- Which entity is authorized to issue currency notes of Rs. 2 and above in India? a) Government of India
b) Reserve Bank of India
c) State Bank of India
d) All of the above
Answer: b) Reserve Bank of India - What is the primary function of “open market operations” conducted by the RBI?
a) Lending to commercial banks
b) Managing scheduled banks’ loans
c) Buying and selling government securities
d) Facilitating central government bond trading
Answer: c) Buying and selling government securities - Merchant Banking primarily facilitates financing for:
a) Domestic wholesale businesses
b) International trade transactions
c) Retail sector expansion
d) Non-profit aid organizations
Answer: b) International trade transactions - The term “gilt-edged market” in India’s financial system is associated with:
a) Long-term private investments
b) Trading of existing securities
c) Corporate securities transactions
d) Government securities market
Answer: d) Government securities market - Which organization regulates credit supply and controls money flow in India?
a) Regional rural banks
b) Commercial banks
c) Reserve Bank of India
d) State Bank of India
Answer: c) Reserve Bank of India - The responsibility of formulating India’s monetary policy lies with:
a) Ministry of Finance
b) Reserve Bank of India
c) Securities and Exchange Board of India
d) Company Law Board
Answer: b) Reserve Bank of India - Which of the following is NOT considered a qualitative credit control tool of the central bank?
a) Cash Reserve Ratio
b) Consumer credit regulation
c) Margin requirement adjustments
d) Selective credit control
Answer: a) Cash Reserve Ratio - The financial market that provides short-term borrowing and lending options is called:
a) Reserve Market
b) Institutional Market
c) Money Market
d) Exchange Market
Answer: c) Money Market - Which regulatory body oversees credit rating agencies in India?
a) Reserve Bank of India
b) Securities and Exchange Board of India
c) Hindustan Computers Limited
d) Infosys
Answer: b) Securities and Exchange Board of India - Who owns and controls Regional Rural Banks (RRBs)?
a) Central Government
b) State Government
c) Sponsor Bank
d) A joint partnership of all the above
Answer: d) A joint partnership of all the above - What does SIDBI stand for?
a) Small Industrial Designed Bank of India
b) Small Industries Development Bank of India
c) Small Innovations Development Bankers Institute
d) Small Industries Development Banker Institute
Answer: b) Small Industries Development Bank of India - Which institution acts as the “Lender of Last Resort” in India?
a) State Bank of India
b) Industrial Development Bank of India
c) National Bank for Agriculture and Rural Development
d) Reserve Bank of India
Answer: d) Reserve Bank of India - A high Statutory Liquidity Ratio (SLR) has what impact on banking operations?
a) Restricts lending
b) Expands cash availability
c) Provides financial assistance to states
d) Strengthens banks’ financial positions
Answer: a) Restricts lending - What is the primary goal of monetary policy?
a) Enhancing government tax revenue
b) Strengthening the Public Distribution System
c) Ensuring economic growth with stable prices
d) Eradicating corruption
Answer: c) Ensuring economic growth with stable prices - Which sector is a priority for commercial bank lending in India?
a) Heavy Industries
b) Agriculture and Small-Scale Industries
c) Foreign Companies
d) State Government in emergencies
Answer: b) Agriculture and Small-Scale Industries - The term “Smart Money” is commonly used to refer to:
a) Credit Cards
b) Internet Banking
c) Electronic Banking
d) Cash in circulation
Answer: a) Credit Cards - Gresham’s Law is associated with:
a) Consumer demand trends
b) Market supply mechanisms
c) Money circulation in an economy
d) Deficit financing strategies
Answer: c) Money circulation in an economy - Which of the following is NOT a component of India’s monetary policy framework?
a) Repo rate adjustments
b) Moral suasion techniques
c) Credit Rationing policies
d) Public debt management
Answer: d) Public debt management - Which of the following is NOT a recognized credit control tool in India?
a) Credit rationing
b) Direct regulatory action
c) Open Market Operations
d) Variable cost reserve ratios
Answer: d) Variable cost reserve ratios - Banks offer loans at their lowest interest rate to their most creditworthy clients under:
a) Prime Lending Rate
b) Statutory Liquidity Rate
c) Bank Rate
d) Repo Rate
Answer: a) Prime Lending Rate - If the “Bank Rate” is reduced, what is its impact on credit availability?
a) Increases credit supply
b) No change in credit flow
c) Decreases credit availability
d) No significant impact
Answer: a) Increases credit supply - “Bank Rate” is best defined as:
a) Interest paid on public deposits
b) Rate at which the central bank lends to commercial banks
c) Interest on government loans
d) Rate at which banks lend to their customers
Answer: b) Rate at which the central bank lends to commercial banks - How does a lower Cash Reserve Ratio (CRR) affect bank lending?
a) Expands lending capacity
b) Restricts lending options
c) Weakens lending capability
d) Reduces cash reserves
Answer: a) Expands lending capacity - What enables commercial banks to create credit?
a) Securities they hold
b) Their available assets
c) Stock market investments
d) Deposits from customers
Answer: d) Deposits from customers - NABARD is classified as a:
a) Commercial Bank
b) Financial Institution
c) Specialized Agricultural Bank
d) Non-Banking Financial Institution
Answer: b) Financial Institution - Which of the following is NOT a quantitative credit control measure?
a) Bank Rate Policy
b) Open Market Operations
c) Cash Reserve Ratio
d) Moral Suasion
Answer: d) Moral Suasion