1. Priority Sector Lending

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THE COMPLETE – STATIC BANKING AWARENESS
 The priority sector refers to the sectors of the economy which may not get timely and adequate
credit in the absence of this special dispensation.
 Priority sector lending comprises small value loans to agriculture and allied sectors, micro, small
and medium enterprises, social infrastructure, renewable energy, housing for poor people, students,
and weaker sections
 All the public sector banks and private banks will have to maintain 40% of their lending to the
priority sector lending.
 Based on Dr. K.S. Krishnaswamy committee recommendations, banks were advised to achieve
the target of 40% for priority sector lending by 1985.
 The provisions of directions of RBI on priority sector advances shall apply to every Scheduled
Commercial Bank {excluding Regional Rural Banks (RRBs) and Small Finance Banks (SFBs)}
licensed to operate in India by the Reserve Bank of India.
 These targets are the percentage of ANBC or credit equivalent amount of Off-Balance Sheet
Exposure, whichever is higher(ANBC- Adjusted Net Bank Credit)
 In the revised PSL Guidelines, the Reserve Bank of India has included some fresh categories
eligible for finance under the priority sector. These include loans to farmers for the installation of
solar power plants; loans for the establishment of Compressed Bio Gas (CBG) plants; and bank
finance to start-ups of up to Rs 50 crore.

 Total Priority Sector:

 1) Domestic scheduled commercial and foreign banks with 20 branches and above: 40 percent of
Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure
(CEOBE), whichever is higher.
 2) Foreign banks with less than 20 branches: 40 percent of ANBC or CEOBE whichever is higher;
out of which up to 32% can be in the form of lending to Exports and not less than 8% can be to any
other priority sector

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THE COMPLETE – STATIC BANKING AWARENESS
2. Agriculture (18% of ANBC)
 Within the 40%, priority sector lending 18%allocated to the agriculture.
 Where an 8% sub-target is kept for small and marginal farmers.
 Marginal Farmer - have land up to 2.5 acres
 Small Farmer - have land up to 2.5 to 5 acres

3. MSME (7.5% of ANBC)

 Within the 40% priority sector lending 7.5%allocated Micro Small Medium Enterprises.
Classification of MSMEs

Type of Activity Investment Turn Over

Micro Upto 1 crore Below 5 crore

Small Upto 10 crore Below 50 crore
Medium Upto 50 crore Below 250 crore
.

4. Export Credit(2% of ANBC)

 The existing guidelines for domestic scheduled commercial banks to classify 'Incremental export
credit over the corresponding date of the preceding year, up to 2% of ANBC or Credit Equivalent
Amount of Off-Balance Sheet Exposure, whichever is higher'
 RBI Enhances Limit For Classification Of Export Credit Under Priority Sector Lending To
Rs.40Crore From Rs.25Crore(Sep 2019)

5. Education
 Under Priority Sector Lending (PSL), the loans and advances are granted to only individuals for
educational purposes up to Rs.10 lakh for studies in India and Rs. 20 lakh for studies abroad.
6. Housing
 Reserve Bank of India has notified them to enhance housing loan limits to individuals up to Rs 35 lakh
in metropolitan centers (which would have a population of over 10 lakhs) and Rs 25 lakh in other
centers, under Priority sector Lending (PSL).
 The total cost of the dwelling unit in the metropolitan center should not exceed Rs.45 lakh and at
other centers should not go beyond Rs.30 lakh for them to be eligible for classification under PSL.
7. Social Infrastructure

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THE COMPLETE – STATIC BANKING AWARENESS
 Bank loans up to a limit of Rs. 5 crores per borrower for building social infrastructure like schools,
health care centers, and drinking water facilities in Tier II to Tier VI centers.
8. Renewable Energy
 Bank loans up to a limit of Rs.15crore per borrower for building renewable energy projects like
solar-based power generation, wind mills, etc.
9. Others
Weaker section (10% of ANBC)
 There is no change in the target of 10 percent of ANBC or Credit Equivalent Amount
Off-Balance Sheet Exposure, whichever is higher, for Weaker Sections.
 Small and Marginal Farmers.
 Artisans, village and cottage industries, where individual credit limits do not exceed Rs.1 lakh.
 Beneficiaries of Differential Rate of Interest (DRI) scheme.
 Individual women beneficiaries up to Rs. 1 lakh per borrower.
 Persons with disabilities.
 Minority communities may be notified by the Government of India from time to time.
Self-Help Groups (SHGs)
10. PLSC(Priority Sector Lending Certificates)
 These certificates are recommended to help those banks which do not achieve PSL targets.
 Priority Sector Lending Certificates (PSLCs) scheme was first suggested in the report of former
governor of RBI Dr. Raghu Ram Rajan-led Committee on Financial Sector Reform
 RBI issued guidelines on the purchase and sale of Priority Sector Lending Certificates.
 The central bank also launched a platform for trading the certificates through its Core Banking
Solution (CBS) portal named e- Kuber.
 All Scheduled Commercial Banks (including Regional Rural Banks), Urban Co-operative
Banks, Small Finance Banks, and Local Area Banks are eligible to participate in the trading.
Types of PSLCs:
There are four kinds of PSLCs:–
1. PSLC Agriculture
2. PSLC S&MF(small and marginal farmers)
3. PSLC Micro Enterprises
4. PSLC General

Topic - 11: NPA and its resolution

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THE COMPLETE – STATIC BANKING AWARENESS
1. NPA
 “An asset(mostly loan) becomes non-performing when it ceases to generate income for the bank”
 Interest and/or installment of principal remain overdue for more than 90 days in respect of a term loan.
 If the cash credit account or overdraft account becomes out of order.
 The committee on Financial System (CFS) headed by Shri M. Narasimham was constituted in the year
1991 and the committee gave recommendations in line with international practices.
 RBI introduced norms for IRAC - Income Recognition Asset Classification
 The policy of income recognition should be objective.
 Banks are urged to ensure realistic repayment schedules based on cash flows with borrowers.
 Despite these precautions taken by banks, NPAs are on the rise either due to reasons beyond their
control or willful defaulting.
 Interest and/or installment of principal remain overdue for more than 90 days in respect of a term loan.
 If the cash credit account or overdraft account becomes out of order.
NPA Measured under three categories

 Substandard Asset
 Doubtful Asset
 Loss Asset
2. Substandard Asset
 Which remained NPA for a period less than or equal to 12 months.
 Indicates a distinct possibility that banks may sustain a loss.
3. Doubtful Assets
 Which remained in the substandard category for 12 months.
4. Loss Assets
 Where loss has been identified by the bank or internal or external auditors or during RBI inspection
but the amount has not been written off.
5. Actions Taken banks against NPA
i)If it is a genuine reason for non-repayment

 Banks offer Restructuring of loans

 Longer repayment period
 Provide Moratorium period
 Additional loan
 Reduction in interest rate.

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THE COMPLETE – STATIC BANKING AWARENESS
 Appoint a member from the bank to help borrowers' business
ii)If it is not a genuine reason for non-repayment

 Referring the matter to Debt Recovery Tribunals (DRTs)

 Referring the matter to Asset Reconstruction Companies (ARCs) as per SARFAESI Act, 2002
 Filing winding-up petitions in a court of law
 By filing criminal cases against the wilful defaulters
If a loan becomes NPA, Banks Classify them as special Mention Accounts
SMA-0 (up to 30 days)
SMA-1 (31 to 60 days)
SMA-2 (61 to 90 days). to take corrective action.
6. JLF(JOINT LENDERS’ FORUM)
 It is mandatory to constitute Joint Lenders’ Forum (JLF) at the SMA-2 stage if the loan exposure
is Rs.100crores or more. It is a formed group of lender banks.
7. SDR(STRATEGIC DEBT RESTRUCTURING)
 Converting debt into equity i.e., banks will assume the role of management (ownership) to look to
turn around the company.
8. CDR(Corporate Debt Restructuring )
 It is part of the restructuring of loans by banks.
 Implemented by RBI in August 2001.
 Aimed at corporates affected by certain genuine internal and external factors.
 It covers only multiple banking accounts, and consortium accounts / syndicated loan accounts,
 where the outstanding exposure is Rs. 10 crores or more.
CDR mechanism banks can allow
i)Extension of the repayment period.
ii)Reduction in interest rate.
iii)Moratorium for some period.
iv)Additional loan.
 CDR is approved if at least 75% of the banks by the value of the loan and 60% by number agree to
the proposal.
 Restructured loans will go out of the books of NPAs
 The biggest worry is that more and more cases are coming up for restructuring, sometimes without
genuine reasons.
9. DRT(DEBT RECOVERY TRIBUNALS)
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THE COMPLETE – STATIC BANKING AWARENESS
 These are established in various cities under the “Recovery of Debts Due to Banks and Financial
Institutions (RDDBFI) Act, 1993”.
 Banks or FIs can apply with DRT to recover dues from persons/companies.
 As per the Act, the issue is to be settled in 6 months.
 So far, the success rate is around 20% to 30%.
10. ARC(SARFAESI ACT)
 These are formed as per the “Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest (SARFAESI) Act, 2002”.
 It empowers Banks & FIs to recover NPAs without the intervention of the court.
 This was brought to circumvent the inefficiency of DRTs.
 Banks have got the power to sell the “declared bad loans.”
 This is applicable for loans with outstanding of Rs. 1 Lakh and above.
 RBI has the power to issue licenses to ARCs and Asset Reconstruction Company (India) Ltd (ARCIL)
is the first ARC established in India.
11. Petition in court Law
 Criminal cases can be filed against the borrower if the bank feels that the non-repayment of debt is due
to “willful default.”
 But, it is rarely resorted to by the banks.
12. Criminal cases against wilful defaulters
 Winding-up petitions can be filed, if the borrower fails to pay back the loan, under the Companies
Act.
 “Official liquidator” will be appointed by the competent authority, if there is a genuine reason.
 It is a long-drawn procedure in courts and has not given satisfactory results to Banks.

Topic - 12: Monetary policy and RBI regulation

1. Money flows in the banking systems

 The Reserve Bank of India Act, 1934 has been amended by the Finance Act, 2016, to provide for a
statutory and institutionalized framework for a Monetary Policy Committee, for maintaining price
stability, while keeping in mind the objective of growth.
 When money is released by the RBI (Reserve Bank of India) into the economy, it goes into
circulation through transactions. The government may pay the people it employs, buys goods and
services, gives subsidies, and so on.
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THE COMPLETE – STATIC BANKING AWARENESS
 Part of this money is kept by the recipients and the rest goes back into bank accounts. A government
servant who receives a salary keeps a fraction of it at home and puts the rest in his bank account to
earn some interest.
 The businessmen who sell their goods or services to the government and get money in their bank
accounts use only a part of that to carry on their business, while the rest stays in the bank.
 One can see that most of the money released into the economy keeps going in and out of the
commercial banking system where businesses and households maintain their accounts. The banks
have to pay the depositors some interest to keep their money with them.
 They too now need to earn some income to pay this interest. They do so by lending the money they
get to those who need it for various purposes.
 I may be setting up a plant to produce some items and may need long-term capital. I may need to set
up an office to provide services. I may need capital to pay wages to my workers and also to buy raw
materials.
 A part of the profit earned by my business is paid to the banks as interest for the loan I have taken.
What this means is that a bank does not have the money that its depositors deposited with it. If all
the depositors come to a bank and want to withdraw their deposits, the bank would not be able to
pay them. This is called a “run” on a bank, and such a bank fails. This is where the RBI plays the
role of a banker to the banks, giving money to the banks.
2. Reserve ratio
i) CRR
 All Banks have to maintain a minimum CRR of Net Demand and Time Liabilities(Total deposits)
with RBI, as cash.
 It can be retained in the RBI currency chest.
 Earlier ceiling limits of 3 to 20% have been removed and RBI has no ceiling in prescribing this
limit
 This is as per section 42(1) of the RBI Act, 1934.
{Amended through RBI (Amendment) Act, 2006}
➢ Scheduled Banks are required to maintain a certain percentage of NDTL in cash form with a special
account with RBI.
➢ For securing monetary stability in the country.
➢ No floor & No ceiling rate.
EX:-

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THE COMPLETE – STATIC BANKING AWARENESS
 Each bank is required to deposit a certain amount of its deposits with the RBI. This is called the cash
reserve ratio (CRR). If a bank gets Rs100 in deposits and the CRR is 10%, then it has to deposit
Rs10 with the RBI. It now has Rs90 to lend. This Rs90 is then given to a borrower, who pays it to
someone else who puts it in their bank. That bank then has to deposit Rs9 with the RBI and can now
lend Rs81. This amount may be lent and may make its way to a third bank, which then has to deposit
Rs8.1 with the RBI.

ii) SLR
 All Banks have to maintain a portion of their total deposits with RBI either as cash or gold or
approved securities.
 This is as per section 24 of the Banking Regulation Act, 1949. {This was amended through the
Banking Regulation (Amendment) Act, 2007}
 No floor rate, but the ceiling is 40%.
 To be maintained in cash, gold & approved securities.
 To hold a certain percentage of NDTL in the above forms as prescribed from time to time.
3. Policy rate
i) Repo rate
 When banks sell security, banks promise to buy back the same security from RBI at a predetermined
date with interest at the rate of REPO.
 It is a repurchase agreement. When RBI reduces the Repo Rate, the banks can borrow more at a
lower cost.
 The minimum amount of loan is Rs. 5 cr.
 Repo rate is short-term lending( 1 to 90 days)
ii) Reverse repo rate
 In case RBI borrows money from banks and the interest paid by RBI to banks on such borrowing is
known as the Reverse Repo Rate. It is the opposite of the Repo rate.
 An increase in this rate can cause the banks to transfer more funds to RBI due to their attractive
interest rates. Hence RBI uses this way to draw out excess money from the banks.
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THE COMPLETE – STATIC BANKING AWARENESS
iii) MSF
 The minimum amount which can be accessed through MSF is Rs. 1 crore and can be in multiples of
Rs.1crore.
 While under Repo all member Banks are eligible to borrow, MSF provides for
an overnight borrowing facility from RBI.
 No additional security is required. With the securities provided for SLR, the
securities can be adjusted against SLR
 Only Scheduled Commercial Banks are eligible
iv) Bank rate
 The bank rate is the interest rate at which the central bank lends money to domestic banks. Such loans
are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks
and treasury bills.
 Thus, the bank rate is also known as the discount rate. At the bank rate, there is no need for collateral
security.
 The interest rate which the RBI charges for its long-term lending is known as the bank rate.
 Bank Rate is a long-term lending (up to 365 days)
Normally, Banks, Financial institutions use this facility.
This has got a direct bearing on the long-term lending activities of the financial system.

4. Open Marketing Operations(OMO)

 Open Market Operations means:
 RBI is purchasing Government securities to infuse liquidity
 RBI is selling Government securities to suck liquidity from the system.
5. Quantitative Credit Controls

6. Qualitative Credit Controls

7. Disinvestments
 If the government has more than a 51% stake in a company or organization, then it is known as a
government sector enterprise. If the government has a 75% stake in a company and would like to sell
24% in it. The process of selling 24 % of its stake is known as disinvestment.
8. Privatization
 Privatization is the process of transferring an enterprise/organization/sector or industry from the
government to private ownership. This process of transferring 100% of ownership to private entities.
9. Fund based Support
i)Vehicle loan
ii)Agriculture loan
iii)Personal loan
iv)Creditor
v)Overdraft Account
vi)Cash Credit Account
10. Non-Fund based Support
i)Bank Guarantee (or) Performance Guarantee

 If a V-Tech company fails to complete the Road Project Govt dept will get the money from SBI
through Bank Guarantee.
ii) Letter of credit

 If the buyer V-Tech Company failed to pay back after getting the goods, then XXX can get paid
through a Letter of Credit.

Topic 13: BASEL NORMS

 The Basel Committee on Banking Supervision (BCBS) was formed in 1974 by a group of central bank
governors of G-10 countries. It was established on 17th March 1930.Head office in Basel,
Switzerland. It acts as Bank for Central Banks.

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THE COMPLETE – STATIC BANKING AWARENESS
BASEL 1 Norms
 Introduced in 1988(India adopted Basel 1 guidelines in 1999)
 Started capital measurement system called Basel capital accord also called Basel 1
 The minimum capital requirement was fixed at 8% of risk-weighted assets (RWA)
 RWA - the minimum amount of capital that must be held by banks to reduce the risk of insolvency
(insolvency is the situation where a bank cannot raise enough cash to meet its obligations)
BASEL 2 Norms
 Introduced in 2004
 Acknowledged as refined and reformed versions of Basel I accord
 Basel II norms in India and overseas are yet to be fully implemented.
 The guidelines were based on three parameters, which the committee calls 3 pillars
3 PILLARS OF BASEL 2 NORMS
 Capital Adequacy Requirements - Banks should maintain a minimum capital
 adequacy requirement of 8% of risk assets
 Supervisory Review - According to this, banks were needed to develop and use better risk
management techniques in monitoring and managing all the three types of risks that a bank faces, viz.
credit, market, and operational risks
 Market Discipline-This need increased disclosure requirements. Banks need to
 mandatory disclose their CAR, risk exposure, etc to the central bank
 BASEL – II failed because it could not cover the systemic risk.
 It could not prevent the 2008 financial crisis
 BASEL – III was proposed after the 2008 financial crisis.
BASEL 3 Norms
 Introduced in 2010. (In India it was implemented on March 31st, 2019)
 These guidelines were proposed in acknowledgment of the financial emergency of 2008.
 BASEL – III recommended that the Capital Adequacy Ratio(CAR) was 8% internationally, while in
India it is 9%.
 A need was thought to further extend the system as banks in the developed economies were under-
capitalized, over-leveraged, and had greater faith in short-term funding
 The guidelines aim to promote a more flexible banking system by focusing on four vital banking
parameters
1) Capital Adequacy
2) Leverage Ratio

Topic 14: Types of Money

1. Dear Money
 “The money which is available at high-interest rates and hence restricts expenditure by companies.”
 “ Due to restricted money supply, interest rates will be pushed up. Hence, it is very difficult to raise
money during this period of dear money.”
2. Barren Money
 Money that does not earn any interest
 Money that is not invested anywhere
 Money which is kept in a safe deposit locker
3. Hot Money
 Hot money refers to funds that are controlled by investors who actively seek short-term returns. These
investors scan the market for short-term, high-interest-rate investment opportunities. A typical short-
term investment opportunity that attracts "hot money" is the certificate of deposits.
 Hot currency is the currency that is easily available in the market and can be converted into another
currency. And it flows easily in and out of the market in terms of investment
4. Hard Currency
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THE COMPLETE – STATIC BANKING AWARENESS
 Hard currency, safe-haven currency, or strong currency is any globally traded currency that serves as a
reliable and stable store of value.
5. Fiat Money
 Fiat money is declared legal tender. This includes any form of currency in circulation such as paper
money or coins. Fiat money is backed by a country's government instead of a physical commodity.
Measures of Money Supply:

Money supply, like money demand, is a stock variable. The total stock of money in circulation among the public at a
particular point in time is called the money supply. RBI publishes figures for four alternative measures of money
supply, viz. M1, M2, M3, and M4. They are defined as follows:

• Reserve Money M0 = Currency in circulation + Bankers’ deposits with the RBI + ‘Other’ deposits with the
RBI
• Narrow Money M1 = Currency with the public + Demand deposits with the banking system + ‘Other’
deposits with the RBI
• Intermediate Money M2 = M1 + Short-term time deposits of residents (including and up to the contractual
maturity of one year).
• Broad Money M3 = M2 + Long-term time deposits of residents + Call/Term funding from financial
institutions.

Topic15: Types of Banking

Branch Banking
 It involves the business of banking via branches.
 The advantage is that it helps in better management, more inclusion, and risk diversification.
Para Banking
 The financial services undertaken by banks such as credit cards, smart cards, mutual funds, primary
dealers, and pension funds come under Para Banking activities
Universal Banking
 These can undertake multiple financial activities under one roof.
 Universal Bank participates in many kinds of banking activities. It is both a commercial bank and
investment bank as well as provides other financial services such as insurance. These are also called
full-service financial firms providing wealth and asset management, trading, underwriting,
researching as well as financial advisory.
Ex: ICICI Bank.

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THE COMPLETE – STATIC BANKING AWARENESS
Narrow Banking
 The obsession of the banks to invest more in risk-free securities like Govt. securities or Govt.
approved securities.

Shadow Banking
 The activities/services undertaken by NBFCs / Unincorporated bodies are similar to the activities
undertaken by banks.
 They are unregulated / loosely regulated and hence the risks associated with shadow banking are very
high in the financial system.
 Credit intermediation involves activities outside the banking system
 Like house loans, gold loans, vehicle finance, etc
 These are called NBFCs
Unit Banking
 It is a type of banking in which where banks operate only from a single branch taking care of a small
community.
Retail Banking
 Retail Banking means banking where transactions are held directly with customers and there are no
transactions with other banks or corporations.
 The banks provide all types of personal banking services such as saving accounts, personal loans,
mortgages, Debit and Credit cards, Transactional accounts, etc.
Wholesale Banking
 Wholesale banking involves banking services for high-net-worth clients like Corporates,
Commercial banks, mid-size companies, etc.
Virtual Banking
 Virtual banking is performing banking operations online.
Chain Banking
 A chain Banking system refers to the type of banking when a group of persons come together to own
and control three or more independently chartered banks.
Offshore banking:
 The deposit of funds by a company or an individual in a bank that is located outside their national
residence.
Green banking:

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THE COMPLETE – STATIC BANKING AWARENESS
 To address sustainable development concerns and create awareness among people about
environmental responsibility.

Merchant banking:

 It is a combination of banking and consultancy service. Consultancy means providing advice,

guidance, and service for a fee.
Neo banking:
 A neobank is a financial technology company that provides banking services via mobile app or
website. Banking options may include the ability to transfer money electronically, pay bills and
receive direct deposit or mobile check deposits.

Topic - 16: Financial Institutions

1. RBI (Reserve Bank of India):

 The Reserve Bank of India (RBI) is the central bank of the country. RBI is a statutory body. It is
responsible for the printing of currency notes and managing the supply of money in the Indian
economy.
 The Reserve Bank of India (RBI) is the highest monetary authority in India. RBI was established in
1935 by the RBI Act 1934.RBI works as a custodian of the foreign reserve, banker’s bank, banker to
the government of India, and controller of credit.
 Initially, the ownership of almost all the share capital was in the hands of non-government
shareholders. So to prevent the centralization of the shares into a few hands, the RBI was nationalized
on January 1, 1949.
 The Reserve Bank has adopted the Minimum Reserve System for issuing/printing currency notes.
Since 1957, it maintains gold and foreign exchange reserves of Rs.200 Cr. of which at least Rs.115 cr.
should be in gold and remain in the foreign currencies.

Functions of Reserve Bank:

1. Issue of Notes:
 The Reserve Bank has a monopoly for printing the currency notes in the country. It has the sole right
to issue currency notes of various denominations except one rupee note (which is issued by the
Ministry of Finance).
2. Banker to the Government:
 The second important function of the Reserve Bank is to act as the Banker, Agent, and Adviser to the
Government of India and states. It performs all the banking functions of the State and Central
Government and it also tenders useful advice to the government on matters related to economic and
monetary policy. It also manages the public debt of the government.
3. Banker’s Bank:
 The Reserve Bank performs the same functions for the other commercial banks as the other banks
ordinarily perform for their customers. RBI lends money to all the commercial banks of the country.
4. Controller of the Credit:
 The RBI undertakes the responsibility of controlling credit created by commercial banks. RBI uses
two methods to control the extra flow of money in the economy. These methods are quantitative and
qualitative techniques to control and regulate the credit flow in the country.
 When RBI observes that the economy has sufficient money supply and it may cause an
inflationary situation in the country then it squeezes the money supply through its tight monetary
policy and vice versa.
5. Custodian of Foreign Reserves:
 To keep the foreign exchange rates stable, the Reserve Bank buys and sells the foreign currencies and
also protects the country's foreign exchange funds. RBI sells the foreign currency in the foreign

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THE COMPLETE – STATIC BANKING AWARENESS
exchange market when its supply decreases in the economy and vice-versa. Currently, India has a
Foreign Exchange Reserve of around US$ 440bn (approx).
6. Other Functions:
 The Reserve Bank performs some other developmental works. These works include the function of a
clearing house arranging credit for agriculture (which has been transferred to NABARD) collecting
and publishing the economic data, buying and selling Government securities (gilt edge, treasury bills,
etc)and trade bills, giving loans to the Government buying and selling of valuable commodities, etc. It
also acts as the representative of the Government in the International Monetary Fund (I.M.F.) and
represents the membership of India.

Subsidiaries of RBI:
The fully owned subsidiaries of the RBI are:
 Deposit Insurance and Credit Guarantee Corporation of India (DICGC),
 Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL),
 Reserve Bank Information Technology Private Limited (ReBIT),
 Indian Financial Technology and Allied Services (IFTAS), and
 Reserve Bank Innovation Hub (RBIH).
1. BRBNMPL
 Bharatiya Reserve Bank Note Mudran Private Limited is a subsidiary of the Reserve Bank of India.
 It was established on 3rd February 1995.
 It designs, prints, and supplies banknotes for the Reserve Bank of India(RBI) to meet the demand for
banknotes in the country.
 The headquarter is in Bangalore, Karnataka.

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 BRBNMPL has two bank note presses in Mysore and Salboni.
2. DICGC
 Deposit Insurance and Credit Guarantee Corporation (DICGC) is a subsidiary of the Reserve Bank of
India.
 The authorized capital of the Corporation is 50 crore, which is fully issued and subscribed by the RBI.
 It is headquartered in Mumbai.
 It was established on 15 July 1978 under the Deposit Insurance and Credit Guarantee Corporation Act,
1961 to provide insurance for deposits and guarantee credit facilities.
 DICGC insures all bank deposits, such as savings, fixed, current, and recurring deposits for up to the
limit of Rs.5,00,000 of each deposit in a bank. (According to Budget 2020-2021)
 The insurance covers principal and interest is now up to a maximum amount of 5 lakh.
 The DICGC does not directly charge any premium from the depositor on this insurance. So Now
Banks will pay a premium of 12paise against 10paise per Rs.100 deposit.
 All commercial banks including branches of foreign banks functioning in India, local area banks,
and regional rural banks are insured by the DICGC.

3. RRB
 After the nationalization, of banks in 1960, some problems made it difficult for commercial banks
even under government ownership to lend to farmers.
 The government set up the Narasimham Working Group in 1975.
 Based on this committee’s recommendations, a Regional Rural Banks Ordinance was promulgated in
September 1975, which was replaced by the Regional Rural Banks Act 1976.
 First RRB: PrathamaGrameen Bank
The RRBs were owned by three entities with their respective shares as follows:
 Central Government → 50%
 State government → 15%
 Sponsor bank → 35
4. NABARD
 NABARD is an apex development bank, established in 1982 by a Special Act of the Parliament
 It has the power to deal with all matters concerning policy, planning as well as operations in giving
credit for agriculture and other economic activities in the rural areas.
 Committee to Review the Arrangements For Institutional Credit for Agriculture and Rural
Development” under the Chairmanship of B. Sivaraman.

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 Based on the recommendations, NABARD (National Bank for Agriculture and Rural
Development) started functioning on 12th July 1982.
 Authorized Capital: RS.30,000crore/-
 A refinancing agency for those institutions that provide investment and production credit for
promoting the several developmental programs for rural development.
 Improving the absorptive capacity of the credit delivery system in India, including monitoring,
formulation of rehabilitation schemes, restructuring of credit institutions, and training of personnel.
 Coordinates the rural credit financing activities of all sorts of institutions engaged in developmental
work at the field level.
 Promotes research in rural banking, and the field of agriculture and rural development
5. Refinance/Direct finance
Refinance :

 Development financial institutions like NABARD will arrange finance to the banks up to the extent.
Banks are giving loans to customers. This is Refinance.

Direct finance :

 Banks will finance customers directly.

6. Lead Bank Scheme
 After the nationalization of 14 banks in 1969, Govt. initiated steps to extend banks' reach to the
rural areas.
 “National Credit Council” study group headed by Prof. D.R. Gadgil, first recommended the “Area”
approach.
 The Committee of Bankers (Nariman Committee) appointed by RBI accepted the ‘Area’ approach
and gave the name “Lead Bank Scheme”.
 In 1969 itself, 380 districts in the country were identified with the Lead Bank Scheme, which later
on extended to all the rural districts of the country.
7. Service Area Approach
 The main aim is to act as a coordinator for credit deployment in the district.
 Act as a leader to bring about coordination among Co-op Banks, RRBs, SCBs, and other financial
institutions to bring about rapid economic development in rural areas.
 Identify unbanked areas and prepare a phased program for branch expansion.
 To inculcate dynamic relationships between various financial institutions.
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8. Co-operative banks
 Banks in India can be broadly classified under two heads — commercial banks and cooperative banks.
While commercial banks (nationalized banks, State Bank group, private sector banks, foreign banks,
and regional rural banks) account for an overwhelming share of the banking business, cooperative
banks also play an important role.
It can be divided into 2 broad segments
i) Urban Cooperative Banks
ii) Rural Cooperative Banks
Urban Cooperative Banks
 Urban Cooperative Banks are scheduled and non-scheduled.
 The banking activities of Urban Cooperative Banks are monitored by RBI. Registration and
Management activities are managed by the Registrar of Cooperative Societies (RCS). These RCS
operate in single-state and Central RCS (CRCS) operate in multiple states.
Rural Cooperatives Banks
 Rural cooperative Banks are short-term and long-term structures.
 Short-term cooperative banks are three-tiered operating in different states.
State Cooperative Banks: Operate at the apex level in states
District Central Cooperative Banks: Operate at the district levels
Primary Agricultural Credit Societies: Operate at the village or grass-root level.
 As per the new guideline, the SFBs should have Rs.200crores minimum capital except for such small
finance banks which are converted from Urban Co-operative Banks (UCBs). UCBs should initially
have at least Rs.100crores from the start of the operation, however, it should make it to Rs.200crores
capital within 5 years, from the date of commencement of business.
9. MUDRA( Micro Units Development and Refinance Agency)
 It is a public sector financial institution in India and provides loans at low rates to micro finance
Institutions and NBFCs which are then provided to MSMEs.
 These banks are set up under Pradhan Mantri MUDRA Yojana Scheme by Prime Minister Narendra
Modi.
Types of MUDRA Loan:

Name of the Scheme Loan Amount

Shishu Up to Rs.50,000

Kishor Rs.50000 to Rs.5 lakh

Tarun Rs.5 lakh to Rs.10 lakh

Topic -17: Differentiated banks

1. NBFC

 It is engaged in the business of loans and advances, acquisition of bonds/debentures/securities issued

by Government or local authority or other marketable securities, leasing, hire-purchase, insurance
business, and chit business but does not include any institution whose principal business is that of
agriculture activity, industrial activity, purchase or sale of any goods or providing any services and
sale or purchase of immovable property
Difference between Banks & NBFCs

 NBFC cannot accept demand deposits

 NBFCs do not form part of the payment and settlement system and cannot issue cheques
drawn on their deposit insurance facility of Deposit Insurance and Credit Guarantee
Corporation is not available to depositors of NBFCs, unlike in the case of banks.
TYPES OF DEPOSITS BANKS & NBFCs

 There is an Ombudsman for hearing complaints against NBFCs.But, it should be a

deposit-taking NBFC.
2. Payment banks and small finance banks

 With a need for financial inclusion in the country, RBI and the government has taken many steps at
different times. Taking a further step, RBI gave differentiated licenses for specific activities to the
new set of banks named Payment Banks and Small Banks.

 Payments banks are a new model of banks conceptualized by the Reserve Bank of India (RBI).
These banks can accept a restricted deposit which is currently limited to INR 1 lakh per customer.
 Initial Capital - 100crore
 Payments Banks Formation - Nachiket Mor Committee
 For the first five years, the stake of the promoter should be 40% minimum.
 The foreign shareholding will be allowed in these banks as per the rules for FDI in private banks in
India on 19 August 2015, the Reserve Bank of India gave "in-principle" licenses to eleven entities
to launch payments banks. Under Section 22 of the Banking Regulation Act, 1949.
Small finance banks :

 Small finance banks are a type of niche bank in India. Banks with a small finance bank license can
provide basic banking services of acceptance of deposits and lending. The aim behind these is to
provide financial inclusion to sections of the economy not being served by other banks, such as small
business units, small and marginal farmers, micro and small industries, and unorganized sector entities.

Small Finance Bank Payment Bank

Capital requirement is Rs.200crore Paid-up equity capital requirement of Rs.100crore

The bank shall primarily undertake basic banking Payment Banks will initially be restricted to
activities of accepting deposits and lending to holding a maximum balance of 1 lakh rupees per
small farmers, small businesses, micro and small individual customer. It can issue ATM or debit
industries, and unorganized sector entities. It cards but not credit cards.
cannot set up subsidiaries to undertake non-
banking financial services activities.

a) Professionals with 10 years in financial Card Issuers, Finance Companies, Business

services or promoter group with a 5-year Correspondents, Telecom Companies, Retailers, etc
track record.

b) Existing Non-Banking Finance Companies

(NBFCs), Micro Finance Institutions (MFIs), and
Local Area Banks (LABs) that are owned and
controlled by residents can also opt for
conversion into small finance banks.

Promoter’s initial contribution should be 40% Promoters should retain a 40% stake for the first
lower to 26% in 12 years. five years.

*The maximum loan size and investment limit No credit lending is allowed
exposure to single/group borrowers/issuers
would be restricted to 15 percent of capital funds

* Loans and advances of up to Rs 25 lakhs,

primarily to micro-enterprises, should constitute
at least 50 percent of the loan portfolio.

For the first three years, 25 percent of branches No such Rules

should be in unbanked rural areas.

The small finance banks will be required to Lending is not allowed in payment banks
extend 75 percent of their Adjusted Net Bank
Credit (ANBC) to the sectors eligible for
classification as priority sector lending (PSL)
by the Reserve Bank.

The foreign shareholding in the small finance bank The foreign shareholding should be as per the
would be as per the Foreign Direct Investment Foreign Direct Investment (FDI) policy for private
(FDI) policy for private sector banks as amended sector banks as amended from time to time.

from time to time.

These banks will be subject to all prudential norms These banks also should maintain CRR with the
and regulations of RBI as applicable to existing Reserve Bank, it will be required to invest a
commercial banks including the requirement of minimum of 75 percent of its demand deposit
maintenance of Cash Reserve Ratio (CRR) and balances in Statutory Liquidity Ratio (SLR) with
Statutory Liquidity Ratio (SLR). No forbearance a maturity of up to one year and hold a
would be provided for complying with the statutory maximum of 25 percent in current and time or
provisions. fixed deposits with other scheduled

commercial banks for operational purposes and

liquidity management.

These Banks can offer all types of Deposits like Payments banks can only offer Savings and Current
commercial Banks be it savings, Current, Fixed as accounts.
well as Recurring.

Small Finance Banks : Payment Banks :

1. AU small finance bank- Jaipur, Rajasthan 1. Paytm payments bank- Noida

2. Capital small finance bank- Jalandhar, Punjab 2. Airtel payments bank – New Delhi

3. ESAF small finance bank- Thrissur, Kerala 3. Jio payments bank- Mumbai

4. Equitas small finance bank- Chennai, Tamil 4. India Post payments bank- New Delhi
Nadu
5. Fino payments bank- Mumbai
5. Fincare small finance bank- Bengaluru,
6. NSDL payments bank- Mumbai
Karnataka

6. Jana small finance bank- Bengaluru, Karnataka

7. North East small finance bank- Guwahati,

Assam

8. Suryoday small finance bank- Navi Mumbai

9. Ujjivan small finance bank- Bengaluru,

Karnataka

10. Utkarsh small finance bank- Varanasi, UP

11. Shivalik Small Finance Bank Limited

Topic -18: History of Banking & Merger of Banks

 The banking system commenced in India with the foundation of the Bank of Hindustan in Calcutta
(now
Kolkata) in 1770 which ceased to operate in 1832.
Presidency Banks:
These banks were funded by the presidential government at that time.
 Bank of Bengal- Established in 1806.
 Bank of Bombay - Established in 1840.
 Bank of Madras - Established in 1843.

Canara Bank 1906

These three presidency banks were re-organized and amalgamated to form a single entity named “Imperial
Bank of India” on 27th January 1927. It was later transformed into the “State Bank of India” in 1955.
Some old Banks:
 Allahabad Bank was established in 1865 in Allahabad (Uttar Pradesh). It is the oldest joint stock bank
of our country functioning till today.
 Oudh Commercial Bank was established in 1881 at Faizabad (Uttar Pradesh). It is the First limited
liability Bank in India and also the first joint-stock bank by Indians. However, it failed in 1958.
 Punjab National Bank was established in 1895 in Lahore (Pakistan) and it was also the first bank to be
managed solely by Indians.
Swadeshi movement:
 Due to the “Swadeshi” movement, many banks were established between 1906 and 1911. Many
local businessmen and strong political figures of India funded the banks for the Indian
community. Some of the banks that were established are as follows:
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Bank Of India 1906

Corporation Bank 1906
Indian Bank 1907
Bank Of Baroda 1908

Nationalization:
 19th July 1969, 14 major Banks were nationalized.
1. Central bank India.
2. Bank of Maharashtra.
3. Dena Bank.
4. Punjab national bank.
5. Syndicate bank.
6. United bank of India.
7. Indian bank.
8. Indian overseas bank.
9. Bank of Baroda.
10. Union bank.
11. Allahabad bank.
12. UCO bank.
13. Canara bank.
14. Bank of India.
In 1980 another 6 banks were nationalized:
1. Andhra bank.
2. Oriental bank of commerce.
3. New bank of India.
4. Corporation bank.
5. Punjab and Sind bank.
6. Vijaya bank.
 There were 27 PSBs in 2017 and now there would be 12. This would result in the creation
of seven large PSBs with each amalgamated entity having a business of over Rs 8 lakh crore,
and five smaller ones.
The five smaller PSBs are
1. Central Bank of India (CBI). [8th largest]
2. Indian Overseas Bank (IOB). [9th largest]
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3. UCO Bank. [10th largest]
4. Bank of Maharashtra (BOM). [11thlargest]
5. Punjab and Sind Bank. [12th largest]
The seven large PSBs (by size) are
1. State Bank of India (SBI)
2. Punjab National Bank (PNB)
3. Bank of Baroda (BOB)
4. Canara Bank
5. Union Bank of India (UBI)
6. Bank of India (BOI)
7. Indian bank
Recent merger announced by Finance ministry:

Anchor Bank Amalgamating bank’s Public sector banks by

size
PNB (Punjab National Bank) Oriental bank of commerce + United 2nd largest
bank of India
Canara bank Syndicate bank 4th largest
Union Bank of India Andhra bank + Corporation Bank 5th largest
Indian bank Allahabad bank 7th largest

 The RBI has excluded six public sector banks, including OBC and Allahabad Bank, from the Second Schedule of
the RBI Act following their merger with other banks. The six banks are Syndicate Bank, Oriental Bank of
Commerce (OBC), United Bank of India, Andhra Bank, Corporation Bank, and Allahabad Bank.

Topic -19: Financial Market

Financial market:

 It is not a tangible market but it refers to a group of entities that participate in borrowing and lending.
 The products are classified as bonds, equities, currencies, and derivatives.
 It is a medium channel between depositors and borrowers.
Financial markets are classified as:
1. Money market
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2. Capital market
(i) Money market:
 It is used for short-term credit.
 Borrowing and lending money is up to one year (1 day to 365 days).
 It includes Rbi, commercial banks, except RRBs, some Nbfcs, cooperative banks, primary dealers,
etc.
 T-bills, commercial papers, and certificates of deposits are traded in this market(banks and primary
dealers) to lend and borrow money when there is a mismatch of funds.
Call money: money is borrowed or lent for 1 day.
Notice money: money is borrowed or lent for 2 to 14 days.
Term money: money is borrowed or lent for exceeding 14 days to 365days.
 In Incall money and notice money, both the borrowers and lenders need to maintain a current account
with RBI because trading happens for a very short tenure.
1. Treasury bills(T-bills):
 It was implemented in 1986. It is also known as T-bills.
 In the money market, if we talk about the lowest risk instrument then it is T-bills.
 It is issued by the central government with a fixed date and fixed time.
 They are highly liquid, bill holders can transfer or get discounts at any time from RBI.
 They are issued as well as auctioned by RBI only but can be purchased by individuals, firms,
institutions, and banks.
 T- bills are available in a denomination of 25000 and multiples of it.
 Its maturity periods are 91, 182, and 364 days.
2. Commercial paper(CP):
 It was introduced in 1990. It is issued in the form of a promissory note.
 In this, the net worth of the company is not less than 4crore.
 All Indian financial institutions, primary dealers, and big companies are permitted to issue commercial
paper to enable them to meet their short-term financing requirements.
 The tenure of CP is 7 days to one year.
 CP is issued under the denomination of 5 lakh and multiple of it.
3. Certificate of deposits(CD):
 It was introduced in 1989.
 Scheduled commercial banks (except Rrb, local area banks), all Indian financial institutions are
permitted by Rbi to purchase the CD.

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 The tenure of CD is 7 days to one year.
 Financial institutions can not issue less than 1 year and not exceed 3 years.
 The denomination of CD is 1 lakh and multiple of it.
4. Cash management bills:
 It is a short-term instrument issued by the central government to meet the temporary cash flow
mismatches of the government.
 The announcement of the auction of bills was made by Rbi.
 The tenure is less than 91 days.
(ii) Capital market:
 It is used for long-term credit.
 Borrowing and lending are above 1 year.
 It includes stock exchanges, housing finance companies, insurance companies, etc.
 All institutions listed in the capital market are called NBFC.
The capital market comprises both
(i) Equity
(ii) Debts are issued and traded.
 This also includes private placement sources of debt and equity as well as organized markets like
stock exchanges.
1. Primary market (IPO):
 It is a market that deals with the trading and issuance of stocks and other securities.
2. Secondary market(FPO):
 It is a market comprising equity and debt markets. It deals with the exchange of existing or previously
issued securities.
Composition of capital market:
(i) Security market
 It deals with shares and debt instruments. These instruments are used for fundraising. In share
instruments, we include equity shares, preferential shares, and derivatives. Investors have
 In debt instruments, we include bonds, debentures, etc. In these instruments, we need to pay interest
to debt instrument holders regardless of profit or loss.
Equity shares:
 Holder has claimed over the capital, profit, or loss.
Debentures:

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 In this, the lender lends money to companies with some surety (maybe plant, machinery). But bonds
are lent without any surety.
Preferential shares:
 Holder entitled to a fixed amount of dividend.
 In case of closing of the company, preferential shareholders have the preference rights to get back the
capital.
 For trading securities, we have primary(new issue) and secondary (old issue) markets
(ii) Development of financial institutions
 They provide a long-term loan, entrepreneurial assistance(technical advice, etc)
Ex: IDBI, EXIM bank
(iii) Financial intermediaries
Rbi regulated:

 Asset finance company

 Loan company
 Investment company
Sebi regulated:

 Venture capital fund, angel capital fund

 Merchant banking companies.
 Stock broking companies
Bill discounting:

 Advanced selling of bills to an intermediary before it is due to be paid.

Topic20: Foreign Direct Investment and Foreign Portfolio Investment

Foreign Direct Investment

 Foreign Direct Investment involves establishing a direct business interest in a foreign country, such as
buying or establishing a manufacturing business, building warehouses, or buying buildings
 Due to the significantly higher level of investment required, foreign direct investment is usually
undertaken by multinational companies, large institutions, or venture capital firms
 The investment may result in the transfers of funds, resources, technical know-how, strategies, etc.
There are several ways of making FDI i.e. creating a joint venture through merger and acquisition
or by establishing a subsidiary company.
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Foreign Portfolio Investment

 Foreign Portfolio Investment refers to investing in the financial assets of a foreign country, such as
stocks or bonds available on an exchange.
 It does not provide the investor with direct ownership of a company's assets and is relatively liquid
depending on the volatility of the market.
 Along with foreign direct investment (FDI), FPI is one of the common ways to invest in an overseas
economy. FDI and FPI are both important sources of funding for most economies.
 These include investments via equity instruments (stocks) or debt (bonds) of a foreign enterprise
which does not necessarily represent a long-term interest.

Difference Between FDI and FPI

Parameters FDI FPI

Definition FDI refers to the investment FPI refers to investing in the
made by foreign investors to financial assets of a foreign
obtain a substantial interest in country, such as stocks or bonds
an enterprise located in a available on an exchange.
different country.
Role of Investors Active Passive
Type Direct Investment Indirect Investment
Degree of Control High Very low
Term Long term Short term
Management of Projects Efficient Comparatively less efficient
Investment Done on Physical assets of the Done on Financial assets of the
foreign country foreign country
Entry & Exit Difficult Relatively Easy
Risks involved Stable Volatile
Leads to Transfer of funds, technology, Capital inflows to the foreign
and other resources to the country
foreign country

Topic 21: Banking Terminologies

Differentiated bank(niche)

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 Payment banks
 Small finance banks
(for the first time, in principle approval is given by RBI for differentiated banks in 2015)
 They can undertake only a limited range / narrow range of activities.
 They are also called “niche” banks.
Greenfield/ Brownfield
Greenfield:
 Starting project afresh, without any link to the previous project.
Brownfield:
 Expanding/modifying / upgrading / extending the existing project.
Bridge loan
 A bridge loan is a type of short-term finance that aims to “bridge the gap” between the purchase of a
property and its sale.
 Short-term financing, normally up to one year, until the company secures permanent/long-term
financing or to tide over current obligations
Channel finance
 Working capital finance to dealers having business relationships with large companies

Insolvency
 Insolvency is a financial state where an entity is not able to repay the debt that it owes to its financial
or operational creditors.
 Insolvency is a financial status: your debts are greater than the fair market value of your assets &
you're unable to pay your debts as they generally become due.

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 State of being not able to pay back the liabilities.
 Condition of having more debts (liabilities) than total assets.
Bankruptcy
 Bankruptcy is a legal procedure for liquidating a business or property owned by an individual, which
can't fully pay its debts out of its current assets.
 Bankruptcy is a legal status: it's a legal procedure whereupon an insolvent person files for protection
from her creditors so that they cannot commence or continue legal proceedings (like a wage
garnishment) against her to recover their debts.
 In return for this protection, she surrenders her assets to the bankruptcy trustee who becomes the legal
owner of her assets. The trustee then sells her assets and distributes the sale proceeds amongst her
creditors.
 And if she has no assets in the first place, her creditors end up getting nothing. They then write off
their debts against her as a business loss.
Liquidation
 Liquidation is a term that is given to the process of dissolving or winding up the company. This is
done by selling off all the assets of the companies and paying the proceeds gathered to any of the
outstanding creditors of the company.
Asset
 Any resource that has economic value that an individual or corporation owns. Assets are generally
viewed as resources that produce cash flow or bring added benefit to the individual or company.
Actuaries

 A person with expertise in the fields of economics, statistics, and mathematics, who helps in risk
assessment and estimation of premiums, etc for an insurance business, is called an actuary.

Accounts Receivable
 The amount of money owed by customers or clients to a business after goods or services have been
delivered and/or used.
Amortization
 It is an accounting technique by which intangible assets are written off over some time.

Accounts Payables

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 The amount of money a company owes creditors (suppliers, etc.) in return for goods and/or services
they have delivered.

Annuity
 It is an investment scheme under which an investor makes recurring investments and a lump sum
payment is made to him at the end.
Arbitrage
 It is the process of simultaneous buying and selling of an asset from different platforms, exchanges, or
locations to cash in on the price difference.
Bancassurance
 Bancassurance means selling insurance products through banks.
 Banks and insurance companies come up in a partnership wherein the banks sell the tied insurance company’s
insurance products to its clients.

Balance of payment
 It is the difference between a country’s exports and imports.
Bank Rate
 It is the rate charged by the central bank for lending funds to commercial banks.

Basis Point :
 One-hundredth of 1% point is normally used for indicating the cost of finance.
Balance Sheet:
 A financial report that summarizes a company's assets (what it owns), liabilities (what it owes), and an
owner or shareholder equity at a given time.
Bitcoin:
 Bitcoin is a virtual currency or cryptocurrency and a payment system. It can be defined as a decentralized
means of tracking and assigning wealth or economy, it is a software protocol.
Bond:
 A debt instrument is used by corporations, governments (including Federal, State, and City), and many other
institutions that are used to generate capital.
Capital:
 A financial asset or the value of a financial asset, such as cash or goods.

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 Working capital is calculated by taking your current assets subtracted from current liabilities—basically the
money or assets an organization can put to work.

Core Banking Solutions (CBS):

 It is a networking of branches that enables customers to operate their accounts and avail of banking services
from any branch of the bank on the CBS network, regardless of where he maintains their account.
Credit:
 An accounting entry that may either decrease assets or increase liabilities and equity on the company balance
sheet, depending on the transaction.
 When using the double-entry accounting method there will be two recorded entries for every transaction: A
credit and a debit.

Dividend:

 It is the amount per share paid by a company to its shareholders.

 Dividend value is based on the company’s profitability.

Demat Account:

 How a bank keeps money in a deposit account in the same way the depository company converts share
certificates into electronic form and keeps them in a Demat account.

Deflation:

 When the overall price level decreases so the inflation rate becomes negative is called deflation.

Diversification:

 The process of allocating or spreading capital investments into varied assets to avoid over-exposure to risk.

Depreciation

 The monetary value of an asset decreases over time due to use, wear and tear, or obsolescence. This decrease
is called depreciation.

Equity

EMI:

 EMI or Equated Monthly Installment, as the name suggests, is one part of the equally divided monthly
outgoes to clear off an outstanding loan within a stipulated time frame.

Exchange Rate:

 It is the price of one currency in terms of another currency.

Face value

 The amount is mentioned on the face of a bond certificate.

Fiscal Deficit :

 The difference between total revenue and total expenditure of the government is termed a fiscal deficit.

Inflation

 It is an increase in the quantity of money in circulation without any corresponding increase in goods thus
leading to an abnormal rise in the price level.

Insolvency

 A state where an individual or organization can no longer meet financial obligations with lenders when their
debts come due.

Initial Public Offering(IPO)

 An initial public offering is when a private company or corporation raises investment capital by offering its
stock to the public for the first time.

Liquidity

 Liquidity means how quickly you can get your cash on your hands. In simple terms, liquidity is to get your
money whenever you need it.

 MSF is a window for banks to borrow from RBI in an emergency when inter-bank liquidity dries up
completely.

Market Capitalisation

 It is the aggregate valuation of the company based on its current share price and the total number of
outstanding stocks.
 It is calculated by multiplying the current market price of the company’s share with the total outstanding
shares of the company.

Mortgage

 A legal agreement that conveys the conditional right of ownership on an asset or property by its owner to a
lender as security for a loan.

Mutual fund

 A mutual fund is a professionally managed investment fund that pools money from many investors to
purchase securities.

Open Market Operations

 It is the sale and purchase of government securities and treasury bills by RBI. The objective of OMO is to
regulate the money supply in the economy. When the RBI wants to increase the money supply in the
economy, it purchases the government securities from the market and sells government securities to suck out
liquidity from the system.

Plastic Money

 Generic term for all types of bank cards, credit cards, debit cards, smart cards, etc.

Prime Rate

 Determined by the federal funds rate (the overnight rate at which banks lend to one another) the prime rate is
the best rate available to a bank’s most credit-worthy customer.

 The interest rate charged by banks to their largest, most secure, and most credit-worthy customers on short-
term loans.

Recession

 An economic condition is defined by a decline in GDP for two or more consecutive quarters. During a
recession, the stock market usually drops, unemployment increases, and the housing market declines.

Special Drawing Rights

 It is a reverse asset created within the framework of the International Monetary Fund in an attempt to increase
international liquidity.

Yield

 The annual rate of return for an investment is expressed as a percentage.

Topic22: Banking Abbreviations

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ANBC Adjusted Net Bank Credit
APBS Aadhar Payment Bridge System
ARC Asset Reconstruction Companies
ASBA Application Supported by Blocked Amount
ATM Automated Teller Machine
BBPS Bharat Bill Payment System
BCBS Basel Committee on Banking Supervision
BCSBI Banking Codes and Standards Board of India
BHIM Bharat Interface for Money
BIS Bank of International Settlements
BOP Balance of Payments
BPLR Benchmark Prime Lending Rate
BRBNM Bharatiya Reserve Bank Note Mudran Private Limited
BSBDA Basic Savings Bank Deposit Account
CAD Capital Account Deficit
CAD Current Account Deficit
CAGR Compound Annual Growth Rate
CAR Capital Adequacy Ratio
CARE Credit Analysis and Research Ltd
CASA Current Account Saving Account
CBLO Collateralized Bank Lending Obligations
CBS Core Banking Solutions
CCEA Cabinet Committee on Economic Affairs
CCF Credit Conversion Factor
CCL Cash Credit Limit
CDR Corporate Debt Restructuring
CDS Credit Default Swap
CEPA Comprehensive Economic partnership Agreement
CIBIL Credit Information Bureau of India Ltd
CIDR Central Identities Data Repository
CII Confederation of Indian Industries
CMIS Currency Management Information System

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CPI Consumer Price Index
CRAR Capital to Risk- Weighted Assets Ratio
CRILC Central Repository of Information on Large Credits
CRIS Comparative Rating Index of Sovereign
CRISIL Credit Rating Information Services of India Ltd
CRR Cash Reserve Ratio
CSR Corporate Social Responsibility
CTS Cheque Truncation System
CVV Card Verification Value
DEAF Depositor Education and Awareness Fund
DICGC Deposit Insurance and Credit Guarantee Corporation of India
DII Domestic Institutional Investor
DNS Domain Name System
DPG Deferred Payment Guarantee
DPN Demand Promissory Note
DRAT Debt Recovery Appellate Tribunal
DRI Differential Rate of Interest
DSCR Debt Service Coverage Ratio
DTAA Double Taxation Avoidance Agreement
ECB External Commercial Borrowings
ECGC Export Credit Guarantee Corporation
ECR Export Credit Refinance
ECS Electronic Clearing System
EDI Electronic Data Interchange
EDP Entrepreneurship Development Programme
EEFC Exchange Earners Foreign Currency
EFSF European Financial Stability Facility
EFTPOS Electronic Funds Transfer at Point of Sale
ELSS Equity Linked Savings Scheme
EMI Equated Monthly Installment
EPOS Electronic Point of Sale
EPS Earnings Per Share

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ETF Exchange Traded Fund
FCA Foreign Currency Assets
FCCB Foreign Currency Convertible Bond
FCNRA Foreign Currency Non Resident Account
FCNRD Foreign Currency Non-Repatriable Deposit
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act
FERA Foreign Exchange Regulation Act
FICCI Federation of Indian Chambers of Commerce and Industry
FII Foreign Institutional Investor
FIMMDA Fixed Income Money Markets and Derivatives Association
FINO Financial Inclusion Network Operation
FIPB Foreign Investment Promotion Board
FPI Foreign Portfolio Investment
FPO Follow on Public Offer
FRA Forward Rate Agreement
FRBM Fiscal Responsibility Budget Management Act
FRBMA Fiscal Responsibility and Budget Management Act
FRN Floating Rate Note
FSLRC Financial Sector Legislative Reforms Commission
GAAR General Anti Avoidance Rule
GFD Gross Fiscal Deficit
GIRO Government Internal Revenue Order
GMS Gold Monetization Scheme
GNFV Gross Negative Fair Value
HCE Host Card Emulation
IBA Indian Banks Association
IBRD International Bank for Reconstruction and Development
ICAAP Internal Capital Adequacy Assessment Process
ICRA Indian Credit Rating Agency
ICRA Investment Information and Credit Rating Agency of India Limited
IDRBT Institute for Development and Research of Banking

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IEPF Investors Education and Protection Fund
IFSC Indian Financial System Code
IIB International Investment Bank
IIP Index of Industrial Production
IMPS Immediate Mobile Payment Service
IMT Instant Money Transfer
INFINET Indian Financial Network
IPO Initial Public Offering
IRBI Industrial Reconstruction Bank of India
IRO Interest Rate Options
ISCI International Standard Industrial Classification
KCC Kisan Credit Card
KVP Kisan Vikas Patra
KYC Know Your Customer
LAF Liquidity Adjustment Facility
LAMPS Large Sized Adivasi Multipurpose Societies
LCR Liquidity Coverage Ratio
LIBOR London Interbank Offered Rate
LRS Liberalised Remittance Scheme
LTCG Long Term Capital Gains
MAMP Minimum Average Maturity Period
MCLR Marginal Cost of Lending Rate
MFI Micro Finance Institutions
MIBOR Mumbai Interbank Offered Rate
MICR Magnetic Ink Character Recognition
MSF Marginal Standing Facility
MSS Market Stabilisation Scheme
MUDRA Micro Units Development and Refinance Agency
NABARD National Bank for Agriculture and Rural Development
NACH National Automated Clearing House
NAS National Accounts Statistics
NBFC Non Banking Finance Companies

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NDS Negotiated Dealing System
NDTL Net Demand Time Liabilities
NEFT National Electronic Funds Transfer
NFA No Frills Account
NFS National Financial Switch
NPA Non Performing Assets
NPCI National Payments Corporation of India
NPS National Pension Scheme
NPV Net Present Value
NRE Non Resident External Account
NRO Non Resident Ordinary Account
OLTAS Online Tax Accounting System
OMO Open Market Operations
OTCEI Over the Counter Exchange of India
P- Notes Participatory Notes
P2P Peer to Peer
PACS Primary Agricultural Credit Societies
PCA Prompt Corrective Action
PCR Public Credit registry
PFRDA Pension Fund Regulatory Development Authority
PGS Payment Gateway System
PIN Personal Identification Number
PIO Persons of Indian Origin
PIS Portfolio Investment Scheme
POA Power of Attorney
PPF Public Provident Fund
PPIs Prepaid Payment Instruments
PPP Public Private Partnership
PPP Purchasing Power Parity
PRSF Partial Risk Sharing Facility
RDBMS Relational Database Management System
RDDBFI Recovery of Debt due to Banks and Financial Institutions

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RIDF Rural Infrastructure Development Fund
RLA Recoveries of Loans & Advances
ROA Return on Investment
RTGS Real Time Gross Settlement
RWA Risk Weighted Assets
Securitization and Reconstruction of Financial Assets and Enforcement of
SARFAESI Security Interest Act
SDR Special Drawing Rights
SFMS Structured Financial Messaging Services
SGB Sovereign Gold Bond
SHG Self Help Group
SIFI Systematically Important Financial Intermediaries
SIP Systematic Investment Plans
SIPS Systematically Important Payment System
SLR Statuatory Liquidity Ratio
SMERA SME Rating Agency of India Limited
SMILE SIDBI Make in India Loan for small Enterprises
SPNS Shared Payment Network System
SPNS Shared Payment Network System
STRIPS Separate Trading of Registered Interest and Principal of Securities
SWIFT Society for Worldwide Interbank Financial Telecommunication
TDS Tax Deducted at Source
TIN Tax Identification Network
UEBA Universal Electronic Bank Account
UIDAI Unique Identification Authority of India
UPI Unified Payments Interface
UPIN Unique Property Identification Number
USSD Unstructured Supplementary Services Date
UTI Unit Trust of India
VCF Venture Capital Fund
VPA Virtual Payment Address
WCTL Working Capital Term Loan

Topic 23: Schemes Related to Banking

Pradhan Mantri Jan Dhan Yojana

 It was launched by PM Modi in 2014 to provide access to various financial services such as savings,
insurance, Pension, Credit, Remittance, etc. in an affordable manner.
 Pradhan Mantri Jan Dhan Yojana is a financial inclusion campaign that provides universal access to banking
facilities. It also ensures to provide financial literacy with at least one basic banking account for every
household in India.

Atal Pension Yojana

Launched in 9th May 2015

Launched by Prime Minister Narendra Modi
Aim To provide social and financial security to people in their old age by enabling them
to make regular savings during their productive years.
Eligibility To avail benefits from the Atal Pension Yojana, you must fulfill the below
requirements:

1. Must be a citizen of India.

2. Must be between the age of 18-50
3. Should make contributions for a minimum of 20 years.
4. Must have a bank account linked with your Aadhar
5. Must have a valid mobile number

Those who are availing benefits of Swavalamban Yojana will be automatically

migrated to Atal Pension Yojana.

Ministry Finance
Minimum Rs5000
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Pension
Maximum Rs10000
Pension

Pradhan Mantri MUDRA Yojana

Launched in 2015
Launched by PM Modi
Eligibility To avail of the benefits of the PMMY Scheme, the person should be a citizen of
India. The loans are basically for people having a business plan in a Non-Farming
Sector with Income generating activities like the following:

• Manufacturing

• Processing

• Trade

• Service Sector

• Or any other fields whose credit demand is less than ₹10 lakhs.

The Indian Citizen seeking MUDRA Loans under the PMMY Scheme will have to
approach either an MFI, Bank, or NBFC to avail of it.

Aim To enable Micro Finance Institutions (MFIs), Non-Banking financial

institutions/Companies (NBFCs), Small Finance Banks, RBRs, Commercial Banks,
Cooperative Banks, etc. to provide Low Rate Loans to eligible entities.
Types of Shishu: Up to 50,000
MUDRA Loan
Kishor:50,000 to 5 lakh

Tarun: 5 lakh to 10 lakhs

Kisan Credit Card

Launched in 1998
Ministry Finance
Recommendation R.V Gupta Committee
Aim The Kisan Credit Card Scheme aims to provide timely and adequate credit to
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THE COMPLETE – STATIC BANKING AWARENESS

farmers to meet their needs at the time of crop production (cultivation expenses)
and meet contingency expenses. It also covers expenses related to ancillary
activities through simplified procedures for obtaining loans as and when needed.
Eligibility • Farmers – individual/joint borrowers who are owner cultivators;
• Tenant farmers, oral lessees & share croppers;
• Self-Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers
including tenant farmers, sharecroppers, etc.

Who can issue Commercial Banks, RRBs, Small Finance Banks, Cooperatives

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Banking Awareness Topic Wise - Committees in Banking

Name of the committee Focus

Basel Committee Banking Supervision

BimalJalan Committee To Scrutinize application for new bank

license

A C Shah NBFC

Athreya Committee Restructuring of IDBI

R V Gupta Kisan Credit Card

Bhandari Committee Reconstruction of RRBs

B Mahapatra To review the existing prudential

guidelines on restructuring of advances by

banks/financial institutions

Janakiraman To investigate the security transactions of

the bank

M Narasimham committee Banking Sector Reforms

NachiketMor comprehensive financial services for small

businesses and low income households

R V Gupta Committee Small Savings

RS Gujral Committee Suggest measures to boost MSME

exports.

S P Talwar Committee Restructuring Of Weak Public Sector Bank

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Banking Awareness Topic Wise - Committees in Banking

Suma Verma Committee To update, and revise the Banking

Ombudsman Scheme, 2006

UK Sharma Committee NABARD‘s Role In RRB

Urjit Patel Committee To examine the current monetary policy

framework

Vaghul Committee Money Market In India

P Selvam Committee Non- Performing Assets of Banks

Dave Committee To review the enforcement mechanism of

SEBI, particularly the recovery mechanism

under securities laws.

Deepak Mohanty Committee Management of Data and information in

the RBI

Gadgil Committee Lead Bank Scheme

Goiporia committee To improve customer service of banks

K V Kamath Restructuring of loans

V S Vyas Rural Credit

Y V Reddy To examine the analytical aspects of the

monetary survey

H R Khan Committee For reviewing the current Securities and

Exchange Board of India (Foreign Portfolio

Investors) Regulations, 2014 and

recommending any amendments that may

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Banking Awareness Topic Wise - Committees in Banking

be required for rationalising and simplifying

the SEBI FPI regulations.

Vijay Kelkar Committee To study and evaluate the extant public-

private partnership (PPP) model in India

Raghuram Rajan committee Financial Sector Reforms

Rattan P Watal Committee Committee on Digital Payments

A Ghosh Committee High Level Committee on Frauds and

Malpractices in Banks

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Important Banking Awareness Questions for Upcoming Mains Exams

1. ADRs are negotiable security instruments market or selling in a rising market to level
issued by a US bank that represent a certain out/rationalize the purchase or sale price.
number of shares of a foreign firm sold on US a) Arbitrage
financial markets. What does D represent in b) Amortisation
ADR? c) Asset Securitisation
a) Deposit d) Asset Reconstruction
b) Debt e) Averaging
c) Debit Answer: A
d) Depository Arbitrage is a strategy of gradually buying more
e) Drafting and more securities in a declining market or
Answer: D selling in a rising market to level out/rationalize
American Depository Receipts (ADR) are the purchase or sale price.
negotiable security instruments that are issued
by a US bank that represent a specific number 4. When was the Basel Committee on Banking
of shares in a foreign company that is traded in Supervision (BCBS) formed by a group of
US financial markets. central bank governors of G-10 countries?
a) 1954
2. Banking Ombudsman scheme was introduced b) 1956
in 2006 under the _________ section of the c) 1963
Banking Regulation Act 1949. d) 1974
a) Section 21 e) 1980
b) Section 24 Answer: D
c) Section 27 The Basel Committee, formerly known as the
d) Section 33 A Committee on Banking Regulations and
e) Section 35 A Supervisory Practices, was formed at the end of
Answer: E 1974 by the central bank governors of the Group
The Banking Ombudsman Scheme is introduced of Ten countries in the aftermath of severe
under Section 35 A of the Banking Regulation market disruptions in international currency and
Act, 1949 by RBI. banking markets (notably the failure of
BankhausHerstatt in West Germany).
3. ______________ is a strategy of gradually
buying more and more securities in a declining 5. Which of the following person headed the

committee to review the existing prudential part of an open and effective international
guidelines on restructuring of advances by economic system and a major catalyst for the
banks/financial institutions? development
a) A. C Shah b) The entry of foreign cash has allowed India to
b) Bimal Jalan improve its infrastructure, increase productivity
c) B Mahapatra and increase employment
d) M Narasimhan c) FDI also serves as a vehicle for acquiring
e) Janakiraman sophisticated technology and mobilizing foreign
Answer: C exchange reserves
B Mahapatra headed the committee to review d) Only (a) and (b)
the existing prudential guidelines on e) All (a), (b) and (c)
restructuring of advances by banks/financial Answer: E
institutions. Foreign direct investment (FDI) is critical to a
country's economic development. The entry of
6. The first POS system was the cash register, foreign cash has allowed India to improve its
invented in 1879 by ________________. infrastructure, increase productivity, and
a) James Ritty increase employment. FDI also serves as a
b) John Taylor vehicle for acquiring sophisticated technology
c) Eugene Mosher and mobilizing foreign exchange reserves.
d) Henry Taylor
e) Henry Mosher 8. Financial Inclusion is a method of offering
Answer: A banking and financial services to individuals.
The cash register, invented in 1879 by Ohio bar Which of the following is the objective of
owner James Ritty, was the first POS system. Financial Inclusion?
The cash register allowed users to accurately a) Universal access to financial services
record transactions, allowing for better b) Providing a basic bouquet of financial
bookkeeping and capital management. Ritty's services
idea was eventually sold to the National Cash c) Access to livelihood and skill development
Register Corporation (NCR) in 1884. d) Financial literacy and education
e) All the above
7. What are the roles of Foreign Direct Answer: E
Investment (FDI) in Indian Growth? RBI identified six strategic objectives of a
a) Foreign direct investment (FDI) is an integral national strategy for financial inclusion: (i)

Universal access to financial services, (ii) Market?

Providing a basic bouquet of financial services, a) It is a platform that facilitates traders to buy
(iii) Access to livelihood and skill development, and sell financial instruments and securities.
(iv) Financial literacy and education, (v) b) Financial markets create liquidity that allows
Customer protection and grievance redressal businesses to grow and entrepreneurs to raise
and (vi) effective coordination. money for their ventures
c)Mobilizing Funds
9. Which among the following is not an All India d) Only (a) and (b)
Financial Institution regulated by the Reserve e) All (a), (b) and (c)
Bank of India (RBI)? Answer: E
a) Export-Import Bank of India (Exim Bank) Functions:
b) Securities and Exchange Board of India 1. It is a platform that facilitates traders to buy
(SEBI) and sell financial instruments and securities.
c) Small Industries Development Bank of India 2. Financial markets create liquidity that allows
(SIDBI) businesses to grow and entrepreneurs to raise
d) National Bank for Financing Infrastructure money for their ventures.
and Development (NaBFID) 3. Mobilizing Funds
e) National Bank for Agriculture and Rural
Development (NABARD) 11. The Public Provident Fund (PPF) was
Answer: B established in India in 1968 to mobilize small
There are five development finance institutions deposits through investment and earn a return.
regulated by the Reserve Bank of India. They What is the current interest rate and Tenure of
are: the Public Provident Fund?
1. Export-Import Bank of India (Exim Bank) a) 7.1% and 15 years
2. National Bank for Agriculture and Rural b) 6.9% and 10 years
Development (NABARD) c) 7.4% and 10 years
3. Small Industries Development Bank of India d) 7.5% and 12 years
(SIDBI) e) 6.8% and 8 years
4. National Housing Bank (NHB) Answer: A
5. National Bank for Financing Infrastructure and The current PPF interest rate is 7.1% the
Development (NaBFID) minimum investment tenure is fixed at 15 years.

10. What are the functions of the Financial 12. Which of the following banks were re-

organized and amalgamated to form a single b) Time to maturity describes the length of the
entity named “Imperial Bank of India” on 27th loan contract
January 1921? c) Payments may be required at the end of the
a) Bank of Bengal contract or set intervals, usually on a monthly or
b) Bank of Bombay semi-annual basis
c) Bank of Madras d) Interest is the cost of borrowing money
d) Both (a) and (b) e) All the above
e) All (a), (b) and (c) Answer: E
Answer: E Characteristics of Loan:
The three presidency banks- Bank of Bengal 1. It is a short-term source of finance
(1806), Bank of Bombay (1840), and Bank of 2. Time to maturity describes the length of the
Madras (1843) were re-organized and loan contract.
amalgamated to form a single entity named 3. Payments may be required at the end of the
“Imperial Bank of India” on 27th January 1921. contract or set intervals, usually on a monthly or
semi-annual basis
13. When was the Know Your Customer 4. Interest is the cost of borrowing money
introduced in the Banking System in India?
a) 1998 15. Pradhan Mantri Jeevan Jyoti BimaYojana
b) 2000 (PMJJBY) is a Life insurance plan specially
c) 2002 designed for underprivileged families in India.
d) 2004 Which of the following are the features of the
e) 2005 PradhanMantriJeevanJyotiBimaYojana
Answer: C (PMJJBY) scheme?
In 2002, the Reserve Bank of India issued KYC a) Simple Renewal
standards to all banks. Before December 31, b) More comprehensive insurance coverage
2005, the RBI instructed all banks to ensure that c) The coverage for life insurance begins 45
they were fully compliant with the KYC rules. days following the date of enrolment
Money laundering, terrorist financing, and theft d) To purchase this plan, the policyholder must
were all targets. have a savings bank account, and it can be
purchased at any partnered banks in India that
14. Which of the following are the have tie-ups with LIC and other private
Characteristics of the Loans? insurance providers
a) It is a short-term source of finance e) All the above

Answer: E d) 8
Features of PMJJBY: e) 10
1. Simple Renewal Answer: C
It gives one year of life insurance and can be The committee consists of six members: three
renewed every year. officials of the Reserve Bank of India and three
2. More comprehensive insurance coverage external members appointed by the Indian
3. There Are No Maturity Benefits government.
Because it is a term insurance plan, the policy
solely covers life risks and no maturity benefits 17. Negotiable Instruments are enacted under
can be collected. the Negotiable Instruments Act _______.
4. Only a savings account is required. a) 1876
To purchase this plan, the policyholder must b) 1880
have a savings bank account, and it can be c) 1881
purchased at any partnered banks in India that d) 1893
have tie-ups with LIC and other private e) 1888
insurance providers. Answer: C
5. No-hassle procedures The Negotiable Instruments are enacted under
The coverage for life insurance begins 45 days the Negotiable Instruments Act 1881.
following the date of enrolment. However, in the
event of death as a result of an accident, the 18. A Non- Performing Assets refers to the
total assured amount will be paid. Even if a arrear in repayment of a loan or advances
policyholder leaves the scheme for whatever overdue for a period of _____________.
reason, he or she can simply rejoin it. a) 45 days
b) 60 days
16. The Central Government's Monetary Policy c) 90 days
Committee (MPC), established under Section d) 120 days
45ZB, determines the policy interest rate e) 150 days
required to meet the inflation target. How many Answer: C
members are there on Monetary Policy A Non- Performing Assets refers to the arrear in
Committee? repayment of a loan or advances overdue for 90
a) 4 days.
b) 5
c) 6 19. When was the Payments and Settlement Act

System 2007 set up by the Reserve Bank of resource base of commercial banks?
India came into force? a) Narasimhan
a) 2007 b) Sivaraman
b) 2008 c) Gadgil
c) 2009 d) H R Khan
d) 2010 e) Vijay Kelkar
e) 2012 Answer: A
Answer: B RRBs were conceptualized by the Narsimhan
Payments and Settlement Act System 2007 was committee in 1975 as a new set of regionally
set up by the Reserve Bank of India on 20th oriented rural banks that would combine the
December 2007 and came into force on 12th local feel and experience with rural difficulties
August 2008. that cooperatives have with the professionalism
and broad resource base of commercial banks.
20. The Reserve Bank of India was established
on April 1, 1935. When was the RBI 22. A savings account is a simple account that
nationalized? allows you to put money in a bank safely. The
a) 1940 Savings Account is eligible for the Indian
b) 1942 residents above the age of _____________
c) 1945 having valid KYC documents.
d) 1949 a) 12 years
e) 1956 b) 14 years
Answer: D c) 16 years
In compliance with the Reserve Bank of India d) 18 years
Act, 1934, RBI began operations on April 1, e) 20 years
1935. The RBI was nationalized on January 1, Answer: D
1949, following India's independence on August A Savings bank account can be opened by any
15, 1947. Indian resident over the age of 18 years who
has acceptable KYC documentation.
21. In 1975, which committee proposed
Regional Rural Banks as a new type of 23. The financial services undertaken by banks
regionally focused rural bank that would such as credit cards, smart cards, mutual funds,
combine the local feel and knowledge of primary dealers, and pension funds come under
cooperatives with the professionalism and large ____________ activities.

a) Branch Banking d) USSD

b) Mixed Banking e) APBS
c) Retail Banking Answer: C
d) Universal Banking A SWIFT code sometimes also called a SWIFT
e) Para Banking number is a standard format for Business
Answer:E Identifier Codes (BIC). Banks and financial
The financial services undertaken by banks institutions use them to identify themselves
such as credit cards, smart cards, mutual funds, globally.
primary dealers, and pension funds come under
Para Banking activities. 26. An ACH is a computer-based electronic
network that allows participating financial
24. When and who introduced the first ATM in institutions to execute transactions, mainly low-
India? value domestic transfers. What does C
a) 1980 and ICICI Bank represent in the acronym ACH?
b) 1982 and HSBC Bank a) Computer
c) 1987 and HSBC b) Clearing
d) 1990 and HDFC c) Clearance
e) 1992 and State Bank of India d) Credit
Answer: C e) Cash
HSBC opened the first ATM in India in Mumbai Answer: B
in 1987. Approximately 1500 ATMs were An automated clearing house (ACH) is a
installed throughout India during the next twelve computer-based electronic network that allows
years. Swadhan, India's first network of shared participating financial institutions to execute
ATMs, was established in 1997 by the Indian transactions, mainly low-value domestic
Banks' Association (IBA). transfers.

25. ____________________ is a standard format 27. When a Senior official is appointed by RBI to
for Business Identifier Codes (BIC) though redress customer complaints against deficiency
which the Banks and financial institutions use in certain banking services, then he/she is called
them to identify themselves globally. ____________.
a) IFSC a) Banking Clerk
b) MICR b) Banking Ombudsman
c) SWIFT c) Probationary Officer of Bank

d) Relationship Manager Answer: B

e) Chief Executive Officer Basel Norms is an international banking system
Answer: B issued by the Basel Committee on Banking
When a senior official is appointed by RBI to Supervision (BCBS). The Basel norms aim is to
redress customer complaints against deficiency coordinate banking regulations across the globe
in certain banking services, then he/she is called and to strengthen the international banking
Banking Ombudsman. system.

28. ______________________ is an accounting 30. Who headed the committee to Scrutinize the
procedure that gradually reduces the cost value application for a new bank license?
of a limited life or intangible asset through a) A.C Shah
periodical charges to income. b) Bimal Jalan
a) Arbitrage c) B Mahapatra
b) Amortisation d) M Narasimhan
c) Asset Securitisation e) Janakiraman
d) Asset Reconstruction Answer: B
e) Averaging In cooperation with the government, the
Answer: B Reserve Bank of India (RBI) established a six-
Amortisation is an accounting procedure that member committee led by former RBI Governor
gradually reduces the cost value of limited life or Bimal Jalan to evaluate the Reserve Bank's
intangible asset through periodical charges to economic capital framework.
income.
31. _________________ is a piece of hardware
29. __________________ is an international used to accept credit cards at retail businesses
banking system issued by the Basel Committee where the software to read magnetic strips of
on Banking Supervision (BCBS) to coordinate credit and debit cards is embedded in the
banking regulations across the globe, to hardware.
strengthen the international banking system. a) Mobile Wallets
a) Financial Inclusion b) Block Chain Technology
b) Basel Norms c) Artificial Intelligence
c) Investment Banking d) Point of Sale (PoS) Terminals
d) Financial Intermediaries e) Cloud Computing
e) Banking Supervision Answer: D

A point of sale terminal (PoS terminal) is an Financial Inclusion is defined as the availability
electronic device used to process card and equality of opportunities to access financial
payments at retail locations. services and refers to a process by which
individuals and businesses can access
32. __________________ involves establishing a appropriate, affordable, and timely financial
direct business interest in a foreign country, products and services.
such as buying or establishing a manufacturing
business, building warehouses, or buying 34. How many All-India Financial Institutions are
buildings. there at present regulated by the Reserve Bank
a) Foreign Direct Investment of India (RBI)?
b) Foreign Portfolio Investment a) 2
c) Foreign Exchange Investment b) 3
d) Fast Direct Investment c) 4
e) Foreign Dual Investment d) 5
Answer: A e) 7
Foreign Direct Investment involves establishing Answer: D
a direct business interest in a foreign country, There are five development finance institutions
such as buying or establishing a manufacturing regulated by the Reserve Bank of India.
business, building warehouses, or buying
buildings. 35. ___________________ encompass any
marketplace where securities are traded, such
33. _____________ is defined as the availability as the stock market, bond market, forex market
and equality of opportunities to access financial and derivatives market, among others.
services and refers to a process by which a) Financial Market
individuals and businesses can access b) Money Market
appropriate, affordable, and timely financial c) Capital Market
products and services. d) Security Market
a) Financial Stability e) Gilt Market
b) Financial Inclusion Answer: A
c) Account Financial markets encompass any marketplace
d) Privatisation where securities are traded, such as the stock
e) Financial Outcome market, bond market, forex market, and
Answer: B derivatives market, among others.

36. The Government of India's Public Provident 38. _____________________ is the mandatory
Fund (PPF) is a retirement savings scheme that process of identifying and verifying the client's
aims to provide everyone with a secure post- identity when opening an account and
retirement existence. When was the Public periodically over time.
Provident Fund (PPF) scheme launched by the a) Application form
Government of India? b) Identification
a) 1956 c) Know Your Customer
b) 1967 d) Know Your Company
c) 1968 e) Verification
d) 1972 Answer: C
e) 1975 Know Your Customer is the mandatory process
Answer: C of identifying and verifying the client's identity
The Public Provident Fund (PPF) was when opening an account and periodically over
established in India in 1968 to mobilize small time.
deposits through investment and earn a return.
It's also known as a savings-cumulative-tax 39. _________________ is a sum of money that
savings investment vehicle since it allows you to an individual or company borrows from a lender
create a retirement fund while lowering your and when you receive money from a friend,
annual taxes. bank, or financial institution in exchange for
future repayment of the principal and interest.
37. Which bank is the first bank to commence its a) Advances
operations in India? b) Loans
a) Bank of Madras c) Lending
b) Bank of Hindustan d) Payment
c) Bank of Bengal e) Ways and Means
d) Bank of Bombay Answer: B
e) Central Bank A Loan is a sum of money that an individual or
Answer: B company borrows from a lender. A loan is when
The banking system commenced in India with you receive money from a friend, bank, or
the foundation of the Bank of Hindustan in financial institution in exchange for future
Calcutta (now Kolkata) in 1770 which ceased to repayment of the principal and interest. A loan is
operate in 1832. essentially an amount borrowed for a fixed
period.

required to meet the inflation target.

40. Pradhan Mantri Suraksha Bima Yojana is a
government-backed accident insurance scheme 42. ___________________ is a document that
introduced in India in 2015. What are the guarantees payment of a specific amount of
premium amount and total coverage amount for money to a specified person (the payee) and a
the Permanent total disability? mode of transferring a debt from one person to
a) Rs. 12 p.a and Rs. 1 lakh another.
b) Rs. 12 p.a and Rs. 1 lakh a) Financial Inclusion
c) Rs. 20 p.a. and Rs. 2 lakhs b) Negotiable Instruments
d) Rs. 20 p.a and Rs. 1 lakh c) Priority Sector Lending
e) Rs. 22 p.a. and Rs. 2 lakhs d) Ombudsman
Answer: C e) Monetary Policy
Pradhan Mantri Suraksha Bima Yojana is a Answer: B
government-backed accident insurance scheme A negotiable instrument is a document that
introduced in India in 2015. The Premium guarantees payment of a specific amount of
amount is Rs.20 per annum and the coverage money to a specified person (the payee). It is a
under this scheme are Rs. 2 lakhs for mode of transferring a debt from one person to
Permanent total disability and Rs. 1 lakh for another.
Permanent Partial Disability.
43. ___________________ is a classification used
41. The Central Government's Monetary Policy by financial institutions for loans and advances
Committee (MPC), established under on which the principal is past due and on which
______________, determines the policy interest no interest payments have been made for some
rate required to meet the inflation target. time.
a) Section 26 a) Negotiable Instruments
b) Section 32 b) Non-Performing Assets
c) Section 34 c) Financial Inclusion
d) Section 45ZB d) Financial Intermediaries
e) Section 47 e) Ombudsman
Answer: D Answer: B
The Central Government's Monetary Policy Non-Performing Asset is a classification used by
Committee (MPC), established under Section financial institutions for loans and advances on
45ZB, determines the policy interest rate which the principal is past due and on which no

interest payments have been made for some _____________ schedule of the RBI Act, 1934.
time. a) First Schedule
b) Second Schedule
44. ________________ is a system which c) Third Schedule
enables payment between two entities i.e. a d) Fourth Schedule
payer and payee and constitutes clearing, e) All the above
settlement or payment service. Answer: B
a) Payment and Settlement Systems Banks that are included in the second schedule
b) Financial System of the RBI Act, 1934 are considered to be
c) Reinsurance scheduled Banks.
d) Underwriting
e) Guarantee 47. ______________ is a simple account that
Answer: A allows you to deposit money safely with a bank
Payment and Settlement Systems constitute a and ensures that your money is safe and
major aspect of a country’s financial and accessible whenever you need it. You can
economic structure. A payment system is a withdraw your funds, either digitally or in person,
system that enables payment between two at any point in time.
entities i.e. a payer and payee and constitutes a) Savings Account
clearing, settlement, or payment service. b) Current Account
c) NRI Account
45. Which committee recommended setting up d) Fixed Deposit
the Reserve Bank of India? e) Recurring Deposit
a) Narasimhan Answer: A
b) Sivaraman A savings account is a simple account that
c) Hilton Young allows you to put money in a bank safely. It
d) Vijay Kelkar protects your money's safety and accessibility
e) H. R. Khan whenever you need it. You can withdraw your
Answer: C funds at any moment, either digitally or in
The Reserve Bank of India was set up based on person. A savings account is a deposit account
the recommendations of the Hilton Young that pays interest and is held with a bank or
Commission. other financial institution.

46. Scheduled Banks are included in the 48. ____________________ is a type of business

of banking through branches that helps in better c) Tenure

management and more risk Diversification. d) Term
a) Branch Banking e) Transaction
b) Mixed Banking Answer: B
c) Retail Banking SWIFT stands for the Society for Worldwide
d) Universal Banking Interbank Financial Telecommunication.
e) Para Banking
Answer: A 51. ALM is a part of a financial accounting
Branch banking involves the business of investment plan and is the activity of controlling
banking through branches. It helps in better financial risks that come from mismatches
management and more risk Diversification. between assets and obligations. What does M
49. _______________________ is an electronic represent?
banking outlet that allows customers to a) Mismatch
complete basic transactions without the aid of a b) Meaning
branch representative or teller. c) Management
a) Automated Teller Machine d) Motive
b) Winding Machine e) Merge
c) Cash Counting Machine Answer: C
d) Compression Testing Machine Asset and Liability Management (ALM) is a part
e) Passbook Printer of a financial accounting investment plan and is
Answer: A the activity of controlling financial risks that
The automated Teller Machine is an electronic come from mismatches between assets and
banking outlet that allows customers to obligations.
complete basic transactions without the aid of a
branch representative or teller. 52. When a Senior official is appointed by RBI to
redress customer complaints against deficiency
50. SWIFT is a standard format for Business in certain banking services, then he/she is called
Identifier Codes (BIC) through which Banks and Banking Ombudsman. What is the tenure of the
financial institutions use them to identify Banking Ombudsman?
themselves globally. What does T represent in a) 2 years
SWIFT code? b) 3 years
a) Transfer c) 4 years
b) Telecommunication d) 5 years

e) No fixed term 1. Basel I

Answer: B 2. Basel II
The Banking Ombudsman will be appointed for 3. Basel III
not more than three years, with the possibility of
a two-year extension subject to an overall age 55. Who was the head of the committee of
restriction of 65 years. comprehensive financial services for small
businesses and low-income households?
53. A situation where the instrument is drawn in a) Bimal Jalan
such a manner that it can be constructed both b) Narasimhan II
as a promissory note or bill of exchange, then it c) Nachiket Mor
is called _________. d) Janakiraman
a) Arbitrage e) R V Gupta
b) Ambiguous Answer: C
c) Amortisation Raghuram Rajan founded the Committee on
d) Asset Securitisation Comprehensive Financial Services for Small
e) Green Field Businesses and Low-Income Households (also
Answer: B known as the Nachiket Mor Committee) on
A situation where the instrument is drawn in September 23, 2013, after being appointed as
such a manner that it can be constructed both the governor of the Reserve Bank of India (RBI).
as a promissory note or bill of exchange is It was headed by Nachiket Mor.
called Ambiguous.
56. ___________ is a secure and immutable
54. How many BASEL Accords have been record-keeping technology that makes it difficult
introduced as of now by the Basel Committee on to hack the system or alter the data recorded on
Bank Supervision (BCBS)? it.
a) 2 a) Mobile Wallets
b) 3 b) Block Chain Technology
c) 4 c) Artificial Intelligence
d) 5 d) Point of Sale (PoS) Terminals
e) 8 e) Cloud Computing
Answer: B Answer: B
Basel Committee on Banking Supervision Blockchain is a record-keeping technology
(BCBS) has issued three sets of regulations : designed to make it impossible to hack the

system or forge the data stored on it, thereby e) PradhanMantri Jan DhanYojana
making it secure and immutable. A blockchain Answer: A
consists of individual blocks of data that involve No- Frill Accounts require zero or very low
a series of related transactions, linked together minimum balance and other banking facilities
in a specific order. such as withdrawals and ATM and Debit card
facilities at zero charges to enable universal
57. What are the Benefits of Foreign Portfolio access to banking facilities introduced in 2005.
Investment (FPI)?
a) Portfolio diversification 59. Which of the following are the Objectives of
b) Increases the liquidity of domestic capital Export and Import Bank (EXIM) Bank?
markets a) To facilitate sustained growth in exports from
c) Promotes the development of equity markets India and import in India
d) Access to markets with different risk-return b) To provide financial and other assistance to
characteristics importers and exporters of the country
e) All the above c) Pre-shipment and Post-shipment
Answer: E d) Overseas investment
Benefits of Foreign Portfolio Investment (FPI): e) All the above
a) Portfolio diversification Answer: E
b) Increases the liquidity of domestic capital The objective of the EXIM Bank had been to
markets import technology and export marketing and
c) Promotes the development of equity markets product development, export production, pre-
d) Access to markets with different risk-return shipment and post-shipment, and overseas
characteristics investment.

58. _________________ require zero or very low 60._________________ is a financial market that
minimum balance and other banking facilities buys and sells long-term debt (over a year) or
such as withdrawals and ATM and Debit card equity-backed securities, as opposed to a
facilities at zero charges to enable universal money market, which buys and sells short-term
access to banking facilities introduced in 2005. debt.
a) No-Frill Accounts a) Financial Market
b) Lead Bank scheme b) Money Market
c) Business correspondents c) Capital Market
d) Small Account d) Security Market

e) Gilt Market Allahabad Bank is an Indian nationalized bank

Answer: C headquartered in Kolkata. It is India's oldest
A capital market is a financial market that buys joint-stock bank.
and sells long-term debt (over a year) or equity-
backed securities, as opposed to a money 63. What is Know Your Customer (KYC) about?
market, which buys and sells short-term debt. a) Identify customer and verify customer’s
identity
61. The Public Provident Fund (PPF) was b) Understand the customer profile and
established in India in 1968 to mobilize small associated risks
deposits through investment and earn a return. c) Perform additional due diligence on high-risk
What are the minimum and maximum areas and customers
investment limits under the Public Provident d) Only (a) and (b)
Fund Scheme? e) All (a), (b) and (c)
a) Rs. 500 and Rs. 1 lakh Answer: E
b) Rs. 1000 and Rs. 1.5 lakhs Financial institutions use Know Your Customer
c) RS. 500 and Rs. 1.5 lakhs (KYC) rules to defend themselves from fraud,
d) Rs. 1000 and Rs. 2 lakhs corruption, money laundering, and terrorist
e) Rs. 1500 and Rs. 1.5 lakhs financing.
Answer: C KYC entails several steps, including:
Public Provident Fund allows a minimum determine the customer's identity;
investment of Rs 500 and a maximum of Rs 1.5 comprehend the nature of customers' actions
lakh for each financial year. Investments can be and ensure that the source of cash is
made in a lump sum or a maximum of 12 legal; and
installments. evaluate the money laundering risks posed
by customers
62. Which of the following bank is the oldest
joint stock bank in India? 64. _______________ are a technique employed
a) Punjab National Bank by the Reserve Bank of India as part of its credit
b) Andhra Bank policy to assist States banking with it in
c) Allahabad Bank overcoming transitory cash flow imbalances in
d) United Bank of India their receipts and payments.
e) Central Bank of India a) Collateral
Answer: C b) Mortgage

c) Reverse Mortgage the Reserve Bank of India and three external

d) Ways and Means Advances members are appointed by the Indian
e) Moratorium government. Who is the Chairperson of the
Answer: D Monetary Policy Committee?
Ways and means advances are a technique a) Finance Minister
employed by the Reserve Bank of India as part b) RBI Governor
of its credit policy to assist States banking with it c) Chief Economic Advisor
in overcoming transitory cash flow imbalances in d) President of India
their receipts and payments. e) Any Individual from the Committee
Answer: B
65. When was the Pradhan Mantri Kisan The composition of the current monetary policy
Samman Nidhi established to supplement the committee is as follows: Governor of the
financial needs of the small and marginal Reserve Bank of India – Chairperson, ex officio -
farmers in procuring various farm inputs to Shaktikanta Das.
ensure proper crop health and appropriate
yields, commensurate with the anticipated farm 67. Which of the following is one among the type
income at the end of each crop cycle? of Negotiable Instruments under the Negotiable
a) 2015 Instruments Act 1881?
b) 2016 a) Promissory note
c) 2017 b) Bill of exchange
d) 2018 c) Cheque
e) 2019 d) Both (a) and (b)
Answer: E e) All (a), (b) and (c)
The Pradhan Mantri Kisan Samman Nidhi (PIV- Answer: E
KISAN) is a new Central Sector Scheme There are three types of Negotiable instruments
launched in 2019 that would give income recognized by the Negotiable instruments act:
support to all landholding farmer families in the Promissory notes, Bills of Exchange, and
country to help them meet their financial Cheques.
demands for agricultural and allied inputs, as
well as home needs. 68. The Non-Performing Assets that have been
past due for anywhere from 90 days to 12
66. The Monetary Policy Committee consists of months. Then such assets are called
six members out of which three officials are from ____________________.

a) Standard Assets following city was initially the capital of the RBI?
b) Sub-Standard Assets a) Kolkata
c) Doubtful Assets b) Chennai
d) Loss of Assets c) Bengaluru
e) Wilful Defaulters d) Pune
Answer: A e) Noida
Standard Assets are the Non-Performing Assets Answer: A
that have been past due for anywhere from 90 The Reserve Bank of India was founded on April
days to 12 months. 1, 1935, under the Reserve Bank of India Act,
1934. The Reserve Bank's Central Office was
69. What are the regulations made by the first founded in Kolkata, but in 1937 it was
Reserve Bank of India (RBI) under the Payment permanently relocated to Mumbai.
and Settlement System Act 2007?
a) Board for Regulation and Supervision of 71. Regional Rural Banks (RRBs) are Indian
Payments and Settlements Systems Regulation, government-owned scheduled commercial
2008 banks that operate at the regional level in
b) Payments and Settlement Systems several states. What are the share of the
Regulations, 2008 Central, state government, and sponsor banks
c) Payments and Settlement Systems in the Regional Rural Banks?
Regulations, 2010 a) 50:15:35
d) Both (a) and (b) b) 50:35: 15
e) Both (a) and (c) c) 35:50:15
Answer: D d) 50:10:40
Under the Payment and Settlement System Act e) 50:40:10
2007, two regulations have been made by RBI Answer: A
1. Board for Regulation and Supervision of The Regional Rural Banks were 50 percent, 15
Payments and Settlements Systems Regulation, percent, and 35 percent owned by the central
2008 government, state government, and sponsoring
2. Payments and Settlement Systems bank, respectively.
Regulations, 2008. 72. Interest on a savings account is determined
__________ depending on your closing amount,
70. The Headquarters of the Reserve Bank of as per the new RBI regulation.
India is situated in Mumbai. Which of the a) Monthly Basis

b) Daily Basis e) John Rutherford

c) Quarterly Answer: A
d) Half-yearly John Adrian Shepherd-Barron, a British inventor
e) Yearly of Indian descent, led the team that installed the
Answer: B first cash machine, now known as the
Interest on a savings account is determined automated teller machine or ATM.
daily depending on your closing amount, as per
the new RBI regulation. Depending on the 75. MICR Code full form is Magnetic Ink
savings account type and the bank's policy, Character Recognition to identify a bank and
interest will be credited to your account on a branch participating in the ECS Credit scheme.
half-yearly or quarterly basis. How many digit code is the MICR?
a) 6
73. _____________ refers to a system in which b) 9
banks offer a wide range of comprehensive c) 11
financial services, including retail, commercial, d) 12
and investment banking. e) 14
a) Branch Banking Answer: B
b) Mixed Banking MICR code is a code printed on cheques using
c) Retail Banking MICR (Magnetic Ink Character Recognition
d) Universal Banking technology). This enables identification of the
e) Para Banking cheques and which in turn means faster
Answer: D processing. A MICR code is a 9-digit code that
Universal banking refers to a system in which uniquely identifies the bank and branch
banks offer a wide range of comprehensive participating in an Electronic Clearing System
financial services, including retail, commercial, (ECS).
and investment banking.
76. The AMFI is dedicated to expanding the
74. Who invented the Automated Teller Machine Indian Mutual Fund Industry on professional,
(ATM)? healthy, and ethical lines, as well as to
a) John Shepherd-Barron improving and maintaining standards in all areas
b) Luther George Simjian to safeguard and promote mutual funds and
c) Donald Wetzel their unit holders. What does A represent?
d) Do Duc Cuopng a) Actual

b) Association c) Annuities
c) Actuary d) Account
d) Asset e) Account Reconciliation
e) Alternative Answer: A
Answer: B Accretion is a process, where increments and
The Association of Mutual Funds in India (AMFI) periodic increases are made in the book value
is dedicated to expanding the Indian Mutual or the balance sheet value of an asset.
Fund Industry on professional, healthy, and
ethical lines, as well as to improving and 79. When did India begin adopting the BASEL-I
maintaining standards in all areas to safeguard recommendations?
and promote mutual funds and their unit holders. a) 1988
b) 1992
77. Which are the Institutions covered under the c) 1993
Banking Ombudsman Scheme, 2006? d) 1999
a) All commercial banks (scheduled and non- e) 1998
scheduled, public and private) Answer: D
b) Regional rural banks Basel- Norms were introduced in 1988 but India
c) Scheduled primary co-operative banks adopted Basel 1 guidelines in 1999.
d) Non-Banking Finance Companies
e) All the above 80. The Kisan Credit Card (KCC) system was
Answer: E developed to provide Kisan Credit Cards to
Institutions covered under the Banking farmers based on their holdings for uniform
Ombudsman scheme are All commercial banks acceptance by banks so that farmers could
(scheduled and non-scheduled, public and easily purchase agriculture inputs such as
private), regional rural banks, scheduled primary seeds, fertilizers, and pesticides, and draw cash
co-operative banks, Non- Banking Finance for their production needs. Under whose
Companies. recommendation does the Kisan Credit Card
scheme introduce?
78. __________ is a process, where increments a) A . C Shah
and periodic increases are made in the book b) Bimal Jalan
value or the balance sheet value of an asset. c) R. V. Gupta
a) Accretion d) M Narasimhan
b) Ambiguous e) Janakiraman

Answer: C a) Individuals
On the suggestions of the R. V. Gupta b) Companies
Committee, the National Bank for Agriculture c) Foreign Government
and Rural Development (NABARD) developed d) Only (a) and (b)
the Kisan Credit Card (KCC) scheme model e) All (a), (b) and (c)
scheme to give advances for agricultural Answer: E
purposes. Foreign portfolio investing is popular among
several different types of investors. Common
81. Which of the following are the features of transactors of foreign portfolio investment
Blockchain Technology? include:
a) Increases the Processing Speed of Individuals
Transactions Companies
b) Eliminates the need for intermediaries to Foreign governments
authorize financial transactions between
customers 83. When was the Basic Savings Bank Deposit
c) Cheaper and Easiest way to exchange Account (BSBDA) introduced in India replacing
currency at lower rates No-Frill Accounts?
d) Monitor Supply Chains a) 2008
e) All the above b) 2010
Answer: E c) 2012
Features of Blockchain Technology: d) 2013
1. Increases the Processing Speed of e) 2015
Transactions Answer: C
2. Eliminates the need for intermediaries to To provide widespread access to banking
authorize financial transactions between services, no-frills bank accounts demand a zero
customers. or very low minimum balance, as well as
3. the Cheaper and Easiest way to exchange additional financial services such as
currency at lower rates withdrawals, ATM, and Debit card services at no
4. Monitor Supply Chains cost. In the year 2012, no-frills bank accounts
5. Transaction is secure and reliable were called Basic Saving Bank Deposit
Accounts.
82. Who among the following can make Foreign
Portfolio Investments? 84. _________________ is India's primary

regulatory organization in charge of matters Functions of Capital Market:

relating to policy, planning, and operations in the 1. The Capital Markets help to accelerate the
field of credit for agriculture and other economic process of economic growth
activities in rural regions. 2. Facilitates the movement of capital to be used
a) Export-Import Bank of India (Exim Bank) more profitability and productively to boost the
b) Securities and Exchange Board of India national income
(SEBI) 3. Minimization of transaction and information
c) Small Industries Development Bank of India cost
(SIDBI) 4. Quick valuations of financial instruments
d) National Bank for Financing Infrastructure 5. Encourages a massive range of ownership of
and Development (NaBFID) productive assets
e) National Bank for Agriculture and Rural
Development (NABARD) 86. ______________ scheme is launched by the
Answer: E Government of India to ensure the financial
The National Bank for Agricultural and Rural independence of women by encouraging them
Development (NABARD) is India's primary to invest in a savings scheme that would enable
regulatory organization in charge of matters them to fulfill their long-term life goals and
relating to policy, planning, and operations in the dreams like higher education, marriage, etc. and
field of credit for agriculture and other economic ensure financial stability.
activities in rural regions. a) Public Provident Fund
b) Sukanya Samriddhi Yojana
85. What are the functions of the Capital c) Senior Citizens Savings Scheme
Market? d) National Savings Certificate
a) The Capital Markets help accelerate the e) Kisan Vikas Patra
process of economic growth Answer: B
b) Facilitates the movement of capital to be used Sukanya Samriddhi Yojana scheme is launched
more profitability and productively to boost the by the Government of India to ensure the
national income financial independence of women by
c) Quick valuations of financial instruments encouraging them to invest in a savings scheme
d) Encourages a massive range of ownership of that would enable them to fulfill their long-term
productive assets life goals and dreams like higher education,
e) All the above marriage, etc. and ensure financial stability.
Answer: E

87. Which of the following is the First Indian Answer: E

Commercial bank wholly owned and managed
by Indians?
a) Punjab National Bank
b) Andhra Bank
c) Allahabad Bank
d) United Bank of India
e) Central Bank of India
Answer: E
The Central Bank of India, founded in 1911, was
90. How much is the income support provided
the first Indian commercial bank to be entirely
annually under the
owned and operated by Indians.
PradhanMantriKisanSammanNidhi (PIV-KISAN)
provided to all eligible farmer families across the
88. Under which regulation have the Know Your
country?
Customer laws been implemented in financial
a) Rs. 2000
transactions?
b) Rs. 3500
a) Prevention of Money Laundering Act
c) Rs. 5000
b) Reserve Bank of India Act
d) Rs. 6000
c) Banking Nominees Act
e) Rs. 7500
d) Companies Act
Answer: D
e) Banking Companies Act
Income support of Rs.6000 per annum is
Answer: A
provided to all eligible farmer families across the
These KYC guidelines are issued under Section
country under the
35A of the Banking Regulation Act, 1949 and
PradhanMantriKisanSammanNidhi in three
Rule 9(14) of Prevention of Money-Laundering
equal installments of Rs.2000 each every four
(Maintenance of Records) Rules, 2005.
months.

89. Which of the following loan is a type of loan?

91. The rate at which the Central Bank lends to
a) Secured Loan
commercial banks against government assets is
b) Revolving Loan
called __________.
c) Term Loan
a) Repo Rate
d) Hard Loan
b) Reverse Repo rate
e) All the above

c) Cash Reserve Ratio e) Wilful Defaulters

d) Bank Rate Answer: B
e) Statutory Liquidity Ratio If an NPA remains for a period less than or
Answer: A equal to 12 months is considered to be Sub-
The rate at which the Central Bank lends to Standard Assets.
commercial banks against government assets is
known as the repo rate. The repo rate is the rate 94. Which among the following is not a type of
at which the Reserve Bank of India lends short- the Payment and Settlement System?
term cash to banks. It is used by monetary a) National Electronic Funds Transfer
authorities to control inflation. b) Immediate Payment Service
c) Unified Payments Interface
92. According to __________ of the Negotiable d) Bharat Bill Payment System
Instruments Act 1881, "A negotiable instrument e) Cryptocurrency
means a promissory note, bill of exchange or Answer: E
cheque payable either to order or to bearer. Payment systems transactions in India would
a) Section 3 comprise transactions processed and settled
b) Section 6 through (a) Paper Clearing [Magnetic Ink
c) Section 11 Character Recognition (MICR), Non-MICR,
d) Section 13 Cheque Truncation System (CTS), Express
e) Section 21 Cheque Clearing System (ECCS)]; (b)Bulk
Answer: D electronic transaction processing systems like
According to Section 13 of the Negotiable Electronic Clearing Service (ECS), with its
Instruments Act 1881, "A negotiable instrument variants Regional ECS and National ECS;
means a promissory note, bill of exchange or National Automated Clearing House (NACH) -
cheque payable either to order or to bearer. Debit and Credit; (c) Card Payments(Debit,
Credit, and Electronic); (d) Large Value [Real
93. If an NPA remains for a period less than or Time Gross Settlement Payment and Settlement
equal to 12 months, then it is considered to be Systems in India (RTGS)]; (e) Retail [National
___________. Electronic Funds Transfer (NEFT)]; (f) Fast
a) Standard Assets Payments [Immediate Payment Service (IMPS),
b) Sub-Standard Assets Unified Payments Interface(UPI)]; and (g) e-
c) Doubtful Assets Money [Prepaid Payment Instrument (PPI)
d) Loss of Assets Cards and Wallets).

between how much banks value receiving more

95. Who served as the first Governor of the deposits and how much savers value the
Reserve Bank of India (RBI)? services of a savings account determines the
a) C. D. Deshmukh interest rate set on savings account deposits at
b) Hilton Young a basic economic level.
c) Osborne Smith
d) Gilbert Singh 98. _____________________ is a financial
e) Narasimhan institution that issues demandable liabilities and
Answer: C invests in assets that have little or no nominal
Sir Osborne Smith was the first Governor of the interest rate and credit risk.
Reserve Bank. a) Branch Banking
b) Mixed Banking
96. What is the authorized capital of Regional c) Narrow Banking
Rural Banks? d) Universal Banking
a) Rs. 20 lakhs e) Para Banking
b) Rs. 50 lakhs Answer: C
c) Rs. 1 crore A narrow bank is a financial institution that
d) Rs. 5 crores issues demandable liabilities and invests in
e) Rs. 100 crores assets that have little or no nominal interest rate
Answer: D and credit risk.
The authorized capital of RRBs – Rs. 5 crores
99. Which bank was the first to introduce the
97. Who determines the interest rate of the Talking ATM?
Savings Bank Account? a) Indian Bank
a) Reserve Bank of India b) Union Bank of India
b) Government of India c) ICICI Bank
c) Ministry of Finance d) HSBC
d) Individual Banks e) HDFC Bank
e) Indian Banks Association Answer: B
Answer: D On June 6, 2012, Union Bank of India, one of
Individual Commercial Banks determine the India's biggest public sector banks, launched
interest rate of the Savings Bank Account which India's first Truly Accessible and Talking ATM in
usually varies from 3.5% to 6%. The link Vastrapur, Ahmedabad, Gujarat, for the visually

and physically impaired. defined investment policy for the benefit of its
investors is referred to as an Alternative
100. Which of the following organizations is Investment Fund or AIF.
responsible for overseeing India's payment and
settlement systems? 102. The Present Banking Ombudsman scheme
a) Ministry of Finance was in practice from the year 2006. When was
b) Government of India the first Banking Ombudsman Scheme
c) Reserve Bank of India introduced?
d) Indian Banks Association a) 1990
e) Bank Boards Bureau b) 1992
Answer: C c) 1995
The RBI's role is to oversee payment and d) 1998
settlement systems, ensuring that the goals of e) 1999
safety and efficiency are met through monitoring Answer: C
current and planned systems. The Banking Ombudsman Scheme was first
introduced in 1995. The current scheme became
101. Any fund established or incorporated in operative on 1st January 2006.
India that is a privately pooled investment
vehicle that collects funds from sophisticated 103. __________________ is the process through
investors, whether Indian or foreign, for which the future receivables (say rent) of an
investing by a defined investment policy for the organisation are converted into debt instruments
benefit of its investors is referred to as an AIF. and then sold.
What does A represent in AIF? a) Arbitrage
a) Alternative b) Amortisation
b) Altering c) Asset Securitisation
c) Actual d) Asset Reconstruction
d) Automated e) Averaging
e) Automatic Answer: C
Answer: A Asset Securitisation is the process through
Any fund established or incorporated in India which the future receivables (say rent) of an
that is a privately pooled investment vehicle that organization are converted into debt instruments
collects funds from sophisticated investors, and then sold.
whether Indian or foreign, for investing by a

104. Which of the following are the aim of Basel c) Inventory and stock management
Norms? d) Quick Payments
a)Make the banking sector strong enough to e) All the above
withstand economic and financial stress Answer: E
b) Reduce risk in the system Features of PoS Terminals:
c) Improve transparency in banks 1. Billing and Order Processing
d) Both (a) and (b) 2. Reads the information of a customer's credit
e) All (a), (b) and (c) or debit card
Answer: E 3. Processing card payments at retail locations
The BASEL norms have three aims: Make the 4. Quick Payments
banking sector strong enough to withstand 5. Ringing up items by department
economic and financial stress; reduce risk in the 6. Tracking sales
system and improve transparency in banks. 7. Adding taxes
8. Creating receipts
105. Who headed the committee for reviewing 9. Inventory and stock management
the progress made in implementing banking
reforms? 107. _______________ refers to investing in the
a) A.C Shah financial assets of a foreign country, such as
b) Bimal Jalan stocks or bonds available on an exchange.
c) B Mahapatra a) Foreign Direct Investment
d) Narasimhan II b) Foreign Portfolio Investment
e) Janakiraman c) Foreign Exchange Investment
Answer: D d) Fast Direct Investment
The Narasimham-II Committee was entrusted e) Foreign Dual Investment
with reviewing the progress made in Answer: B
implementing banking reforms since 1992 to Foreign Portfolio Investment refers to investing
strengthen India's financial institutions. in the financial assets of a foreign country, such
as stocks or bonds available on an exchange.
106. Which of the following are the Features of a
point of sale terminal (POS terminal)? 108. Financial inclusion attempts to provide
a) Billing and Order Processing digital financial solutions to the country's
b) Reads the information of a customer's credit economically disadvantaged citizens. Which of
or debit card the following is one among the schemes

introduced to promote Financial Inclusion? 110. What are the types of Financial Market?
a) Basic Savings Bank Deposit Account a) Capital Market
(BSBDA) b) Money Market
b) Lead Bank scheme c) Gilt Market
c) PradhanMantri Jan DhanYojana (PMJDY) d) Both (a) and (b)
d) Business correspondents e) Both (a) and (c)
e) All the above Answer: D
Answer: E Financial markets are classified as:
The Government of India has introduced several 1. Money market
financial Inclusion schemes. They are 2. Capital market
i.Basic Savings Bank Deposit Account (BSBDA)
ii. Lead Bank scheme 111. What are the Benefits of the Public
iii.PradhanMantri Jan DhanYojana (PMJDY) Provident Fund?
iv. Business correspondents a) Good returns
v.Stand up India scheme b) Risk-free returns as the returns are not
dependent on the market volatility
109. Exim Bank was established by the Indian c) This scheme tends to serve as a prerequisite
government under the Export-Import Bank of for financial requirements at the time of
India Act ________ as an export credit provider, retirement
replicating worldwide export credit agencies. d) Liquidity with Partial Withdrawal and Loan
Where is the headquarters of EXIM Bank? Facilities
a) 1976 and Delhi e) All the above
b) 1979 and Mumbai Answer: E
c) 1981 and Mumbai Benefits of the Public Provident Fund:
d) 1984 and Delhi i) Good returns
e) 1987 and Mumbai ii) Risk-free returns as the returns are not
Answer: C dependent on the market volatility
Exim Bank was established by the Indian iii) This scheme tends to serve as a prerequisite
government under the Export-Import Bank of for financial requirements at the time of
India Act, 1981 as an export credit provider, retirement
replicating worldwide export credit agencies. iv) Liquidity with Partial Withdrawal and Loan
Headquarters: Mumbai Facilities
v) Flexibility of Tenure

or a business to support a borrowing request.

112. Under whose recommendation was a) Collateral
Imperial bank of India nationalized and renamed b) Mortgage
as State Bank of India on July 1, 1955? c) Advances
a) Kelkar Committee d) Ways and Means
b) Gorewala Committee e) Moratorium
c) Gadgil Committee Answer: A
d) Narasimhan Committee A collateral loan is a secured loan in which the
e) Sivaraman Committee borrower can secure a loan by pledging any
Answer: D asset. The loan amount is determined by the
On the Gorewala Committee's recommendation, collateral's value.
the Imperial Bank was nationalized in 1955 and
renamed the State Bank of India. 115. What is the premium amount to be paid
under the
113. What is the procedure for giving the PradhanMantriJeevanJyotiBimaYojana
impression that huge sums of money earned (PMJJBY) annually?
from major crimes like drug trafficking or terrorist a) Rs. 330
activity came from a lawful source? b) Rs. 350
a) Money Fraud c) Rs. 420
b) Money Laundering d) Rs. 436
c) Money Theft e) Rs. 450
d) Unaccounted Cash Answer: D
e) Illigetimate Money PMJJBY provides life insurance coverage of Rs.
Answer: B 2 lakhs for a yearly payment of Rs. 436.
Money laundering is a method used by criminals
to conceal the illegal source of their revenue. 116. The MPC meets six times a year (about
Money is "cleaned" of its illicit origin and made every seven to ten weeks) to review economic
to seem like legitimate business profits by and monetary conditions, as well as other risk
moving it via intricate transfers and transactions, variables that affect inflation and economic
or through a series of businesses. growth, to make the best monetary policy
decisions possible. What are the policy rates of
114. ________________ is an asset that is the Reserve Bank of India?
pledged as security to a lender by an individual a) Repo Rate

b) Reverse Repo rate signature of the drawer or the maker, the

c) Cash Reserve Ratio instrument shall not be a valid one.
d) Bank Rate ●These instruments can be transferred
e) All the above indefinitely till they are at maturity.
Answer: E ●These instruments are in writing and
The Monetary Policy Rates are: signed by the parties, they are used as
Policy Repo Rate evidence of the fact of indebtedness
Reverse Repo Rate because they have special rules of
Bank Rate evidence.
Cash Reserve Ratio ●These instruments relate to the payment
StatuatoryLiquidity Ratio of certain money in legal tender, they are
considered money substitutes and are
117. Which among the following are the features accepted in exchange for goods because
of the Negotiable Instruments? cash can be obtained at any moment by
a) It is freely transferable paying a small commission.
b) A negotiable instrument must bear the
signature of its maker 118. What are the causes of Non- Performing
c) These instruments relate to the payment of Assets (NPAs)?
certain money in legal tender a) Business Management problems
d) These instruments can be transferred b) Internal bank Management
indefinitely till they are at maturity c) Credit Policy
e) All the above d) Lack of adequate resources
Answer: E e) All the above
Features: Answer: E
●A negotiable instrument is freely Causes of NPA:
transferable. 1. Business Management problems
●A negotiable instrument must be in 2. Internal bank Management
writing. This includes handwriting, typing, 3. Credit Policy
computer printout, engraving, etc. 4. Lack of adequate resources
●The time of payment must be certain
●The payee must be a certain person 119. What are the Objectives of the Payments
●A negotiable instrument must bear the and Settlement Systems Act?
signature of its maker. Without the a) Provides for the regulation and supervision of

payment systems in India a) Rs. 2 lakhs

b) To designate the RBI as authority for b) Rs. 5 lakhs
purposes related to payment systems in India c) Rs. 10 lakhs
c) The Act also provides the legal basis for d) Rs. 20 lakhs
netting and settlement facility e) Rs. 50 lakhs
d) Only (a) and (b) Answer: B
e) All (a), (b) and (c) Banks that are classified in Schedule II of the
Answer: E Reserve Bank of India Act, 1934 are referred to
Objectives of Payment and Settlement Act: as scheduled banks. To qualify as a scheduled
1. Provides for the regulation and supervision of bank, the bank's paid-up capital and raised
payment systems in India funds must total at least Rs. 5 lakhs. These
2. To designate the RBI as authority for banks are eligible for low-interest RBI loans.
purposes related to payment systems in India
3. The Act also provides the legal basis for 122. ________________ is a type of deposit
netting and settlement facilities. account maintained by Individuals who carry out
a significantly higher number of transactions or
120. What was the authorized capital of the businesses with banks regularly.
Reserve Bank of India at the time of a) Savings Account
establishment? b) Current Account
a) Rs. 2 crores c) NRI Account
b) Rs. 4 crores d) Fixed Deposit
c) Rs. 5 crores e) Recurring Deposit
d) Rs. 10 crores Answer: B
e) Rs. 25 crores A Current Account, also known as a financial
Answer: C account, is a type of deposit account held by
At the time of establishment, the authorized people who make a lot of transactions with
capital of the Reserve Bank of India was Rs. 5 banks regularly. Businessmen who do a large
crores. number of regular transactions with the bank
open a current bank account.
121. What is the minimum paid-up capital a
bank must have to be eligible for inclusion in the 123. What are the Para banking activities
Reserve Bank of India Act, 1934's Second undertaken by the Banks?
Schedule to attain Scheduled Banks’ status? a) Portfolio Management Services

b) Insurance Business b) 10
c) Investment in Venture Capital Funds c) 11
d) Retailing of Government Securities d) 12
e) All the above e) 14
Answer: E Answer: C
Insurance business, portfolio management IFSC stands for Indian Financial System Code.
services, becoming a pension fund manager, It is an 11-digit alpha-numeric code that uniquely
mutual funds business, money market mutual identifies a bank branch participating in any RBI-
funds, underwriting of PSU bonds, participation regulated funds transfer system. The IFSC code
in venture capital funds, and so on are examples helps to transfer money using RTGS, NEFT, or
of para banking operations. Banks must adhere IMPS methods.
to the entire set of RBI requirements.
126. For subscribing to an issue, ASBA is an
124. What are the features of the Automated application that has the authority to block money
Teller Machine (ATM)? in the bank account (Savings Account and
a) Transfer of Funds Current Account without Overdraft Facility).
b) Easy Cash Withdrawal What does second A represent in ASBA?
c) Cash Deposit a) Account
d) Balance Enquiry b) Application
e) All the above c) Amount
Answer: E d) Actuary
Features of ATM: e) Arbitrage
1. Transfer of Funds Answer: C
2. Balance Enquiry For subscribing to an issue, ASBA is an
3. Easy Cash Withdrawal application that has the authority to block money
4. Unlock or Change Pin in the bank account (Savings Account and
5. Cash Deposit Current Account without Overdraft Facility).
ASBA means Application Supported by Blocked
125. Immediate Payment Service (IMPS) is Amount.
issued to account holders by their banks to
receive money. How many alpha-numeric digit 127. Who can be appointed as a Banking
codes are IMPS? Ombudsman member?
a) 7 a) The person who is of high standing in the

Legal, Banking, Financial Services, or Public e) All (a), (b) and (c)
Administration Answer: E
b) The Person who worked as an Advocate in Basel II uses a "three pillars" concept
any of the High courts i) Minimum capital requirements (addressing
c) Retired Chief Executive officers risk)
d) Retired Military Personnel (ii) Supervisory review and
e) All the above (iii) Market discipline.
Answer: A
A person who is of high standing in the Legal, 130. Which committee recommended that the
Banking, Financial Services, or Public bank's customer service be improved?
Administration is appointed as the Banking a) Goiporia
Ombudsman. b) V S Vyas
c) Gadgil
128. ____________ is a partnership between a d) Vijay Kelkar
bank and an insurance business to provide e) H R Khan
insurance products or services to the bank's Answer: A
clients. The Goiporia Committee was entrusted with
a) Bill Discounting looking into and making recommendations for
b) Book Building how to improve bank customer service.
c) Banking Outlet
d) Business Facilitator 131. ____________ is an electronic payment
e) Bancassurance system that allows the bank or other financial
Answer: E institution customers to execute a variety of
Bancassurance is a partnership between a bank financial transactions via the financial
and an insurance business to provide insurance institution's website.
products or services to the bank's clients. a) Internet Banking
b) Virtual Banking
129. Which of the following are the pillars of the c) e-Banking
BASEL-II Accord? d) Only (a) and (b)
a) Capital Adequacy Requirements e) All (a), (b) and (c)
b) Supervisory Review Answer: E
c) Market Discipline Internet banking, often known as online banking,
d) Only (a) and (b) e-banking, or virtual banking, is an electronic

payment system that allows the bank or other c) Vijay Kelkar

financial institution customers to execute a d) R H Khan
variety of financial transactions via the financial e) Narasimhan
institution's website. Answer: A
A High-Level Committee headed by Usha
132. Which of the following are the different Thorat was constituted to review the Lead Bank
types of FIIs who are allowed to invest in India? Scheme and improve its effectiveness, with a
a) Asset Management Companies focus on financial inclusion and recent
b) Foreign Mutual Funds developments in the banking sector in 2009.
c) Insurance Companies
d) Hedge Funds 134. What are the functions of the Small
e) All the above Industries Development Bank of India (SIDBI)?
Answer: E a) Initiates steps for technology adoption,
The different types of FIIs who are allowed to technology exchange, transfer and up-gradation,
invest in India are: and modernization of existing units
Asset Management Companies b) In partnership with commercial banks, SIDBI
Endowments supports the timely flow of credit to SSI for both
Foreign Mutual Funds term loans and working capital
Hedge Funds c) SIDBI directly discounts and rediscounts bills
Insurance Companies to promote bill culture and assist SSI units in
Investment Banks realizing capital goods, equipment, and
Pension Funds component sale earnings
Sovereign Wealth Funds d) SIDBI encourages employment-oriented
Treasury Funds industries, particularly in semi-urban areas, to
Trusts – Private and Public increase employment opportunities and reduce
University Funds rural-urban migration
e) All the above
133. In 2009, the High-level committee that Answer: E
reviewed the scheme was headed by (i) Takes steps to adopt technology, exchange
____________ to suggest reforms in the Lead technology, transfer, and upgrade existing units,
Bank Scheme. and modernize them.
a) Usha Thorat (ii) In partnership with commercial banks, SIDBI
b) Gadgil supports the timely flow of credit to SSI for both

term loans and working capital. b) Individuals who have attained 55 years but
(iii) SIDBI expands SSIs' product marketing are less than sixty years old are also eligible to
capabilities in both domestic and foreign apply for the senior citizen's savings scheme
markets. provided they have retired under applicable
(iv) SIDBI directly discounts and rediscounts superannuation or VRS rules
bills to promote bill culture and assist SSI units c) This scheme is also available for the retired
in realizing capital goods, equipment, and defense personnel irrespective of the above-
component sale earnings. mentioned age limits subject to fulfillment of
(v) SIDBI promotes employment-oriented other terms & conditions
industries, particularly in semi-urban areas, to d) Both (a) and (b)
increase employment opportunities and reduce e) All (a), (b) and (c)
rural-urban migration. Answer: E
Eligibility of the Senior Citizens Savings
135. _____________ is a financial instrument Scheme:
issued by a firm that acknowledges its 1. Available to any resident individual aged 60
responsibility to return a quantity of money at a years and above.
predetermined rate and that also bears interest. 2. Individuals who have attained 55 years but
a) Securities are less than sixty years old are also eligible to
b) Debentures apply for the senior citizen's savings scheme
c) Bonds provided they have retired under applicable
d) Equity Shares superannuation or VRS rules.
e) Preference Shares 3. The scheme is also available for the retired
Answer: B defense personnel irrespective of the above-
A debenture is a financial instrument issued by a mentioned age limits subject to fulfillment of
firm that acknowledges its responsibility to other terms & conditions.
return a quantity of money at a predetermined
rate and that also bears interest. 137. The Second Nationalisation of Banks took
place in 1980. Which of the following bank is not
one among nationalized in the second
136. What are the eligibility criteria for the nationalization in 1980?
Senior Citizens Savings Scheme (SCSS)? a) Andhra Bank
a) Available to any resident individual aged 60 b) Corporation Bank
years and above c) Vijaya Bank

d) Allahabad Bank interest rate or an interest rate lower than the

e) Punjab and Sind Bank market interest rates.
Answer: D
In 1980 another 6 banks were nationalized: 140. Which organization is the shareholder of
1. Andhra bank. the Investment Information and Credit Rating
2. Oriental bank of commerce. Agency (ICRA) headquartered in Gurugram for
3. New bank of India. assigning corporate governance rating,
4. Corporation bank. performance rating, and mutual funds ranking?
5. Punjab and Sind bank. a) Fitch
6. Vijaya bank. b) Moody’s
138. What is the periodical verification of KYC c) Standard & Poor’s
taken for Medium Risk Customers? d) TransUnion
a) Once every 2 years e) None of the above
b) Once in every 5 years Answer: B
c) Once in every 8 years Moody's Investors Service, the international
d) Once in every 10 years Credit Rating Agency, is ICRA's largest
e) Once every 15 years shareholder.
Answer: C 141. The interest rate at which a country's
Periodic updation shall be carried out at least central bank lends money to domestic banks,
once every eight years for medium-risk usually in the form of relatively short-term loans,
customers from the date of opening of the is known as the bank rate. The Bank Rate is
account / last KYC updation. published under __________ of the Reserve
Bank of India Act, 1934.
139. ______ means a loan with generally no a) Section 26
interest rate or an interest rate lower than the b) Section 32
market interest rates. c) Section 34
a) Revolving Loan d) Section 45ZB
b) Hard Loan e) Section 49
c) Soft Loan Answer: E
d) Secured Loan The Bank Rate is published under Section 49 of
e) Unsecured Loan the Reserve Bank of India Act, 1934.
Answer: C
A soft loan means a loan with generally no 142. According to Section 6, of the Negotiable

Instruments Act, 1881 ____________________ is business

defined as “a bill of exchange drawn on a 5. Should not Hike Salary of the Employees
specified banker and not expressed to be 6. Impose restrictions on the bank on
payable otherwise than on demand.” borrowings from the interbank market.
a) Promissory note
b) Bill of exchange 144. Immediate Payment Services (IMPS) is an
c) Cheque electronic fund transfer mechanism of the Indian
d) Demand Draft banking system that let you transfer funds to a
e) Cash Management Bill payee’s bank account instantly. What is the
Answer: C maximum transaction limit of the Immediate
According to Section 6, of the Negotiable Payment Services (IMPS) at present?
Instruments Act, 1881, the term Cheque is a) Rs. 2 lakhs
defined as “a bill of exchange drawn on a b) Rs. 1 lakh
specified banker and not expressed to be c) Rs. 5 lakhs
payable otherwise than on demand.” d) Rs. 50000
e) Rs. 10 lakhs
143. Which of the following are the restrictions Answer: C
of the Prompt Corrective Action (PCA)? IMPS is an electronic fund transfer mechanism
a) Banks should not expand their Branches of the Indian banking system. It lets you transfer
b) Banks are not allowed to renew or access funds to a payee’s bank account instantly. This
costly deposits service is available for the customers 24*7.
c) Banks are not allowed to enter into a new Launched in November 2010. IMPS per
business transaction limit increased to Rs.5 Lakhs from
d) Impose restrictions on the bank on Rs.2 Lakhs.
borrowings from the interbank market
e) All the above 145. Which of the following is the role of the
Answer: E Reserve Bank of India?
PCA Restrictions: a) Development of the Banking System
1. Banks should not expand their Branches b) Promotion of Commercial and Cooperative
2. Banks are not allowed to renew or access Banking
costly deposits c) Promotion of Differential rate of Interest
3. Banks Should not Grant Loans Scheme
4. Banks are not allowed to enter into a new d) Facilitating Economic Growth

e) All the above a) Only (i) and (ii)

Answer: E b) Only (i) and (iii)
Roles of RBI: c) Only (i)
1) Development of financial Institutions d) Only (ii) and (iii)
2) Development of the Banking System e) All (i), (ii), and (iii)
3) Facilitating Economic Growth Answer: e
4) Bringing Economic Stability Higher CASA Ratio → Net Interest Margin is
5) Promotion of Commercial and Cooperative better → Better operating efficiency of the bank.
Banking 148. _____________ refers to the type of banking
6) Promotion of Industrial Finance when a group of persons come together to own
7) Preparing Interest rate Structure and control three or more independently
8) Promotion of Differential rate of Interest chartered banks.
Scheme. a) Shadow Banking
b) Wholesale Banking
146. ____________________ are the branches in c) Chain Banking
India of the joint stock banks incorporated d) Retail Banking
abroad. e) Virtual Banking
a) Regional Rural Banks Answer: C
b) Public Sector Banks Chain Banking is a system under which different
c) Private Banks banks come under common control through
d) Foreign Banks Common – shareholders. It is a type of banking
e) Local Area Banks where a group of persons together own &
Answer: D control three or more independently chartered
Foreign Banks are the branches in India of the Banks.
joint-stock banks incorporated abroad.
149. Which of the following is not one among
147. CASA Ratio is defined as the ratio of the the Types of ATMs found in India?
deposits in the form of current and savings a) White Label ATM
accounts to the total deposits. What happens b) Green Label ATM
when there is a Higher CASA Ratio? c) Purple ATM
i) Lower cost of funds d) Brown Label ATM
ii) Net Interest Margin is better e) Pink ATM
iii) Better operating efficiency of the bank Answer: C

Purple ATM is not found.

152. A Banking Ombudsman is a senior official
150. Which of the following language is not appointed by the RBI to resolve customer
available in the Bharat Interface for Money complaints about deficiencies in certain banking
(BHIM) app? services. Which organization appoints the
a) Hindi Banking Ombudsman?
b) Tamil a) Government of India
c) Santhali b) Reserve Bank of India
d) Assamese c) Ministry of Finance
e) Odia d) Indian Banks Association
Answer: C e) NABARD
Currently, BHIM is available in 20 languages, Answer: B
i.e., Hindi, English, Tamil, Telugu, Malayalam, The Banking Ombudsman is a senior official
Bengali, Odia, Kannada, Punjabi, Assamese, appointed by the Reserve Bank of India to
Urdu, Marathi, Gujarati, Haryanvi, Bhojpuri, resolve customer complaints about deficiencies
Konkani, Marwari, Manipuri, Khasi and Mizo. in specific banking services that fall under
Clause 8 of the Banking Ombudsman Scheme
151. ARC is a specialist financial firm that 2006.
purchases non-performing assets (NPAs) from
banks and financial institutions to help them 153. _______________ are representatives
clean up their balance sheets. What does R appointed by banks to act as their agents and
represent in ARC? provide banking services in remote locations
a) Restructuring where the bank does not have a presence to
b) Revolving promote financial inclusion.
c) Resting a) Business Correspondents
d) Reconstruction b) Book Building
e) Registering c) Business Facilitator
Answer: D d) Both (a) and (c)
An Asset Reconstruction Company (ARC) is a e) Both (a) and (b)
specialist financial firm that purchases non- Answer: D
performing assets (NPAs) from banks and Business Correspondents and Business
financial institutions to help them clean up their Facilitators are representatives appointed by
balance sheets. banks to act as their agents and provide banking

services in remote locations where the bank 156. _________________ allow banks to utilize
does not have a presence to promote financial resources in a highly flexible and efficient
inclusion. manner with the help of data analytics, data
storage, and batch processing.
154. What was the minimum percentage CRAR a) Mobile Wallets
established by the Reserve Bank of India by b) Block Chain Technology
BASEL-II guidelines? c) Artificial Intelligence
a) 6% d) Point of Sale (PoS) Terminals
b) 7.2% e) Cloud Computing
c) 8% Answer: E
d) 9% Cloud computing services allow banks to utilize
e) 10% resources in a highly flexible and efficient
Answer: D manner with the help of data analytics, data
Continuously, banks must maintain a minimum storage, and batch processing.
Pillar 1 Capital to Risk-weighted Assets Ratio
(CRAR) of 9%. (other than capital conservation 157. ________________ is an investment made
buffer and countercyclical capital buffer). by an investor in the markets of a foreign nation
in which the companies only need to get
155. Who is the chairman of the RBI committee registered in the stock exchange to make
tasked with restructuring Covid-affected loans? investments.
a) H R Khan a) Foreign Direct Investment
b) Vijay Kelkar b) Foreign Portfolio Investment
c) K V Kamath c) Foreign Exchange Investment
d) Y V Reddy d) Foreign Institutional Investors
e) V S Vyas e) Foreign Dual Investment
Answer: C Answer: D
Under the chairmanship of former ICICI Bank FII or Foreign Institutional Investor is an
Chief Executive KV Kamath, the RBI appointed investment made by an investor in the markets
a five-member committee to offer of a foreign nation. In FII, the companies only
recommendations on the financial factors to be need to get registered in the stock exchange to
considered in the restructuring of loans make investments.
impacted by the Covid-19 pandemic.
158. When was Lead Bank Scheme introduced

to promote the role of banks in the overall licensing and regulating micro, small, and
development of the rural sector under the medium-sized enterprise financial companies. It
recommendation of Prof. D. R. Gadgil Study is governed by the Government of India's
group and Banker's committees? Ministry of Finance. Headquarters: Lucknow.
a) 1960
b) 1969 160. Which of the following are Capital Market
c) 1972 Instruments?
d) 1980 a) Securities
e) 1989 b) Debentures
Answer: B c) Bonds
Lead Bank scheme: d) Equity Shares
●Establishment: 1969 e) All the above
●Objective: To promote the role of banks in the Answer: E
overall development of the rural sector. The main instruments traded in the capital
●Recommendation: Prof. D. R. Gadgil Study market are equity shares, debentures, bonds,
group and Banker's committees. and preference shares.

159. ____________ is India's apex regulatory 161. The main objective of the Senior Citizens
organization for licensing and regulating micro, Savings Scheme (SCSS) is to provide an
small and medium-sized enterprise financial assured return (paid every quarter) to senior
companies. citizens and in doing so to create a guaranteed
a) Export-Import Bank of India (Exim Bank) regular income flow. When was the Senior
b) Securities and Exchange Board of India Citizens Savings Scheme (SCSS) established
(SEBI) and What is its Tenure?
c) Small Industries Development Bank of India a) 2004 and 10 years
(SIDBI) b) 2004 and 5 years
d) National Bank for Financing Infrastructure c) 2007 and 5 years
and Development (NaBFID) d) 2005 and 15 years
e) National Bank for Agriculture and Rural e) 2005 and 10 years
Development (NABARD) Answer: b
Answer: C Explanation:
The Small Industries Development Bank of India The Senior Citizen Savings Scheme (SCSS) is a
is India's apex regulatory organization for government-sponsored savings program for

anyone over the age of 60. This scheme was

created by the Indian government in 2004 to 163. What is the periodical verification of KYC
provide senior individuals with a stable and taken for Low-Risk Customers?
secure source of income during their post- a) Once every 2 years
retirement years. The maturity period of the b) Once in every 5 years
scheme is 5 years. c) Once in every 8 years
d) Once in every 10 years
162. Mergers and acquisitions are the most e) Once every 15 years
common method employed by banks (or any Answer: D
other company) to strengthen and maintain their KYC is required to be done once every ten
market position. Which of the following bank is years for low-risk customers.
the second largest after amalgamation?
a) Punjab National Bank 164. A revolving loan facility is a type of credit
b) Canara Bank provided by a financial institution that allows the
c) Union Bank of India borrower to draw down or withdraw funds, repay
d) Indian Bank the loan, and withdraw funds again. Which
e) Bank of Baroda among the following is an example of a
Answer: A Revolving Loan?
Recent merger announced by Finance ministry: a) Credit Cards
b) Car Loans
Anchor Bank Amalgamating Public c) Debit Cards
bank’s sector d) Personal Loan
banks by e) Gold
size Answer: A
PNB (Punjab Oriental bank of 2nd largest Credit Cards is a revolving loan facility is a type
National commerce + of credit provided by a financial institution that
Bank) United bank of allows the borrower to draw down or withdraw
India funds, repay the loan, and withdraw funds again
Canara bank Syndicate bank 4th largest
Union Bank Andhra bank + 5th largest 165. Which of the following is the Oldest Credit
of India Corporation Bank Rating Agency in India?
Indian bank Allahabad bank 7th largest a) Credit Rating Information Services of India
Limited (CRISIL)

b) India Ratings and Research Private Limited e) Section 9

c) Investment Information and Credit Rating Answer: C
Agency (ICRA) Section 5 in The Negotiable Instruments Act,
d) Credit Analysis and Research Limited 1881 defines “Bill of exchange”.
(CARE)
e) SMERA Ratings 168. What are the Causes of Non- Performing
Answer: A Assets (NPA)?
India's Credit Rating Information Services a) Asset quality
Limited (CRISIL) is one of India's oldest credit b) Profitability
rating organizations. It was first introduced in the c) Total debt level or leverage, which measures
country in 1987, and the company went public in the financial risk of the bank
1993. d) Both (a) and (b)
166. _________________ is the interest rate at e) All (a),(b) and (c)
which a central bank lends money to domestic Answer: E
banks in the form of very short-term loans. Causes of PCA:
a) Bank Rate 1. Capital Adequacy Ratio (CAR)
b) Repo Rate 2. Asset quality
c) Cash Reserve Ratio 3. Profitability
d) Statutory Liquidity Ratio 4. Total debt level or leverage, which measures
e) Reverse Repo Rate the financial risk of the bank
Answer: A 169. How much amount can be transferred to
The interest rate at which a country's central Nepal through Indo Nepal Remittance Facility
bank lends money to domestic banks, usually in under the National Electronic Fund Transfer
the form of relatively short-term loans, is known (NEFT)?
as the bank rate. a) Rs. 10000
b) Rs. 50000
167. The Bill of Exchange is covered under c) Rs. 25000
which section of the Negotiable Instruments d) Rs. 1 lakh
Act? e) Rs. 2 lakhs
a) Section 3 Answer: E
b) Section 4 The Reserve Bank of India has increased the
c) Section 5 maximum amount of money that can be
d) Section 6 transferred under the Indo-Nepal Remittance

Facility Scheme from Rs 50,000 to Rs 2 lakhs through it for more than 12 months, then it is
per transaction. Previously, there was a 12- called ____________.
transaction limit per year. a) Inactive Account
b) Dormant Account
170. The Indian Currency and Finance Royal c) Gilt Account
Commission was also known as ___________. d) Either (a) or (b)
a) Narasimhan Commission e) Either (a) or (c)
b) SivaramanCommission Answer: A
c) Hilton YoungCommission If you haven't used your savings or checking
d) Vijay KelkarCommission account for more than a year, it will be
e) H. R. KhanCommission considered inactive. The account goes dormant
Answer: C or inoperative after two years of inactivity.
The Royal Commission on Indian Currency and
Finance, popularly known as the Hilton-Young 173. When the banking services are offered to
Commission, recommended the establishment Institutional customers, high net worth clients
of the Reserve Bank of India. like corporates, Commercial banks, and mid-
size companies, then they are called
171. The Local Area Bank Scheme was ____________.
introduced in August 1996. What is the minimum a) Shadow Banking
Paid-up capital required for setting up Local b) Retail Banking
Area Banks? c) Narrow Banking
a) Rs. 1 crore d) Wholesale Banking
b) Rs. 2 crores e) Unit Banking
c) Rs. 5 crores Answer: D
d) Rs. 10 crores Whole Sales banking services are offered to
e) Rs. 200 crores Institutional customers, high net worth clients
Answer: C like corporates, Commercial banks, mid-size
The Local Area Bank Scheme was introduced in companies, etc.
August 1996. The minimum start-up capital of a
LAB was fixed at Rs.5 crores. 174. What are the Disadvantages of the
Automated Teller Machine (ATM)?
172. If a customer has a current or a savings a) Possibility of Misusing the ATM card if
bank account and has not done any transactions misplaced, lost, or stolen

b) Limitation of Cash Withdrawals purchases non-performing assets (NPAs) from

c) Hacking is possible banks and financial institutions to help them
d) If you get a problem with your bank card, or clean up their balance sheets. What does R
forget your pin, you can’t withdraw your money represent in ARC?
e) All the above a) Restructuring
Answer: E b) Revolving
Disadvantages of ATM: c) Resting
1. Limitation of Cash Withdrawals d) Reconstruction
2. Possibility of Misusing the ATM card if e) Registering
misplaced, lost, or stolen Answer: d
3. Hacking is possible Explanation:
4. Lack of Personal Service An Asset Reconstruction Company (ARC) is a
5. Banks have limited ATMs in Rural Areas specialist financial firm that purchases non-
6. If you get a problem with your bank card, or performing assets (NPAs) from banks and
forget your pin, you can’t withdraw your money financial institutions to help them clean up their
balance sheets.
175. Which country became the first to adopt 177. A Banking Ombudsman is a senior official
India's Unified Payment Interface (UPI) system appointed by the RBI to resolve customer
as a payments platform? complaints about deficiencies in certain banking
a) Nepal services. Which organization appoints the
b) Bangladesh Banking Ombudsman?
c) UAE a) Government of India
d) Bhutan b) Reserve Bank of India
e) Singapore c) Ministry of Finance
Answer: A d) Indian Banks Association
Nepal shall be the first country outside of India e) NABARD
to adopt UPI as the payments platform driving Answer: B
the digitalization of cash transactions and The Banking Ombudsman is a senior official
furthering the vision and objectives of the Nepal appointed by the Reserve Bank of India to
Government and Nepal Rastra Bank as the resolve customer complaints about deficiencies
Central bank. in specific banking services that fall under
Clause 8 of the Banking Ombudsman Scheme
176. ARC is a specialist financial firm that 2006.

180. Who is the chairman of the RBI committee

178. _______________ are representatives tasked with restructuring Covid-affected loans?
appointed by banks to act as their agents and a) H R Khan
provide banking services in remote locations b) Vijay Kelkar
where the bank does not have a presence to c) K V Kamath
promote financial inclusion. d) Y V Reddy
a) Business Correspondents e) V S Vyas
b) Book Building Answer: C
c) Business Facilitator Under the chairmanship of former ICICI Bank
d) Both (a) and (c) Chief Executive KV Kamath, the RBI appointed
e) Both (a) and (b) a five-member committee to offer
Answer: D recommendations on the financial factors to be
Business Correspondents and Business considered in the restructuring of loans
Facilitators are representatives appointed by impacted by the Covid-19 pandemic.
banks to act as their agents and provide banking
services in remote locations where the bank 181. _________________ allow banks to utilize
does not have a presence to promote financial resources in a highly flexible and efficient
inclusion. manner with the help of data analytics, data
storage, and batch processing.
179. What was the minimum percentage CRAR a) Mobile Wallets
established by the Reserve Bank of India by b) Block Chain Technology
BASEL-II guidelines? c) Artificial Intelligence
a) 6% d) Point of Sale (PoS) Terminals
b) 7.2% e) Cloud Computing
c) 8% Answer: E
d) 9% Cloud computing services allow banks to utilize
e) 10% resources in a highly flexible and efficient
Answer: D manner with the help of data analytics, data
Continuously, banks must maintain a minimum storage, and batch processing.
Pillar 1 Capital to Risk-weighted Assets Ratio 182. ________________ is an investment made
(CRAR) of 9%. (other than capital conservation by an investor in the markets of a foreign nation
buffer and countercyclical capital buffer). in which the companies only need to get
registered in the stock exchange to make

investments. small and medium-sized enterprise financial

a) Foreign Direct Investment companies.
b) Foreign Portfolio Investment a) Export-Import Bank of India (Exim Bank)
c) Foreign Exchange Investment b) Securities and Exchange Board of India
d) Foreign Institutional Investors (SEBI)
e) Foreign Dual Investment c) Small Industries Development Bank of India
Answer: D (SIDBI)
FII or Foreign Institutional Investor is an d) National Bank for Financing Infrastructure
investment made by an investor in the markets and Development (NaBFID)
of a foreign nation. In FII, the companies only e) National Bank for Agriculture and Rural
need to get registered in the stock exchange to Development (NABARD)
make investments. Answer: C
The Small Industries Development Bank of India
183. When was Lead Bank Scheme introduced is India's apex regulatory organization for
to promote the role of banks in the overall licensing and regulating micro, small, and
development of the rural sector under the medium-sized enterprise financial companies. It
recommendation of Prof. D. R. Gadgil Study is governed by the Government of India's
group and Banker's committees? Ministry of Finance. Headquarters: Lucknow.
a) 1960
b) 1969 185. Which of the following are Capital Market
c) 1972 Instruments?
d) 1980 a) Securities
e) 1989 b) Debentures
Answer: B c) Bonds
Lead Bank scheme: d) Equity Shares
●Establishment: 1969 e) All the above
●Objective: To promote the role of banks in the Answer: E
overall development of the rural sector. Explanation:
●Recommendation: Prof. D. R. Gadgil Study The main instruments traded in the capital
group and Banker's committees. market are equity shares, debentures, bonds,
and preference shares.
184. ____________ is India's apex regulatory
organization for licensing and regulating micro, 186. The main objective of the Senior Citizens

Anchor Bank Amalgamating Public 187. Mergers and acquisitions are the most
bank’s sector common method employed by banks (or any
banks by other company) to strengthen and maintain their
size market position. Which of the following bank is
PNB (Punjab Oriental bank of 2nd largest the second largest after amalgamation?
National commerce + a) Punjab National Bank
Bank) United bank of b) Canara Bank
India c) Union Bank of India
Canara bank Syndicate bank 4th largest d) Indian Bank
Union Bank Andhra bank + 5th largest e) Bank of Baroda
of India Corporation Bank Answer: A
Indian bank Allahabad bank 7th largest Recent merger announced by Finance ministry:
Savings Scheme (SCSS) is to provide an
assured return (paid every quarter) to senior
citizens and in doing so to create a guaranteed 188. What is the periodical verification of KYC
regular income flow. When was the Senior taken for Low-Risk Customers?
Citizens Savings Scheme (SCSS) established a) Once every 2 years
and What is its Tenure? b) Once in every 5 years
a) 2004 and 10 years c) Once in every 8 years
b) 2004 and 5 years d) Once in every 10 years
c) 2007 and 5 years e) Once every 15 years
d) 2005 and 15 years Answer: D
e) 2005 and 10 years KYC is required to be done once every ten
Answer: B years for low-risk customers.
The Senior Citizen Savings Scheme (SCSS) is a 189. A revolving loan facility is a type of credit
government-sponsored savings program for provided by a financial institution that allows the
anyone over the age of 60. This scheme was borrower to draw down or withdraw funds, repay
created by the Indian government in 2004 to the loan, and withdraw funds again. Which
provide senior individuals with a stable and among the following is an example of a
secure source of income during their post- Revolving Loan?
retirement years. The maturity period of the a) Credit Cards
scheme is 5 years. b) Car Loans

c) Debit Cards e) Reverse Repo Rate

d) Personal Loan Answer: A
e) Gold The interest rate at which a country's central
Answer: A bank lends money to domestic banks, usually in
Credit Cards is a revolving loan facility is a type the form of relatively short-term loans, is known
of credit provided by a financial institution that as the bank rate.
allows the borrower to draw down or withdraw
funds, repay the loan, and withdraw funds again 192. The Bill of Exchange is covered under
which section of the Negotiable Instruments
190. Which of the following is the Oldest Credit Act?
Rating Agency in India? a) Section 3
a) Credit Rating Information Services of India b) Section 4
Limited (CRISIL) c) Section 5
b) India Ratings and Research Private Limited d) Section 6
c) Investment Information and Credit Rating e) Section 9
Agency (ICRA) Answer: C
d) Credit Analysis and Research Limited Section 5 in The Negotiable Instruments Act,
(CARE) 1881 defines “Bill of exchange”.
e) SMERA Ratings
Answer: A 193. What are the Causes of Non- Performing
India's Credit Rating Information Services Assets (NPA)?
Limited (CRISIL) is one of India's oldest credit a) Asset quality
rating organizations. It was first introduced in the b) Profitability
country in 1987, and the company went public in c) Total debt level or leverage, which measures
1993. the financial risk of the bank
d) Both (a) and (b)
191. _________________ is the interest rate at e) All (a),(b) and (c)
which a central bank lends money to domestic Answer: E
banks in the form of very short-term loans. Causes of PCA:
a) Bank Rate 1. Capital Adequacy Ratio (CAR)
b) Repo Rate 2. Asset quality
c) Cash Reserve Ratio 3. Profitability
d) Statutory Liquidity Ratio 4. Total debt level or leverage, which measures

the financial risk of the bank introduced in August 1996. What is the minimum
Paid-up capital required for setting up Local
194. How much amount can be transferred to Area Banks?
Nepal through Indo Nepal Remittance Facility a) Rs. 1 crore
under the National Electronic Fund Transfer b) Rs. 2 crores
(NEFT)? c) Rs. 5 crores
a) Rs. 10000 d) Rs. 10 crores
b) Rs. 50000 e) Rs. 200 crores
c) Rs. 25000 Answer: C
d) Rs. 1 lakh The Local Area Bank Scheme was introduced in
e) Rs. 2 lakhs August 1996. The minimum start-up capital of a
Answer: E LAB was fixed at Rs.5 crores.
The Reserve Bank of India has increased the
maximum amount of money that can be 197. If a customer has a current or a savings
transferred under the Indo-Nepal Remittance bank account and has not done any transactions
Facility Scheme from Rs 50,000 to Rs 2 lakhs through it for more than 12 months, then it is
per transaction. Previously, there was a 12- called ____________.
transaction limit per year. a) Inactive Account
b) Dormant Account
195. The Indian Currency and Finance Royal c) Gilt Account
Commission was also known as ___________. d) Either (a) or (b)
a) Narasimhan Commission e) Either (a) or (c)
b) SivaramanCommission Answer: A
c) Hilton YoungCommission If you haven't used your savings or checking
d) Vijay KelkarCommission account for more than a year, it will be
e) H. R. KhanCommission considered inactive. The account goes dormant
Answer: C or inoperative after two years of inactivity.
The Royal Commission on Indian Currency and
Finance, popularly known as the Hilton-Young 198. When the banking services are offered to
Commission, recommended the establishment Institutional customers, high net worth clients
of the Reserve Bank of India. like corporates, Commercial banks, and mid-
size companies, then they are called
196. The Local Area Bank Scheme was ____________.

a) Shadow Banking as a payments platform?

b) Retail Banking a) Nepal
c) Narrow Banking b) Bangladesh
d) Wholesale Banking c) UAE
e) Unit Banking d) Bhutan
Answer: D e) Singapore
Whole Sales banking services are offered to Answer: A
Institutional customers, high net worth clients Nepal shall be the first country outside of India
like corporates, Commercial banks, mid-size to adopt UPI as the payments platform driving
companies, etc. the digitalization of cash transactions and
furthering the vision and objectives of the Nepal
199. What are the Disadvantages of the Government and Nepal Rastra Bank as the
Automated Teller Machine (ATM)? Central bank.
a) Possibility of Misusing the ATM card if
misplaced, lost, or stolen
b) Limitation of Cash Withdrawals 201. ANBC is net bank credit and bank
c) Hacking is possible investments in non-SLR bonds held to maturity
d) If you get a problem with your bank card, or or the credit equivalent amount of off-balance-
forget your pin, you can’t withdraw your money sheet exposure, whichever is greater. What
e) All the above does A represent in ANBC?
Answer: E a) Actual
Disadvantages of ATM: b) Adjusted
1. Limitation of Cash Withdrawals c) Alternative
2. Possibility of Misusing the ATM card if d) Active
misplaced, lost, or stolen e) Adjustment
3. Hacking is possible Answer: B
4. Lack of Personal Service Adjusted Net Bank Credit is net bank credit +
5. Banks have limited ATMs in Rural Areas bank investments in non-SLR bonds held to
6. If you get a problem with your bank card, or maturity or the credit equivalent amount of off-
forget your pin, you can’t withdraw your money balance-sheet exposure, whichever is greater.

200. Which country became the first to adopt 202. The RBI appoints a senior employee as the
India's Unified Payment Interface (UPI) system Banking Ombudsman to resolve customer

complaints under which clause of the Banking a) 6%

Ombudsman Scheme 2006? b) 7.2%
a) Clause 3 c) 8%
b) Clause 4 d) 9%
c) Clause 6 e) 10%
d) Clause 8 Answer: C
e) Clause 9 All banks are required to maintain a Capital
Answer: D Adequacy Ratio of 8 % under the BASEL-I
The Banking Ombudsman is a senior official guidelines.
appointed by the Reserve Bank of India to
resolve customer complaints about deficiencies
in specific banking services that fall under 205. Who headed the committee that first
Clause 8 of the Banking Ombudsman Scheme recommended Money Market in India?
2006. a) Sukhamoy Chakravarty
b) Vaghul
203. The term _____________ refers to the laws, c) Dave
regulations, and procedures intended to prevent d) U K Sharma
criminals from disguising illegally obtained funds e) Deepak Mohanty
as legitimate income. Answer: A
a) Annuity In 1985, the Committee to Review the Working
b) Accretion of the Monetary System (Chairman: Sukhamoy
c) Account Chakravarty) was the first to issue a set of
d) Anti-Money Laundering suggestions for the growth of the money market.
e) Account Reconciliation
Answer: D 206. ______________________ is the simulation
Anti-Money Laundering refers to the laws, of human intelligence in robots that have been
regulations, and procedures intended to prevent trained to think and act like humans and is
criminals from disguising illegally obtained funds frequently utilized to present people with
as legitimate income. customized recommendations based on their
prior searches and purchases, as well as other
204. What was the minimum percentage CRAR online activity.
established by the Reserve Bank of India by a) Mobile Wallets
BASEL-I guidelines? b) Block Chain Technology

c) Artificial Intelligence c) Provides Accidental Insurance cover of Rs.2

d) Point of Sale (PoS) Terminals lakh
e) Cloud Computing d) The customer should have a complete KYC
Answer: C e) The Individual is eligible to have only one
Artificial intelligence (AI) is the simulation of Basic saving Bank account in one bank
human intelligence in robots that have been Answer: C
trained to think and act like humans. Artificial Features of BSBDA:
intelligence is frequently utilized to present 1.Account can be opened by any individual who
people with customized recommendations can open a regular savings account.
based on their prior searches and purchases, as 2.The customer should have a complete KYC.
well as other online activities. 3.The Interest rates offered by it are the same
as a savings bank account.
207. What are the capital instruments that an 4.The customer cannot have any other savings
Indian firm can use to receive foreign bank account if they have a BSBDA in a bank.
investment? 5.The Individual is eligible to have only one
a) Equity shares Basic saving Bank account in one bank.
b) Preference shares 6.If the customer already has a savings bank
c) Debentures account, that has to be closed within 30 days of
d) Share Warrants opening the BSBD Account.
e) All the above
Answer: E 209.National Bank for Agriculture and Rural
The term 'capital instruments' refers to equity Development (NABARD) is an apex
shares, debentures, preference shares, and development bank established in 1982 set up
share warrants issued by an Indian company under the recommendation of ____________
that can be used to receive foreign investment. committee.
a) Narasimhan
208. Which of the following is not a feature of b) B. Sivaraman
Basic Saving Bank Deposit Accounts? c) H. R. Khan
a) Account can be opened by any individual who d) Kelkar
can open a regular savings Account e) Gadgil
b) If the customer already has a savings bank Answer: B
account, that has to be closed within 30 days of NABARD is an apex development bank,
opening the BSBD Account established in 1982 by a Special Act of the

Parliament. Committee to Review the Sukanya Samridhi Yojana?

Arrangements For Institutional Credit for a) 2014 and 7.4%
Agriculture and Rural Development” under the b) 2015 and 7.5%
Chairmanship of B. Sivaraman. c) 2016 and 7.6%
d) 2015 and 7.6%
210. What Characteristics Do Financial Markets e) 2016 and 7.8%
Possess? Answer: D
a) It connects investors and borrowers, bridging Sukanya Samriddhi Account (Girl Child
the gap between them for mutual gain. Prosperity Account) is a government-sponsored
b) These marketplaces are accessible to both savings program for parents of girl children. The
investors and borrowers at any time. program encourages parents to set up money
c)By adopting various rules and regulations, the for their female child's future education. Prime
government regulates the functioning of a Minister Narendra Modi announced the scheme
financial market in the country. on January 22, 2015, as part of his Beti Bachao,
d)Financial markets offer investors the option to BetiPadhao campaign. At the moment, the
invest their money in a variety of assets or scheme offers a 7.6% interest rate.
schemes for short or long-term gains.
e) All the above 212. Which is the first bank in India to introduce
Answer: E a cheque system?
The features of the Financial Market are: a) Bengal Bank
a) It connects investors and borrowers, bridging b) Bank of Hindustan
the gap between them for mutual gain. c) Punjab National Bank
b)These marketplaces are accessible to both d) Allahabad Bank
investors and borrowers at any time. e) United Bank of India
c)By adopting various rules and regulations, the Answer: A
government regulates the functioning of a The first bank to introduce the cheque system in
financial market in the country. India was Bengal Bank in the year 1833.
d)Financial markets offer investors the option to
invest their money in a variety of assets or 213. KYC is a requirement for the prevention of
schemes for short or long-term gains. ______________.
a) Money Laundering Act 2000
211. When was Sukanya Samridhi Yojana b) Money Laundering Act 2002
launched and what is the current interest rate of c) Money Laundering Act 2004

d) Money Laundering Act 2005 enterprises, small and marginal farmers, and
e) Money Laundering Act 2008 small businesses. What is the minimum paid-up
Answer: B capital required for setting up Small Finance
The Prevention of Money Laundering Act Banks?
(PMLA) of 2002 established Know Your a) Rs. 100 crores
Customer (KYC) in India. In a separate b) Rs. 150 crores
document dubbed the PML Rules, the c) Rs. 200 crores
government provided procedural specifics. d) Rs. 250 crores
e) Rs. 500 crores
214. When the borrower pledges some asset as Answer: C
collateral for the loan which then becomes a The minimum paid-up voting equity capital for
secured debt is called a secured loan. Which of small finance banks shall be Rs.200 crores.
the following are the examples of Secured
Loans? 216. The rate at which the Central Bank lends to
a) Car Loan commercial banks against government assets is
b) Vehicle Loan known as the repo rate. When the repo rate
c) Gold Loan __________ liquidity decreases and helps to
d) Home Loan Control Inflation.
e) All the above a) Decreases
Answer: E b) Increases
Examples of Secured Loans: c) Stable
1. Car loan d) Partial Increase
2. Vehicle Loans e) Low
3. Gold Loan Answer: B
4. Home Loan In the event of inflation, central banks raise the
5. Loan against Property repo rate to discourage banks from borrowing
from the central bank. This reduces the money
215. Small Finance Banks (SFBs) is a type of supply i.e Liquidity in the economy, which helps
bank established by the Reserve Bank of India to keep inflation under control.
(RBI) under the direction of the Indian
government to promote financial inclusion by 217. According to Section 4 of the Negotiable
providing basic banking services to the Instruments Act _________________ is an
unorganized sector, micro, small, and medium instrument in writing (not being a bank note or a

currency note) containing an unconditional Impact of NPA:

undertaking, signed by the maker, to pay a 1.Reduces the Profit of the bank but also
certain sum of money to or to the order of a increases the loss.
certain person, or the bearer of the instruments. 2.Higher interest rates by the banks to maintain
a) Promissory note the profit margin
b) Bill of exchange 3.High Non-Performing Assets reduces the
c) Cheque confidence level of the investor which
d) Demand Draft significantly impacts the Share price of the Bank
e) Cash Management Bill in this situation, banks stop payout of dividend to
Answer: A the shareholders, which was not in the interest
A promissory note is an instrument in writing of the investor.
(not being a bank note or a currency note) 4.Higher NPA affects the whole economic
containing an unconditional undertaking, signed structure
by the maker, to pay a certain sum of money to
or to the order of a certain person, or the bearer 219. _________________ is an online payment
of the instruments. system for transferring funds from one bank to
another started in November 2005 and
218. Which of the following are the impacts of established and maintained by Institute for
the Non-performing Assets? Development and Research in Banking and
a) Reduces the Profit of the bank but also Technology.
increases the loss a) National Electronic Funds Transfer
b) Higher interest rates by the banks to maintain b) Immediate Payment Service
the profit margin c) Unified Payments Interface
c) High Non-Performing Assets reduces the d) Bharat Bill Payment System
confidence level of the investor which e) Real Time Gross Settlement
significantly impact the Share price of the Bank Answer: A
in this situation, banks stop payout of dividend to NEFT - National Electronic Funds Transfer is an
the shareholders, which was not in the interest online payment system for transferring funds
of the investor from one bank to another. Started in November
d)Higher NPA affects the whole economic 2005 established and maintained by Institute for
structure Development and Research in Banking and
e) All the above Technology. NEFT is a 24*7 facility.
Answer: E

220. The Reserve Bank of India now uses the 222. Whom all can open the Current Account in
Minimum Reserve System to issue currency. Banks with no interest on deposits?
The RBI is required to retain a minimum reserve a) Firms
of ___________ in foreign currencies, gold coins, b) Individuals
and gold bullion under the Minimum Reserve c) Trusts
System. d) Association of persons
a) Rs. 115 crores e) All the above
b) Rs. 125 crores Answer: E
c) Rs. 150 crores Individuals, partnership firms, private and public
d) Rs. 200 crores limited corporations, HUFs/specified
e) Rs. 225 crores associations, societies, trusts, and other entities
Answer: D can open current accounts (C/As). Individuals'
The Reserve Bank of India now uses the current account introduction and opening
Minimum Reserve System to issue currency. It formalities/procedures are the same as those
was adopted in 1956. The RBI is required to described for Savings Bank Accounts.
retain a minimum reserve of Rs 200 crores in
foreign currencies, gold coins, and gold bullion 223. ______________ refers to a group of non-
under the Minimum Reserve System (minimum bank financial intermediaries (NBFIs) that offer
of Rs 115 crore in the form of gold). services comparable to those offered by typical
commercial banks but operate outside of the
221. Which bank is the sponsor bank of India’s scope of standard banking rules.
first Regional Rural Bank PrathamaGrama Bank a) Shadow Banking
in Uttar Pradesh? b) Mixed Banking
a) Indian Bank c) Narrow Banking
b) Canara Bank d) Universal Banking
c) Syndicate Bank e) Para Banking
d) State Bank of India Answer: A
e) Indian Overseas Bank The shadow banking system refers to a group of
Answer: C non-bank financial intermediaries (NBFIs) that
On October 2, 1975, Syndicate Bank sponsored offer services comparable to those offered by
the first regional rural bank in India, Prathama typical commercial banks but operate outside of
Bank, in Moradabad, Uttar Pradesh. the scope of standard banking rules.

224. Which bank has introduced the first floating is used for crediting DBT transactions for
ATM in India? Government/ Government agency
a) State Bank of India disbursements. What is the full form of DBT?
b) HDFC Bank a) Debt Base Transmission
c) Union Bank of India b) Direct Benefit Transfer
d) Indian Bank c) Direct Bridge Transfer
e) Canara Bank d) Debit Base Telecommunication
Answer: A e) Discharge Bridge Transfer
In 2004, SBI opened the first floating ATM in Answer: B
Kerala. The SBI floating ATM was installed in Aadhaar Payments Bridge System (APBS) is
the Kerala Shipping and Inland Navigation used for crediting Direct Benefit Transfer (DBT)
Corporation's Jhankar yacht (KSINC). transactions for Government/ Government
agency disbursements. The primary aim of this
225. Section ________ of the Payments and Direct Benefit Transfer program is to bring
Settlement Systems Act 2007 defines a transparency and terminate pilferage from the
payment system to mean a system that enables distribution of funds sponsored by the Central
payment to be effected between a payer and a Government of India.
beneficiary, involving clearing, payment, or
settlement service or all of them. 227. What are the issues faced by the customer
a) Section 2 (1) who can take the redressal complaint to the
B) Section 6 Banking Ombudsman if it is not resolved by the
c) Section 12 bank?
d) Section 22 a) Non-payment or inordinate delay in payment
e) Section 25 of cheques, drafts, bills
Answer: A b) Your loan application is accepted, but money
Section 2(1) of the Payments and Settlement is not released in time
Systems Act 2007 defines a payment system to c) Customers can take cases up to the banking
mean a system that enables payment to be ombudsman in case of non-adherence to the
effected between a payer and a beneficiary, instructions of the Reserve Bank on ATM or
involving clearing, payment, or settlement debit cards, prepaid cards, and credit cards
service or all of them. d) Bank refuses to open your account without
giving valid reasons
226. Aadhaar Payments Bridge System (APBS) e) All the above

Answer: E d) Business Facilitator

Types of Complaints redressed to the Banking e) Bancassurance
Ombudsman: Answer: B
1.Non-payment or delay in payment of inward Book Building is the process by which an
remittances or non-payment of the same can underwriter attempts to determine the price at
also be raised with the banking ombudsman. which an initial public offering (IPO) will be
2.Delay in issue of drafts, pay orders, or offered.
bankers’ cheques, and/or failure to issue such
drafts and cheques. 229. Basel II is a global business standard that
3.Inordinate delay in the payment, or non- mandates financial institutions to keep sufficient
payment, delay in collection of cheques, drafts, capital buffers to meet operational risks. When
bills, etc. were the BASEL-II Guidelines introduced?
4.Bank refuses to open your account without a) 1999
giving valid reasons. b) 2000
5.Your loan application is accepted, but money c) 2002
is not released in time. d) 2004
6.Cases where the bank has failed or delayed in e) 2005
providing banking facilities, other than loans, Answer: D
promised by the bank in writing or by a direct The Basel Committee on Banking Supervision
agent. established Basel II as a set of worldwide
7.The bank levying charges without adequate banking regulations. Basel II was launched in
prior notice to the customer. 2004 to gradually implement over several years.
8.Customers can take cases up to the banking
ombudsman in case of non-adherence to the 230. Under whose chairmanship the committee
instructions of the Reserve Bank on ATM or has introduced the Lead Bank Scheme
debit cards, prepaid cards, and credit cards. introduced by the Reserve Bank of India (RBI)?
228. _____________ is the process by which an a) Narasimhan
underwriter attempts to determine the price at b) Gadgil
which an initial public offering (IPO) will be c) Dave
offered. d) H R Khan
a) Bill Discounting e) Vijay Kelkar
b) Book Building Answer: B
c) Banking Outlet The Lead Bank Scheme was introduced by RBI

in response to the Gadgil Study Group's and

Banker's Committee's recommendations. 232. What is the present Foreign Direct
According to the findings of the committees' Investment (FDI) Limit of the civil aviation
study, rural communities were unable to gain industry in India?
from banking. a) 50%
b) 64%
231. Which of the following are the features of c) 75%
Artificial Intelligence (AI)? d) 93%
a) Detect and Prevent Anti Money Laundering e) 100%
and Perform KYC Regulatory checks Answer: E
b) Predictive Data Analysis to offer the best At present, 100 percent FDI is permissible in
services scheduled air transport services/domestic
c) To manage huge volumes of data at record scheduled passenger airlines under the current
speed to derive valuable insights from it FDI policy (Automatic up to 49 percent and
d) Identifying Fraudulent activities carried out in Government routes beyond 49 percent ).
Payments
e) All the above 233. Which of the following service is not offered
Answer: E by Basic Savings Bank Deposit Account?
Features: a) Cash withdrawal
1. To Assess Financial Risks b) Credit of money through electronic payment
2. Detect and Prevent from Anti Money channels
Laundering and Perform KYC Regulatory c) Deposit/collection of cheques
checks d) Digital Currency
3. Identifying Fraudulent activities carried out in e) Deposit of Cash
Payments Answer: D
4. Creating Operational Efficiencies Services offered at BSBDA: Deposit, cash
5. Predictive Data Analysis to offer the best withdrawal, credit of money through electronic
services payment channels, deposit/collection of
6. Realistic Interactive Interfaces cheques.
7. Enhanced Customer Experience
8. Prediction of Future Outcomes and trends 234. What are the Functions of the National
9. To manage huge volumes of data at record Bank for Agriculture and Rural Development
speed to derive valuable insights from it. (NABARD)?

a) Monitoring the flow of ground-level rural credit NABARD is responsible for the development
b) Help Cooperative and Regional Rural Banks of the small industries, cottage industries,
prepare a development action plan for and any other such village or rural
themselves projects.
c) Provides recommendations to the Reserve It partners with various organizations for
Bank of India on the issue of licenses to many innovative projects such as SHG-
Cooperative Banks, opening of new branches by Bank linking and innovative schemes for
State Cooperative Banks and Regional Rural water and soil conservation.
Banks (RRBs)
d) NABARD is responsible for the development 235. ____________ is one during which a
of small industries, cottage industries, and any company issues new securities in exchange for
other such village or rural projects cash from an investor (buyer) that deals with the
e) All the above trade of new issues of stocks and other
Answer: E securities sold to the investors.
Functions of NABARD: a) Primary Market
Monitoring the flow of ground-level rural b) Secondary Market
credit c) Tertiary Market
Help Cooperative and Regional Rural Banks d) Capital Market
prepare development actions to plan for e) Commodity Market
themselves Answer: A
Provides recommendations to Reserve Bank A primary market is one during which a
of India on the issue of licenses to company issues new securities in exchange for
Cooperative Banks, opening of new cash from an investor (buyer). It deals with the
branches by State Cooperative Banks trade of new issues of stocks and other
and Regional Rural Banks (RRBs). securities sold to the investors. The primary
Provide financial assistance to cooperative market mainly deals with new securities that are
banks for building improved management issued within the stock market for the first time.
information systems, computerization of Thus it is also referred to as the new issue
operations, and development of human market. The main objective is capital formation
resources. for government, institutions, companies, etc.
Framing Policy and guidelines for Rural also referred to as Initial Public Offer (IPO).
Financial Institutions.
236. What are the Benefits of the

SukanyaSamridhiYojana scheme by the Answer: E

Government of India? In India, banks were nationalized under an
a) Highest Interest Rate among all Small ordinance passed in 1969. Indira Gandhi was
Savings Schemes offered by the Government of India's prime minister when banks were
India nationalized. On July 19, 1969, the first bank
b) Tax benefits are extended to the maturity nationalization took place. In 1969, 14 banks
amount too were nationalized.
c) A minimum of Rs 250 and a maximum of Rs
1.5 lakh can be deposited during the ongoing 238. Individuals and companies (other than
financial year those with a high net worth) whose entities and
d) Premature withdrawal allowed under special sources of money can be easily traced, and
circumstances transactions in their accounts largely conform to
e) All the above the known profile are categorized as
Answer: E __________.
Need a small amount of INR 250 for opening a) Low-Risk Customers
a SukanyaSamriddhiYojana account. b) Medium Risk Customers
Helps save for your girl child's educational c) High-Risk Customers
expenses. d) Dangerous Customers
You only need to deposit for 15 years. e) All the above
Premature withdrawal is allowed under Answer: A
special circumstances. Individuals and companies (other than those
Highest Interest Rate among all Small with a high net worth) whose entities and
Savings Schemes offeed by the sources of money can be easily traced, and
Government of India transactions in their accounts largely conform to
the known profile are categorized as Low-Risk
237. In India, banks were nationalized under an Customers.
ordinance passed in 1969. How many banks
were nationalized in the year 1969? 239. _______________ loan facility is a type of
a) 6 credit provided by a financial institution that
b) 8 allows the borrower to draw down or withdraw
c) 10 funds, repay the loan, and withdraw funds again.
d) 12 a) Term Loan
e) 14 b) Revolving Loan

c) Secured Loan a) Decreases

d) Soft Loan b) Increases
e) Hard Loan c) Stable
Answer: B d) Partial Increase
A revolving loan facility is a type of credit e) Partial Low
provided by a financial institution that allows the Answer: A
borrower to draw down or withdraw funds, repay An increase in the reverse repo rate will
the loan, and withdraw funds again. Because of decrease the money supply and vice-versa,
its repayment and re-borrowing options, a other things remaining constant. An increase in
revolving loan is considered a flexible financial the reverse repo rate means that commercial
strategy. banks will get more incentives to park their
funds with the RBI, thereby decreasing the
240. Debt Recovery Tribunals were established supply of money in the market.
under whose recommendation to recover debts
in banks and other financial institutions with the 242. ___________________ is an instrument in
customers? writing containing an unconditional order, signed
a) Sivaraman by the maker, directing a certain person to pay a
b) Narasimhan certain sum of money only to, or to the order of,
c) H R Khan a certain person or the bearer of the instrument.
d) Vijay Kelkar a) Promissory note
e) V S Vyas b) Bill of exchange
Answer: B c) Cheque
The Narasimhan Committee of 1991 advocated d) Demand Draft
the establishment of Special Tribunals such as e) Cash Management Bill
DRTs (Debt Recovery Tribunals) and DRATs Answer: B
(Debt Recovery Appellate Tribunals) to recover A “bill of exchange” is an instrument in writing
debts in banks and other financial institutions containing an unconditional order, signed by the
with the customers. maker, directing a certain person to pay a
241. The short-term borrowing rate at which the certain sum of money only to, or to the order of,
RBI borrows money from commercial banks is a certain person or the bearer of the instrument.
known as the reverse repo rate. An increase in
the reverse repo rate will ________ the money 243. When was the Reserve Bank of India
supply. introduced the Prompt Corrective Action (PCA)

in India? e) Monitoring Non-Bank Financial organizations

a)1998 Answer: C
b) 2000 Explanation:
c) 2001 Functions of RBI:
d) 2002 1) The issuer of the currency
e) 2004 2) Banker’s bank
Answer: D 3) Bankers to the Government
Reserve Bank of India had introduced a Prompt 4) Monetary Authority
Corrective Action Framework (PCA) for 5) Acts as a Clearing House
Scheduled Commercial Banks in 2002 and the 6) Regulator of Economy
same has been reviewed from time to time 7) Regulator of Foreign Exchange
based on the experience gained and 8) Controls credit in the Economy
developments in the banking system. 9) Regulator and Supervisor of Expense and
Settlement Structures
244. Which of the following is the only country 10) Impartial practices codes for Investors
where you can transfer money through NEFT 11) Monitoring Non-Bank Financial
outside India? organizations
a) France 12) Providing the authorization to banks and
b) Nepal managing new branches
c) Bangladesh 13) Execution of Deposit Insurance scheme.
d) Pakistan
e) Sri Lanka 246. Anyonya Co-operative Bank Limited
Answer: B (ACBL) is the first cooperative bank in India.
Nepal is the only country where you can transfer Where was it located?
money through NEFT outside India. a) Gujarat
b) Uttar Pradesh
245. Which of the following is not a function of c) Maharashtra
the Reserve Bank of India (RBI)? d) Bihar
a) Bankers to the Government e) Madhya Pradesh
b) Regulator of Economy Answer: A
c) Accepting Deposits from the customers The first co-operative bank in India is Anyonya
d) Regulator and Supervisor of Expense and Co-operative Bank Limited (ACBL), which is
Settlement Structures based in Vadodara (previously Baroda) in

Gujarat. banking to manage their money, obtain credit,

and deposit funds in a secure manner.
247. A _________ CASA ratio indicates a lower
cost of funds because banks do not usually give 249. What are the Advantages of the Automated
any interests on current account deposits. Teller Machine (ATM)?
a) Higher a) Offer Financial Inclusion
b) Lower b) Hard cash anywhere at anytime
c) Stable c) Access to banks from any part of the world
d) Partial High d) Continue to operate when businesses close
e) Partial Low due to natural disasters, health crises, or
Answer: A economic depression
A bank's CASA ratio is the proportion of current e) All the above
and savings account deposits to total deposits. Answer: E
Because banks rarely pay interest on current Advantages of ATM:
account deposits, a greater CASA ratio reflects 1. Offer Financial Inclusion
a lower cost of funding. A greater CASA ratio 2. Offers a wide range of services
indicates that a larger part of the bank's deposits 3. Hard cash anywhere at anytime
came from current and savings accounts, which 4. Continue to operate when businesses close
are often less expensive sources of funds. due to natural disasters, health crises, or
248. _____________is a type of banking that economic depression
caters to individuals rather than enterprises that 5. Round-the-clock services
provides credit, deposits, and a way to manage 6. Access to banks from any part of the world
money for Consumers & small businesses.
a) Shadow Banking 250. _________________ is based on a cheque
b) Retail Banking truncation or online image-based cheque
c) Narrow Banking clearing system where cheque images and
d) Universal Banking magnetic ink character recognition (MICR) data
e) Unit Banking are captured at the collecting bank branch and
Answer: B transmitted electronically.
Retail banking, often known as consumer a) Bharat Bill Payment System
banking or personal banking, is a type of b) Unified Payments Interface
banking that caters to individuals rather than c) National Automated Clearing House
enterprises. Individual customers can use retail d) Cheque Clearance System

e) Cheque Truncation System Answer: D

Answer: E If a bank does not respond within one month (30
Cheque Truncation System (CTS) is based on a days) after receiving a complaint, if the bank
cheque truncation or online image-based rejects the complaint, or if the complainant is
cheque clearing system where cheque images unhappy with the bank's response, one can
and magnetic ink character recognition (MICR) submit a complaint to the Banking Ombudsman.
data are captured at the collecting bank branch
and transmitted electronically. 253. Which of the following is a system that
provides a quote-driven automated trading
251. APBS is used for crediting DBT facility to members of exchange working on a
transactions for Government/ Government direct connection to the broker office and
agency disbursements. What is the full form of through telephone leased lines?
APBS? a) BOLT
a) Actual Payment Base System b) DOLT
b) Adjusted Payment Base System c) HALT
c) Aadhaar Payment Bridge System d) BULL
d) Alternative Payment Bridge System e) BEAR
e) Actual Planning Building System Answer: A
Answer: C Bombay Online Trading System (BOLT)is a
Aadhaar Payments Bridge System (APBS) is system that provides a quote-driven automated
used for crediting DBT transactions for trading facility to members of exchange working
Government/ Government agency on a direct connection to the broker office and
disbursements. through telephone leased lines.

252. A bank customer can register a complaint 254. ___________ are used to determine the
against a banking institution if the bank does not minimum amount of capital that banks and other
respond within ____ days after receiving the financial institutions must hold to avoid going
complaint representation. bankrupt.
a) 7 days a) Capital Adequacy Ratio
b) 15 days b) Risk-Weighted Assets
c) 10 days c) Ways & Means Advances
d) 30 days d) Capital to Risk-Weighted Ratio
e) 60 days e) Cash Reserve Ratio

Answer: B c) Digital services maintain customer relations

Risk-weighted assets are used to determine the anywhere and anytime through cloud computing
minimum amount of capital that must be held by d) With the help of the internet, many services
banks and other financial institutions to reduce like storing, managing, and accessing
the risk of insolvency. information have become easier for both
bankers and the consumers
255. A Sebi panel recommended that the market e) All the above
watchdog's enforcement mechanism be Answer: E
strengthened, as well as the method for Features of Cloud Computing technology:
recovering money that has been stolen. Who 1. Cloud computing creates an opportunity for
was the head of the committee? bankers to connect with their users directly.
a) Sukhamoy Chakravarty 2. With the help of the internet, many services
b) Vaghul like storing, managing, and accessing
c) Dave information have become easier for both
d) U K Sharma bankers and consumers.
e) Deepak Mohanty 3. It is an easy technique to deploy and integrate
Answer: C with all the services of the bank system which
A Sebi panel recommended that the market decreases the time and effort of the user.
watchdog's enforcement mechanism be 4. Digital services maintain customer relations
strengthened, as well as the method for anywhere and anytime through cloud computing
recovering money that has been stolen. Former
Supreme Court Judge Anil Dave chaired a 257. What is the current Foreign Direct
commission that has recommended a way of Investment (FDI) Limit of the insurance sector in
quantifying the profit made by the defaulter and India?
the loss suffered by investors. a) 49%
b) 52%
256. Which of the following are the Features of c) 63%
Cloud Computing technology? d) 74%
a) Cloud computing creates an opportunity for e) 82%
bankers to connect with their users directly Answer: D
b) It is an easy technique to deploy and The Insurance Amendment Bill 2021 was
integrate with all the services of the bank system enacted by Parliament, increasing the FDI
which decreases the time and effort of the user ceiling in the insurance sector from 49 percent

to 74 percent. c) Handicrafts
d) Rural crafts
258. What are all the conditions of holding a e) All the above
Basic Savings Bank Deposit Account? Answer: E
a) Maximum balance in the account should not For the promotion and development of
exceed Rs. 50000 rupees at any time agriculture, small-scale industries, cottage and
b) Total credit in BSBD account should not village industries, handicrafts, and other rural
exceed Rs.1 lakh in a year crafts and other allied economic activities in
c) Total cash withdrawals and transfers shall not rural areas to promote integrated rural
exceed Rs.10,000 in a month development and secure prosperity of rural
d) Only (a) and (b) areas.
e) All (a), (b) and (c)
Answer: E 260. What are the types of Capital Market?
Conditions of BSBD Account: a) Primary Market
1)Maximum balance in the account should not b) Secondary Market
exceed Rs. 50000 rupees at any time c) Tertiary Market
2)Total credit in the BSBD account should not d) Both (a) and (b)
exceed Rs.1 lakh in a year. e) Both (a) and (c)
3)Total cash withdrawals and transfers shall not Answer: D
exceed Rs.10,000 in a month. The capital market consists of two types i.e.
4)Small accounts are valid for 12 months initially Primary and Secondary.
which may be extended by another 12 months if
the person provides proof of OVDs 261. What are the eligibility criteria for the
5)Remittances from abroad cannot be credited Sukanya Samridhi Yojana?
to small accounts without completing KYC a) The account can be opened by the natural or
formalities. legal guardian for a girl child of age below 10
years
259. What are the sectors covered under the b) A depositor can open and operate only one
NABARD allied economic activities in rural account in the name of a girl child under the
areas to promote integrated rural development scheme rules
and secure prosperity of rural areas? c) Only One Account is allowed for a girl child
a) Small-scale industries d) A family can open only 2 SSY accounts
b) Cottage and village industries e) All the above

Answer: E The "Officially valid document" (OVD) for KYC

The account can be opened by the natural or includes the
legal guardian for a girl child of age below 10 a) Passport
years. A depositor can open and operate only b) Driving license
one account in the name of a girl child under the c) Permanent Account Number (PAN) Card
scheme rules. The natural or legal guardians of d) Voter`s Identity Card issued by the Election
a girl child are allowed to open the account for Commission of India
two girl children only. e) Job card issued by NREGA duly signed by an
officer of the State Government.
262. Which bank is the first bank to introduce a f) Letter issued by the Unique Identification
savings account in India? Authority of India containing details of name,
a) Presidency Bank address, and Aadhaar number
b) Bengal Bank
c) Allahabad Bank 264. Unsecured Loan means the loan is
d) Bank of Hindustan approved without producing Collateral. The
e) Central Bank of India Unsecured Loan is a reverse of a Secured Loan.
Answer: A Which of the following is an example of an
Presidency Bank was the first bank in India to Unsecured Loan?
establish a savings account system in 1833. a) Credit Cards
b) Student Loans
263. Which of the following document is not one c) Personal Loan
among the Officially Valid Documents (OVDs) of d) Bank Overdraft
KYC? e) All the above
a) Passport Answer: E
b) Permanent Account Number (PAN) Card Examples of Unsecured Loans:
c) Ration Card 1. Credit Cards
d) Job card issued by NREGA duly signed by an 2. Student Loans
officer of the State Government 3. Personal Loan
e) Driving license 4. Unsecured Bonds
Answer: C 5. Bank Overdrafts
Documents required for KYC:
● Photo Identity Proof 265. Match the correct pair:
● Address Proof 1. AU Small Finance Bank- A) Chennai

2. Equitas Small Finance Bank-B) Bengaluru d) Bank Rate

3. ESAF Small Finance Bank- C) Jaipur e) Statutory Liquidity Ratio
4. Jana Small Finance Bank- D) Thrissur Answer: B
a) 1-C, 2-A, 3-D, 4-B The short-term borrowing rate at which the RBI
b) 1-A, 2-D, 3-B, 4-C borrows money from commercial banks is
c) 1-B, 2- A, 3-D, 4-C known as the reverse repo rate.
d) 1- D, 2-B, 3-A, 4-C
e) 1-C, 2- D, 3- A, 4- B 267. Which of the following are the elements of
Answer: A a Promissory Note?
Headquarters a) It must contain a promise/undertaking to pay

ce Bank Jaipur, Rajasthan a certain sum of money

b) It must be stamped according to the
nance Bank Jalandhar, Punjab
provisions of the stamp act, 1940
inance Bank Chennai
c) It must be duly signed and delivered by the
ance Bank Thrissur, Kerala maker
inance Bank Bengaluru d) The Promissory note must be in writing

ance Bank Bengaluru e) All the above

Answer: E
Finance Bank Navi Mumbai
Elements of Promissory Notes:
nance Bank Bengaluru
●The Promissory note must be in writing
inance Bank Varanasi ●It must contain a promise/undertaking to pay a
ll Finance Bank Guwahati certain sum of money
●The promise must be unconditional and certain
●It must be duly signed and delivered by the
inance Bank Limited Saharanpur, Uttar Pradesh
maker
●The parties must be certain
●It must be stamped according to the provisions
266. _______________is the rate at which the of the stamp act, 1940.
RBI borrows funds from the commercial banks & 268. ______________________ are the borrowers
the country. who are unwilling to repay their debt obligations,
a) Repo Rate despite having the capacity to pay.
b) Reverse Repo rate a) Standard Assets
c) Cash Reserve Ratio b) Sub-Standard Assets

c) Doubtful Assets Chintaman Dwarkanath Deshmukh, a member

d) Loss of Assets of the Indian Civil Service. When he was
e) Wilful Defaulters appointed Government liaison officer in 1939, he
Answer: E began his affiliation with the Bank. He went on
In any of the four situations listed below, a to become Secretary of the Bank and then
person or company is considered a "wilful Deputy Governor in 1941.
defaulter": When a borrower (person or
business) fails to meet their payment 271. When was the Cooperative Credit Societies
obligations, although having the financial means Act of 1904 amended to allow non-credit
to do so. There is a planned plan to default on societies to be formed under the McLagan
the debt. Committee to access their performance?
a) 1905
269. What is the minimum transaction limit b) 1909
under the National Electronic Funds Transfer c) 1912
(NEFT)? d) 1925
a) Rs. 500 e) 1936
b) Rs. 10000 Answer:C
c) Rs. 25000 The Cooperative Credit Societies Act of 1904
d) Rs. 50000 was amended in 1912 to allow non-credit
e) No minimum limit societies to be formed. The Maclagan
Answer: E Committee was formed in 1915 to assess their
There is no minimum limit on National Electronic performance and provide recommendations for
Funds Transfer (NEFT) transfers. improvement.

270. Who was the first Indian Governor of the 272. _______________ is defined as the ratio of
Reserve Bank of India? the deposits in the form of current and savings
a) C. D. Deshmukh accounts to the total deposits.
b) Hilton Young a) SASA
c) Osborne Smith b) CASA
d) Gilbert Singh c) No frill Account
e) Narasimhan d) Yield Ratio
Answer: A e) Lending Ratio
The first Indian Governor of the Bank was Answer: B

The CASA ratio indicates how much of a bank's d) 7

total deposits are in both current and savings e) 9
accounts. The ratio can be calculated using the Answer: D
following formula: CASA Ratio = CASA Deposits As per the RBI instructions in case of a failed
÷ Total Deposits. ATM transaction, the card-issuing bank has
been mandated to resolve the customer
273. ______________ is a banking system in complaint by re-crediting the customer's account
which a bank works in a small geographic area, within 7 working days from the date of
does not create branches elsewhere, and is complaint.
more sensitive to local requirements.
a) Shadow Banking 275. FASTag is a device that employs ________
b) Mixed Banking technology for making toll payments directly
c) Narrow Banking while the vehicle is in motion.
d) Universal Banking a) Radio Frequency Identification (RFID)
e) Unit Banking b) Audio Frequency Identification (AFID)
Answer: E c) Electronic Toll Identification
Unit banking is a banking system in which a d) Auto Frequency Identification
bank works in a small geographic area, does not e) Virtual Frequency Identification
create branches elsewhere, and is more Answer: A
sensitive to local requirements. These self- FASTag is a device that employs Radio
contained and segregated entities are Frequency Identification (RFID) technology for
responsible for all banking operations as well as making toll payments directly while the vehicle is
maintaining good health. in motion. FASTag (RFID Tag) is affixed to the
windscreen of the vehicle and enables a
274. As per the RBI instructions in case of a customer to make the toll payments directly from
failed ATM transaction, the card-issuing bank the account which is linked to FASTag.
has been mandated to resolve the customer
complaint by re-crediting the customer's account 276. CAR is the ratio of a bank's capital with its
within ______ working days from the date of risk-weighted assets and current liabilities. What
complaint. does A represent in CAR?
a) 3 a) Actual
b) 5 b) Adjusted
c) 6 c) Adequacy

d) Adjustment stock exchange other than its primary and

e) Actuary original stock exchange is known as Cross
Answer: C Listing.
Capital Adequacy Ratio (CAR) is the ratio of a 279. How much capital conservation buffer are
bank's capital to its risk-weighted assets and banks need to hold under Basel III?
current liabilities. a) 1.5%
b) 2.5%
277. A Banking Ombudsman is a senior official c) 3%
appointed by the RBI to resolve customer d) 3.75%
complaints about deficiencies in certain banking e) 5%
services. There are four NBFC Ombudsman are Answer: B
there at present. Where are their offices Under Basel III, all banks must retain 4.5
located? percent of their risk-weighted assets in high-
a) Chennai quality capital, plus a 2.5 percent capital
b) Kolkata conservation buffer (CCB). The CCB was
c) New Delhi established to encourage banks to save money.
d) Mumbai
e) All the above 280. Who headed the committee to enquire into
Answer: E various aspects of frauds and malpractices in
Four NBFC Ombudsman offices have been banks to make a recommendation to reduce
established in Chennai, Kolkata, New Delhi, and such incidence?
Mumbai. a) A Ghosh
b) H R Khan
278. The listing of a company's common shares c) Vijay Kelkar
on a stock exchange other than its primary and d) Gadgil
original stock exchange is known as _________. e) V S Vyas
a) Up Listing Answer: A
b) Cross Listing Under the chairmanship of A. Ghosh, the then
c) Up Lifting Dy. Governor, the RBI established a High-Level
d) Dual Listing Committee on Frauds and Malpractices in
e) Share Listing Banks to investigate various areas of bank
Answer: B frauds and malpractices to give
The listing of a company's common shares on a recommendations to reduce such occurrences.

In June of 1992, the Committee submitted its Need of Foreign Institutional Investors (FII):
report. a) FIIs play an essential role in attracting non-
debt foreign capital inflows, as well as
281. ______________ is a 10-digit Alpha Numeric developing India's capital market, lowering the
code used to prevent tax evasion by individuals cost of capital for Indian businesses, and
and entities as it links all financial transactions improving corporate governance frameworks
made by a particular individual or entity. indirectly
a) Tax Deduction Account Number b) The FII contributes to India's currency
b)Universal Account Number reserves
c) Permanent Account Number c) Financial innovation and the creation of
d) Permanent Retirement Account Number hedging tools are aided by FII inflows
e) International Securities Identification Number
Answer: C 283. When was the Standup India scheme
A permanent Account Number is used to launched to support entrepreneurship among
prevent tax evasion by individuals and entities women and SC&ST Communities who are
as it links all financial transactions made by a looking to obtain a loan to launch their business
particular individual or entity. venture?
a) 15 April 2010
282. What is the need of Foreign Institutional b) 20 August 2011
Investors (FII)? c) 1 December 2012
a) FIIs play an essential role in attracting non- d) 12 July 2014
debt foreign capital inflows, as well as e) 5 April 2016
developing India's capital market, lowering the Answer: E
cost of capital for Indian businesses, and The Government of India launched the Stand-
improving corporate governance frameworks Up India scheme on April 5, 2016, as part of
indirectly efforts to support entrepreneurship among
b) The FII contributes to India's currency women and Scheduled Caste & Scheduled
reserves Tribe (SC & ST) communities.
c) Financial innovation and the creation of
hedging tools are aided by FII inflows 284. What was the authorized share capital
d) Only (a) and (b) when the National Bank for Agriculture and
e) All (a), (b) and (c) Rural Development (NABARD) was
Answer: E established?

a) Rs. 20 crores years

b) Rs. 100 crores b) The applicant must be a citizen of India. KVP
c) Rs. 200 crores cannot be purchased by a minor
d) Rs. 500 crores c) NRIs and an undivided Hindu family (HUF)
e) Rs. 550 crores are not eligible to apply for KisanVikasPatra
Answer: B d) Only (a) and (b)
The agricultural credit functions of RBI and the e) All (a), (b) and (c)
refinance functions of the erstwhile Agricultural Answer: E
Refinance and Development Corporation a) The applicant must be above the age of 18
(ARDC) were transferred to NABARD on July years
12, 1982, established with an Rs.100 crore b) The applicant must be a citizen of India. KVP
starting capital. cannot be purchased by a minor
c) NRIs and an undivided Hindu family (HUF)
285. Which among the following is the tenure of are not eligible to apply for KisanVikasPatra
the Treasury Bills issued by the Government of
India? 287. Mergers and acquisitions are the most
a) 91 days common method employed by banks (or any
d) 182 days other company) to strengthen and maintain their
c) 364 days market position.___________________ bank is
d) Both (a) and (b) the fifth largest bank post-merger.
e) All (a), (b) and (c) a) Punjab National Bank
Answer: E b) Canara Bank
T-bills, or Treasury notes, have a maximum c) Union Bank of India
maturity of 364 days. As a result, they're d) Indian Bank
classified as money market instruments (money e) Bank of Baroda
market deals with funds with a maturity of less Answer: C
than one year). Treasury bills are currently Recent merger announced by Finance ministry:
available in three maturities: 91 days, 182 days,
and 364 days.

286. What are the eligibility conditions of Kisan

Vikas Patra (KVP)?
a) The applicant must be above the age of 18

Anchor Bank Amalgamating bank’s Public sector banks by c)

size Operating
PNB (Punjab National Oriental bank of 2nd largest costs
Bank) commerce + United bank d) Tenor
of India premium
Canara bank Syndicate bank 4th largest e) All the
Union Bank of India Andhra bank + 5th largest above
288. Corporation Bank Answer: E
Which Indian bank Allahabad bank 7th largest The
of the marginal
following is the Advantage of the Central KYC cost of the Lending Rate consists of the
Registry? following components.
a) Facilitates uniformity 1. Marginal cost of funds
b) Inter-usability of KYC records & processes 2. Negative carry on account of CRR
across the financial sector 3. Operating costs
c) Secure and advanced user authentication 4. Tenor premium
mechanisms for system access.
d) All of the above 290. What are the Criteria for setting up small
e) None of these finance banks?
Answer: D a) The minimum paid-up capital for small
The advantage of the Central KYC Registry is finance Banks shall be Rs.200 Crores
that it facilitates uniformity & inter-usability of b) Primary urban cooperative Banks which are
KYC records & processes across the financial desirous of voluntarily converting into small
sector and also Secure and advanced user finance banks
authentication mechanisms for system access. c) Resident Individuals / Professionals singles or
jointly having at least 10 years of experience in
289. The lowest interest rate a bank or lender banking & Finance at senior level, and
can provide is the MCLR (marginal cost of companies & Societies in the Private Sector,
funds-based lending rate). What are the that are owned and controlled by Residents
Components needed for the Marginal cost of a d) Only (a) and (b)
funds-based lending rate? e) All (a), (b) and (c)
a) Marginal cost of funds Answer: E
b) Negative carry on account of CRR Criteria for setting up small finance Banks:

The minimum paid-up capital for small can also be transferred to the bank account of
finance Banks shall be Rs.200 Crores. the person who presented the cheque.
Resident Individuals / Professionals singles a) Crossed Cheque
or jointly having at least 10 years of b) Mutilated Cheque
experience in banking & Finance at c) Open Cheque
senior level, and companies & Societies d) Ante-dated Cheque
in the Private Sector, that are owned and e) Post- Dated Cheque
controlled by Residents. Answer: C
Primary urban cooperative Banks are An Open Cheque or An uncrossed cheque is a
desirous of voluntarily converting into cheque that has not been crossed with two
small finance banks. parallel lines on the top left corner. Such
cheques can be encashed at any bank. It can
291. The interest rate at which the Reserve also be transferred to the bank account of the
Bank of India lends money to scheduled person who presented the cheque.
commercial banks that are experiencing severe
liquidity shortages is ______________. 293. When was the Corporate Debt
a) Cash Reserve Ratio Restructuring implemented by the RBI in India
b) Marginal Standing Facility for rearrangement of a distressed company's
c) Liquidity Adjustment Facility outstanding commitments?
d) Statutory Liquidity Ratio a) 1998
e) Repo Rate b) 2000
Answer: B c) 2001
The MSF rate, or Marginal Standing Facility d) 2004
rate, is the rate at which the Reserve Bank of e) 2005
India lends money to scheduled commercial Answer: C
banks that are experiencing severe liquidity Corporate Debt Restructuring, or CDR, is a
shortages. Banks can obtain overnight cash scheme developed by the Reserve Bank of India
from RBI by paying the exclusive MSF rate, (RBI) through a circular released on August 23,
which differs from the Repo rate. 2001, for implementation by banks and financial
institutions (FIs) to recover debt from debtors
292. ___________ is a cheque that has not been who are unable to pay the full amount owed.
crossed with two parallel lines on the top left
corner that can be encashed at any bank and 294. __________ are payment orders/instructions

that are set up by Bank customers to ensure DICGC up to a limit of Rs. 500,000 per depositor
that payments are transferred regularly on a in a bank.
certain date and a method of debiting your
Operative account to make an automatic 296. Which committee has been tasked with
payment of a predetermined sum at regular reviewing the progress of the implementation of
times. banking reforms since 1992 to further
a) Standing Instruction strengthen Indian financial institutions?
b) Payment Instruction a) H R Khan committee
c) Electronic Clearance b) Narasimhan-II committee
d) Reinsurance c) Kelkar Committee
e) Bancassurance d) Sivaraman Committee
Answer: A e) Gadgil Committee
Standing Instructions are payment Answer: B
orders/instructions that are set up by Bank The Narasimham II Commission has been
customers to ensure that payments are tasked with reviewing the progress of the
transferred regularly on a certain date and a implementation of banking reforms since 1992
method of debiting your Operative account to to further strengthen Indian financial institutions.
make an automatic payment of a predetermined
sum at regular times. 297. If the deposits are Rs.2 crore or more, they
295. When a bank fails to pay its depositors, the come under the ____________.
Deposit Insurance Credit Guarantee Corporation a) Bulk Deposits
(DICGC) provides deposit insurance. What is b) Recurring Deposits
the maximum amount insured by the Deposit c) Fixed Deposits
Insurance and Credit Guarantee Corporation of d) Gilt Deposits
India (DICGC)? e) Trading
a) Rs. 1 lakh Answer: A
b) Rs. 3 lakhs If the deposits are Rs.2 crore or more, they
c) Rs. 5 lakhs come under the Bulk Deposits.
d) Rs. 10 lakhs
e) Rs. 25 lakhs 298. Merchant Banking is a combination of
Answer: C banking and consultancy service. Consultancy
All bank deposits, such as savings, fixed, means providing advice, guidance, and service
current, and recurring deposits, are insured by for a fee. What are the functions of Merchant

Banking? a) Bharat Bill Payment System

a) Raising funds for clients b) Unified Payments Interface
b) It helps clients raise funds by issuing shares, c) National Automated Clearing House
debentures, and bank loans d) Aadhar Payment Bridge System
c) It helps clients raise funds both in the e) Cheque Truncation System
domestic as well as the international market Answer: B
d) Only (a) and (b) UPI is an acronym for Unified Payments
e) All (a), (b) and (c) Interface. UPI is a real-time instant money
Answer: E transfer between banks. This interface is
The important functions of merchant banking are regulated by RBI and works by transferring
discussed below: Raising funds for clients: funds to banks on a mobile platform. It is a
Merchant banking helps clients raise funds by single-window system developed by NPCI.
issuing shares, debentures, and bank loans.
This helps clients raise funds both in the 301. BOP is a statement of all transactions that
domestic as well as international market. take place between entities in one country and
the rest of the world over a certain period, such
299. Which bank has introduced the first Mobile as a quarter or a year. What is the full form of
ATM in India? BOP?
a) ICICI Bank a) Balance of Payment
b) HSBC b) Best of Payment
c) HDFC Bank c) Balance of Period
d) State Bank of India d) Best of Period
e) Axis Bank e) Bank of Period
Answer: A Answer: A
ICICI Bank, India's largest private sector bank, The Balance Of Payments (BOP), sometimes
inaugurated India's first mobile ATM, "ATM on known as the balance of international payments,
Wheels," in Mumbai. is a statement of all transactions that take place
between entities in one country and the rest of
300. ______________ is a real-time instant the world over a certain period, such as a
money transfer between the banks and this quarter or a year.
interface is regulated by RBI and works by
transferring funds from banks on a mobile 302. What is the maximum compensation
platform. amount provided by Banking Ombudsmen for

Banks if the redressal is not resolved? c) Standard approach

a) Rs. 5 lakhs d) Market discipline
b) Rs. 10 lakhs e) Risk-Weighted Ratio
c) RS. 20 lakhs Answer: D
d) Rs. 25 lakhs Basel III uses a "three pillars" concept
e) Rs. 50 lakhs i) Minimum capital requirements
Answer: C (ii) Supervisory review and
The sum paid by the bank to the complaint as (iii) Market discipline.
compensation for any damage sustained by the
complainant is restricted to the amount directly 305. The Reserve Bank of India (RBI) formed a
deriving from the bank's conduct or omission, or 14-member committee to review existing
Rs. 20 lakhs whichever is less. financial inclusion policies and develop a five-
303. ____________ is a certificate that year (medium-term) action plan. Who headed
represents an interest-bearing debt, where the the committee?
issuer is required to pay a sum of money a) Sukhamoy Chakravarty
periodically till the maturity, and then receive b) Vaghul
back the accumulated amount. c) Dave
a) Bond d) U K Sharma
b) Debenture e) Deepak Mohanty
c) Shares Answer: E
d) Promissory Note The Reserve Bank of India (RBI) has released
e) Stocks the report of a 14-member committee led by RBI
Answer: A Executive Director Deepak Mohanty on the
A bond is a certificate that represents an medium-term path to financial inclusion. In July
interest-bearing debt, where the issuer is 2015, the RBI formed a committee to review
required to pay a sum of money periodically till existing financial inclusion policies and develop
maturity, and then receive back the accumulated a five-year (medium-term) action plan.
amount.
306. RBI enforces Legal Entity Identifier (LEI) for
304. Which of the following is known as the third cross-border deals above Rs 50 crores. How
pillar of the Basel-II accord? many digit code is Legal Entity Identifier (LEI)?
a) Minimum capital requirement a) 11
b) Supervisory review process b) 12

c) 15 b) The overdraft facility of Rs.10,000 is available

d) 19 c) Accidental Insurance cover of Rs.2 lakh
e) 20 d) Account holders can check their balance
Answer: E using the mobile banking facility
The Reserve Bank of India (RBI) made 20 digit e) All the above
number of Legal Entity Identifiers (LEI) Answer: E
mandatory for cross-border transactions for Features of PMJDY:
capital or current account transactions of Rs 50 1) Zero Balance Account can be opened by
crores and above. Individuals.
2) Transfer of money is Simple
307. What was the limit set by RBI for 3) The overdraft facility of Rs.10,000 is available
investments in the debt Market under the 4) The amount Deposited earns Interest Rate
voluntary retention route (VRR) to foreign 5) Accidental Insurance cover – Rs.2 lakh.
portfolio investors?
a) Rs. 1 lakh crore 309. What are the functions of the National
b) Rs. 1.5 lakh crores Housing Bank (NHB)?
c) Rs. 2 lakh crores a) Regulation and Supervision of Housing
d) Rs. 2. 5 lakh crores Companies operating in India
e) Rs. 5 lakh crores b) Raising of Funds on large scale and onward
Answer: D refinancing to Housing Finance companies,
The Reserve Bank of India (RBI) has increased Cooperative Banks, and other housing agencies
the limit for foreign portfolio investors (FPIs) to for onward lending to Individual and
invest in the local debt market under the Infrastructure companies in Housing Segment
voluntary retention route (VRR) by Rs 1 lakh c) Acts as a guaranteeing institute for small
crore to Rs 2.5 lakh crores. Housing finance companies who cannot raise
funds from the market
308. PMJDY is a government-sponsored d) Only (a) and (b)
scheme that aims to provide financial inclusion e) All (a),(b) and (c)
for everyone in India who does not have a bank Answer: E
account. What are the features available in Functions of NHB:
Pradhan Mantri Jan-Dhan Yojana (PMJDY)? 1. Regulation and Supervision of Housing
a) Zero Balance Account can be opened by Companies operating in India
Individuals 2. Raising of Funds on large scale and onward

refinancing to Housing Finance companies, cannot make NSC investments

Cooperative Banks, and other housing agencies d) Only (a) and (b)
for onward lending to Individual and e) All (a), (b) and (c)
Infrastructure companies in Housing Segment. Answer: E
3. Acts as a guaranteeing institute for small Eligibility of National Savings Certificate (NSCs):
Housing finance companies who cannot raise 1. All resident Indians are eligible to invest in
funds from the market. NSCs.
2. Non-resident Indians cannot purchase new
310. The money market refers to trading in very NSCs. However, in the case of resident
short-term debt investments. What are the types subscribers of NSC becoming NRI before the
of Money market Instruments? maturity of certificates, such NSCs can be held
a) Treasury Bills till maturity.
b) Commercial Papers 3. Trusts and Hindu Undivided Family (HUFs)
c) Bills of Exchange cannot make NSC investments
d) Repurchase Agreements
e) All the above 312. Which bank was the first commercial bank
Answer: E in India?
Money market instruments include Bills of a) State Bank of India
Exchange or Commercial Bills, Treasury Bills (T- b) Allahabad Bank
Bills), Commercial Papers (CP), Certificate of c) Oudh Commercial Bank
Deposits (CD), Repurchase Agreements, and d) Punjab National Bank
Banker's Acceptance and Call & Notice Money. e) Andhra Bank
Answer: C
311. What are the Eligibility Conditions of Oudh Commercial Bank, also known as Awadh
National Savings Certificates (NSCs)? Commercial Bank, was an Indian bank that
a) All resident Indians are eligible to invest in began operations in Faizabad in 1881 and
NSCs ceased operations in 1958. It was the first
b) Non-resident Indians cannot purchase new commercial bank in India to have limited liability
NSCs. However, in the case of resident and an entirely Indian board of directors.
subscribers of NSC becoming NRI before the
maturity of certificates, such NSCs can be held 313. What are the steps taken for Know Your
till maturity Customer Verification?
c) Trusts and Hindu Undivided Family (HUFs) i) Customer Identification Program

ii) Customer Due Diligence a) Mumbai

iii) Ongoing Monitoring b) New York
a) Both (i) and (ii) c) Washington D. C.
b) Only (i) d) Paris
c) Only (iii) e) Delhi
d) Only (i) and (iii) Answer: B
e) All (i), (ii), and (iii) The headquarters of Moody's Investors Service
Answer: E is in New York, the United States.
KYC Verification Process – 3 Steps to Know
Your Customer: 316. Cash Reserve Ratio is maintained under
Customer Identification Program (CIP) _______________ section of the Reserve Bank of
Customer due diligence. India 1934.
Ongoing monitoring. a) Section 26
b) Section 42 (1)
314. The benchmark prime lending rate (BPLR) c) Section 34 (1)
is the interest rate that commercial banks d) Section 45ZB
charge their most creditworthy customers. e) Section 49
Under whose chairmanship does RBI constitute Answer: B
a working group to review the rates? All Scheduled Banks are required to maintain a
a) Deepak Mohanty Cash Reserve Ratio (CRR) of 4% of Net
b) H R Khan Demand and Time Liabilities (NDTL) with the
c) Deepak Mohan Reserve Bank of India under section 42(1) of the
d) Kelkar Reserve Bank of India Act, 1934.
e) John Paul
Answer: A 317. The person named in the instruments, to
RBI constituted a working group under the whom or to whose order the money is by the
Chairmanship of Shri Deepak Mohanty to review instrument directly to pays is called
the benchmark prime lending rate. ______________.
315. Moody's Investors Service provides a) Drawee
investors with credit ratings, risk analysis, and b) Drawer
research for stocks, bonds, and government c) Payer
entities. Where is the headquarters of Moody's d) Payee
Investors Service? e) Endorser

Answer: D remitted through RTGS is Rs. 2 lakhs. There is

The person named in the instruments, to whom no upper ceiling for RTGS transactions.
or to whose order the money is by the
instrument directly to pays, and calls the 320. The Reserve Bank of India (RBI) regulates
“Payee.” the banking system. How many Subsidiaries are
318. _______________ allows banks that have there in RBI at present?
given corporates loans to convert a portion of a) 3
the total outstanding loan amount and interest b) 4
into substantial ownership equity in the c) 5
company. d) 6
a) Prompt Corrective Action e) 10
b) Non-Performing Assets Answer: C
c) Strategic Debt Restructuring Scheme The Reserve Bank of India (RBI), India's main
d) Joint Lenders’ Forum financial agency, regulates the banking system.
e) Corporate Social Responsibility RBI has five wholly-owned subsidiaries. In other
Answer: C words, these are the companies that are fully
The RBI's Strategic Debt Restructuring Scheme owned and controlled by RBI.
(SDR) allows banks that have given corporates There are five fully owned subsidiaries of RBI:
loans to convert a portion of the total DICGC, BRBNMPL, ReBIT, IFTAS, and RBIH.
outstanding loan amount and interest into
substantial ownership equity in the company. 321. Which of the following are the development
Banks operating in India?
319. What is the minimum and maximum a) Industrial Finance Corporation of India
transaction limit under the Real Time Gross b) National Bank for Agriculture and Rural
Settlement (RTGS)? Development
a) Rs. 2 lakhs and No maximum limit c) Export-Import Banks of India
b) Rs. 1 lakh and Rs. 5 lakhs d) Both (a) and (b)
c) Rs. 50000 and Rs. 20 lakhs e) All (a), (b) and (c)
d) No minimum Limit and Rs. 2 lakhs Answer: E
e) Rs. 2 lakhs and Rs. 5 lakhs The major development banks in India are
Answer: A Industrial Finance Corporation of India (IFCI
The RTGS system is primarily meant for large Ltd), 1948, Industrial Development Bank of
value transactions. The minimum amount to be India' (IDBI) 1964, Export-Import Banks of India

(EXIM) 1982, Small Industries Development was established.

Bank Of India (SIDBI) 1989, National Bank for
Agriculture and Rural Development (NABARD) 324. When non-bank organizations own and
1982. operate ATMs but do not have an 'outsourcing
contract' with a specific bank. Such type of ATM
322. What is the minimum and maximum is ____________.
maturity term period of Recurring Deposits a) Onsite ATM
respectively? b) Offsite ATM
a) 3 months and 1 year c) White Label ATM
b) 6 months and 5 years d) Brown Label ATM
c) 3 months and 10 years e) Pink Label ATM
d) 6 months and 10 years Answer: C
e) 6 months and 15 years RBI permitted NBFCs/FIs to establish ATMs
Answer: D with their brand name. These are known as
Recurring Deposit accounts have a six-month White Label ATMs.
minimum deposit period and a ten-year
maximum deposit period. 325. ___________ is a platform for bill payments
and the service is carried online and through a
323. A bank is governed by an international network of agents established in 2013, this
banking license (also known as an offshore system will encourage cashless transactions.
license), which prevents the bank from a) Bharat Bill Payment System
conducting business in the jurisdiction where it b) Unified Payments Interface
was established, is called ____________. c) National Automated Clearing House
a) Shadow Bank d) Aadhar Payment Bridge System
b) Wholesale Bank e) Cheque Truncation System
c) Offshore Banks Answer: A
d) Retail Bank BBPS stands for Bharat Bill Payment System. It
e) Virtual Bank is established in 2013 and owned by NPCI. It is
Answer: C a platform for bill payments and the service is
An offshore bank is governed by an international carried online and through a network of the
banking license (also known as an offshore agent. This system will encourage cashless
license), which prevents the bank from transactions.
conducting business in the jurisdiction where it

February 23, 2018, the Scheme is being

326. CAGR is the average yearly growth rate of implemented under Section 45 L of the Reserve
an investment over some time greater than one Bank of India Act, 1934.
year. What does C represent?
a) Compound 328. ___________ is calculated by dividing the
b) Current total fixed costs of production by the price per
c) Capital individual unit less the variable costs of
d) Currency production.
e) Committee a) Balance of Trade
Answer: A b) Cash Reserve Ratio
CAGR stands for Compound Annual Growth c) Break-Even Point
Rate, which is the average yearly growth rate of d) Yield Ratio
an investment over some time greater than one e) Asset Quality
year. Answer: C
The Break-Even Point is calculated by dividing
327. Non-Banking Finance Companies (NBFC) the total fixed costs of production by the price
Ombudsman scheme have been introduced in per individual unit less the variable costs of
2018 under the ___________ section of the production.
Reserve Bank of India Act, 1934.
a) Section 34 329. Basel III guidelines aim to promote a more
b) Section 35 A flexible banking system by focusing on some
c) Section 42 vital banking parameters. What are they?
d) Section 45L i) Capital Adequacy
e) Section 48B ii) Leverage Ratio
Answer: D iii) Net Stable Funding Ratio
The Reserve Bank of India has established an iv) Liquidity Coverage Ratio
Ombudsman Scheme for Non-Banking Financial a) Only (i) and (ii)
Companies' consumers (NBFCs). The b) Only (iii) and (iv)
Ombudsman Scheme for Non-Banking Financial c) All (i), (ii) and (iii)
Companies, 2018 (the Scheme) is a fast and d) All (ii), (iv) and (iii)
low-cost apex-level method for resolving e) All (i), (ii), (iii) and (iv)
complaints from NBFC customers about specific Answer: E
services provided by NBFCs. With effect from The guidelines aim to promote a more flexible

banking system by focusing on four vital banking Answer: B

parameters Whenever a user attempts to send or receive
1) Capital Adequacy money using the IMPS method of payments
2) Leverage Ratio using the mobile number, Mobile Money
3) Net Stable Funding Ratio Identifier (MMID) code is brought into use.
4) Liquidity Coverage Ratio Mobile Money Identifier (MMID) is a 7-digit code
in which the First 4 digits represent Bank and
330. The Reserve Bank of India had constituted the Last 3 digits represent the Account of the
a High-Level Committee on the Deepening of user.
Digital Payments under the Chairmanship of
___________. 332. Which is the nodal department for
a) H R Khan formulation of the policy on Foreign Direct
b) Rattan P Watel Investment (FDI)?
c) Nandan Nilekani a) Reserve Bank of India
d) Vijay Kelkar b) Ministry of Finance
e) Gadgil c) Department for Promotion of Industry and
Answer: C Internal Trade (DPIIT)
The Reserve Bank of India had constituted a d) Department of Telecommunication
High-Level Committee on the Deepening of e) National Bank for Agriculture and Rural
Digital Payments under the Chairmanship of Development
Nandan Nilekani. Answer: C
The Department for Promotion of Industry and
331. Whenever a user attempts to send or Internal Trade (DPIIT) under the Ministry of
receive money using the IMPS method of Commerce and Industry is the nodal department
payments using the mobile number, Mobile for the formulation of the Government's policy on
Money Identifier (MMID) code is brought into Foreign Direct Investment (FDI).
use. How many digit code is Mobile Money
Identifier (MMID)? 333. What are the roles of Business
a) 6 Correspondents to aid the process of financial
b) 7 Inclusion and take banking to the remote areas
c) 9 of the country?
d) 11 a) Responsible for Disbursing small loans like
e) 12 agricultural loan set

b) Handling Receipt & delivery of small value the field of infrastructure financing
remittances & other payment Instruments c) Extending loans and advances for
c) Filling of applications/account opening forms infrastructure projects
including nomination clause and submission to d) Facilitating negotiations with various
the Bank government authorities for dispute resolution in
d) Cross-selling of financial products like the field of infrastructure financing
Insurance / mutual fund Products e) All the above
e) All the above Answer: E
Answer: E NaBFID's functions include: (i) Extending loans
Role of BCs: and advances for infrastructure projects, (ii)
Responsible for Disbursing small loans like Taking over or refinancing such existing loans,
agricultural loan set. (iii) Attracting private sector and institutional
Handling Receipt & delivery of small value investment for infrastructure projects, and (iv)
remittances & other payment Organising and facilitating foreign participation
Instruments. in infrastructure projects, (v) Facilitating
Creating awareness about savings & other negotiations with various government authorities
bank products. for dispute resolution in the field of infrastructure
KYC will be completed by BC. financing, and (vi) Facilitating negotiations with
Opening of no-frill Accounts and other various government authorities for dispute
products. resolution in the field of infrastructure financing.
Cross-selling of financial products like
Insurance / mutual fund Products etc. 335. ___________ are short-term debt
Filling of applications/account opening forms instruments with zero-coupon securities and no
including nomination clause and interest which are the safest short term fixed
submission to the Bank. income investments as they are backed by the
Government of India.
334. What are the functions of the National Bank a) Treasury Bills
for Financing Infrastructure and Development b) Commercial Papers
(NaBFID)? c) Bills of Exchange
a) Organising and facilitating foreign d) Repurchase Agreements
participation in infrastructure projects e) Certificate of Deposits
b) Facilitating negotiations with various Answer: A
government authorities for dispute resolution in Treasury Bills are short-term debt instruments

with zero-coupon securities and no interest that money laundering cycle?

are the safest short-term fixed-income a) Placement
investments as they are backed by the b) Layering
Government of India. c) Integration
d) All of the above
336. Kisan Vikas Patra is a savings certificate e) None of the above
scheme launched in 1988 to encourage people Answer: D
to adopt long-term financial discipline. What is Money laundering is the processing of criminal
the tenure of Kisan Vikas Patra (KVP)? proceeds to disguise their illegal origin. The
a) 120 months money laundering cycle consists of placement,
b) 122 months layering, and integration.
c) 124 months
d) 125 months 339. The lowest interest rate a bank or lender
e) 126 months can provide is the MCLR. What does L
Answer: C represent in MCLR?
Kisan Vikas Patra is an Indian post office a) Low
certificate scheme. In approximately 10 years b) Lending
and 4 months, it doubles a one-time investment c) Leverage
(124 months). d) Liquidity
e) Level
337. Where is the headquarters of Punjab Answer: B
National Bank? The lowest interest rate a bank or lender can
a) Mumbai provide is the MCLR (marginal cost of funds-
b) New Delhi based lending rate).
c) Chennai
d) Bengaluru 340. When were SMERA Ratings established in
e) Noida Mumbai that analyse and establishes the
Answer: B credibility of existing micro, small, and medium
Punjab National Bank (abbreviated as PNB) is enterprises (MSMEs)?
an Indian public sector bank located in Delhi, a) 1998
India. b) 2000
c) 2002
338. Which of the following comes under the d) 2005

e) 2004 Answer: C
Answer: D A soiled Cheque is not a type of cheque.
SMERA Ratings was established in Mumbai in The types of Cheques are:
2005 to analyze and establish the credibility of Bearer Cheque
existing micro, small, and medium enterprises Order Cheque
(MSMEs). Crossed Cheque
Stale Cheque
341. Which of the following is true regarding the Post Dated Cheque
Statutory Liquidity Ratio (SLR)? Ante Dated Cheque
a) Statutory Liquidity Ratio is to be maintained in Traveler’s Cheque
cash, gold & approved securities Mutilated Cheque
b) This is as per section 24 of the Banking Open Cheque
Regulation Act, 1949
c) No floor rate, but the ceiling is 40%. 343. The Prompt Corrective Action (PCA) are
d) Both (a) and (b) applicable to all banks in India except
e) All (a), (b) and (c) ________________.
Answer: E i) All Scheduled Commercial Banks
All Banks have to maintain a portion of their ii) Foreign Banks
total deposits with RBI either as cash or iii)Small Finance Banks
gold or approved securities. iv) Payment Banks
This is as per section 24 of the Banking v) Regional Rural Banks
Regulation Act, 1949. {This was a) Only (i) and (iii)
amended through the Banking Regulation b) Only (ii) and (v)
(Amendment) Act, 2007} c) All (iii), (iv) and (v)
No floor rate, but the ceiling is 40%. d) All (ii), (iv) and (v)
e) Only (iv) and (v)
342. Which among the following is not a type of Answer: C
Cheque? Except for Regional Rural Banks and
a) Crossed Cheque Cooperative Banks, the framework would apply
b) Mutilated Cheque to all institutions operating in India, including
c) Soiled Cheque small banks and foreign banks.
d) Ante-dated Cheque
e) Post- Dated Cheque 344. How many languages are there available in

the Bharat Interface for Money (BHIM) app? The primary banking regulator in India is the
a) 14 Reserve Bank of India (RBI). The RBI has broad
b) 15 regulatory authority over the financial sector.
c) 18
d) 20 347. What is the minimum lock-in period of the
e) 22 Recurring Deposit?
Answer: D a) 7 days
Currently, Bharat Interface for Money (BHIM) is b) 15 days
available in 20 languages. c) 2 month
d) 3 months
345. What is the Headquarters and Authorised e) 1 year
capital of the Deposit Insurance and Credit Answer: D
Guarantee Corporation of India (DICGC)? An RD account's minimum lock-in duration is
a) Kolkata and Rs. 20 crores usually three months. If a premature withdrawal
b) Mumbai and Rs. 25 crores is made before this period, the account holder
c) Mumbai and Rs. 50 crores will receive no interest and the bank will only
d) Delhi and Rs. 50 crores reimburse the principal amount deposited.
e) Mumbai and Rs. 200 crores
Answer: C 348. When was the Green Banking concept
Deposit Insurance and Credit Guarantee initially introduced?
Corporation of India: a) 2000
●Headquarters: Mumbai b) 2002
●Authorized capital –Rs. 50 Crores c) 2004
d) 2009
346. Which organization is the sole regulator for e) 2012
the banking sector in India that has broad Answer: D
regulatory authority over the financial sector? Green banking was first implemented in the
a) Reserve Bank of India state of Florida in 2009. The largest commercial
b) Ministry of Finance bank in India, SBI (State Bank of India), took the
c) Small Industries Development Bank of India lead in implementing greater sustainability
d) Securities and Exchange Board of India requirements and pioneering the "green
e) Government of India banking" concept.
Answer: A

349. ________________ allows customers to setter for bank prudential regulation and serves
simply drive at the ATM and access their as a venue for frequent cooperation on banking
account without even stepping out of their supervisory issues. What does first B represent
vehicles. in BCBS?
a) Mobile ATM a) Banking
b) Onsite ATM b) Basel
c) Offsite ATM c) Bank
d) White Label ATM d) Bridge
e) Pink Label ATM e) Best
Answer: A Answer: B
Customers can drive up to a mobile ATM and The Basel Committee on Banking Supervision
access their accounts without ever getting out of (BCBS) is the major international standard-
their automobiles. Customers can use mobile setter for bank prudential regulation and serves
ATMs to withdraw cash, deposit money, and do as a venue for frequent cooperation on banking
anything else that regular ATMs can do. supervisory issues.

350. Unified Payments Interface is a real-time 352. The Banking Ombudsman is a position
instant money transfer between banks. When formed by the Indian government to resolve
was the Unified Payments Interface introduced? customer issues and complaints. What are the
a) 2008 role and responsibilities of the Banking
b) 2010 Ombudsman?
c) 2012 a) The Ombudsman investigates complaints
d) 2016 against public bodies and, where appropriate,
e) 2017 recommends redress
Answer: D b) The Banking Ombudsman can receive and
UPI is an acronym for Unified Payments consider any complaint relating to the number of
Interface. UPI is a real-time instant money deficiencies related to banking operations
transfer between banks. This interface is including internet banking
regulated by RBI and works by transferring c) The Reserve Bank extended the scope of the
funds to banks on a mobile platform. Introduced Banking Ombudsman Scheme under which
in 2016. It is a single-window system developed banks could be penalized for mis-selling third-
by NPCI. party products like insurance and mutual funds
351. BCBS is the major international standard- via mobile or electronic banking

d) Only (a) and (b)

e) All (a), (b) and (c) 354. When were the BASEL –III Guidelines
Answer: E introduced?
Role of Banking Ombudsman: a) 2008
1.The Ombudsman investigates complaints b) 2004
against public bodies and, where appropriate, c) 2010
recommends redress. d) 2014
2.The Banking Ombudsman can receive and e) 2019
consider any complaint relating to several Answer: C
deficiencies related to banking operations BASEL-III Accord was introduced in 2010 and in
including internet banking. India, it was implemented on March 31st, 2019.
3.The Reserve Bank extended the scope of the
Banking Ombudsman Scheme under which 355. What did Vijay Kelkar Committee
banks could be penalized for mis-selling third- recommend?
party products like insurance and mutual funds a) To examine the analytical aspects of the
via mobile or electronic banking. monetary survey
b) Financial Sector Reforms
353. A scheme whereby a bank may raise funds c) Committee on Digital Payments
by issue of Usance Promissory Notes in d) To study and evaluate the extant public-
convenient lots and maturities on the strength of private partnership (PPP) model in India
genuine trade bills discounted by it. This e) Management of Data and information in the
scheme is known as ____________. RBI
a) Bill Rediscounting Answer: D
b) Book Building The Kelkar Committee to Analyze Public-Private
c) Banking Outlet Partnerships in India was formed to research
d) Business Facilitator and evaluate the existing public-private
e) Bancassurance partnership (PPP) model in India.
Answer: A
A scheme whereby a bank may raise funds by 356. _____________________ is a reference
issue of Usance Promissory Notes in convenient number similar to a bar code that is used to
lots and maturities on the strength of genuine uniquely identify a legally distinct entity that
trade bills discounted by it. This scheme is engages in a financial transaction across
known as Bill Rediscounting. markets and jurisdictions.

a) Unstructured Supplementary Service Data country. and finan

(USSD) investors i
b) Mobile Money Identifier (MMID)
Term Long term Short term
c) Legal Entity Identifier (LEI)Investment Physical Assets or real Financial A
d) Basic Statistical Returns (BSR) investment or a direct
e) International Securities Identification Number monetary
(ISIN) Risks Stable Volatile
Answer: C Degree of Control Higher Degree of Control Low De
The Legal Entity Identifier (LEI) is a reference compared
number similar to a bar code that is
Investors used to
type Active-Investors Passive
uniquely identify a legally distinct entity that involved
engages in a financial transaction across functioning
markets and jurisdictions. as strateg
any domes
357. Which of the following Liquidity
are the differences Low High
between Foreign Direct Investment
Selling and Foreign Difficult Easy
Portfolio Investment?
a) FDI is a long-term investment whereas FPI is 358. When was Pradhan Mantri Jan Dhan
a short term Yojana launched by the Government to provide
b) Liquidity is high in FDI whereas low in FPI easy access to financial services such as
c) Selling of FDI is difficult whereas Selling is Remittance, credit, Insurance, Pension, savings
easy in FPI & Deposits Accounts to the poor and needy
d) Risks are stable in FDI whereas it's Volatile in section of our society?
FPI a) 20 July 2010
e) All the above b) 24 August 2012
Answer: E c) 28 August 2014
FDI FPI d) 1 April 2015
Foreign Direct Investment Foreign Portfolio
e) 12Investment
July 2015
Foreign direct investment (FDI) Foreign
Answer: C portfolio
is when a company takes investment (FPI) is aMantri
Pradhan common
Jan-Dhan Yojana (PMJDY) is a
controlling ownership of a way to invest in Mission
National overseas
for Financial Inclusion that was
business entity in another economies. Itlaunched
includes securities
on August 28, 2014, to ensure

inexpensive access to financial services such as Answer: C

basic savings and deposit accounts, remittance, Bonds are financial instruments in which an
credit, insurance, and pension. investor lends money to a corporation or
government for a specific length of time in
359. Which Organisation promotes housing for exchange for regular interest payments.
all and stabilizes the market for Housing finance
to serve the housing needs of all segments with 361. National savings certificate is a
a special focus on affordable housing segments government-backed form of savings account,
for lower and middle-class people? meaning that they offer a secure way to store
a) Export-Import Bank of India (Exim Bank) your money away. What is the maturity period of
b) Securities and Exchange Board of India the National savings certificate (NSC)?
(SEBI) a) 5 years
c) Small Industries Development Bank of India b) 7 years
(SIDBI) c) 10 years
d) National Housing Bank d) 12 years
e) National Bank for Agriculture and Rural e) 15 years
Development (NABARD) Answer: A
Answer: D National Savings Certificate schemes come with
National Housing Bank promotes housing for all a maturity of 5 years.
and stabilizes the market for Housing finance to
serve the housing needs of all segments with a
special focus on affordable housing segments 362. Which bank is the Largest Commercial
for lower and middle-class people. bank in India?
a) Punjab National Bank
360. ______________ are financial instruments in b) Canara Bank
which an investor lends money to a corporation c) Union Bank of India
or government for a specific length of time in d) Indian Bank
exchange for regular interest payments. e) State Bank of India
a) Securities Answer: E
b) Debentures The State Bank of India is India's largest
c) Bonds commercial bank and one of its oldest banks. It
d) Equity Shares is a government-owned corporation with
e) Preference Shares headquarters in Mumbai, which was founded in

1955. b) Bengaluru
c) Chennai
363. What is the periodical verification of KYC d) Mumbai
taken for High-Risk Customers? e) Noida
a) Once every 2 years Answer: D
b) Once every 5 years Credit Analysis and Research Limited was
c) Once every 8 years established as a public limited company under
d) Once every 10 years the Companies Act on April 21, 1993, in
e) Once every 15 years Mumbai, Maharashtra.
Answer: A
Periodic updation shall be carried out at least 366. ___________ is the minimum proportion/
once every two years for high-risk customers percentage of a bank's deposits to be held in the
from the date of opening of the account / last form of cash with the RBI.
KYC updation. a) Bank Rate
b) Repo Rate
364. Which of the following type of loans is also c) Cash Reserve Ratio
called Concessional Loans? d) Statutory Liquidity Ratio
a) Revolving Loan e) Reverse Repo Rate
b) Hard Loan Answer: C
c) Soft Loan CRR is the minimum proportion/ percentage of a
d) Secured Loan bank's deposits to be held in the form of cash
e) Unsecured Loan with the RBI. It is used to regulate the money
Answer: C supply, level of inflation, and liquidity in the
A soft loan is a type of loan which bears no country. The higher the CRR, the lower the
interest or with a lower rate of interest. This type liquidity with the banks and vice versa.
is also called Concessional Loan. These Loans
have an extended grace period or interest 367. What are the Requirements of a Bill of
holidays for repayment. Exchange?
365. Where is the headquarters of Credit a) The instrument must contain an order to pay,
Analysis and Research Limited (CARE) which is express and unconditional
established in 1993 to help corporates to raise b) The amount of money to be paid must be
funds for their investment requirements? certain
a) Delhi c) The instrument must be signed by the drawer

d) The payment must be in the legal tender days on a 24x7x365 basis. When was it
currency of India introduced?
e) All the above a) 2000
Answer: E b) 2002
Requirements of Bill of Exchange: c) 2004
1. The instrument must be in writing. d) 2005
2. The instrument must be signed by the drawer. e) 2008
3. The instrument must contain an order to pay, Answer: C
which is express and unconditional. RTGS is a funds transfer system where money
4. The drawer, drawee, and the payee must be is moved from one bank to another in ‘real-time’
certain and definite individuals. and on a gross basis. It is not subjected to a
5. The amount of money to be paid must be waiting period. It was introduced by RBI in 2004.
certain. The system is available on all days on a
6. The payment must be in the legal tender 24x7x365 basis. The RTGS system is primarily
currency of India. meant for large-value transactions.
7. The money must be payable to a definite
person or according to his order. 370. Which department of RBI is responsible for
issuing currency notes?
368. If an NPA remained for more than 12 a) Department of Finance
months, then it is called ______________. b) Department of Currency Management
a) Standard Assets c) Department of Payment and Settlement
b) Sub-Standard Assets Systems & Financial Inclusion and Development
c) Doubtful Assets Department
d) Loss of Assets d) Department of Economic and Policy
e) Wilful Defaulters Research & Department of Statistics and
Answer: C Information Management
If an NPA remained for more than 12 months is e) Department of Supervision
called Doubtful Assets. Answer: B
Under the Reserve Bank of India Act, 1934, the
369. Real-Time Gross Settlement is a funds Department of Currency Management is
transfer system where money is moved from responsible for administering the Reserve
one bank to another in ‘real-time’, and on a Bank's currency management functions.
gross basis and this system is available on all Currency management is primarily concerned

with the issuance of notes and coins, as well as a) Shadow Banking

the removal of unfit notes from circulation. b) Wholesale Banking
c) Chain Banking
371. Which of the following bank is not an d) Retail Banking
example of a Private Sector Bank? e) Virtual Banking
a) ICICI Bank Answer: E
b) City Union Bank Virtual banking is the act of gaining online
c) Central Bank of India access to banking organizations and their
d) HDFC Bank services without having to physically visit a
e) Federal Bank bank.
Answer: C
Central Bank of India is the only Public sector 374. When the ATMs are set up on the premises
bank is in this list of the bank so that both the physical branch and
ATM can be used. Then such type of ATM is
372. ____________ is the monthly deposit with called ____________.
the bank for an agreed period in which interest a) Onsite ATM
is credited on the accumulated balance at b) Offsite ATM
regular intervals. c) Branch ATM
a) Savings Account d) Premise ATM
b) Current Account e) Pink Label ATM
c) NRI Account Answer: A
d) Fixed Deposit Onsite ATMs are ATMs that are installed in the
e) Recurring Deposit same location as a bank branch, allowing
Answer: E customers to use both the actual branch and the
A recurring Deposit is a monthly deposit with the ATM. This is referred to as being on-site and it
bank for an agreed period in which interest is can be utilized for a variety of purposes.
credited on the accumulated balance at regular
intervals. 375. ___________ is a payment app that lets you
make simple, easy, and quick transactions using
373. ________________ is the act of gaining the Unified Payments Interface (UPI).
online access to banking organizations and their a) Bharat Bill Payment System
services without having to physically visit a b) Unified Payments Interface
bank. c) National Automated Clearing House

d) Aadhar Payment Bridge System connected with public administration.

e) Bharat Interface for Money b) An important function of the Ombudsman is to
Answer: E protect the rights and freedoms of citizens and
Bharat Interface for Money (BHIM) is a payment needless
app that lets you make simple, easy, and quick c) They investigate complaints that haven't been
payment transactions using Unified Payments solved by the organization complained against
Interface (UPI). d) Ombudsmen investigate complaints when
something has been handled badly or unfairly,
376. The difference between the money making someone suffer as a result, which is
generated from selling products to other sometimes called maladministration
countries and the money spent on buying goods e) All the above
and services from other countries is known as Answer: E
CAD. What does D represent in CAD? Power and Functions of Banking Ombudsman:
a) Difference To receive complaints relating to the provision of
b) Deficit banking services to consider such complaints
c) Debit and facilitate their satisfaction or settlement by
d) Debt agreement, by making a recommendation, or
e) Deliver award by this scheme.
Answer: B 1.An important function of the Ombudsman is to
The difference between the money generated protect the rights and freedoms of citizens and
from selling products to other countries and the needless.
money spent on buying goods and services from 2.The ombudsman shall have the power to
other countries is known as the current account supervise the general civil administration. On
deficit (CAD). this point, the duty of the ombudsman is closely
connected with the public administration.
377. The Banking Ombudsman is a position 3.They investigate complaints that haven't been
formed by the Indian government to resolve solved by the organization complained against.
customer issues and complaints. What are the 4.Ombudsmen investigate complaints when
powers and functions of the Banking something has been handled badly or unfairly,
Ombudsman? making someone suffer as a result. This is
a) The ombudsman shall have the power to sometimes called maladministration.
supervise the general civil administration. On
this point, the duty of the ombudsman is closely 378. ___________ can be defined as a statement

of assets and liabilities/financial position of a iv) Perpetual Non-Cumulative Preference

business concern on a given date. Shares (PNCPS)
a) Bill Discounting v) Any other type of instrument generally notified
b) Balance of Trade by the Reserve Bank from time to time for
c) Balance Sheet inclusion in Tier 1 capital.
d) Bridge Financing
e) Book Building 380. Who headed the committee for reviewing
Answer: C the current Securities and Exchange Board of
A Balance Sheet can be defined as a statement India (Foreign Portfolio Investors) Regulations,
of assets and liabilities/financial position of a 2014, and recommending any amendments that
business concern on a given date. may be required for rationalizing and simplifying
the SEBI FPI regulations?
379. Which of the following are the elements of a) H R Khan
Tier-1 capital? b) Vijay Kelkar
a) Paid-up equity capital, statutory reserves, and c) K V Kamath
other disclosed free reserves if any d) Y V Reddy
b) Capital reserves representing surplus arising e) V S Vyas
out of sale proceeds of assets Answer: A
c) Innovative perpetual debt instruments eligible the committee for reviewing the current
for inclusion in Tier 1 capital Securities and Exchange Board of India
d) Any other type of instrument generally notified (Foreign Portfolio Investors) Regulations, 2014,
by the Reserve Bank from time to time for and recommending any amendments that may
inclusion in Tier 1 capital be required for rationalizing and simplifying the
e) All the above SEBI FPI regulations.
Answer: E
For Indian banks, Tier 1 capital would include 381. USSD is used for fund transfers, checking
the following elements: account balances, and generating bank
i) Paid-up equity capital, statutory reserves, and statements, among other uses. What does the
other disclosed free reserves if any first S represent in USSD?
ii) Capital reserves representing surplus arising a) Statement
out of sale proceeds of assets b) Supplementary
iii) Innovative perpetual debt instruments eligible c) Service
for inclusion in Tier 1 capital d) Statutory

e) Selling Business correspondents are retail agents

Answer: B engaged by banks for providing banking
Unstructured Supplementary Service Data services at locations other than a bank branch.
(USSD) is used for fund transfers, checking
account balances, and generating bank 384. _________________ is set up as the
statements, among other uses. principal development financial institution (DFIs)
382. What is the present Foreign Direct for infrastructure financing.
Investment (FDI) Limit of the Defence industry a) Export-Import Bank of India (Exim Bank)
subject to industrial licensing under the b) Securities and Exchange Board of India
Automatic Route? (SEBI)
a) 50% c) Small Industries Development Bank of India
b) 64% (SIDBI)
c) 74% d) National Bank for Financing Infrastructure
d) 93% and Development (NaBFID)
e) 100% e) National Bank for Agriculture and Rural
Answer: C Development (NABARD)
The Indian government has raised the FDI Answer: D
ceiling in the defence sector to 74 percent The National Bank for Financing Infrastructure
through the Automatic Route for companies and Development (NaBFID) is set up as the
seeking new defence industrial licenses, and to principal development financial institution (DFIs)
100 percent through the Government Route for infrastructure financing. The National Bank
wherever it is expected to result in access to for Financing Infrastructure and Development
current technology. Bill, 2021 was introduced in Lok Sabha on
March 22, 2021.
383. _____________are retail agents engaged by
banks for providing banking services at locations 385. Which of the following is the purpose of the
other than a bank branch introduced in 2006. Money Market?
a) No-Frill Accounts a) Maintains Liquidity in the Market
b) Lead Bank scheme b) Utilisation of Surplus Funds
c) Business correspondents c) Provides Funds at Short Notice
d) Small Account d) Helps in Monetary Policy
e) PradhanMantri Jan DhanYojana e) All the above
Answer: C Answer: E

Purpose of Money Market:

1. Maintains high Liquidity in Market 388. Under Central KYC Registry how many
2. Provides Funds for short term numbers are linked with ID proof?
3. No fixed geographical Location a) 11
4. Utilisation of Surplus Funds b) 10
5. Helps in Monetary Policy c) 15
d) 18
386. Kisan Vikas Patra is a small savings e) 14
instrument that facilitates people to invest in a Answer: E
long-term savings plan. When was the Kisan Central KYC Registry is a centralized repository
Vikas Patra established by the Government of of KYC records of customers in the financial
India? sector with uniform KYC norms and inter-
a) 1962 usability of the KYC records across the sector.
b) 1968 14-digit numbers linked with the ID proof.
c) 1972
d) 1988 389. Base rate is the interest rate below which
e) 1992 scheduled commercial banks will lend no loans
Answer: D to their customers. What are the components
Kisan Vikas Patra is a savings certificate needed for calculating the base rate?
scheme launched in 1988 to encourage people a) Cost of funds
to adopt long-term financial discipline. b) Operating expenses to run the banks
c) Average return on networth
387. Which of the following banks were merged d) Negative carry on CRR and SLR
with Punjab National Banks after e) All the above
amalgamation? Answer: E
a) Syndicate Bank Factors determining the base rate
b) Oriental Bank of Commerce Cost of funds i.e. interest rate provided by
c) United Bank of India the bank on deposits.
d) Both (a) and (b) Operating costs.
e) Both (b) and (c) The minimum rate of returns.
Answer: E Cost of the Cash Reserve Ratio.
Oriental Bank and United Bank merged with 390. CAMELS Ratings is one among the rating
Punjab National Bank on April 1, 2020. agency originally developed in the US that is

used by regulatory banking authorities to rate signs his name on the back of the cheque for
financial institutions. What does A represent in negotiable and he says to be the ____________.
the acronym of CAMELS? a) Drawee
a) Arbitrage b) Drawer
b) Asset quality c) Endorsee
c) Asset d) Payee
d) Actuary e) Endorser
e) Actual Answer: E
Answer: B The maker or the holder of the cheque signs his
CAMELS acronym stands for Capital adequacy, name (endorse) on the back of the cheque for
Asset quality, Management, Earnings, Liquidity, negotiable and he says to be the ‘Endorser.’
and Sensitivity. It is one of the rating agencies
originally developed in the US. It is used by 393. The rearrangement of a distressed
regulatory banking authorities to rate financial company's outstanding commitments to its
institutions, according to the six factors creditors aims to restore a company's liquidity
represented by its acronym. so that it can avoid bankruptcy is called
_____________________________.
391. All Banks have to maintain a portion of their a) Prompt Corrective Action
total deposits with RBI either as cash or gold or b) Non-Performing Assets
approved securities are called c) Strategic Debt Restructuring Scheme
__________________. d) Joint Lenders’ Forum
a) Bank Rate e) Corporate Debt Restructuring
b) Repo Rate Answer: E
c) Cash Reserve Ratio The rearrangement of a distressed company's
d) Statutory Liquidity Ratio outstanding commitments to its creditors is
e) Reverse Repo Rate known as corporate debt restructuring. A
Answer: D corporate debt restructuring aims to restore a
All Banks have to maintain a portion of their total company's liquidity so that it can avoid
deposits with RBI either as cash or gold or bankruptcy.
approved securities are called Statutory Liquidity
Ratio. 394. What are the reasons to name Credit and
Debit Cards Plastic Money?
392. The maker or the holder of the cheque a) Plastic money is a term that is used

predominantly about the hard plastic cards we ● Reserve Bank Information Technology Pvt.
use every day in place of actual banknotes Ltd (ReBIT)
b) Debit and Credit Cards are increasingly being ● Indian Financial Technology and Allied
used in place of actual cash Services (IFTAS)
c) Plastic money has made it easier for us to ● Reserve Bank Innovation Hub (RBIH)
carry out transactions in our daily lives
d) Only (a) and (b) 396. Which of the following is the function of
e) All (a), (b) and (c) Banks in India?
Answer: E i) Acceptance of deposits from the public
Cards are increasingly being used in place of ii)Issue of drafts
actual cash. Plastic money refers to these cards. iii) Lending Money to people in the form of Loan
Debit and credit cards represent plastic money. iv) Transfer of Funds
Plastic money has made it easier for us to carry a) Both (i) and (ii)
out transactions in our daily lives. b) Both (i) and (iv)
c) All (i), (ii) and (iv)
395. RBI has five wholly-owned subsidiaries. d) All (ii), (iii) and (iv)
Which of the following is not a subsidiary of e) All (i), (ii), (iii) and (iv)
RBI? Answer: E
a) Reserve Bank Information Technology Pvt. Accepting public deposits
Ltd (ReBIT) Providing a demand withdrawal facility
b) Reserve Bank Innovation Hub (RBIH) Lending facility
c) Bharatiya Reserve Bank Note Mudran Pvt. Money transfers
Ltd (BRBNMPL) Distribution of draughts
d) National Bank for Agriculture and Rural Make lockers available to clients.
Development (NABARD) Managing foreign exchange
e) Indian Financial Technology and Allied
Services (IFTAS) 397. What is the minimum and maximum
Answer: D maturity term period of Fixed Deposits
Subsidiaries of RBI: respectively?
● Deposit Insurance and Credit Guarantee a) 7 days to 5 years
Corporation of India (DICGC) b) 7 days to 10 years
● Bharatiya Reserve Bank Note Mudran Pvt. Ltd c) 15 days to 10 years
(BRBNMPL) d) 15 days to 15 years

e) 7 days to 15 years
Answer: B 400. ___________________ is a web-based
The maturity term for a Fixed Deposit account payment solution that helps financial institutions
ranges from 7 days to 10 years. to handle bulk transactions that will facilitate all
kinds of interbank, electronic transfers for bulk
398. _____________ are mission-driven financial volume payments in easy ways.
firms that use innovative finance to speed the a) Bharat Bill Payment System
transition to sustainable energy and combat b) Unified Payments Interface
climate change. c) National Automated Clearing House
a) Shadow Bank d) Aadhar Payment Bridge System
b) Wholesale Bank e) Cheque Truncation System
c) Green Banks Answer: C
d) Retail Bank NACH stands for National Automated Clearing
e) Virtual Bank House. It is a web-based payment solution that
Answer: C helps financial institutions to handle bulk
Green Banks are mission-driven financial firms transactions. The solution will facilitate all kinds
that use innovative finance to speed the of interbank, electronic transfers for bulk volume
transition to sustainable energy and combat payments in easy ways.
climate change.
401. CDR is a voluntary framework through
399. Which of the following Company is the first which financial institutions and banks restructure
to install a White Label ATM in India? the debt of firms that are experiencing financial
a) Vakrangee difficulties owing to a variety of circumstances to
b) Reliance One give timely assistance. What does C represent
c) Tata Communications Limited in CDR?
d) BTI Payments Private Limited a) Corporate
e) Hitachi Payment Services Limited b) Committee
Answer: C c) Capital
The Reserve Bank of India (RBI) first approved d) Compound
Tata Communications Payment Solutions e) Current
Limited (TCPSL) to open White Label ATMs in Answer: A
the country. It was released under the name Corporate Debt Restructuring (CDR) is a
'Indicash.' voluntary framework through which financial

institutions and banks restructure the debt of gives a fair deal to all stakeholders i.e.
firms that are experiencing financial difficulties shareholders, bank customers, regulatory
owing to a variety of circumstances to give authority, society at large, employees, etc.
timely assistance.
404. __________________ is the risk of losses on
402. In case of mental agony and harassment financial investments caused by adverse price
the Banking Ombudsman may award movements.
compensation not exceeding __________ to the a) Credit Risk
complainant. b) Market Risk
a) Rs. 1 lakh c) Financial Risk
b) Rs. 2 lakhs d) Systematic Risk
c) Rs. 5 lakhs e) Operational Risk
d) Rs. 10 lakhs Answer: B
e) Rs. 20 lakhs Market risk is the risk of losses on financial
Answer: A investments caused by adverse price
The Banking Ombudsman may give the movements. Examples of market risk are
complaint compensation for mental agony and changes in equity prices or commodity prices,
harassment up to one lakh rupees. interest rate moves, or foreign exchange
403. ____________ refers to conducting the fluctuations.
affairs of a banking organization by following the
best business practice, in such a manner that 405. The Reserve Bank of India (RBI) has
gives a fair deal to all stakeholders i.e. constituted an Advisory Committee on the flow
shareholders, bank customers, regulatory of credit to agriculture and related activities.
authority, society at large, employees, etc. Who headed the committee?
a) Crowd Funding a) Y H Malegam
b) Corporate Governance b) Vijay Kelkar
c) Cash Balancing c) Paneer Selvam
d) Circular Trading d) H R Khan
e) Upselling e) V S Vyas
Answer: B Answer: E
Corporate Governance refers to conducting the Under the chairmanship of famous economist
affairs of a banking organization by following the Prof. V.S. Vyas, the Reserve Bank has
best business practice, in such a manner that established an Advisory Committee on the flow

of credit to agriculture and allied businesses e) 90 days

from the banking system. Answer: E
To get the benefit of Accidental Insurance Cover
406. Basic Statistical Returns are used mainly under PMJDY, RuPay Debit Card must be used
when filing Tax Deduction at Source (TDS) and at least once in 90 days which was extended by
Tax Collected at Source (TCS) returns and this NPCI from 45 days earlier for Rupay Classic
code help banks to keep a clear record of every Cardholders.
online payment done towards tax, which is all 408. What are the functions of the Securities
made available to the Income Tax Department and Exchange Board of India (SEBI)?
by the banks. How many digit code is Basic a) To regulate and perform functions such as
Statistical Returns (BSR)? checking the books of accounts of stock
a) 7 exchanges and calling for periodical returns,
b) 10 approve by-laws of stock exchanges
c) 12 b) It monitors and regulates the securities
d) 14 market and protects the interests of the
e) 20 investors by enforcing certain rules and
Answer: A regulations
Basic Statistical Returns is a 7-digit code used c) Designing guidelines and code of conduct for
mainly when filing Tax Deduction at Source the proper functioning of financial intermediaries
(TDS) and Tax Collected at Source (TCS) and corporate
returns and this code help banks to keep a clear d) To protect the interests of investors and
record of every online payment done towards traders in the Indian stock market
tax, which is all made available to the Income e) All the above
Tax Department by the banks. Answer: E
Functions of SEBI:
407. What is the claim settlement term for 1. To regulate and perform functions such as
Pradhan Mantri Jan-Dhan Yojana (PMJDY) checking the books of accounts of stock
account holders under the Rupay card exchanges and calling for periodical returns, and
insurance policy? approving by-laws of stock exchanges.
a) 30 days 2. It monitors and regulates the securities
b) 15 days market and protects the interests of the
c) 60 days investors by enforcing certain rules and
d) 45 days regulations.

3. To protect the interests of investors and Pradhan Mantri Mudra Yojana (PMMY) loans
traders in the Indian stock market. will be extended by all Public Sector Banks such
4. Register and regulate credit rating agency as PSU banks, Regional Rural Banks (RRBs),
5. Prohibit fraudulent and unfair trade practices Small Finance Banks, Private Sector Banks,
6. Designing guidelines and code of conduct for Foreign Banks, Micro Finance Institutions, and
the proper functioning of financial intermediaries Non-Banking Finance Companies.
and corporate.
411. Which bank became the first to open a
409. Certificate of Deposit or CD is a fixed- branch outside India?
income financial instrument governed under the a) Bank of Maharashtra
Reserve Bank and India (RBI) and issued in a b) ICICI Bank
dematerialized form. When was the Certificate c) Bank of India
of Deposit introduced in India? d) Punjab National Bank
a) 1976 e) State Bank of India
b) 1980 Answer: C
c) 1982 The Bank of India was established in Mumbai in
d) 1989 1906. In 1946, it opened its first branch outside
e) 1990 of India in London, and in 1974, it opened its
Answer: D first branch in continental Europe in Paris.
In 1989, India introduced Certificates of Deposit
(CDs) to expand the country's money market 412. Which of the following KYC documents are
instrument options and provide investors more mandatorily submitted as per PMLA guidelines?
freedom in how they use their short-term cash. a) Ration Card and Aadhar
b) Aadhaar and PAN Card
410. Which of the following Organisation have c) Ration Card and PAN Card
the eligibility to provide loans under the Pradhan d) Birth Certificate and Ration Card
Mantri Mudra Yojana (PMMY)scheme? e) Ration Card and Driving License
a) Commercial Banks Answer: B
b) Regional Rural Banks (RRBs) Aadhaar and PAN Card are mandatorily
c) Small Finance Banks submitted as per The Prevention of Money
d) Micro Finance Institutions Laundering Act as KYC documents
e) All the above
Answer: E 413. A reverse mortgage loan, like a traditional

mortgage, allows homeowners to borrow money India’s first payments Bank?

using their home as security for the loan. What a) Fino Payments Bank
are the eligibility criteria for Reverse Mortgage b) Airtel Payments Bank
loans? c) India Post Payments Bank
a) This loan is available to residents of India d) Paytm Payments Bank
who own a residential property or apartment and e) Jio Payments Bank
are over the age of 60 Answer: B
b) If the loan is in a joint account then one of the Bharti Airtel launched India's first payments
spouses must be 60 years and above and the bank named Airtel Payments Bank in March
other must be at least 58 years 2017.
c) The age of the mortgaged property should not
be more than 20 years old 415. How many sections and schedules are
d) Only (a) and (c) there in the Reserve Bank of India Act 1934?
e) All (a), (b) and (c) a) 56 and 2
Answer: E b) 58 and 3
Eligibility conditions of Reverse Mortgage Loan: c) 60 and 4
This loan is available to residents of India d) 61 and 4
who own a residential property or e) 67 and 4
apartment and are over the age of 60. Answer: D
The residence must be in his name or jointly The Reserve Bank of India Act 1934 is divided
owned by him and his spouse. into 61 Sections and four schedules.
If the loan is for a joint account, one spouse
must be at least 58 years old and the 416. _____________ is an outdated cheque
other must be at least 60 years old. issued to the bank after the date of payment
The mortgaged property should not be older (after three months) has expired.
than 20 years old. a) Mutilated Cheque
It is required to obtain a NOC if the individual b) Stale Cheque
has taken out a house loan against the c) Bearer Cheque
property in question. Any restriction or d) Open Cheque
burden must be removed from the e) Post-Dated Cheque
property. Answer: B
A stale cheque is an outdated cheque issued to
414. Which of the following payments Banks is the bank after the date of payment (after three

months) has expired. National Payments Corporation of India (NPCI)

has announced the formation of its wholly-
417. How shall the Non-Performing Assets or owned subsidiary firm - NPCI Bharat BillPay Ltd.
Prompt Corrective Action be recovered? (NBBL)
a) Loan Restructuring Schemes
b) Amendment of Banking Law to give RBI more 419. Which organization is responsible for
powers Minting the coins?
c) Enabling foreign portfolio investors (FPIs) and a) Reserve Bank of India
alternative investment funds (AIFs) to purchase b) Bharatiya Reserve Bank Note Mudran Private
NPAs Ltd. (BRBNMPL)
d) Carrying out One Time Settlement (OTS) to c) Ministry of Finance
recover Bad Loans d) Government of India
e) All the above e) Reserve Bank Information Technology Pvt.
Answer: E Ltd (ReBIT)
Recovery of NPA/ PCA: Answer: D
1. Loan Restructuring Schemes The Government of India is also in charge of
2. Amendment of Banking Law to give RBI more designing and minting coins in various
powers denominations. The four India Government
3. Enabling foreign portfolio investors (FPIs) and Mints, located in Mumbai, Alipore (Kolkata),
alternative investment funds (AIFs) to purchase Saifabad (Hyderabad), Cherlapally (Hyderabad),
NPAs. and NOIDA (UP), produce coins.
4. Carrying out One Time Settlement (OTS) to
recover Bad Loans
420. How many Regional Rural Banks are
418. Which of the following firm is the Subsidiary operating in India at present (2022)?
of the National Payments Corporation of India a) 40
(NPCI)? b) 43
a) National Financial Switch (NFS) c) 56
b) NPCI Bharat Bill Pay Limited d) 59
c) National Automated Clearing House e) 61
d) Electronic Clearing House Answer: B
e) NPCI Enabled House There are 43 Regional Rural Banks in India
Answer: B operating since 1 April 2020.

a) Yellow Label ATM- E-commerce

421. Which of the following is false regarding the b) Pink Label ATM- Women
Bulk Deposits? c) Green Label ATM- Agriculture purpose
a) Deposits of Rs.2crore and above constitute d) Brown Label ATM- Share Transactions
bulk deposits e) White Label ATM- NBFC
b) Interest rates vary based on the quantum of Answer: D
deposit Yellow Label ATM: ATMs provided for online
c) Have a lock-in-period of 30 days - to 3 purposes
months Pink Label ATM: ATMs provided for Women
d) High-interest rates, so the cost of funds is Green Label ATM: ATM for Agricultural
high Transaction
e) Normally these deposits are obtained from Orange Label ATM: ATM for Share Transactions
High Net-worth Individuals White Label ATM: Set up by Non- Banking
Answer: C Finance Companies
All the other options except option C are true. Brown Label ATM: Owned by the bank but
operated by a Third Party
422. Which of the following type of Banking is
often referred to as Consumer Banking or 424. _______________ is the largest
Personal Banking? interconnected network of Automated Teller
a) Shadow Banking Machines in India developed by the Institute of
b) Retail Banking Development and Research in Banking
c) Narrow Banking Technology (IDRBT).
d) Universal Banking a) National Financial Switch
e) Unit Banking b) Aadhar Enabled Payment System
Answer: B c) National Automated Clearing House
Retail banking, often known as consumer d) Aadhar Payment Bridge System
banking or personal banking, is a type of e) Cheque Truncation System
banking that caters to individuals rather than Answer: A
enterprises. Individual customers can use retail National Financial Switch is the largest
banking to manage their money, obtain credit, interconnected network of Automated Teller
and deposit funds in a secure manner. Machines in India. NFS enabled the
interconnectivity between the bank’s switches
423. Which of the following is the Wrong Pair? such that the transactions made at any ATM

could be routed to the connected banks. This 427. What is the maximum compensation
NFS is developed by the Institute of amount provided by NBFC Ombudsmen if the
Development and Research in Banking redressal is not resolved?
Technology (IDRBT). It is run by the National a) Rs. 5 lakhs
Payments Corporation of India (NPCI). b) Rs. 10 lakhs
c) RS. 20 lakhs
425. If two parallel lines are drawn across the d) Rs. 25 lakhs
cheque with the name of the bank, the lines are e) Rs. 50 lakhs
called ________________. Answer: B
a) General Crossing The amount of compensation that the NBFC
b) Special Crossing Ombudsman can award for any damage
c) Hypothecation sustained by the complaint is restricted to the
d) Endorsement amount arising directly from the NBFC's act or
e) Parallel Crossing omission, or Rs. 10 lakhs, whichever is lower.
Answer: B
If two parallel lines are drawn across the cheque 428. ______________ is a form of mutual fund
with the name of the bank, the lines are called that raises cash for its initial investments by
special/restrictive crossing. selling a limited number of shares in a single
initial public offering (IPO).
426. CDS is a financial derivative that allows an a) Open-Ended Scheme
investor to swap or offset his or her credit risk b) Closed-Ended Scheme
with that of another. What does D represent in c) Green Field
CDS? d) Differentiated Banks
a) Debit e) Niche Banks
b) Debt Answer: B
c) Default Close Ended Scheme is a form of mutual fund
d) Derivative that raises cash for its initial investments by
e) Deliverables selling a limited number of shares in a single
Answer: C initial public offering (IPO).
A credit default swap (CDS) is a financial
derivative that allows an investor to swap or 429. Which of the following risks are covered
offset his or her credit risk with that of another. under the BASEL-II norms?
a) Market Risk

b) Operational Risk d) Biocon

c) Credit Risk e) Artificial Intelligence
d) Only (a) and (b) Answer: A
e) All (a), (b) and (c) A cryptocurrency is a marketable digital asset or
Answer: E digital form of money that is exclusively
The Basel II Accord is a set of agreements on available online and is based on blockchain
banking regulations concerning credit risk, technology.
market risk, and operational risk.
432. Khan Commission was set up in 2004 to
430. ___________ Committee in 1987 proposed ________________.
that the call money market should be strictly an a) Investigate the state of financial inclusion in
inter-bank market and that the restrictions on India and lay out a series of recommendations
entry into the market that was in place at the b) Review the Monetary Policy statement
time should be maintained. c) Introduction of Cryptocurrency
a) Vaghul d) Investigating Wilful Defaulters of the Banks
b) Pannir Selvam e) Recommendation for the appointment of
c) A Ghosh Banking Ombudsman to NBFCs
d) H R Khan Answer: A
e) Dave The Reserve Bank of India (RBI) established the
Answer: A Khan Commission in 2004 to evaluate the
The Vaghul Committee in 1987 proposed that situation of financial inclusion in India and make
the call money market should be strictly an inter- suggestions.
bank market and that the restrictions on entry
into the market that was in place at the time 433. What are the functions of the Industrial
should be maintained. Finance Corporation of India (IFCI)?
a) The main function of the IFCI is to provide
431. ______________ is a marketable digital medium and long-term loans and advances to
asset or digital form of money that is exclusively industrial and manufacturing concerns
available online and is based on blockchain b) The corporation grants loans and advances to
technology. industrial concerns
a) Cryptocurrency c) To underwrite the issue of stocks, shares,
b) Neo Banking bonds, or debentures by industrial concerns
c) Bitcoin d) Only (a) and (b)

e) All (a), (b) and (c) especially to provide financial support for
Answer: E farmers and to meet the comprehensive credit
Functions of IFCI: requirements of the agriculture sector and for
1. The main function of the IFCI is to provide fisheries and animal husbandry by giving
medium and long-term loans and advances to financial support to farmers.
industrial and manufacturing concerns. a) Pradhan Mantri Mudra Yojana (PMMY)
2. The corporation grants loans and advances to b) Pradhan Mantri Jan Dhan Yojana
industrial concerns. c) Kisan Credit Card Scheme
3. To underwrite the issue of stocks, shares, d) Pradhan Mantri Kisan Sammann Nidhi
bonds, or debentures by industrial concerns e) Gold Monetization Scheme
Answer: A
434. _______________ is a money-market Pradhan Mantri Mudra Yojana (PMMY) scheme
instrument issued by large organizations to raise is introduced in 1988 especially to provide
funds for short-term debt obligations (such as financial support for farmers and to meet the
payroll) that are guaranteed only by the issuing comprehensive credit requirements of the
bank's or company's promise to pay the face agriculture sector and for fisheries and animal
amount on the maturity date specified on the husbandry by giving financial support to farmers.
note.
a) Treasury Bills 436. Which bank was the first to launch the
b) Commercial Papers credit card in India?
c) Bills of Exchange a) Andhra Bank
d) Repurchase Agreements b) Canara Bank
e) Certificate of Deposits c) Allahabad Bank
Answer: B d) Bank of Maharashtra
Commercial paper is a money-market e) Central Bank of India
instrument issued by large organizations to raise Answer: E
funds for short-term debt obligations (such as Central Bank of India was the first public bank to
payroll) that are guaranteed only by the issuing introduce credit cards in India.
bank's or company's promise to pay the face
amount on the maturity date specified on the 437. What is the limit of Aadhaar-based e-KYC?
note. a) Rs. 10000
b) Rs. 15000
435. ____________ scheme is introduced in 1988 c) Rs. 25000

d) Rs. 50000 Customer of the bank

e) Rs. 1 lakh d) It is an Unconditional order of payment
Answer: D e) All the above
Only Rs 50,000 per financial year per fund Answer: E
house is allowed under Aadhaar-based KYC Features of Demand Draft:
compliance. Some fund houses allow in-person 1. It is issued by one bank to another bank
verification (IPV) through video calls, but you 2. It is only payable to the payee written on the
must present your original ID and proof of demand draft and it is payable on demand.
address. 3. The Purchaser of the DD need not be a
Customer of the bank
438. _____________ loan allows homeowners to 4. DD cannot be stopped except by court order.
borrow money using their home as security for The amount is refunded if DD is not delivered.
the loan and this is especially for seniors ages 5. It is an Unconditional order of payment
62 and older.
a) Collateral 440. Which section of the RBI Act 1934 involves
b) Revolving Loan the Denominations of notes?
c) Reverse Mortgage Loan a) Section 23
d) Soft Loan b) Section 24
e) Hard Loan c) Section 27
Answer: C d) Section 36
A Reverse Mortgage Loan, like a traditional e) Section 42
mortgage, allows homeowners to borrow money Answer: B
using their home as security for the loan. This Section 24 of the RBI Act 1934 involves the
type of loan is especially for seniors ages 62 Denominations of notes.
and older. This is the opposite of a Plain Home
Loan. 441. The amount specified in the cheque will be
transferred immediately into the account of the
439. Which of the following are the features of cheque holder and will not be delivered as cash
Demand Draft (DD)? to the owner over the bank counter, according to
a) DD is issued by one bank to another bank ________ of the Negotiable Instruments Act,
b) It is only payable to the payee written on the 1881.
demand draft and it is payable on demand a) Section 13
c) The Purchaser of the DD need not be a b) Section 120

c) Section 118
d) Section 123 443. What are the roles and responsibilities of
e) Section 125 the National Payments Corporation of India
Answer: D (NPCI)?
According to Section 123 of the Negotiable a) Owns and operates Unified Payment
Instruments Act, 1881 regarding Crossing of Interface (UPI)
Cheque, the guidance declared defines that the b) Provides safe and secure payment through
amount defined in the cheque will be transferred UPI
directly into the account of the cheque holder c) NPCI approves the participation of Issuer
and will not be directly delivered as cash to the Banks, PSP Banks, Third-Party Application
owner over the bank counter. Providers (TPAP), and Prepaid Payment
Instrument issuers (PPIs) in UPI
442. Under the SARFAESI Act, banks and other d) NPCI includes transaction processing and
financial institutions, within the capacity of settlement, dispute management, and clearing
secured creditors are allowed to auction cutoffs for settlement
residential or commercial properties of e) All the above
borrowers to recover loans, without approaching Answer: E
the courts. What does R represent in Roles and Responsibilities of NPCI:
SARFAESI? 1. Owns and operates Unified Payment
a) Restructuring Interface (UPI)
b) Recovery 2. Provides safe and secure payment through
c) Reconstruction UPI
d) Reliable 3. NPCI approves the participation of Issuer
e) Revolving Banks, PSP Banks, Third-Party Application
Answer: C Providers (TPAP), and Prepaid Payment
Securitization and Reconstruction of Financial Instrument issuers (PPIs) in UPI.
Assets and Enforcement of Security Interest Act, 4. NPCI includes transaction processing and
2002 (SARFAESI). Under the SARFAESI Act, settlement, dispute management, and clearing
banks and other financial institutions, within the cutoffs for settlement.
capacity of secured creditors are allowed to
auction residential or commercial properties of 444. IFTAS provides critical infrastructure
borrowers to recover loans, without approaching services to RBI, banks, cooperative societies,
the courts. and other financial institutions. Which committee

has recommended the formation of Indian a) Should be a Non-Resident Indian (NRI)

Financial Technology and Allied Services b) Indian citizen residing in a foreign country for
(IFTAS)? studies, employment, or business
a) Narasimhan c) Individuals working for the UN or for the
b) Sivaraman Indian government or a public sector entity who
c) Rangarajan are posted abroad
d) H R Khan d) Both (a) and (b)
e) Kelkar e) All (a), (b) and (c)
Answer: C Answer: E
The Institute for Development and Research in The following are the requirements for opening
Banking Technology (IDRBT), an autonomous an NRE savings account: Should be an Indian
entity supported by the Reserve Bank of India, non-resident (NRI). Indian citizens studying,
launched IFTAS in February 2015 in response working, or doing business in another country.
to the Rangarajan Committee's recommendation Individuals employed by the Indian government
(2009). or a public sector undertaking and posted to UN
organizations.
445. Which of the following services are not
offered by the Banks? 447. Which is the first Universal Bank in India?
a) Funds remittance a) State Bank of India
b) Plastic Card b) ICICI Bank
c) Chit Funds c) HDFC Bank
d) Locker Facility d) IndusInd Bank
e) Collecting and paying the credit instruments. e) Axis Bank
Answer: C Answer: B
Chit fund companies are regulated by their ICICI Bank Limited is the first universal bank
respective state governments and Nidhi established in India.
Companies are regulated by the Ministry of
Internal Affairs and Communications of the 448. What was the location of the first Indicash
Government of India. Chit funds are not ATM?
regulated by the Reserve Bank of India. a) Uttar Pradesh
b) Maharashtra
446. Who is eligible for opening an NRE c) Gujarat
Savings account in India? d) Madhya Pradesh

e) Bihar branch to pay to the third party. The DD is

Answer: B issued by the bank to the drawer, directing
The first Indicash ATM was inaugurated in another bank or the own bank branch to pay a
Chandrapada, a remote village in Thane district, specific amount of money to the payee.
Maharashtra, in line with the Reserve Bank of
India's (RBI) objective to accelerate growth and 451. In the field of credit rating, the CCF is a
enhance ATM penetration across the country. coefficient. It's the proportion of a loan's
additional amount used in the future compared
449. _________________ is an amendment or to the amount that could be claimed. What does
special clause to a document or contract, an second C represent in CCF?
authorizing signature, or a public declaration of a) Credit
support. b) Capital
a) Endorsement c) Conversion
b) Negotiable Instrument d) Compound
c) Crossing e) Claim
d) Financial Inclusion Answer: C
e) Money Market Instruments In the field of credit rating, the credit conversion
Answer: A factor (CCF) is a coefficient. It's the proportion of
Endorsement is an amendment or special a loan's additional amount used in the future
clause to a document or contract, an authorizing compared to the amount that could be claimed.
signature, or a public declaration of support.
452. What are the grounds for complaints taken
450. _________________ is a Bill of Exchange to the NBFC Ombudsman?
drawn by a bank on another bank or by itself to a) Non-repayment or inordinate delay in the
its other branch to pay to the third party. repayment of deposits
a) Promissory Notes b) Failure or refusal to provide sanction letter/
b) Cash Management Bills terms and conditions of sanction in the
c) Demand Draft vernacular language or a language as
d) Cheque understood by the borrower
e) Endorsement c) Levying of charges without adequate prior
Answer: C notice to the borrower/customer
Demand Draft is a Bill of Exchange drawn by a d) Non-payment or inordinate delay in the
bank on another bank or by itself to its other payment of interest on deposits

e) All the above

Answer: E 453. ________________ stands for offering to the
The NBFC Ombudsman can receive and existing and new customers, some additional
consider any complaint about the following banking products, to expand the banking
reasons, according to Clause 8 of the Scheme: business, reduce the per customer cost of
Interest on deposits not being paid or being operations and provide more satisfaction and
paid with excessive delay; value to the customer.
non-compliance with Reserve Bank a) Bancassurance
directives on deposit interest rates, if any b) Cross-Selling
exist; c) Upselling
Non-payback or excessive delay in deposit d) Dual Listing
repayment; e) Share Listing
Non-presentation or excessive delay in the Answer: B
presentation of customer-provided post- Cross-Selling stands for offering to the existing
dated cheques; and new customers, some additional banking
Failure to disclose the amount of the loan products, to expand the banking business,
sanctioned, as well as the terms and reduce the per customer cost of operations and
conditions, including the annualized rate provide more satisfaction and value to the
of interest and manner of application, in customer.
writing;
Inability or refusal to give a vernacular 454. _______________ in banking is the risk of
language or a language that the borrower loss that stems from inadequate or failed
understands in the penalty letter/terms internal systems, internal controls, procedures,
and conditions of sanction; or policies due to employee errors, breaches,
Lack or reluctance to provide proper notice in fraud, or any external event that disrupts a
vernacular language understandable by financial institution’s processes.
the borrower of intended changes to a) Credit Risk
sanctioned terms and conditions; b) Market Risk
Failure or unreasonable delay in releasing c) Financial Risk
securities/documents to the borrower d) Systematic Risk
after all dues have been paid; e) Operational Risk
Charging fees without giving the Answer: E
borrower/customer proper notice. Operational risk in banking is the risk of loss that

stems from inadequate or failed internal Securities and is often needed for companies
systems, internal controls, procedures, or seeking to raise capital, whether debt or equity.
policies due to employee errors, breaches,
fraud, or any external event that disrupts a 457. What is the minimum age eligibility for
financial institution’s processes. opening Pradhan Mantri Jan-Dhan Yojana
(PMJDY) account?
455. Who recommended the committee makes a) 10 years
recommendations for reforms in the insurance b) 12 years
sector? c) 14 years
a) V S Vyas d) 18 years
b) Vijay Kelkar e) 20 years
c) R N Malhotra Answer: A
d) Vijay Malhotra Individuals who are Indian citizens are eligible to
e) H R Khan open this PMJDY account. Even minors above
Answer: C the age of 10 can open an account under this
In 1993, a COMMITTEE chaired by R.N. arrangement. Nonetheless, guardians are in
Malhotra, the former Governor of the Reserve charge of children's accounts. Minors are
Bank of India, was formed to offer suggestions eligible for a RuPay Card, which may be used to
for reforms in the insurance market. make four monthly withdrawals.

456. ISIN is a 12- Alpha Numeric digit code 458. Industrial Finance Corporation of
used to Identify Securities and is often needed India(IFCI) was the first industrial financing
for companies seeking to raise capital, whether institution set up to provide medium and long-
debt or equity. What does the second I term financial assistance to large-scale industrial
represent in the ISIN code? undertakings. When was it established?
a) International a) June 21, 1947
b) Information b) July 1, 1948
c) Identification c) July 21, 1950
d) Internal d) October 1, 1956
e) Interval e) August 1, 1960
Answer: C Answer: B
International Securities Identification Number is IFCI was India's first industrial financing
a 12- Alpha Numeric digit code used to Identify institution, founded shortly after independence.

The Industrial Finance Corporation of India Act Products of MUDRA:

1948 established it as a statutory corporation in 1. Shishu: Covering Loans up to Rs.50,000
July 1948. It has now been converted into a 2. Kishore: Covering Loans above Rs.50,000 to
joint-stock company under the Companies Act of Rs.5 lakh
1956, with effect from July 1, 1993. 3. Tarun: Covering Loans above Rs.5 lakh to
Rs.10 lakh
459. Certificate of Deposit or CD is a fixed-
income financial instrument governed under the 461. Which of the following is the First Bank to
Reserve Bank and India (RBI) issued in a introduce a Mutual Fund in India?
dematerialized form. What is the minimum a) Bank of Maharashtra
denomination of the Certificate of Deposits? b) ICICI Bank
a) Rs. 25000 c) Bank of India
b) Rs. 1 lakh d) Punjab National Bank
c) Rs. 5 lakhs e) State Bank of India
d) Rs. 10 lakhs Answer: E
e) Rs. 25 lakhs SBI Mutual Fund was the first mutual fund to be
Answer: C launched in June 1987, followed by Canbank
Certificates of Deposits will only be issued in Mutual Fund in December 1987, Punjab
dematerialized form and will be maintained at a National Bank Mutual Fund in August 1989,
depository that is registered with the Securities Indian Bank Mutual Fund in November 1989,
and Exchange Board of India. CDs will be Bank of India Mutual Fund in June 1990, and
released in denominations of 5 lakh minimum Bank of Baroda Mutual Fund in October 1992.
and 5 lakh multiples thereafter.
462. What is STR in Money Laundering?
460. Which of the following are the a) Suspicious Transaction Reports
products/loans offered under the Pradhan Mantri b) Super Transition Record
Mudra Yojana (PMMY) scheme? c) Suspect Transaction Record
a) Shishu d) Suspicious Transaction Register
b) Kishore e) Small Transaction Reports
c) Tarun Answer: A
d) Only (a) and (b) Every banking company is required by the
e) All (a), (b) and (c) Prevention of Money Laundering Act of 2002
Answer: E and its Rules to report suspicious transactions,

whether or not they were done in cash. STR For borrowers above the age of 60, co-
stands for Suspicious Transaction Reports. A borrower less than 60 years old is
suspicious transaction is not done in cash yet mandatory
appears to be suspicious to a person working in
good faith. 464. What are the services handled by the Non-
Banking Finance Companies (NBFCs)?
463. Crop loan is a short-term advance that is a) Portfolio Management Service
given to the farmers and agriculturists by banks b) Underwriting
and cooperative societies. What are the c) Retail Financing
eligibility criteria to avail Crop Loan? d) Merchant Banking
a) Farmers who own less than 2.5 acres of e) All the above
irrigated land or 5 acres of non-irrigated land, Answer: E
i.e-marginal and small farmers-are eligible to Services Handled under the NBFC:
buy land by availing a bank loan 1. Portfolio Management Service
b) Sharecroppers and tenant farmers can also 2. Asset Management company
be covered under the scheme 3. Underwriting
c) For borrowers above the age of 60, co- 4. Retail Financing
borrower less than 60 years old are mandatory 5. Hire purchase Service
d) Should not have defaulted on any previous 6. Merchant Banking
loan 7. Foreign Exchange -related business
e) All the above 8. Rural Financing
Answer: E
Eligibility Criteria for Crop Loan: 465. Which section of the Reserve Bank of India
Age Criteria: Min. 18 years and Max. 65 Act 1934 involves the Establishment and
years incorporation of the Reserve Bank?
Farmers who own less than 2.5 acres of a) Section 3
irrigated land or 5 acres of non-irrigated b) Section 4
land, i.e-marginal and small farmers-are c) Section 5
eligible to buy land by availing of a bank d) Section 17
loan e) Section 18 A
Indian Citizen with no criminal record Answer: A
Should not have defaulted on any previous Section 3 of the RBI Act 1934 involves the
loan Establishment and incorporation of the Reserve

Bank. d) Loan repayments

e) All the above
466. If a cheque is torn into two or more pieces, Answer: E
then it is called _______________. The brand under the new entity - Bharat BillPay
a) Mutilated Cheque - offers various recurring payment services to
b) Stale Cheque customers, including bill payments for electricity,
c) Bearer Cheque telecom, DTH, Gas, Education fees, water, and
d) Open Cheque municipal taxes, NETC FASTag recharge, Loan
e) Post-Dated Cheque repayments, Insurance, Cable, Housing Society,
Answer: A Subscription Fees, Hospital, Credit card, Clubs
If a cheque is torn into two or more pieces, it is and association, etc.
called a Mutilated Cheque.
469.ReBIT focus on IT and cyber security
467. Debt Recovery Tribunals are established in (including related research) of the financial
various cities under the Recovery of Debts Due sector and assists in IT systems audit and
to Banks and Financial Institutions (RDDBFI) assessment of the RBI-regulated entities. When
Act ________. was the Reserve Bank Information Technology
a) 1993 Pvt. Ltd (ReBIT) established in Mumbai?
b) 1995 a) 2000
c) 1996 b) 2002
d) 1998 c) 2004
e) 2002 d) 2010
Answer: A e) 2016
Debt Recovery Tribunals are established in Answer: E
various cities under the “Recovery of Debts Due The IT subsidiary of the Reserve Bank of India,
to Banks and Financial Institutions (RDDBFI) Reserve Bank Information Technology Pvt Ltd
Act, 1993”. was established in 2016.

468. What are the services offered by NPCI 470. Uttar Pradesh has the highest number of
Bharat BillPay Ltd. (NBBL)? Regional Rural Banks operating in India. Which
a) Bill payments for electricity of the following states have no Regional Rural
b) Water and municipal taxes Banks in India?
c) NETC FASTag recharge a) Sikkim

b) Gujarat c) Better products

c) Goa d) Only (a) and (b)
d) Both (a) and (b) e) All (a), (b) and (c)
e) Both (a) and (c) Answer: E
Answer: E The main advantage of universal banking is that
Uttar Pradesh has the highest number at 36 it results in greater economic efficiency in the
branches of RRB, followed by Madhya Pradesh form of lower costs, higher output, and better
at 19 RRB and Bihar at 16 RRB. Goa and products.
Sikkim do not have RRB.
473. ______________________ is the ATM
471. An overdraft facility is a financial facility or located within the premises of an organisation
instrument that allows you to withdraw money and generally meant only for the employees of
from your bank account (savings or current) the organization.
even if there is no money in it. Which of the a) Onsite ATM
following account has an overdraft facility? b) Offsite ATM
a) Current Account c) Mobile ATM
b) Savings Account d) Worksite ATM
c) Fixed and Recurring Deposit e) Payout ATM
d) Both (a) and (b) Answer: D
e) Both (b) and (c) Worksite ATMs are ATMs that are positioned
Answer: D within a company's premises and are normally
An overdraft is a credit facility that allows money only available to that company's workers.
to be taken out of a current or savings account
even if the balance is zero. 474. Which of the following are the products of
the National Payments Corporation of India
472. Universal Banking is a mix of both (NPCI)?
commercial and investment banks as well as a) National Financial Switch
providing other financial services such as b) Aadhar Enabled Payment System
Insurance. What are the advantages of c) National Automated Clearing House
Universal Banking? d) Aadhar Payment Bridge System
a) Greater economic efficiency in the form of e) All the above
lower cost Answer: E
b) Higher output Aadhaar Enabled Payment System

Bharat Bill Payment System (BBPS) 476. What does the second C represent in the
BharatQR acronym CCEA?
BHIM a) Compound
Cheque Truncation System (CTS) b) Current
Immediate Payment Service (IMPS) c) Capital
National Automated Clearing House d) Currency
National Common Mobility Card - Rupay e) Committee
Contactless Answer: E
National Electronic Toll Collection CCEA- Cabinet Committee on Economic Affairs.
National Financial Switch 477. If a customer is not satisfied, either of the
RuPay parties i.e. Bank or the Ombudsman can
Unified Payments Interface (UPI) approach the appellate authority within 30 days.
*99# USSD Appellate authority vested with a __________.
UPI Pay123 a) Governor of RBI
DigiSaathi b) Prime Minister
c) President
475. ______________ is a 9-digit code that d) Deputy Governor of RBI
enables identification of the cheques and which e) Vice-President
in turn means faster processing. Answer: D
a) SWIFT Code If a person is dissatisfied with the Banking
b) IFSC Code Ombudsman's decision, they have the option of
c) MICR Code filing an appeal with the Appellate Authority
d) NEFT Code within 30 days of receiving the award. The RBI's
e) RTGS deputy governor serves as the Appellate
Answer: C Authority.
MICR code is a code that is printed on MICR
cheques (Magnetic Ink Character Recognition 478. The method of raising finance from a large
technology). This allows the cheques to be number of people, each contributing a small
identified, which leads to speedier processing. A amount of money that makes use of the internet
MICR code is a nine-digit identifier that uniquely to talk to thousands of potential funders, then it
identifies a bank and branch that participates in is called ________________.
an Electronic Clearing System (ECS). a) Casino Trading
b) Crowd Funding

c) Stake Trading c) Pannir Selvam

d) Circular Trading d) H R Khan
e) Hollow Trading e) V S Vyas
Answer: B Answer: A
Crowd Funding is a method of raising finance The committee, headed by Reserve Bank's
from a large number of people, each Central Board Director Y. H. Malegam, pitched
contributing a small amount of money. Crowd for the creation of a separate category of non-
Funding makes use of the internet to talk to banking financial companies (NBFC-MFI) for the
thousands of potential funders. microfinance sector.

479. Which of the following type of risk is 481. Permanent Retirement Account Number
caused by the lender may not receive the owned (PRAN) is a unique and portable number
principal and interest which in turn results in provided to each subscriber under NPS and
interruption of cash flows and increased costs remains with him/ her throughout. How many-
for collection? digit of code is the Permanent Retirement
a) Credit Risk Account Number (PRAN)?
b) Market Risk a) 9
c) Financial Risk b) 10
d) Systematic Risk c) 12
e) Operational Risk d) 14
Answer: A e) 20
Credit Risk means the borrower fails to repay Answer: C
the debts. This is caused due to the lender may A Permanent Retirement Account Number
not receive the owned principal and interest (PRAN) is a 12-digit unique and portable
which in turn results in interruption of cash flows number provided to each subscriber under NPS
and increased costs for collection. and remains with him/ her throughout.

480. Who headed the committee for the creation 482. Which organization has launched "Project
of a separate category of non-banking financial Financial Literacy" to spread information about
companies (NBFC-MFI) for the microfinance the central bank and general banking principles
sector? to a variety of target groups, including school
a) Y H Malegam and college students, women, the rural and
b) Vijay Kelkar urban poor, defence personnel, and older

residents? guidelines to protect investors' interests.

a) NABARD
b) Reserve Bank of India 484. Call money rate is the rate at which short-
c) Government of India term funds are borrowed and lent in the money
d) Ministry of Finance market overnight. When the money is borrowed
e) Indian Banks Association or lent for exceeding 14 days to 365 days, then
Answer: B it is called ______________.
The Reserve Bank of India has launched a) Term Money
"Project Financial Literacy" to spread information b) Notice Money
about the central bank and general banking c) Barren Money
principles to a variety of target groups, including d) Fiat Money
school and college students, women, the rural e) Extent Money
and urban poor, defence personnel, and older Answer: A
residents. When the money is borrowed or lent for
exceeding 14 days to 365 days, then it is called
483. _______ is an organization tasked with Term Money.
monitoring and regulating the Indian capital and
securities markets, as well as drafting legislation 485. Pradhan Mantri Mudra Yojana (PMMY)
and guidelines to protect investors' interests. was launched by the Government of India in
a) Export-Import Bank of India (Exim Bank) _________ to encourage entrepreneurs and
b) Securities and Exchange Board of India small business units to expand their capabilities
(SEBI) and operations, reduce over-indebtedness, and
c) Small Industries Development Bank of India provide a formal system of credit (finance) under
(SIDBI) the Companies Act 2013.
d) National Bank for Financing Infrastructure a) 2012
and Development (NaBFID) b) 2013
e) National Bank for Agriculture and Rural c) 2014
Development (NABARD) d) 2015
Answer: B e) 2017
Securities and Exchange Board of India (SEBI) Answer: D
is an organization tasked with monitoring and Pradhan Mantri MUDRA Yojana (PMMY) is a
regulating the Indian capital and securities scheme launched on April 8, 2015, for providing
markets, as well as drafting legislation and loans up to 10 lakhs to the non-corporate, non-

farm small/micro-enterprises. 488. The Differential Rate of Interest (DRI)

system, also known as DIR, was established in
486. First bank to introduce internet banking in 1972 to help low-income people gain access to
India is ____________. credit. This lending system allows banks to lend
a) ICICI Bank to the poorer members of society at a lower
b) State Bank of India interest rate. What is the current DRI interest
c) Karur Vysya Bank rate?
d) HSBC a) 3%
e) HDFC Bank b) 3.5%
Answer: A c) 3.9%
ICICI Bank began offering internet banking d) 4%
services to its customers in India in the year e) 5%
1998. Answer: D
The Differential Rate of Interest (DRI) system,
487. Which Organisation has been authorized to also known as DIR, was established in 1972 to
carry out the functions of the Central KYC help low-income people gain access to credit.
Registry? The lending system allows banks to lend to the
a) Reserve Bank of India poorer members of society at a lower interest
b) Government of India rate. The interest rate that applies is 4% per
c) Securities and Exchange Board of India year.
d) Small Industries Development Bank of India
e) Central Registry of Securitisation Asset 489. What are the eligibility conditions for setting
Reconstruction and Security Interest of India up Payment Banks?
(CERSAI) a) Non-bank Pre-paid payment Instrument (PPI)
Answer: E issues
The Central KYC Registry (CKYCR) is a registry b) Individuals/professionals, NBFCs, Business
that acts as a central record for all financial correspondents, mobile companies, and Real
institution customers' KYC information. The sector cooperatives owned & Controlled by
Central Registry of Securitisation Asset residents
Reconstruction and Security Interest of India c) Promoter group having a joint venture with an
(CERSAI) has been given the authority to existing scheduled commercial bank to set up a
perform the functions of CKYCR in India. payment bank
d) Registered under the Companies Act, 2013

e) All the above 6. RBI guidelines

Answer: E
Eligibility: 491. When you write a date on a cheque that is
● Non-bank Pre-paid Payment Instrument (PPI) older than the date on which it is delivered to the
issues. bank, a cheque is considered _____________.
● Individuals/professionals, NBFCs, Business a) Bearer Cheque
correspondents, mobile companies, and Real b) Mutilated Cheque
sector cooperatives owned & Controlled by c) Open Cheque
residents. d) Ante-dated Cheque
● Promoter group having a joint venture with an e) Post- Dated Cheque
existing scheduled commercial bank to set up a Answer: D
payment bank. Ante-dated Cheque When you write a date on a
● Registered under the Companies Act, 2013. cheque that is older than the date on which it is
● The minimum paid-up capital for opening a delivered to the bank, a cheque is considered an
payment bank is Rs.100 crores for the first 5 Ante-dated cheque.
years of commencement, the Promoter must
contribute at least 40% of the paid-up capital 492. The RBI has established various trigger
points for assessing, monitoring, controlling, and
490. Which of the following is one of the correcting weak and troubled banks. Which of
Qualitative Credit Controls of the Monetary the following are the trigger points established
Policy? by the RBI?
a) Margin requirements a) Capital to Risk-weighted Assets Ratio
b) Rationing of credit (CRAR)
c) Moral suasion b) Non-Performing Assets (NPA)
d) Regulation of consumer credit c) Return on Assets (RoA)
e) All the above d) All the above
Answer: E e) None of the above
Qualitative Credit Controls Answer: D
1. Margin requirements As part of the prompt corrective action (PCA)
2. Rationing of credit framework, the Reserve Bank has defined
3. Regulation of consumer credit regulatory trigger points in terms of three
4. Moral suasion parameters: capital to risk-weighted assets ratio
5. Direct action (CRAR), net non-performing assets (NPA), and

Return on Assets (RoA). assets banks have available to quickly pay bills
and meet short-term business and financial
493. Which of the following is not a promoter obligations.
bank of the National Payments Corporation of a) Liquidity
India (NPCI)? b) Fidelity
a) Punjab National Bank c) Annuity
b) City Union Bank d) Bancassurance
c) Union Bank of India e) Mutual Funds
d) State Bank of India Answer: A
e) Bank of Baroda Liquidity is a measure of the cash and other
Answer: B assets banks have available to quickly pay bills
NPCI has ten core promoter banks—State Bank and meet short-term business and financial
of India, Punjab National Bank, Bank of Baroda, obligations. Liquidity is the basis of the well-
Canara Bank, Bank of India, Union Bank of being of financial institutions, especially banks. It
India, HDFC Bank, Citibank, HSBC, and ICICI guarantees the smooth functioning of financial
Bank. markets and thus determines the growth and
494. The primary function of Bharatiya Reserve development of banks.
Bank Note Mudran Private Ltd. (BRBNMPL)is to
print the banknotes for the Reserve Bank of 496. Which of the following is true regarding the
India (RBI). It operates with 2 presses. What are Fixed Deposits?
they? a) Account can be operated for a tenure ranging
a) Mysore from 7 days to 10 years
b) Salboni b) Interest rates should be based on Tenure
c) Mumbai only
d) Both (a) and (b) c) The interest earned gets added to the
e) Both (a) and (c) principal amount after every specific interval
Answer: D d) In case of urgency, the depositor can close
The Bharatiya Reserve Bank Note Mudran the amount prematurely by paying the penalty
Private Ltd. (BRBNMPL) manages 2 Presses e) All the above
one at Mysore in Karnataka and the other at Answer: E
Salboni in West Bengal. Fixed Deposit:
●Fixed deposits have fixed tenure. It is an
495. _______ is a measure of the cash and other Investment scheme in that banks and NBFCs

provide FD and offer greater returns on the recycled PVC plastic.

principal invested when compared to the returns
generated from a regular savings account. 499. ______________ allows financial inclusion
●You can earn interest on the principal sum transactions at Micro ATM through the Business
throughout the tenure. The interest earned gets Correspondents of any bank using the Aadhar
added to the principal amount after every authentication that empowers all sections of
specific interval. society by making financial and banking
●Tenure: 7 days to 10 years services available to all through Aadhar.
●In case of urgency, the depositor can close the a) National Financial Switch
amount prematurely by paying a penalty. b) Aadhar Enabled Payment System
c) National Automated Clearing House
497. Which of the following does not belong to d) Aadhar Payment Bridge System
the Neo bank category? e) Cheque Truncation System
a) FI Money Answer: B
b) Niyo AePS is the acronym for Aadhar Enabled
c) Paypal Payment System. AEPS allows financial
d) Razorpay inclusion transactions at Micro ATM through the
e) Jupiter Business Correspondents of any bank using the
Answer: C Aadhar authentication. This system empowers
Other than Paypal all the other options are Neo all sections of society by making financial and
banks. banking services available to all through Aadhar.

498. Which Indian bank has launched the first 500. When was the Cheque Truncation System
recyclable PVC plastic credit card? (CTS) introduced by the Reserve Bank of India
a) ICICI Bank (RBI)?
b) HSBC India a) 2008
c) HDFC Bank b) 2009
d) State Bank of India c) 2010
e) Axis Bank d) 2012
Answer: B e) 2013
To assist conserve plastic waste and reducing Answer: C
overall carbon emissions, HSBC India has In India, the Reserve Bank of India (RBI)
launched India’s first credit card made from launched the Cheque Truncation System (CTS)

or Image-based Clearing System (ICS) in 2010 through 22 Offices of Banking Ombudsman

to speed up the clearing of cheques. (OBOs), which cover all states and union
territories. New Delhi has the most Banking
501. CBLO is a money market instrument that Ombudsman offices, with three.
represents an obligation between a borrower
and a lender concerning the terms and 503. __________ is where the members of the
conditions of a loan. What does C represent in exchange form a cartel and trade among
CBLO? themselves creating huge false volumes and
a) Collateral rigging the price of shares, thus misleading the
b) Collateralised common investors.
c) Casual a) Casino Trading
d) Credit b) Up Trading
e) Cash c) Stake Trading
Answer: B d) Circular Trading
A Collateralized Borrowing and Lending e) Hollow Trading
Obligation (CBLO) is a money market product Answer: D
that represents a loan agreement between a Circular Trading is where the members of an
borrower and a lender. exchange form a cartel and trade among
themselves creating huge false volumes and
502. How many regional offices of Banking rigging the price of shares, thus misleading the
Ombudsman are there in India and Which common investors.
region has the highest number of Banking
Ombudsman offices? 504. ________________ risk develops from the
a) 20 and Mumbai business transactions done by the Banks which
b) 22 and New Delhi is exposed to potential Loss.
c) 20 and Chennai a) Market Risk
d) 24 and New Delhi b) Financial Risk
e) 23 and Kolkata c) Systematic Risk
Answer: B d) Liquidity Risk
The Reserve Bank originally notified the e) Operational Risk
Banking Ombudsman Scheme (BOS) in 1995 Answer: B
under Section 35 A of the Banking Regulation Financial Risk develops from the business
Act, 1949. The Reserve Bank administers it transactions done by the Banks which are

exposed to potential Loss. contribute to the EPF. The Employees'

Provident Fund Organization (EPFO) generates
505. The committee was appointed to give a and assigns this number, which is granted by
detailed report on the Non-Performing Assets of the Ministry of Labour and Employment.
public sector banks. Who headed the
committee? 507. What are the eligibility conditions of the
a) Vaghul Standup India Scheme?
b) Pannir Selvam a) SC/ST and women entrepreneurs above 18
c) A Ghosh years of age are eligible for the scheme
d) H R Khan b) Borrower should not be in default to any
e) Dave bank/ financial Institution
Answer: B c) Loans under the scheme is available only for
Arbitration/Conciliation under the Arbitration Act green field Project
1996 is suggested as an effective instrument in d) Only (a) and (b)
the Pannier Selvam Committee Report on NPAs e) All (a), (b) and (c)
of Public Sector Banks, which was submitted in Answer: E
1998. Eligibility conditions for Lead Bank Scheme:
SC/ST and women entrepreneurs above 18
506. UAN stands for Universal Account Number, years of age.
which is assigned by EPFO and serves as an In the case of non - Individual enterprises,
umbrella for the many Member Ids assigned to 51% of the shareholding and controlling
an individual by various organizations. How stake should be held by either SC/ST
many digit code is Universal Account Number and/or Women Entrepreneur.
(UAN)? The borrower should not be in default to any
a) 9 bank/ financial institution.
b) 10 Loans under the scheme are available only
c) 12 for green field Project.
d) 14
e) 20 508. Who among the following dedicated the
Answer: C National Bank for Agriculture and Rural
The Universal Account Number, or UAN, is a Development (NABARD) to the nation?
12-digit identification number that is assigned to a) C. D. Deshmukh
both you and your employer and is used to b) Narasimhan

c) Indira Gandhi a) 2012

d) Vijay Kelkar b) 2013
e) Manmohan Singh c) 2014
Answer: C d) 2016
The agricultural credit functions of RBI and the e) 2017
refinance functions of the erstwhile Agricultural Answer: C
Refinance and Development Corporation The Honourable Prime Minister Shri Narendra
(ARDC) were transferred to NABARD on July Modi introduced the Pradhan Mantri Jan Dhan
12, 1982. On November 5, 1982, the late Prime Yojana (PMJDY), the world's largest financial
Minister Smt. Indira Gandhi dedicated it to the inclusion initiative, from the ramparts of the Red
nation's service. Established with an Rs.100 Fort on August 15, 2014, and launched it across
crore starting capital. the country on August 28, 2014.

509. What is the minimum denomination of the 511. The first ATM in India was set up by HSBC
Treasury Bills issued by the Government of Bank in __________ at Mumbai.
India for three maturities as 91,182 and 364 a) 1980
days? b) 1984
a) Rs. 5000 and its multiples c) 1987
b) Rs. 10000 and its multiples d) 1990
c) Rs. 15000 and its multiples e) 1992
d) Rs. 25000 and its multiples Answer: C
e) Rs. 1 lakh and its multiples The first Automated Teller Machine (ATM) in
Answer: D India was set up in 1987 by HSBC in Mumbai.
T-bills are available for a minimum amount of
Rs. 25,000 and in multiples of Rs. 25,000. 512. e-KYC is possible only for those who have?
a) PAN card
510. Pradhan Mantri Jan Dhan Yojana is a b) Aadhaar card
financial inclusion campaign that provides c) Passport
universal access to banking facilities that d) Driving License
ensures to provide financial literacy with at least e) None of these
one basic banking account for every household Answer: B
in India. When was Pradhan Mantri Jan Dhan e-KYC is possible only for those who have
Yojana established? Aadhaar cards. Aadhaar is a 12-digit random

number issued by UIDAI to the residents of 515. The minimum amount which can be
India. accessed through Marginal Standing Facility
(MSF) is ________________.
513. When was the Differential Rate of Interest a) Rs. 20 lakhs
(DRI) lending program launched by the b) Rs. 30 lakhs
Government of India to provide credit access to c) Rs. 50 lakhs
low-income groups? d) Rs. 1 crore
a) 1956 e) Rs. 5 crores
b) 1963 Answer: D
c) 1972 Banks can access a minimum of Rs. 1 crore
d) 1975 through Marginal Standing Facility (MSF). They
e) 1982 can avail the money in multiples of Rs. 1 crore.
Answer: C
The Differential Rate of Interest (DRI) system, 516. _________________ is the kind of cheque
also known as DIR, was established in 1972 to where two parallel transverse lines are drawn
help low-income people gain access to credit. across the top left, with or without the words: ‘&
The lending system allows banks to lend to the Co., Not Negotiable, A/c Payee which cannot be
poorer members of society at a lower interest encashed at any bank and can be credited only
rate. to the account of the Payee.
a) Crossed Cheque
514. Under whose recommendation did b) Mutilated Cheque
Payment Banks set up? c) Open Cheque
a) Narasimhan d) Ante-dated Cheque
b) NachiketMor e) Post- Dated Cheque
c) Sivaraman Answer: A
d) Raghuram Crossed Cheque is the kind of cheque where
e) H R Khan two parallel transverse lines are drawn across
Answer: B the top left, with or without the words: ‘& Co.,
A payment bank is operating under the Not Negotiable, A/c Payee. It cannot be
recommendation of NachiketMor on a smaller encashed at any bank and can be credited only
restricted scale. It can accept only Demand to the account of the Payee.
deposits and not time Deposits.
517. ______________________ were created to

facilitate the speedy recovery of debt payable to (RPS) in India. It has been incorporated as a
banks and other financial institutions by their “Not for Profit” Company under the provisions of
customers. Section 25 of the Companies Act 1956 (now
a) Prompt Corrective Action Section 8 of the Companies Act 2013).
b) Debt Recovery Tribunals
c) Strategic Debt Restructuring Scheme 519. Where is the headquarters of Bharatiya
d) Joint Lenders’ Forum Reserve Bank Note Mudran Private Ltd.
e) Corporate Debt Restructuring (BRBNMPL) located?
Answer: B a) Mumbai
Debt Recovery Tribunals were established to b) Bengaluru
help clients collect debts owed to banks and c) Noida
other financial organizations quickly. DRTs were d) Kolkata
established when the Recovery of Debts Due to e) New Delhi
Banks and Financial Institutions Act (RDBBFI) Answer: B
was passed in 1993. The BRBNMPL has been registered as a Private
Limited Company under the Companies Act
518. National Payment Corporation of India is 1956 with its Registered and Corporate Office
an Umbrella Organization for operating retail situated in Bengaluru.
Payments and settlement systems in India.
Under which section of the Companies Act 2013 520. Which of the following is not one among
was the NPCI incorporated in 2008 initiated by the assets of the Bank?
the Reserve Bank of India and Indian Banks a) Loans and Advances
Association? b) Securities
a) Section 8 c) Deposits
b) Section 12 d) Reserves
c) Section 14 e) Call and Notice Money
d) Section 19 Answer: C
e) Section 25 Deposit is the Liabilities of the Bank.
Answer: E
The Reserve Bank encouraged the setting up of 521. ____________ of the Companies Act 2013
the National Payments Corporation of India mandates that deposits accepted before the
(NPCI) to act as an umbrella organization for Act's implementation be refunded within one
operating various Retail Payment Systems year of the Act's implementation or the day on

which payment of the deposit becomes due, are owned by a service provider but Cash
whichever occurs first. Management is handled by the respective
a) Section 46 Banks. Such type of ATM is said to be
b) Section 49 __________________.
c) Section 56 a) White Label ATM
d) Section 74 b) Brown Label ATM
e) Section 75 c) Black Label ATM
Answer: D d) Pink Label ATM
Section 74 of the 2013 Act mandates that e) Green Label ATM
deposits accepted before the Act's Answer: B
implementation be refunded within one year of 'Brown label' ATMs are ones where a service
the Act's implementation or the day on which provider owns the hardware and leases the
payment of the deposit becomes due, whichever ATM, but a sponsor bank provides cash
occurs first. management and connectivity to banking
networks.
522. ____________ are digital and operate
online, and they do not have any physical 524. Match the representation of the IFSC
branches that are usually mobile-first, leveraging codes.
technology to minimize operating costs and offer i) First 4 digit code– Branch (A)
a customer-friendly interface. ii) 5th character- Bank (B)
a) Merchant Banks iii) Last 6 characters- Zero (C)
b) Retail Banks a) i- B, ii- C, iii- A
c) Neo Banks b) i- A, ii-C, iii- B
d) Universal Banks c) i- C, ii- A, iii- B
e) Green Banks d) i- A, ii- B, iii- C
Answer: C e) i- B, ii- A, iii- C
Neo banks are digital and operate online, and Answer: A
they do not have any physical branches. They The first 4 digits of the IFSC represent the bank
are usually mobile-first, leveraging technology to and the last 6 characters represent the branch.
minimize operating costs and offer a customer- The 5th character is zero.
friendly interface.
525. ____________________ is a process of
523. Hardware and lease of the ATM Machine clearing cheques electronically rather than

processing the physical cheque by the presenting bank enroute to the paying bank
presenting bank enroute to the paying bank branch. It is a step undertaken by the Reserve
branch. Bank of India (RBI) for quicker cheque
a) Endorsement clearance.
b) Negotiable Instrument
c) Crossing
d) Financial Inclusion
e) Cheque Truncation System
Answer: E
Cheque Truncation System (CTS) is a process
of clearing cheques electronically rather than
processing the physical cheque by the

Banking Ombudsman
 Senior official appointed by RBI to redress customer complaints against deficiency in
certain banking services.
 Under section 35a of the Banking Regulation Act 1949
 The Banking Ombudsman Scheme was first introduced in 1995.
 The Current scheme became operative from 1st January 2006
 At present 22 banking ombudsman are being operated mostly in state capitals.
 All scheduled commercial banks (including RRB’S, cooperative banks) are covered
 Customer can complaint against
 Non-payment or inordinate delay in payment of cheques, drafts, bills etc…
 Also RBI has later included the facility for net-banking, digital transactions,
mobile banking, Debit card, Credit card, ATM related etc…
HOW TO COMPLAIN?
 First we should approach the bank for any grievance.
 If the grievance is not settled by the bank in 30 days (If not replied / rejection by bank /
reply does not satisfy the customer), then we can approach the banking Ombudsman
within 1 year.
 Complaints can be lodged on plain paper or by sending e-mail requests.
 No charges involved.
 Maximum limit of award for bank is Rs.20 lakhs. (Rs 1 lakh in case of credit card related
complaints)
 Maximum limit of award for NBFC is Rs.10 lakhs.
 If a customer is not satisfied, either of the parties can approach appellate authority within
30 days. Appellate authority vested with a deputy governor of RBI.

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Banking Awareness Topic Wise - Technologies and Codes used in Banking

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Banking Awareness Topic Wise - Technologies and Codes used in Banking

MICR (Magnetic Ink Character Recognition)

 A MICR code is a 9-digit code that uniquely identifies a bank and a branch participating in an
Electronic Clearing System (ECS).
 First 3 digit= city code Middle 3 digit = bank code Last 3 digit = branch code
 One can locate the MICR code at the bottom of a cheque leaf, next to the cheque number.
 It is also normally printed on the first page of a bank savings account passbook.
IFSC Code
 It is Indian Financial System Code.
 It is alpha – numeric code which identifies any branch under the NEFT system
 IFSC code is must for NEFT and RTGS transactions
 It is 11 digit code

4 Alpha 0 Last 6digits

Characters

 First 4 characters represents bank name

 Fifth digit buffer
 Last six digits are represents bank branch

SWIFT Code

 SWIFT stands for Society for Worldwide Interbank Financial Telecommunication

 SWIFT Code is a standard format of Bank Identifier code.
 This code is used particularly for interbank transfer of money between banks & majority of
FOREX related message are sent to correspondent banks abroad with the help of SWIFT
code.
 SWIFT Code consists 8 or 11 character when the code is 8 digits, it refers to the primary
office.
4 digits – Bank code
2 digits – Country code
2 digits – Location code
3 digits – Branch code (optional)

 On November 14, 2019 India, China and Russia have partnered together to explore an
alternative to the SWIFT (Society for Worldwide Interbank Financial Telecommunication)
payment mechanism in-order to smoothen the trade with countries that face American
sanctions
 As India doesn’t have its own domestic financial payments system, it is in plan to link the
Central Bank of Russia’s platform with a service that is under development.

Unstructured Supplementary Service Data (USSD)

 USSD refers to unstructured supplementary service data.

 It is a platform that allows transfer of money between two bank accounts using a feature
phone/smart phone without internet connection by dialing USSD code

*99#

 The telecom service providers will charge to use services.

 The transactions limit for *99# banking is set to ₹ 5000 per transaction by RBI.

Query Service of AADHAAR Mapper (QSAM)

 NPCI has launched QSAM, a USSD based serviced that lets the user know their AADHAAR
seeding status.
 Since the service works on USSD, it is available across all handsets and very convenient to use.
 In QSAM users can dial *99*99# from their handset and can know the AADHAAR seeding status
by inputting their AADHAAR number.

Differentiated bank (niche)

 Payment banks
 Small finance banks
(for the first time, in principle approval is given by RBI for differentiated banks in 2015)
 They can undertake only a limited range / narrow range of activities.
 They are also called “niche” banks.
Green field/ Brown field
Green field:
 Starting project afresh, without any link to the previous project.
Brown field:
 Expanding / modifying / upgrading / extending the existing project.
Bridge loan
 A bridge loan is a type of short term finance that aims to “bridge the gap” between the
purchase of a property and its sale.
 A short term financing, normally up to one year, until the company secures permanent /
long term financing or to tide over current obligations
Channel finance
 Working capital finance to dealers having business relationships with large companies

Insolvency
 Insolvency is a financial state where an entity is not able to repay its debt that it owes to its
financial or operational creditors.

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Banking Awareness Topic Wise - Banking Terminologies

 Insolvency is a financial status: your debts are greater than the fair market value of your
assets & you're unable to pay your debts as they generally become due.
 State of being not able to pay back the liabilities.
 Condition of having more debts (liabilities) than total assets.
Bankruptcy
 Bankruptcy is a legal procedure for liquidating a business or property owned by an
individual, which can't fully pay its debts out of its current assets.
 Bankruptcy is a legal status: it's a legal procedure whereupon an insolvent person files for
protection from her creditors so that they cannot commence or continue legal proceedings
(like a wage garnishment) against her to recover their debts.
 In return for this protection, she surrenders her assets to the bankruptcy trustee who
becomes the legal owner of her assets. The trustee then sells her assets and distributes
the sale proceeds amongst her creditors.
 And if she has no assets in the first place, her creditors end up getting nothing. They then
write off their debts against her as a business loss.

Liquidation
 Liquidation is a term which is given to the process of dissolving or winding up of the
company. This is done by selling off all the assets of the companies and paying the
proceeds gathered to any of the outstanding creditors of the company.

 Any resource that has economic value that an individual or corporation owns. Assets are generally
viewed as resources that produce cash flow or bring added benefit to the individual or company.

Actuaries

 A person with expertise in the fields of economics, statistics and mathematics, who helps in risk
assessment and estimation of premiums etc for an insurance business, is called an actuary.

Accounts Receivable

 The amount of money owed by customers or clients to a business after goods or services have been
delivered and/or used.

Amortization

 It is an accounting technique by which intangible assets are written off over a period of time.

Accounts Payables

 The amount of money a company owes creditors (suppliers, etc.) in return for goods and/or services
they have delivered.

Annuity

 It is an investment scheme under which investor makes recurring investments and lump sum
payment is made to him at the end.

Arbitrage

 It is the process of simultaneous buying and selling of an asset from different platforms, exchanges
or locations to cash in on the price difference.

Bancassurance

 Bancassurance means selling insurance products through banks.

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Banking Awareness Topic Wise - Banking Terminologies
 Banks and insurance company come up in a partnership wherein the banks sells the tied insurance
company’s insurance products to its clients.

Balance of payment

 It is the difference between a country’s exports and imports.

Bank Rate

 It is the rate charged by the central bank for lending funds to commercial banks.

Basis Point :

 One- hundredth of 1% point normally used for indicating cost of finance.

Balance Sheet:

 A financial report that summarizes a company's assets (what it owns), liabilities (what it owes)
and owner or shareholder equity at a given time.

Bitcoin:

 Bitcoin is a virtual currency or cryptocurrency and a payment system. It can be defined as a

decentralized means of tracking and assigning wealth or economy, it is a software protocol.

Bond:

 A debt instrument used by corporations, governments (including Federal, State and City) and many
other institutions that are used to generate capital.

Capital:

 A financial asset or the value of a financial asset, such as cash or goods.

 Working capital is calculated by taking your current assets subtracted from current liabilities—
basically the money or assets an organization can put to work.

Core Banking Solutions (CBS):

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Banking Awareness Topic Wise - Banking Terminologies
 It is a networking of branches which enables customers to operate their accounts and avail banking
services from any branch of the bank on CBS network, regardless of where he maintains his account.

Credit:

 An accounting entry that may either decrease assets or increase liabilities and equity on the
company balance sheet, depending on the transaction.

 When using the double-entry accounting method there will be two recorded entries for every
transaction: A credit and a debit.

Currency Chest

 The Reserve Bank of India (RBI) stored all of the excess money of banks in a currency chest.
Whenever the RBI prints fresh currency notes, it first distributes them to currency chests, who then
distribute them to banks. A currency chest is a depositary of the Reserve Bank of India.

Co-branded Credit Card

 A co-branded card is a credit card that a retailer of consumer goods or services issues in partnership
with a particular credit card issuer or network.

Currency Swap

 A currency swap is an agreement in which two parties exchange the principal amount of a loan and
the interest in one currency for the principal and interest in another currency.

Core Banking Solution:

 Core Banking Solution (CBS) is the networking of bank branches, which allows customers to
manage their accounts, and use various banking facilities from any part of the world. In simple terms,
there is no need to visit your own branch to do banking transactions.

Dividend:

 It is the amount per share paid by a company to its shareholders.

 Dividend value is based upon company’s profitability.

Demat Account:

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Banking Awareness Topic Wise - Banking Terminologies
 The way in which a bank keeps money in a deposit account in the same way the depository
company converts share certificates into electronic form and keep them in a demat account.

Deflation:

 When the overall price level decreases so that inflation rate becomes negative is called deflation.

Diversification:

 The process of allocating or spreading capital investments into varied assets to avoid over-exposure
to risk.

Depreciation

 The monetary value of an asset decreases over time due to use, wear and tear or obsolescence.
This decrease is called depreciation.

Equity

 Equity= Total assets- Total liabilities

EMI:

 EMI or Equated Monthly Installment, as the name suggests , is one part of the equally divided
monthly outgoes to clear off an outstanding loan within a stipulated time frame.

Exchange Rate:

 It is the price of one currency in terms of another currency.

Face value

 The amount mentioned on face of a bond certificate.

Fiscal Deficit :

 The difference between total revenue and total expenditure of the government is termed as fiscal
deficit.

Inflation

 It is an increase in the quantity of money in circulation without any corresponding increase in goods
thus leading to an abnormal rise in the price level.
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Banking Awareness Topic Wise - Banking Terminologies
Insolvency

 A state where an individual or organization can no longer meet financial obligations with lenders
when their debts come due.

Initial Public Offering (IPO)

 An initial public offering is when a private company or corporation raises investment capital by
offering its stock to the public for the first time.

Liquidity

 Liquidity means how quickly you can get your cash on your hands. In simple terms, liquidity is to get
your money whenever you need it.

Marginal Standing Facility :

 MSF is a window for banks to borrow from RBI in an emergency situation when inter bank liquidity
dries up completely.

Market Capitalisation

 It is the aggregate valuation of the company based on its current share price and the total number of
outstanding stocks.

 It is calculated by multiplying the current market price of the company’s share with the total
outstanding shares of the company.

Mortgage

 A legal agreement that conveys the conditional right of ownership on an asset or property by its
owner to a lender as security for a loan.

Mutual fund

 A mutual fund is a professionally managed investment fund that pools money from many investors to
purchase securities.

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Banking Awareness Topic Wise - Banking Terminologies
Non-Convertible Debentures (NCD)

 The debentures which can't be converted into shares or equities are called non-convertible
debentures (or NCDs). Non-convertible debentures are used as tools to raise long-term funds by
companies through a public issue.

Open Market Operations

 It is the sale and purchase of government securities and treasury bills by RBI. The objective of
OMO is to regulate the money supply in the economy. When the RBI wants to increase the
money supply in the economy, it purchases the government securities from the market and it sells
government securities to suck out liquidity from the system.

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Banking Awareness Topic Wise - Banking Terminologies

Plastic Money

 Generic term for all types of bank cards, credit cards, debit cards, smart cards etc..

Prime Rate

 Determined by the federal funds rate (the overnight rate at which banks lend to one another) the
prime rate is the best rate available to a bank’s most credit-worthy customer.

Prime Lending Rate

 The interest rate charged by banks to their largest, most secure, and most credit worthy customers
on short term loans.

Recession

 An economic condition defined by a decline in GDP for two or more consecutive quarters. During a
recession, the stock market usually drops, unemployment increases, and the housing market declines.

Stressed assets

 Stressed assets are equal to non performing assets plus written off assets plus restructured loans
(NPAs + Restructured loans + Written off assets).

Sovereign Gold Bonds

 Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are
substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be
redeemed in cash on maturity. The Bond is issued by the Reserve Bank on behalf of the government of
India.

 The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram. The
maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar
entities per fiscal year (April-March) notified by the Government from time to time.

Special Drawing Rights

 It is a reverse asset created within the framework of the International Monetary Fund in an attempt to
increase international liquidity.

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Banking Awareness Topic Wise - Banking Terminologies
Special Mention Accounts:

 Special Mention Accounts are those assets/accounts that shows symptoms of bad asset quality in
the first 90 days itself or before it being identified as NPA.

Yield
 The annual rate of return for an investment expressed as a percentage.

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Banking Awareness Topic Wise - Types of Banking

Branch Banking
 It involves business of banking via branches.
 The advantage is that it helps in better management, more inclusion and risk
diversification.
Para Banking
 The financial services undertaken by banks such as credit cards, smart cards, mutual
funds, primary dealers, pension funds comes under Para Banking activities
Universal Banking
 These can undertake multiple financial activities under one roof.
 Universal Bank participates in many kinds of banking activities. It is both a commercial
bank and investment bank as well as providing other financial services such as insurance.
These are also called full service financial firms providing wealth and asset management,
trading, underwriting, researching as well as financial advisory.
Ex: ICICI Bank.
Narrow Banking
 The obsession of the banks to invest more in risk free securities like Govt. securities or
Govt. approved securities.
Shadow Banking
 The activities / services undertaken by NBFCs / Unincorporated bodies, similar to the
activities undertaken by banks.
 They are unregulated / loosely regulated and hence the risks associated with shadow
banking are very high in the financial system.
 Credit intermediation involving activities outside the banking system
 Like house loans, gold loans, vehicle finance etc
 These are called NBFCs
Unit Banking
 It is a type of banking in which where banks operate only from a single branch taking care
of a small community.

Retail Banking

 Retail Banking means banking where transactions are held directly with customers and
there are no transactions with other banks or corporations.
 The banks provide all types of personal banking services such as Saving accounts,
personal loans, mortgages, Debit and Credit cards, Transactional accounts etc.
Wholesale Banking
 Wholesale banking involves banking services for high net worth clients like Corporates,
Commercial banks, mid-size companies etc.
Virtual Banking
 Virtual banking is performing banking operations online.
Chain Banking
 Chain Banking system refers to the type of banking when a group of persons come
together to own and control three or more independently chartered banks.
Offshore banking:
 The deposit of funds by a company or an individual in a bank that is located outside their
national residence.
Green banking:

 To address sustainable development concerns and creating awareness among people

about environmental responsibility.

Merchant banking:

 It is the combination of banking and consultancy service. Consultancy means to provide

advice, guidance and service for a fee.

Neo Banking:

 Neo banks are digital and operate online, and they do not have any physical branches.

They are usually mobile-first, leveraging technology to minimise operating costs and

offer a customer-friendly interface.

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