MODULE-I
Central Banks -Rbi

SECTION – A

Multiple Choice Questions

Question. The Reserve Bank of India was established on
(a) April 1, 1935
(b) July 12, 1982
(c) May 26, 2006
(d) September 30, 2005

Question.. On which commission’s recommendations; Reserve Bank of India was established?
(a) Chamberlain Commission
(b) Hilton Young Commission
(c) Keynes Commission
(d) None of the above

Question. Which among the following is incorrect?
(a) RBI is the Bank of Issue
(b) RBI acts as Banker to the Government
(c) RBI is Banker’s Bank
(d) RBI does not regulate the flow of credit

Question. Which of the following is true about the restrictions on RBI?
(i) It is not to compete with the commercial banks.
(ii) It is not allowed to pay interest on its deposits.
(iii) It cannot engage directly or indirectly in trade.
(iv) It cannot acquire or advice loans against immovable property.
(v) It is prohibited from purchasing its own shares or the shares of any other bank or any company or granting loans on such security.
(a) only (i),(ii),(iii), and (iv)
(b) only (v)
(c) all the above
(d) none of the above

Question. Which of the following is not the work of RBI?
(a) Bank of the banks
(b) Credit controller
(c) Custodian of foreign currency
(d) Allocating funds directly to the farmers for agricultural development

Question. Which of the following words is not used in Monetary Policy?
(a) Cash reserve ratio
(b) Repo Rate
(c) Bank rate
(d) Blue chip

Question. For issuing / printing currency notes, the RBI has adopted a system –
(a) Minimum Reserve System
(b) Fixed fiduciary system.
(c) Maximum limit system
(d) Proportional reserve system.

Question. The methods of credit control used by RBI includes
(i) Open market operation
(ii) Changes in CRR and SLR
(iii) Selective credit control
(iv) Changes in SLR
(a) (i), (ii) and (iii)
(b) (ii), (iii) and (iv)
(c) (i), (iii) and (iv)
(d) (i), (ii), (iii) and (iv)

Question. The full form of EMI used in the banking sector is
(a) Easy Monthly Installment
(b) Equal Monthly Investment
(c) Equated Monthly Installment
(d) Equated Mortgage Investment.

Question. Bank rate is decided by
(a) Reserve Bank of India
(b) Govt. of India
(c) State Bank of India
(d) Securities and Exchange Board of India (SEBI)

Question. The reserves held by the Commercial Banks over and above the statutory minimum with the RBI are called
(a) Cash reserves
(b) Deposit reserves
(c) Excess reserves
(d) Momentary reserves.

Question. Which of the following is true about the objectives of RBI trying to achieve-
(i) Price Stability
(ii) Reduce deficit
(iii) Encourage export
(iv) Growth
(a) Both (i) and (ii)
(b) Both (iii) and (iv)
(c) All the Above
(d) None of the above

Question. RBI has withdrawn the circulation of coins in the denomination of 1 paise, 2 paise, 3 paise, 5 paise, 10 paise, 20 paise and 25 paise in which year ?
(a) 2010
(b) 2011
(c) 2012
(d) 2013

Question. What would be the impact on cash reserves of the commercial banks if RBI conducts the sale of securities?
(a) Decrease
(b) Increase
(c) Either increase or decrease
(d) Remains contant

Question. Which of the following works as the agent of RBI while it has no own offices ?
(a) IMF
(b) SBI
(c) GOI
(d) Ministry of Finance

Question. Which of the following Governors of RBI also served as the Finance Minister of India ?
(a) Pranav Mukherjee
(b) Amitabha Ghosh
(c) Sir Benegal Rama Rao
(d) Dr. Manmohan Singh

Question. The commercial banks were required to keep some percentages of their time deposits and their demand deposits with the RBI in the form of reserves is known as
(a) Statutory Liquidity ratio
(b) Cash reserve ratio
(c) Moral suasion
(d) Open market operation

Question. Decreasing percentage of statutory liquidity ratio by RBI
(a) Increase the volume credits at the hands of commercial banks.
(b) Reduce inflation.
(c) Decrease the volume credit at the hands of commercial banks.
(d) Raise the interest rate charged by the commercial banks.

Question. If the RBI wants to control the speculation on the price of essential commodities, adopted a measure known as
(a) Open market Operations.
(b) Credit monitoring Arrangement
(c) Selective credit control
(d) Moral suasion.

Question. The RBI’s function of Banker to Government implies
(a) Issue of currency
(b) Buys and sells government securities
(c) Manages public debt by issuing government loans
(d) Sells treasury bills on behalf of government
(a) All of the above
(b) (a), (b) and (c)
(c) (b), (c ) and (d)
(d) (a), (c) and (d)

Fill Up The Blanks:

Question. The Board of Directors of RBI were appointed by __________.

Question. The first Headquarters of Reserve Bank of India (RBI) at_________.

Question. The first Indian RBI Governor was__________.

Question. Banking Ombudsman scheme was introduced by __________.

Question. In India, the monopolistic control of note issue is vested in_________.

Question. In India, Bank rate is fixed by ____________

Question. _________is the percentage of reserve that the commercial banks have to keep with the RBI from the time and demand deposits.

Question. _________is the rate at which the RBI borrows money from commercial banks.

Question. Under Banking Regulation Act, 1949, all commercial banks are required to keep some percentages out of the time and demand deposits with them in the form of liquidity ratio is known as _____________.

Question. A ____________is the interest rate at which the central bank in a country repurchases Government securities (such as Treasury securities) from commercial banks.

MODULE-II
Money & Commercial Banking

Multiple Choice Questions

Question. Which of the following is a commercial bank?
(a) State Bank of India
(b) Unit Trust of India (UTI)
(c) IDBI
(d) NABARD

Question. The recent conversion of Financial Institutions into Commercial Banks or Non-Banking Finance Companies (NBFCs) under the regulatory aspect of RBI was suggested by
(a) Narasimham Committee
(b) Ministry of Company Affairs
(c) Ministry of Finance
(d) None of the above

Question. In which year was the Banking Regulation Act passed?
(a) 1949
(b) 1955
(c) 1959
(d) 1969

Question. What is the most widely used tool of monetary policy?
(a) Issuing of notes
(b) Open market operation
(c) Discount rate
(d) None of the above

Question. Banking sector comes under which of the following sectors?
(a) Manufacturing sectors
(b) Industrial sectors
(c) Service sectors
(d) None of the above

Question. Which property the paper money does not possess
(a) Acceptability
(b) Divisibility
(c) Duality
(d) Portability

Question. Rupee is a coin
(a) Full Value
(b) Token money
(c) Credit money
(d) Convertible

Question. Which one of the following is not included in the function of money
(a) Make demand and supply
(b) Store of value
(c) Medium of exchange
(d) Measure of value

Question. Convertible money means
(a) It can buy means
(b) Government can give gold against it
(c) Illegal money
(d) Low value of money

Question. Which of the following limits the power of credit creation by commercial bank
(a) Fiscal policy
(b) Banking loan
(c) Business possession
(d) None of the above

Question. Deposits which arise from granting of loans are called
(a) primary deposits
(b) derivative deposits
(c) fixed deposits
(d) All the above

Question. The commercial bank do not perform one function out of the following
(a) Mobilization of saving
(b) Giving loans and advances
(c) Issues currency notes
(d) Financing priority sectors

Question. The following is not a type of liability
(a) Short term
(b) Current
(c) Fixed
(d) Contingent

Question. Accounting equation is base of
(a) Single entry system
(b) Dual concept
(c) Double entry system
(d) Costing measurement system

Question. Anything used as money must be
(a) Fixed in value
(b) Fixed in supply
(c) Legal tender
(d) Readily acceptable

Question. The assets can be convert into cash within a short period like one year or less are known as
(a) Current asset
(b) Fixed asset
(c) Tangible asset
(d) Investment

Question. Debentures is also name as
(a) share
(b) Bond
(c) Equity
(d) Reserve

Question. A bills of exchange when drawn requires
(a) Nothing
(b) Discounting
(c) Acceptance
(d) Investment

Question. Which of the following can change money supply
(a) National Assembly
(b) Supreme Court
(c) Government
(d) State Bank

Question. Which of the following increase money supply in the country?
(a) Purchase of bonds by State Bank
(b) Sale of bonds by State Bank
(c) Increase in discount rate
(d) Decrease in taxes

Fill in the blanks

Question. The Accounting equation is Asset + liability + ———————–
(equity/ shares/ bonds/ profit)

Question. ———– is considered to be the most liquid assets.
(gold/ money/ land/ bonds)

Question. Historically the Indian rupee was a ———— coin
(copper/ gold/ silver/ bronze)

Question. The bankers bank is the ———- bank
(central/ commercial/ foreign/ State)

Question. If the asset of a business is Rs 100,000 and equity is Rs 20,000 the value of liability will be ——–
(20,000/30,000/80,000/40.000)

Question. Net Income = Income — ————–
(expense/ saving/ investment/ multiplier)

Question. Introduction of ———— removed difficulties of barter
(metals/ bank/ money/ shares)

Question. ———– is a primary function of commercial banks.
(accepting deposits/ letter of credit/ selling securities/ bonds)

Question. Commercial banks create ———- money
(paper/ metallic/ commodity/ credit)

Question. Deposit from ——- account can be withdrawn without any notice.
(saving/ current/ fixed/ recurring)

MODULE –III
Non-Banking Financial Institutions

Multiple Choice Question

Question. The National Co-operative Development Corporation (NCDC) was established in
(a) march 1960
(b) march 1961
(c) March 1962
(d) March 1963

Question. ‘One man one vote’ principle in Co-operative Society was recommended by
(a) Gorwala Committee
(b) Mac Lagan Committee
(c) Minto Morley Committee
(d) Montaque Chelmsford Committee

Question. The Urban Credit Cooperative are also commonly known as
(a) Urban Cooperative Banks
(b) Cooperative Banks
(c) National Banks
(d) Non of the above

Question. Interest rate of Deposit of cooperative credit societies are fixed by
(a) Registrar
(b) Government
(c) RBI
(d) General Body

Question. Co-operative banks
(a) cannot create credit
(b) are of ‘unit banking type’
(c) cannot mobilizem\ deposit
(d) both (a) and (b)

Question. The Industrial Reconstruction Corporation of India (IRCI) was converted into a statutory corporation called the Industrial Reconstruction Bank of India (IRBI) in
(a) March 1982
(b) March 1983
(c) March 1984
(d) March 1985

Question. The first Development banks in India was
(a) IDBI
(b) ICICI
(c) LIC
(d) IFCI

Question. Which of the following organizations in India is mainly working to meet the credit needs of all types of agricultural and rural development?
(a) FCI
(b) NABARD
(c) IDBI
(d) UTI

Question. The land mortgage banks grant _______________ to the farmers against the conveyance of land as security.
(a) short term loans
(b) medium term loans
(c) long term loans
(d) short& medium term loans

Question. With the government take-off of all the life insurance companies in India, the Life Insurance Corporation of India (LIC) was formed in
(a) 1953
(b) 1954
(c) 1955
(d) 1956

Question. The Unit Trust of India (UTI) was set up in
(a) 1984
(b) 1994
(c) 1954
(d) 1956

Question. ICICI is a
(a) Public sector institution
(b) Private sector institution
(c) Joint sector institution
(d) World Bank’s institution

Question. Which one of the following institutions provide medium-term finance to industries?
(a) UTI
(b) LIC
(c) GIC
(d) Commercial Banks

Question. Among Mutual Funds Industry in India, the top and dominating position is held by
(a) QIC
(b) LIC
(c) IDBI
(d) UTI

Question. Venture Capital Fund provides
(a) long-term credit to industries
(b) short-term credit and medium-term credit to the farmers
(c) risk capital to little known, unregistered, young and small business
(d) All of the above

Question. Which was the first mutual fund established in India?
(a) SBI Mutual fund
(b) Unit Trust of India (1963)
(c) LIC Mutual Fund
(d) Venture Capital

Question. The IDBI at present is a
(a) subsidiary of RBI
(b) Subsidiary of IFC
(c) autonomous institution
(d) none of the above

Question. Which of the following is not a function of General Insurance?
(a) Cattle Insurance
(b) Crop Insurance
(c) Fire Insurance
(d) Medical Insurance

Question. Which one among the following promoted the concept of self-help groups (SHGs) for financing the poor.
(a) RBI
(b) NABARD
(c) Union Ministry of Rural Development
(d) Union Ministry of Labour

Question. Which one of the following is the main objectives of Unit Trust of India.
(a) To mobilize the saving of high income groups
(b) To mobilizes the saving of low and high income groups
(c) To mobilizes the saving of corporates
(d) To mobilizes the saving of low and middle income groups

Fill up the Blanks :

Question. In India, the first cooperative Societies Acts was passed in __________, by the Government of India.

Question. A ______________acts as a balancing centre and clearing house for the central cooperative banks.

Question. The members of a Co-operative Society have _______________liability.

Question. The agricultural Refinance and Development Corporation (ARDC), was established in 1963 to provide medium and long term finance for the development of Agriculture, but it was replace by ____________ in 1982.

Question. For promoting and developing exports and imports, an all-India level institution called ______________ was established in 1982.

Question. The IFCI and UTI are the subsidiaries of the ____________________.

Question. The State Financial Corporations are set up in the different states for providing term finance to medium and small scale Industries under the provision of ____________________.

Question.  ___________provides short-term , medium-term and long-term credits to state co-operative Banks , RRBs, LDBs and other financial institutions approved by RBI.

Question. All non-banking financial intermediaries with net owned funds of Rs.50 lakh and above are required to register themselves compulsorily with it in the__________________.

Question. A _____________ is a financial intermediary that pools the savings of investors for collective investments in a diversified portfolio of securities.

Question. __________________ is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.

Question. The Life Insurance Corporation of India Act was passed by ________________ , on September 1,1956.

MODULE –IV
Foreign Exchange Markets

Multiple Choice Question

Question. Which function of foreign exchange market protects against the foreign exchange risk?
(a) Credit function
(b) Hedging function
(c) Transfer function
(d) All of them

Question. Reduction in the value of domestic currency by the government is called
(a) depreciation
(b) devaluation
(c) revaluation
(d) appreciation

Question. Reduction in the value of domestic currency through market forces is called
(a) depreciation
(b) devaluation
(c) revaluation
(d) appreciation

Question. Foreign exchange is demanded by..
(a) domestic residents to purchase goods and services from other countries
(b) sending gifts and grants to foreign countries (abroad)
(c) the domestic residents to purchase financial assets in a particular country
(d) all of them

Question. The supply of foreign exchange comes from..
(a) the foreigners purchasing home country’s goods and services through exports
(b) the foreigners who invest in home country through joint ventures or through financial market operations
(c) currency dealers and speculators.
(d) all of them

Question. Buyers and sellers of foreign exchange are
(a) central banks
(b) commercial banks
(c) brokers
(d) all of them

Question. Which exchange rate measures the average relative strength of a given currency with respect to other currencies without eliminating the effect of change in price?
(a) Nominal exchange rate
b) Nominal effective exchange rate
(c) Real exchange rate
(d) Real effective exchange rate

Question. When one country manipulates exchange rate against the interest of other country, is known as
(a) managed floating
(b) dirty floating
(c) wide band
(d) crawling peg

Question. Indirect quotation is also known as
(a) home currency quotation
(b) foreign currency quotation
(c) European quotation
(d) American quotation

Question. If rupee is getting depreciated fast and is considered undesirable by the government, the RBI may be advised to
(a) Sell dollars in the foreign exchange market
(b) Purchase dollars
(c) Print more currency notes
(d) Raise tariffs on imports

Question. In a flexile exchange rate regime
(a) central government control the rate
(b) state government control the rate
© government do not have any intervention
(d)central bank control the rate

Question. A foreign currency account maintained by a bank abroad is its
(a) nostro account
(b) vostro account
(c) loro account
(d) foreign bank account

Question. The statutory basis for administration of foreign exchange in India is
(a) Foreign Exchange Regulation Act, 1973
(b) Conservation of foreign Exchange and Prevention of Smuggling Act.
(c) Foreign Exchange Management Act, 1999
(d) Exchange Control Manual

Question. Reduction in the value of domestic currency by the government is called
(a) depreciation
(b) devaluation
(c) revaluation
(d) appreciation

Question. Under fixed exchange rate system, the currency rate in the market is maintained through
(a) official intervention
(b) rationing of foreign exchange
(c) centralising all foreign exchange operations with central bank of the country
(d) none of the above

Question. Euro was launched on
(a) 1999
(b) 2000
(c) 2002
(d) 2004

Question. Indirect rate of exchange is quoted in India for –
(a) sale of foreign travellers cheque
(b) sale of rupee travellers cheques
(c) purchase of personal cheques
(d) none of the above

Question. A transaction in which the currencies to be exchanged the next day of the transaction is known as
(a) ready transaction
(b) value today
(c) spot transactions
(d) Value tomorrow

Question. The transaction in which the exchange of currencies takes place at a specified future date, subsequent to the spot date is known as a
(a) swap transaction
(b) forward transaction
(c) future transaction
(d) non-deliverable forwards

Question. The buying rate is also known as the
(a) bid rate
(b) offer rate
(c) spread
(d) swap

Fill In The Blanks:

Question. Convertibility of rupee refers to its convertibility into a _________as desired by its holder

Question. _________ rate system refers to a system in which foreign exchange rate is determined by market forces and central bank influence the exchange rate through intervention.

Question. Imports of goods and services raises the ___________ of foreign exchange

Question. Under FEMA, the RBI has been authorised to make _______ to carry out the provisions of the Act

Question. Reduction in the value of domestic currency by the government is called _________.

Question. Rupee is partially convertible on _________.

Question. Forward exchange rates involve the exchange of ________ at some specified future date.

Question. The starting point for understanding how exchange rates are determined is a simple idea called ________ which states that if two countries produce an identical good, the price of the good should be the same throughout the world no matter which country produces it

Question. Pegging operations refer to all efforts made by the _________ to keep the rate of exchange stable.

Question. For fixed exchange rate system, a Central Bank actively uses its ________reserves to maintain the officially determined exchange rate.