Banking Awareness Quiz with Explanation: Part 14

(1). Adjusting expenses for intangible assets over a long span of time is called
(a) Amortization
(b) Balloon Payment
(c) Call Money
(d) CAMEL



(2). What is the minimum amount of Certificate of Deposit(CD)?
(a) Rs. 50000
(b) Rs. 2 lakh
(c) Rs. 25000
(d) Rs. 1 lakh 


(3). When a company launch the share after IPO(Initial Public Offer), then it is known as
(a) FPO
(b) MSF
(c) NFO
(d) PLR 


(4). What is the maximum limit of SLR (Statutory Liquidity Ratio)?
(a) 30%
(b) 40%
(c) 50%
(d) 60% 


(5). Which of the following organisation is known as the Banter to The Government?
(a) World Bank
(b) IMF
(c) RBI
(d) SEBI 


(6). College of Agriculture Banking (CAB) was set up by
(a) Ministry of Agriculture
(b) RBI
(c) NABARD
(d) None of the above 


(7). What is 'M' stands for in the MSF (a monetary tool of RBI)?
(a) Money
(b) Monetary
(c) Management
(d) Market 


(8). The Banking Ombudsman Scheme was introduced under which of the following section of the Banking Regulation Act, 1949?
(a) Section 25 A
(b) Section 35 A
(c) Section 45 A
(d) Section 55 A 


(9). Which of the following is not a Benefit of CTS(related to cheques)?
(a) CTS speeds up the process of collection of cheques.
(b) It Reduces the scope for clearing-related frauds or loss of instruments in transit.
(c) Lowers the cost of collection of cheques.
(d) All of the Above 


(10). In order to protect the deposit of small depositors, Deposit Insurance Guarantee Corporation was set up by
(a) Finance Ministry
(b) IRDA
(c) RBI
(d) None of the above 


EXPLANATION:


(1). Answer Key: (a)
Amortization refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principal over time.

(2). Answer Key: (d)

  • CD- Certificate of Deposit
  • CD is issued by the bank
  • Minimum amount of CD is 1 lakh
  • Valid for minimum – 7 days
  • Valid for maximum – 365 days


(3). Answer Key: (a)
FPO (Follow on Public Offer)

(4). Answer Key: (b)
Bank have to maintain some part of their deposits in itself in the form of cash/foreign exchange, mutual fund. This is called SLR. Its maximum limit can be 40% and there is no minimum limit.

(5). Answer Key: (c)
RBI works as an agent of the central and state governments. On the behalf of government it makes payments, taxes and deposits etc. It also represent the government at international level also. It maintains government accounts and provide financial advice to the government. It also manages government public debts and maintains foreign exchange reserves on behalf of the government. RBI also provides overdraft facility to the government in case of financial shortage.

(6). Answer Key: (b)
RBI always tried to provide essential training to the staff of the banking industry. RBI has set up banker's training college at several places. The training institute namelyNational Institute of Bank Management (NIBM), Bankers Staff College (BSC), College of Agriculture Banking (CAB) etc.

(7). Answer Key: (c)
By MSF mechanism commercial banks can get loans from RBI for their emergency needs. Under the Marginal Standing Facility (MSF), currently banks avail funds from the RBI on overnight basis against their excess SLR holdings.

(8). Answer Key: (b)
The Banking Ombudsman Scheme was introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.

(9). Answer Key: (d)
The RBI has instructed all banks to implement the Cheque Truncation System (CTS) across the country.

(10). Answer Key: (c)
The RBI has set up the Deposit Insurance Guarantee Corporation in order to protect the deposit of small depositors. All bank deposits below Rs. 1 Lakh are insured with this corporation. The RBI work to implement the Deposit Insurance Scheme in case of a bank failure.
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