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
