School of Distance Education

UNIVERSITY OF CALICUT SCHOOL OF DISTANCE EDUCATION

BA ECONOMICS (2011 Admission Onwards) VI Semester

Additional Course (In lieu of Project)

Banking And Finance QUESTION BANK 1. 2. 3. 4. 5.

The definition of ‘banking is given in (a) Negotiable Instruments Act 1981 (b) RBI Act 1934

Presently the public sector banks in India (a) 6 (b) 19

(c) Banking Regulation Act 1949 (d) Contract Act (c) 20 (d) 26

Which of the following banks are not commercial banks (a) Foreign banks (c) Private banks (b) State cooperative banks (d) Regional Rural Banks

Under which of the following methods of note issue, RBI issues currency notes (a) Fixed fiduciary system (c) Maximum fiduciary system (b) Minimum reserve system (d) Proportional reserve system Lead bank scheme was introduced in (a) 1965 (b) 1969

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(c) 1981 (d) 1992

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6. 7. 8. 9.

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A rise in reserve ratio of banks will lead to (a) An increase in money supply (b) Proportionate increase in money supply SLR stands for (a) Single lens route (b) Statutory Liquidity Ratio

(c) Decrease in money supply (d) None of these (c) Statutory Liability Ratio (d) None of these

Which of the following categories the payment can be stopped (a) Gift cheques (c) Bill of exchange (b) Cheques (d) Promissory notes Which of the following are legal tender (a) Currency notes (b) Draft

10. CRR is required to maintain in the form of (a) Cash with RBI (b) Cash with bank (e)

(c) Cheques (d) Pro note (c) Approved govt. securities (d) All the above

11. The validity of a cheque is ………… months from the date of cheque (a) 3 months (c) 1 month (b) 6 months (d) 12 months 12. Gilt edged securities are (a) Shares of private limited company (b) First class govt. securities

(c) Shares of a company (d) None of the above

13. Currency notes deposited at currency chest are the property of (a) SBI (c) Respective Bank who made deposit (b) RBI (d) Government 14. When a bankers name is written on a cheques instead of two parallel lines, it is a (a) General crossing (c) Special crossing (b) No crossing (d) Payable to bearer 15. Which of the following is a borrowing facility (a) Term finance (b) Performance guarantee 16. Selective credit control covers (a) Margin (b) Interest Banking and Finance

(c) Bills received under letter of credit (d) All the above (c) Level of credit (d) All the above Page 2

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17. Pledge of advance is made against (a) Gold (b) Commodities

(c) Coins and Notes (d) All the above

18. Cash credit account is closed on the death of (a) Agent (b) Principal

(c) Managing Director (d) None of the above

19. Which bank does not belongs to state bank group (a) State bank of Bikaner and Jaipur (c) State bank of Patiala (b) State bank of Travancore (d) State bank of Banaras 20. (a) (b) (c) (d)

The power of banks to create credit depends on Deposit available with them and safe ratio Safe ratio only Deposit available with them only None of the above

21. Largest nationalized bank of India is (a) Central bank of India (b) State bank of India

(c) Reserve Bank of India (d) None the above

22. Difference between market value of security and loan amount is known as (a) Collateral value (c) Margin (b) Security value (d) All the above 23.

Bank rate policy as a weapon of credit control has emerged from the central bank’s function as (a) Bank of note issue (c) Bankers’ bank (b) Lender of last resort (d) All the above

24. Discount rate on certificate of deposits is decided by (a) RBI (c) SBI (b) IBA (d) None the above 25. The central bank of India is (a) Central bank of India (b) Reserve bank of India

(c) Federal Bank of India (d) None the above

26. Minimum age to open a SB account in own name is (a) 10 (b) 18 (c) 21 27. DFHI started its business in (a) 1975 (b) 1988 Banking and Finance

(d) 15

(c) 1991 (d) 1999 Page 3

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28. The main objective of EXIM Bank is to promote (a) Saving habit among public (b) Foreign trade

(c) Small scale industries (d) None the above

29. DFHI was established for creating secondary market in (a) Govt. securities (c) money market instruments (b) Capital market instruments (d) all the above 30. The Main difference between capital market and money market is with regard to (a) Type of securities (c) Value of securities (b) Maturity period of securities (d) None the above 31. Replica of a bank account kept with customer is known as (a) Book of account (c) Ledger account (b) Pass book (d) None the above 32. Insurance of bank deposit is done by (a) Oriental insurance (b) Reserve bank of India

(c) DICGC (d) None the above

33. A set of institutions, instruments and markets which encourage savings and

channelise them for productive purposes (a) Stock Exchange (b) Financial market

(c) Financial System (d) Derivative market.

34. The market where the securities are issued for the first time is called (a) Primary market (c) Tertiary market (b) Secondary Market (d) Bond market 35. …………………….. is a share in the share capital of a Company. (a) Share (c) Bond (b) Debenture (d) Capital.

36. Preferential shares have preferential right for ……………. (a) Payment of dividend (c) Both of these (b) Repayment of Capital (d) None of these 37. ................ is an acknowledgement of the debt of the Company. (a) Share (d) Debentures (b) Preference shares (d) None of these 38. The maximum allowable underwriting commission for shares (a) 2.5% (c) 7.5% (b) 5% (d) 10% Banking and Finance

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39. The supplementary public issue made by a company once it is listed and established on a stock exchange is called (a) IPO (c) Bonus issue (b) FPO (d) Right issue 40. The process of generating and recording investor demand for shares during their

issuance process, in order to support efficient price discovery. (a) Merchant Banking (c) Private placement (b) Stock Broking (d) Book Building

41. Payment of dividend in the form of fully paid shares are called

(a) Right issue (b) Bonus issue

(c) Preferential issue (d) None of these

holding is called (a) Bonus issue (b) Right issue

(c) Private placement (d) None of these

42. Issue of shares to the existing shareholders of a company in proportion to their

43. A stock issue to the specified employees of a company as an option scheme is called (a) ESOS (c) Right issue (b) Deferred Issue (d) Option placement

44. The process of converting the physical form of shares into electronic form is called

(a) Materialisation (b) Dematerialisation

(c) Rematerialisation (d) ESOP

45. …………………… is an organisation which holds securities in electronic format at the request of the investor (a) Depository (c) Merchant Banker (b) Stock Broker (d) Clearing House 46. Anybody of individuals whether incorporated or not, constituted for the purpose of

assisting, regulating or controlling the business of buying, selling of securities. (a) Sock Broker (c) Secondary market (b) Merchant Banker (d) Book runner

47. Bombay Stock Exchange was established in the year (a) 1785 (c) 1895 (b) 1875 (d) 1895

48. Which of the following is a stock index of the Bombay Stock exchange (a) Nifty (c) NASDAQ (b) DJIA (d) Sensex

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49. CNX Nifty is a stock market index of ………………… companies (a) 30 (c) 50 (b) 40 (d) 75 50. The base year of SENSEX (a) 1978-79 (b) 1979-80

(c) 1995 (d) 1996

51. An investor or investment fund that is established or registered in a foreign country

and investing in the financial markets of India (a) DII (b) FII

(c) Both of these (d) None of these

52. Securities and Exchange Board of India (SEBI) had become a statutory body by passing SEBI act in the year (a) 1988 (c) 1992 (b) 1990 (d) 1998 53. Market for short term financial assets is known as a) Money market c) Financial market b) Capital market d) None of these

54. A money market instrument with maturity of more than one day but not exceeding 14 days is known as a) Call money c) Notice money b) Term money d) None of these 55. Interest rate in call money market is decided by a) RBI c) Govt. of India b) SBI d) None of these 56. Treasury bills are issued in multiples of …… a) Rs.10,000 b) Rs.25,000

c) Rs.50,000 d) Rs.100,000

57. Ad hoc treasury bills are issued by RBI on behalf of a) Govt. of India c) Commercial banks b) State Govt. d) RBI 58. On the basis of its maturity, treasury bills are classified into a) 2 b) 3 c) 4 59. Certificate of Deposit is issued by a) RBI b) Financial institutions Banking and Finance

d) 5

c) Companies d) Govt. of India Page 6

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60. Certificate of Deposits is issued in multiples of a) Rs.10,000 b) Rs.25,000 61. Commercial Papers are issued by a) Banks b) RBI

c) Rs.50,000 d) Rs.100,000 c) Govt. of India d) Joint Stock Companies

62. Commercial Papers are issued in multiples of … a) Rs.25,000 c) Rs.100,000 b) Rs.50,000 d) Rs.500,000 63. Repo Rate is a) Lending rate of banks to RBI b) Lending rate of RBI to banks

c) Lending rate of RBI to public d) None of these

64. Maximum period for which domestic fixed deposits are accepted by Indian banks is a) 5 years c) 10 years b) 7 years d) 15 years 65. Which of the following is not a negotiable instrument a) Cheque c) Fixed deposit receipt b) Bill of exchange d) Promissory note 66. a) b) c) d)

Power of attorney refers to An authority to operate a bank account Power of a person An instrument by which a person is empowered to act for another person All the above

67. The latest recovery channel made available to bank to recover NPA is a) SARFAESI Act c) RBI Act b) Banking Regulation Act d) Right to Information Act

68. Which of the following card product launched by the banks is working on the principle of ‘Buy Now Pay Later’? a) Credit Card c) Master Card b) Debit Card d) ATM Card 69. When bank returns cheque unpaid, it is called a) Blank cheque b) Dishonor of cheque

c) Mutilated cheque d) Bearer cheque

70. Which of the following carries out Open Market Operation a) Bombay Stock Exchange c) Reserve Bank of India b) National Stock Exchange d) Securities Exchange Board of India

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71. Federal Reserve is central bank of a) India b) Pakistan

72. Rate of interest on term deposit is fixed by a) RBI b) SBI 73. Financial year in banks is period between a) January to December b) March to April 74. RBI was natinalised in the year a) 1947 b) 1948

c) UK d) US c) Govt. d) Banks themselves c) April to March d) July to June c) 1949 d) 1950

75. The Indian bank with highest number of branches operated in foreign country is a) State Bank of India c) Bank of India b) Bank of Baroda d) Central Bank of India 76. The latest public sector bank in India is a) Federal bank b) State Bank of Travancore

c) ICICI Bank d) IDBI Bank

78. The present governor of RBI is a) D Subbarao b) Raghuram Rajan

c) CD Deshmukh d) Bimal Jalan

80. The head quarters of RBI is situated at a) Mumbai b) Chennai

c) New Delhi d) Culcutta

77. The first nationalization of banks in India was in the year a) 1948 c) 1969 b) 1950 d) 1975

79. Which is the largest private sector bank in India a) HDFC bank c) AXIS bank b) IDBI bank d) ICICI bank

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ANSWER KEY

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Banking Regulation Act 1949 26 State cooperative banks Minimum reserve system 1969 Decrease in money supply Statutory Liquidity Ratio Cheques Currency notes Cash with RBI 3 months First class govt. securities RBI Special crossing Term finance All the above Commodities Agent State bank of Banaras Deposit available with them and safe ratio State bank of India Margin Lender of last resort None the above Reserve bank of India 10 1988 Foreign trade money market instruments Maturity period of securities Pass book DICGC Financial System Primary market Share Both of these Debentures 5% FPO

21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. Book Building Banking and Finance

41. Bonus issue 42. Right issue 43. ESOS

44. Dematerialisation 45. Depository

46. Secondary market 47. 48. 49. 50.

1875 Sensex 50 1978-79

51. FII

© Reserved

52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80.

1992 Money market Notice money None of these Rs.25,000 RBI 3 Financial institutions Rs.100,000 Joint Stock Companies Rs.500,000 Lending rate of RBI to banks 10 years Fixed deposit receipt All the above SARFAESI Act Credit Card Dishonor of cheque Reserve Bank of India US Banks themselves April to March 1949 Bank of Baroda IDBI Bank 1969 Raghuram Rajan ICICI bank Mumbai Page 9