Indian Financial System - MCQs

1. Indian financial system comprises of both ———————-and ———————-sector.

Ans. organized and Unorganized sector.

2. SEBI was given legal status in the year————-set up in1988

Ans . 1992

3. Non-banking assets and Non-performing assets are synonymous term. (True or False)

4. The Indian money market does not deal in cash or money but in promissory notes, government paper.

True or False)

5. Mention one function of underwriters.

Ans: They ensure the sale of shares or debentures of a company

even before offering to the public.

6. RBI follows ————————— for issuing paper currency note.

Ans. Minimum Reserve System

7. Under —————of the RBI Act, the RBI issues notes.

Ans: Section 22

8. IFCI was the first development bank of India. It was established in ————

Ans. 1948.

9. The bill which does not require any acceptance is called —————

Ans. Promissory Note.

10. The company which sets up a mutual fund is called —————

Ans . Sponsor.

11. Sponsoring ————————-contributes 35% of the total share capital of the Regional Rural Bank.

Ans. commercial bank

(Govt. of lndia=50%, Sponsor banks=35% and State govt=15%)

12. Bank deposit is a non-marketable security.

Ans. True

13. Government bond is a long-term security.

Ans .True

14. Certificate of deposit can be issued only by commercial bank. Ans. False, can also be issued by Fls

15. Credit card is a prepaid card.

Ans. False

16. The Government of India set up the the Narasimham committee in ————-

Ans. 1991 .

17. Mutual Fund is an AMERICAN concept.

18. A development bank does not accept deposits from———.

Ans. public

19. Industrial development bank of India is a wholly owned subsidiary of—————.

Ans. RBI. lt was established in 1964.

20. The …………..has been set up to Protect interest of the investors in company and Regulate the working of stock broker.

Ans. SEBI

21. Commercial banks are allowed to enter into insurance business by————————.

Ans. The IRDA Act of 1999

22. NABARD was established in the year———-

Ans. 1982.

23. The Reserve Bank of India is managed by———————-

Ans. GOVERNOR.

24. Treasury Bills are instruments of ————-market.

Ans. MONEY

25. Financial market comprises of Capital Market and Money Market. TRUE

26. The main function of mutual funds is to mobilize the savings of the general public and invest the same

in the stock market securities.

Ans. TRUE

27. Financial institutions are also termed as—————————.

Ans. FINANCIAL MARKET

28. Primary market refers to the long-term flow of funds from the surplus sector to the government and Private sector through primary issue of ———————————

Ans. equity and debts.

29. Treasury Bills, Commercial papers, Commercial Bills are one of the instruments of money market.

Ans. TRUE

30. Bull, Bear, Stag and Lame Duck are the speculators who are active on Stock Exchange of India.

Ans. TRUE

31. Capital market deals with buying and selling of long term investible fund and money market deals with————————-

Ans. short-term funds.

32. RBI acts as a lender of last resort in Indian banking system.

Ans . TRUE

33. The company which set up a mutual fund company is called ——————

Ans. Asset Management company.

34. Indian Commercial Banks are categorized into:a) Public sector Banksb) Foreign Banksc) Private Sector Banksd) All of the above

Ans . D

35. Regional Rural Banks have been set up with the basic objectives of:a) Providing credit to semi - urban & urban populationb) Providing deposits facilities to farmersc) Providing credit & deposit facilities to rural areasd) Providing credit, deposit and other banking facilities to people in rural areas

Ans. D

36. Interest on Government securities on fixed basis is known as:a) Bank rateb) Couponc) Prime Lending Rated) Bench mark PLR

Ans. B

37. —————-was not nationalized in 1969:a) Punjab National Bankb) Oriental Bank of commercec) Bank of Barodad) Union Bank of India

Ans. B

38. In the first round 14 major banks with a liability base of ____ were nationalized:a) 10 crore or moreb) 20 crore or morec) 50 crore or mored) 100 crore or more

Ans C

39. What is meant by development Oriented banking?a) Infrastructure financingb) Extending loans to States, which are un-developmentc) Taking up the task of development of the economy by providing support to under privileged sections of the societyd) All the above

Ans. C

40. Principal functions of SIDBI:a) Promotion of SSIb) Finance of SSIc) Development of SSId) All the aboveAns. D

41. Regulatory Authority for Regional Rural Bank is of___________(a) RBI and NABARD(b) NABARD(c) RBI(d) State Government

Ans. A

42. The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following?1 Other bank retains their deposits with the RBI.2 The RBI lends funds to the commercial banks in times of need.3 The RBI advises the commercial banks on monetary matters.Select the correct answer using the codes given below:

a) 2 and 3 onlyb) 1 and 2 onlyc)1 and 3 onlyd)1, 2 and 3

Ans. B

43. Consider the following statements:

1. Payment bank cannot issue credit cards

2. There is a limit on maximum balance of individual customer in payment bank

3. SLR requirements for payment banks and small banks is less than commercial banks

4. Priority sector lending up to 40% is mandatory for both private banks and small banks

(a) 1, 2, 4 correct

(b) 3, 4 correct

(c) 1, 2 correct

(d) 1, 3, 4 correct

Ans. C