CAIIB MCQs for practice

HRM IN BANKS
1. HRD environment eventually means actions, tendencies and commitments which supports.
a. openess and risks taking b) Proactivity and autonomy c) Collides with each other d) Only (a) + (b)
2. Prerequisites for HRD is/are- a) Examining appraisal systems b) Selection of chiefs for HRD among senior officers
c) Executive is made/leader d) Both (a) and (c)
3. What are the requirements for effective of HRM?
a. Posting of staff with appropriate skills and capabilities
b. Identify long term trends in the supply and demand for staff and plan accordingly
c. Incorporate employee performances in the deployment process/ ability to make changes in the staffing pattern
d. Giving continuous training to employees
4. Public Sector Banks whether business unit or HRD have any role in selection of candidates?
a. HR is solely responsible for staff management b) HR is primarily responsible
c) HR and Business units are jointly responsible d) Business units are solely responsible
5. For Management Development Programme course contents includea.
Organisation/management principles/human relations b) Skills for other's development
c) Behavioural aspect of Management d) Both (a) + (b)
6. HRD practices in banks include- a)Staff meetings/Quality-Circle b) Brain Storming Sessions/Study Circles
c) Both (a) + (b) d) Executives Meeting
7. Where the most of jobs in banking are monotonous/ repetitive and routine, what is the role of the HRD department?
a. empower employees through motivation organisational structure
b. engage employees through systems and procedure
c. emergiges employees through need to focus greater attention d) All above
8. If the challenges faced by banks is on sustaining profit and business development, then what are the related issues?
a. Improving skill sets with the staff b) build a casual marketing staff
c) Slowly and steady develop skills to match the business priorities d) Both (a) and (b)
9. To sustain and improve the profit volume and margins, banks have to doa.
Developing new areas of business/improving service quality
b. Increasing operational effectiveness/deepening customer base,
c. Both (a) + (b) d) To continue traditional way of delivery channels.
10. Labour Welfare Officers appointment were first started undera.
Factories Act, 1948 b) Companies Act, 1922
c) Employees Provident Fund Act d) Industries Development (Regulation) Act
11. The general functional areas of personnel can be grouped
a. determining the staffing/measuring performance and developing potential
b. maintaining effective personnel management relationships
c. anticipating and coping with organisational changes d) All above e) Both (a) + (b)
12. The role of HRD personnel is toa.
description of entire process/analytical decomposition b) identification of HRD elements and resources
b. Both (a) + (b) d) Analytical decomposition only
13. The primary goal of HRD isa.
To increase productivity of workers/and organisational profitability
b. Improve workers' skill and enhance motivation, to prevent obsolesces at all levels
a. prevent obsolescence and increase organisational profitability only d) Both (a) ± (b)
14. To achieve, workers increased productivity and organisational profitability, the role of a HRD manager isa.
to assist employees in obtaining knowledge/skills b) to play enabling role for providing the right context
a. Intervention on individual and organisational effectiveness c) Both (a) and (b) d) All above
15. There are various roles of a HRD officer as per American Society for Training and Development. Which are 3 important among
them?
a. Administrator's/evaluator's/career development advisor
b. Supporting individual's work/managing staff, unions discussion/ watching organisational behaviour
c. Leader's/facilitator's/provider of instructional material from management's role
d. Needs analysat's/organisational's change/basing decisions on traditional method's roles.
16. Under HRD Officer's role, for providing co-ordination and support services, for the delivery of HRD programme, is calleda.
Administrator's role b) Leader's Role c) Market role d) Need's analysists role
17. What activities are covered under HRD Officer's role or Researcher?
a. Identifying developing and testing new theories concepts and their implications
b. Identifying theories, concepts and technologies models
c. Developing and testing hardwares d) Testing and translating implications
18. For which activities, knowledge and internal skill, HRD consultants are appointed?
a) Training and management development programmes TQM/ISO:9000/quality circles/BPR/Benchmarking
b) Value engineering/Just in time/total productive maintenance/six sigma, c) All above d) Both (c) and (b)
19. Vedas say that there are 3 pathway for anyone, to opt under HRD. Which are to be opted by a HRD Manager?
a. Brahmajnaan prayaanam/dharma jhaana prayaraanam/Karma ]naana prayanam
b. Brahma Jnaana/Dharma c) Dharma/Karma d) Brahma/Karma
20. State the practical managerial principles from Vedas for HRD
a. Asathos Maa Sat Ga mayafTamaso maa 3yotir Gamaya/Mruthyormaa Anutham gamaya
b. Saha naa Vavatu/Saha naa Bhumktu
c. Satyaan no pramadithvyam/Bhadram Kernebhi Srunuyaam deva
d. All above e)) Both (a) + (b) only
21. Vedas lay great emphasis on proper Human Resource)..
a. Development b) Remuneration c) Practices d) Management
22. For personality development, what personality traints are prodminant in Vedas?
a. Annamaya + Pranamaya + Mano Maya + Vijananamaya + AnandaMaya
b. All above except manomaya c) All above except pranamaya + Vijnanamaya
d) All above except Anandmaya + Manomaya
23. Among the 5 types of personality traits in vedas, which is the most commonly observed phenonenon?
a. Annamaya (Physical + Materiaslistic) b) Pranamaya (enargetic + action oriented)
c) Mamomaya (emotional + sentimental) d) Vijnanamaya (Intellectual + Judgmental)
e) Anand Maya (Creative + Visionary)
24. Vedas have got Varnas and competency (classes) based on the core principle of division of work (because of varying mental
temperaments. Such varnas area.
Brahman b) Khastriya c) Brahman + Khastriya + Vaisya + Shudra d) Shudra
25. Why such varna's were created in Vedas, based on which type of labour expertisation for Brahman?
a. Admministrator'execution/Governance b) Planning / advisory services / consulting / preaching
c) Service / physical labour d) Trade / Service / Manual Labour
26. Prodominant quality in each division of labour is different. What are predominant qualities for Ksastriya Varna?
a. Rajas - Tamar - Satva – Tamas b) Tamas – Satva c) Rajsik d) Tamsik
27. Vedic division of labour is meant for selecting any vocation or job that suits one's inherent
a. Mental temperament b) Birth c) Specialization d) Treatment
28. Vedic management structure (Asrama) in a business organisational environment depends on which dimensional approach?
a) Brahmachari/Grihastha/Vanprastha/Sanyasi
38 .
b) ManagementTrainee/ Manager/ director/ management consultant Student / married person / forest hermit / world renouncer
c) All above have same meaning d) Only (b) (c)
29. In Vedic management structure Grihastha asrama represents -
a) Learning of management practices b) Learning of job under guidance of Grihastha
c) Middle and senior level manager who performs the job d) Top level management responsible for visioning
30. Under Vedic management Sanyasi refers toa)
neutral and independent management consultant
b) experienced executive, who has disassociated with any kind of job
c) broad policy layer for healthy corporate culture d) Guides and facilitates the work of Grihasthas
31. Leadership is the -
a. ability to influence other people b) ability to create within people an urge to do
c) ability to obtain willing co-operation of the followers d) All above e) Only (a) + (b)
32. A leader is concerned with- a)Task b) Individuals c) Groups d) Task / individuals and groups
33. There are various styles of a leadership which one is most useful? –a)1.1 style b) 1.9 style c) 9.9 style d) 9.1 style
34Leadership style of 1.9 type means -
a. having high concern for people and low for tasks
b.having low concern for people and also low for tasks
c. having equal high concern for birth task and people
d. having high concern for task and low concern for people
35. What is meant by Building Teams? –a)A common group b) A cohesive group c) A command group d) A correlated group
36. A team is evaluated on features like- a)Co-operation / confrontation avoiding / common objectives
a. Openess of view and unwritten procedure systems, b)Regular review/appropriate leadership d) All above
e) Both (b) + (c)
37. In building teams thing are evalulated on the basis of various features. While interacting with each other there would be
differences and misunderstandings, which are discussed to clear up, what it is called?
a. Openess b) Confrontation removal c) Support and trust Co-operation
38. In building team, what members do to clarify and improve working. This is calleda.
Grievances settlement b) Regular Review c) Audit d) Supervision
39. What is intended in change?
a. Implying adaptation and transformation b) Improve effectiveness and should be appropriate
c) Both (a+) + (b) d) Transformation and appropriateness
40. The major elements of an organisation are?
a. Goals/structure/technology and people b) Targets/profitability/mechanisation
c) Result oriented goals/human resource management d) Both (b) + (c)
41. Management of change is concerned with context of
a. Organisation (inner and outer) / time of sequence b) Change c) Process of implementing change
d. All above e) Both (a) + (c)
42. In the context of organisation process of change includesa.
Trade unions / Government policy b) Political situation, popular opinion and all in (a)
c) Adaptation to environment d) Drift
43, The most common manifestations of drift area.
Strong departmental perceptives as against conflicts
b. diffused contracts / low morale of employees / rigihtidity in style of functioning + all in (a) above
c. High accommodation in inter personal relationship d) All above
44. Changes in management may relate to which element of the system?
a) Goals - workgroup – skills b) b. Role relationship - updated technology - service functions and (a) above
c) structure-management styles-information systems-wages and incentives + (b) above
d) Loss of power I influence/status
45. Why there is resistance to change?
a) Loss of power - loss of influence - loss of status b) b. Loss of opportunities growth or career + (a) above
c) Inability to acquire new skills inability to fit in to new roles + (b) above
d) inconvenience in new working conditions and more burden and responsibility + (c) above
e) Only (c) + (a)
46. The resistance to change can decrease by -
39 .
a. Competent authority who directed for change b) authority is untrustworthy, promises are incredible
c) authority is seen as now sensitive to difficulties and concern of subordinates
d) When one is afraid for penalty if mistakes are made
47. Is there any system, by which resistance to change can be reduced?
a. by dose monitoring and guidance b) by success achieved by those who innovate being made known to others
c) both (a) + (b) d) Resistance can not be reduced
48. When superior uses his/her authority to make decisions and announces what he/she expects from others is calleda.
Unilateral approach to change b) Shared approach to change
c) Delegation approach to change d) Shared and delegated approach to change
49. In group discussions, in which groups are given wide latitude to diagnose problems or to choose from alternatives is called
approach to change) – a) Unilateral b) Shared c) Delegation d) All above
50. An approach to change which lays emphasis on the subordinates reaching decisions, on their own is calleda.
Delegation b) Shared c) Unilateral d) Both (b) + (c)
51. What is required to be done, when change management helps an organisation to stay on top of changes bya.
Building resilence b) Focus on critical issues and avoid energy description
c) Anticipate opportunities to become more competitive and manage in a climate of uncertainty, d) Only (a) + (c) e) All above
52. The main activities of change management area.
Filtering changes/managing changes/management reporting b) Reviewing and closing of requests for change
c) All above d) Providing management information
53. There are various conditions for change management. Tick minimal 3 such conditions :
a. Ability to notice weakesses/top management commitment with grant of services/appointment of staff non-renewable period
b.Monitor changes at specific stages/experience of early success/ no deal in context of local situation,
c. Trust and candour rests with juniors/ensures non diversion of direction under day to day work/staff to oversee the implementation d)
All above
54. For Total Quality Management (TQM) the required qualities are :-
a. Understand customer's current and future needs/leaders establish unity of purpose/involvement of people for organisation's benefit
b. achievement of desired results when resources and activities are managed as a process and (a) above
c. Mutually beneifical suppliers relationships enhances the ability to create value and (b) also
d. Should have a temporary objective of the organisation
55. What management system are available for TQM?
a. Organisational management system b) Human resource management system
c) Total quality management system d) All above
56. Business Process Re-engineering is all abouta.
Searching new/business process
b. Implementation new/business process to achieve breakthrough results + (a) above
c. Fundamentals rethinking and radical redesign of business process + (b) above
d. It involves, going back to beginning and forget the earlier growth
57. The characteristics of BPR area.
Structure to process orientation/business process/customer oriented/benchmarking of BPR
b. Number of business process varies/owning of responsibility/holistic view of process/role of LT
c) All above d) Some of (a) and some of (b)
58. Continuous improvement and radical innovations in order for reduce time and cost with enhancement of organisational
flexibility and customer satisfaction is the feature ofa.
TQM b) BPR c) ISO 9000 d) Benchmarking
59. A system which cuts across functions/departments and boundaries of organistion, to achieve organisational goals, is known
a. Quality Circle b) TQM c) BPR d) All above
60. In business and financial institutions, to manage the volume of transactions, to improve the quality standards of service to
customers and introduce new products or services, is named as
a. Customer Service b) TQM c) Quality Circle d) Role of I.T. in BPR
61. Objectives of BPR is/area.
cost reduction/time and space shrinkage/quality enhancement
b. work life average/profit improvement/survival in present
c. Time and space enhancement/cost increase/increase customer satisfaction
d. Simply process for employees/maintain market share at quality dilution
62. Define the basic steps needed in BPR
a. Implementation of traditional process/designing and preparing a prototype of new process
40 .
b. Implementation of new process/reviewing and evaluating the progress.
c. Identification of IT. levels/discarding the existing processes
d. Development of business vision keeping the old objectives
63. BPR is a pre requisite for banking ina)
Core Banking Solutions b) Total Banking Solutions c) Networking d) All above
64. BPR in banking and finance aims ata.
Considerably reduction in the time lag of deliverables
b. Undertake transactions much more conveniently and improving profitability
c. Enhancement of business prospects and retention of clients d) All above e) Both (b) + (c)
65. Banks do, by popularizing LT. based delivery channels, for reduction in transaction costs?
a. Telebanking b) Kiosks/Internet banking + (a) above
c) Remote customer enquiry terminals + (b) d) Phone banking only
66. Considerations, which are required to be thought before adopting BPR in banks?
a. Type of customer service improvement/their impact on performance
b. Total cost savings achievable/reduction in time cycles/unsuitability of present process + (a) above
c. Commitment by top management to re-engineering/support of employees/reasonable time limit for re-engineering process + (b)
d) Low feasibilty success
67. Common illness in BPR area.
Resources used only to cope with crises/large number of errors and rework/numerous signs off
b. Lower ratio of total process time/normal complexity as a result of changes
c. Mountains of paper work/reports and files/rising customer complaints and system break down
d. Both (a) + (c)
68. Barriers to BPR area.
Fear of employees and managers/employees sufferloss of morale
b) Willing acceptance by employees/adequate knowledge and skills
c) Benefits poorly communicated/resistance by employees/ organisational overload and lack of resources + (a) above
d) All above
69. Implications of benchmarking technique used are for
a. Quality management b) Human resource management
c) Search for best practices + (a) d) Customer service with no difference
70. Benchmarking meansa.
Copying ideas from competitors b) search for those best practices that would lead to superior performance c)
Systematic and continuous measurement process d) All above
71. An examination of a competitors, product to see addition of new features and use of new process by them is called
a. Reverse engineering b) Process benchmarking c) BPR d) Combination of all
72. State the benchmarking process which does not necessarily lead to learning is called
a. Process benchmarking b) Xerox benchmarking c) Reverse engineering d) Internal Engineering
73. A process which is aimed at understanding how a corporate's processes perform in comparison to competitors, is called -
a. Process benchmarking b) TQM c) ISO 9000 d) Quality Circle
74. Which type of process benchmarking with indirect competitors in the banking/financial and insurance services may be much
better. The risk of legal action and accusation of collaboration are probably lessa)
Internal b) Competitive c) Out of Industry d) All above
75. To facilitate the international exchange of goods and services formation of standardisation in done bya.
Central Government b) ISO-9000:2000 c) BPR d) Quality Circle
76. ISO 9001:2000 specifies requirements for
a. Quality Management b) Performance improvements , c) Certification on the basis of parameters d) All above
77. Guidelines for standardised performance improvements are known bya.
ISO 9002:2000 b) ISO 9001:2000 c) ISO 9004:2000 d) ISO 9003:2000
78. In ISO 9000:2000 the various sections of standardisation area.
Activities used to supply products b) Quality management/Management responsibility
c) Resource management and measurement analysis d) All above
79. Quality Circle is a circle ofa.
Quality conscious people organised for quality improvement and work environments
b. Small voluntary group of people, from same work area for solving work related problems
41 .
c. Quality circle is an important management tool in the management for increased employee motivation and productivity
d. d) All above are the same
80. Which are the areas, where quality circle plays its part in customer service, in banks?
a. Reduction in transaction time/timely payment of pensions
b. Balancing of books/efficient functioning of ledger posting machine
c. Growth in resident deposits/recovery of monthly instalments of recurring deposits
a. Employment of staff on busy days/easy availability of vouchers/ form
81. What role the QC has in recovery of Non-Performing Assets of the bank?
a. Recovery of entire NPA b) Recovery of agricultural advances
c) Recovery of weaker sector advances d) Recovery of SME advances
82. All types of prevention of frauds is done by QC exercises. How far true?
a. All frauds prevention b) Frauds where outsiders are involved
c) Fraud preventation in outstation cheques sent for collection not under CBS,
d) Systematic change of duties of clerks/officers. e) Both (c) + (d)
83. What is easily, possible under QC for optimium utilisation of manpower?
a. Saving manhours/employment of staff on busy days overcoming shortage of peons/ improvement in arrangements within
the branch.
b. All of (a) above except overcoming shortage of clerks and officers.
c. All as in (a) except employment of staff on busy day and shortage of peons and clerks
d. Nothing since this is the job of the management
84. What QCS do for the providing of amenities to customers?
a. enough seating arrangement/easy availability of vouchers/necessary firm and stationery to customers
b. drinking water facility + all above
c. drinking water facility to staff and not to customers + all above as in (a)
d) easy availability of vouchers/forms to customers only
85. Is it possible to do any thing under QC for the personal growth of staff?
a. Improvement in job knowledge/increasing general awareness of staff
b. Better security to staff during working hours
c. Improvement in job knowledge is the work of employees' unions, rest of (a) (b), c) Both (a) + (b)
86. What is not in the scope of the QC?
a. Cleanliness in the premises/beautification of branch
b. Guidance to illiterate and new customers especially school children
c. To transfer the unwanted employee/officers from the branch
d. To discuss their problem of increment/promotion and overloading in work e) Both (c) (d)
87. It is now well appreciated by the corporate world, that the customers have their rightful expectations to buy quality products
at competitive price) For improving the bottom line (profit) synergy between their two can be calleda.
QC b) TQM c) Six Sigma practices d) BPR
88. Designing and monitoring business activities to minimise waste and resources without compromising with customer satisfaction,
is in which quality practice?
a. TQM b) Six Sigma c) Quality Circle d) All above
89. What does differentiate six sigma with TQM?
a) Defects free b) Less Quality c) Good Quality d) Better Quality
90. Success of any bank or financial institution is measured in terms ofa.
Market Share b) Profit c) Size d) All above
91. HRD department's work includes employees'
a. Selection/placement/induction/training/objective
b. Performance appraisal/career planning/potential development
c. Some of as in (a) and some as in (b) d) Both (a) (b)
92. What are the major challenges in bank's merger and acquistions-human due diligence?
a. Teams are cohesive groups
b. All groups are teams
c. Building team means one man output is another man's input, the another person being the external customer
d. Members of the team cooperate with each other this implies that they do not show concern and adjust to each other
93. Members of the team take responsibility, for the team as a whole only if there isa.
Co-operation b) Support and trust c) Common objective d) Appropriate leadership
94. Certain traits are essential for
42 .
a. Effective leadership b) Help in effective leadership c) Goal clarity d) Help produce result
95. The leadership function is exercised by
a. The formal leader only b) Members other than the formal leader
c) Leaders to produce result d) Members to have goal clarity
96. Which of the following cause fear and resistance to change?
a) Shift away from your close friends b) Change in Junior c) Decrease workload d) Irresponsibility
97. Which of the following helps to reduce resistance?
a. Learning the new skills b) Juniors are sensitive to concerns of subordinates
c) Information about negative results experienced elsewhere d) Both (b) (c)
98. The levels at which the changes takes placea.
Attitude of the group b) Knowledge at individual level
c) Behaviour level of individuals/organizational d) Both (a) + (b)
99. Change may also be resisted because one does not likea.
Initiation of the change b) Principles not justifying the change
c) Purposes sought to be achieved by the old system d) Both (b) (c)
100. The motivation to try out the changes improvesa.
Mission clarified and accepted b) Values are not shared
c) Feeling of some liberty on the change agenda d) Sense of more liberty without responsibility or without any status
101. What are the expectations from HR department?
a. Change a fact of corporate life b) Employee satisfaction c) Employees commitment d) All above
102. Why people/employees of an organisation leave?
a. Valve-perceived worth to an organization b) Equity-perceived worth compared to other individuals
b. Finances-ability to maintain certain standard of living c) All above d) Both (a) + (c)
103. Employees who leave any organisation due to reasons ofa,
Jealousy due to non recognition/favourtism-person may be singled out to receive less
b) Anomaly-payment for attendance only/twisting precedent-nor recognition of similar actions in future
c) Both (a) + (b) d) Favouratism only
104. What is the object, under performance appraisal of the employee, in any organisation?
a. Avoid discimination in ranking the personnel b) Avoid professionalism to base the career of the personel
c) To assess as per whims of the seniors d) To assess as per exit policy of the organisation
105. Pension is given to employee fora.
Loyalty and compliance b) Susistance amount for old age
c) Not working any other organisation lower in rank d) Meet out the old age diseses expenses
106. What is most appropriate for keeping employees in an organisation?
a. Extrinsic reward only b) Intrinsic motivation
c) Guaranteed employment without career d) Possibility of getting pension after retirement
107. To produce optimum quality in banking industry, what is essential?
a. Extrinsic factors b) Intrinsic factors as beauty c) Both (a) + (b) d) Competition among employees
108. Human due diligence means investigation ofa.
Management team/staff b) Structure/issues/managerial capacity of a potential partner
c) Both (a) + (b) d) Financial due diligence
109. In mergers and acquisitions of banks in India, what are steps essential before M & A?
a. Inclusion of 1-IRD managers is core strategic team b) Analysis and offer to evaluate the fitness of companies
c) Transition and integration to be known to employees d) Both (a) + (b)
110. Discuss the fundamental is human due diligence?
a) Concrete and sound HR guidelines/motivation/suitable reward systems
b)neverance for management and staff/managerial competence/ training needs/feedback and learning devices
c)Internal alignment during integration/expendable skills of the potential bank/non availability of resources
d) Both (a) + (b) only
111. Human capital plays constructive role in M & A process. What is required for its effectiveness?
a. ensuring effective communications
b. achieving cultural alignment + formation of mobile team of transition executives + (a) above
c. treating those leaving with same respect and attention as those staying d) Both (b) (c)
112. What are the issues/constraints in CBS vis-a-vis involvement of FIR?
43 .
a. Out sourcing vs. recruitment for special task b) High average age of the employee/pruning of staff
c) Training, re-training seeds vis-a-vis low appetite of acquiring new skills d) All above
113. Important features of knowledge area.
Does not suffer from scarcity/location no longer matters
b. Trade business, laws, taxes etc, cannot be applied easily +knowledge is difficult to quantify
c. Both (b) + (a) , d) Knowledge is difficult to quantify + (a) above
114. Knowledge management refers for critical issues of
a. Organisational adaptation b) Survival and competence against discontinuous environmental change
c) Synergisticscomination of data and information processing capacity d) All above e) Only (a) + (c)
115. Knowledge management is the process of -a)Identifying knowledge resources b) Organising knowledge resources
c) Manazing + Organisating + Identifying the knowledge resources d) Only (a) + (b)
116. In the process of implementation and scaling up, banks have faced variety of difficulties, such as
a. Snapping of connectivity/errors in software b) Slowdowns/down time/wrong entries in customer accounts + (a) above c)
Natural disasters like floods, earthquakes d) Fine tune contingency, planning and operational risk
117. The importance of training in banking sector depends upon the sense of seriousness ofa.
Chairman & Managing Director b) Executive Director c) General Manager HRD and training, d) Reserve Bank of India
118. Banks have diversified platforms to deliver training such asa.
Classroom b) Business games/simulatious/online learning c) On job training/structured mentoring/coaching
d) All above e) Only (a) + (c)
119. In order to add value, training needs to be –a) Measured b) Invested c) mentored d) disseminated
120. When can a bank employee be constructed as having professional attitude?
a. When punctual/respects the valuable time of others b) Follows the superior instructions/observant and responsible c)
Representative of his/her organisation's goodwill d) Both (a) to (c)
121. Demographic vairables do not influence the bank employees' overall work related attitude, such as a.Age/income/length of
service, b.Gender/educational qualification/ownership of bank
c. Length of service/income amount/cadre d) They do influence the attitude on all above
122. What influences the bank employees' attitude on work culture?
a. Educational qualification b) Ownership of bank c) Location of the branch d) All above e) Only (a) + (c)
123. What is the major change in Public Sector Banks, after globalisation?
a. Shed off their traditional attitude b) resorted to aggressive marketing
c) Used better technology and customer orientation as against private sector banks
d) Success depends on the ability of banks for financial potential
124. Foreign banks are allowed to function in India, but this has led to- a)Restoration of PSBs net worth b) high level of transparency
c) Indigenous banks to be competitive d) Both (a) + (b)
125. Most often training programmes are measured by reaction. Can it be on the basis of? a)Learning b) Behaviour, c) Results , d) All
above
ANSWER
1 D 2 A 3 C 4 C 5 D
6 C 7 D 8 A 9 C 10 A
11 D 12 C 13 D 14 E 15 A
16 A 17 A 18 D 19 C 20 A
21 B 22 A 23 A 24 C 25 B
26 C 27 A 28 D 29 C 30 A
31 D 32 D 33 C 34 A 35 B
36 D 37 B 38 B 39 C 40 A
41 D 42 B 43 B 44 C 45 D
46 A 47 C 48 A 49 B 50 A
51 E 52 C 53 A 54 C 55 D
56 C 57 C 58 B 59 D 60 D
61 A 62 B 63 D 64 D 65 C
66 C 67 D 68 C 69 C 70 D
71 D 72 C 73 A 74 B 75 B
76 D 77 C 78 D 79 B 80 A
44 .
81 D 82 E 83 A 84 B 85 A
86 E 87 C 88 B 89 A 90 D
91 D 92 A 93 D 94 B 95 B
96 A 97 A 98 B 99 A 100 A
101 D 102 D 103 C 104 A 105 A
106 B 107 B 108 C 109 D 110 D
111 D 112 C 113 D 114 D 115 C
116 B 117 A 118 D 119 A 120 D
121 D 122 D 123 A 124 C 125 D
SOME MORE PRACTICE
1. One of the pressing problems faced by organizations in the society.
1) Population 2) Red tapism
3) Under utilization of people 4) none of these
2. Management theories always based on finding solutions which can be applied to all kinds of organization
because organizations are.
1) Social Systems 2) Using same technology
3) Producing products of same type 4) none of these
3. ----------------forms the subject matter of Human Resource Management
1) Human behaviour 2) Organizational policies
3) Technical development 4) none of these
4. The 'LAND MARKs OF TOMMOROW' is written by-----------------------------
1) F.W.Taylor 2) Henry Fayol
3) Peter Drucker 4) None of these
5. No matter how much we can quantify, the basic Phenomena are qualitative ones. This is the
observation of a famous management guru. Who is that?
1) Abraham Maslow 2) McClelland
3) Peter Drucker 4) None of these
6. -------------------always deal in identifying and resolving organizational problems.
1) Managers 2) Labour unions
3) Behavioural Scientists 3) None of these
7. ----------------Component is a key factor to success of any strategy.
1) People • 2) Technology
3) Capital 4) Process
3. "It ;s relativel-y easy to think and decide up on a change in the technology, out me
implementation is often a slow process or a difficult one to go through". Is the statement true.
1) Yes 2) No
9. Business Environment always prone to changes, it includes.
1) Change in technology 2) Business dimension
3) Strategies 4) Customer expectations
5) All the above 6) I & 2
10. An organization is a planned co-ordination of the activities of a number of people for the achievement of common
organizational objectives through involvement of people of assigned functions and through a
hierarchy of authority and responsibility using appropriate technology". Whose definition is this?
1) Peter Drucker 2) Elton Mayo
3) Edgar Schein 4) Henry Fayol
11. A given goal, a structure, explicit roles and relationships to co-ordinate activities etc are the
features of - ------------------organization.
1) Political 2) Govt.
3) Formal 4) None of these
45 .
12. Informal organization evolves as an outcome of------------------------------
1) Organizational policies 2) Group process
3) Politics 4) None of these
5) All the above
13. "A manager's best investment was in his workers" Whose word is this?
1) Robert Owen 2) Edger Schein
3) Charles Babbage 4) None of these
14. According to whom "Workers are vital machines".
1) Robert Owen 2) F.W.Taylor
3) Macgregor 4) None of these
15. Who conceptualized the theory of scientific management?
1) Frederick Taylor 2) Henry Fayol
31 Robert Owen 41 None of these
16. Who proposed the concept of 'Division of labour' Time Motion studies?
1) Frederick Taylor 2) Henry Fayol
3) Robert Owen 4) None of these
17. Scientific management concept was one of the reasons for the rise of labour unions and labour
unrest. Is the statement true?
1) Yes 2) No
18. 'Haw throne studies' is a landmark in the evolution of the management thought and human
approach in management. Who carried out these studies?
1) Elton Mayo 2) Robert Owen
3) Charles Babbage 4) None of these
19. Hawthorne studies result in the evolution of--------------------------approach in management.
1) Socialistic 2) Scientific
3) Human approach 4) None of these
20. approach of management replaced the rational- economic man by the social man
perspective.
1) Empirical approach 2) Humanistic approach
3) System approach 4) None of these
21. ------------------------approach of management focused on the role played by the various relationships that
.-lot roin, nc. nrs
1) Humanistic approach 2) System approach
3) Rationalistic approach 4) None of these
22. Pick the odd one out.
1) Chris Argyris, 2) Abraham Maslow
3) Douglas McGregor 4) Frederic Taylor
23. Which of the following statements are true regarding humanistic approach to management?
1) Individuals are motivated by monetary factors
2) Individuals like to experience a sense of responsibility while performing a task.
3) People feel a sense of achievement when the task is completed.
4) I & 2 5) 2 6) All the above
24. Human Resource Management assumes the following perspectives such as.
1) Management of people is an integral part of the resource management task.
2) Employees motivation, development and growth constitute a critical factor in the growth development of
the organization
3) People will have to do what is defined by the organization and in turn by the technology
4) People will do a given activity in return for money
5) 1)&2 6) All the above
46 .
25. HRD functions emphasis on -----------------------------
1) Organizational interventions for climate development
2) Conducting surveys and research to sick employee's feedback and opinions
3)Innovations to formulate people related policies,4) Recruitment and selection, 5) 1), 2 & 3 6) All the above
26. HRD is considered as a subsystem of HRM. is the statements true?
1) Yes 2) No
STATE WHETHER THE FOLLOWING STATEMTNS TUREIFALSE
27. HRD and HRM are more or less same concepts.
28. Peopie component of an organtzabon nas a'ways re..!veci due atentio-,r
29. Industrial revolution led to the rise of unions.
30. Management theories and approach to people management is not just a quantitative expansion of
the people management function but is qualitatively different.
31. Personnel Management and HRD are Synonymous terms.
32. HRD and human relations movement are not the same
33. HRM is a subsystem of HRD.
34. Scientific Management approach is the foundation of today's concept of Human Resource
Management.
35. Labour Management to Human Resource Management is not just a quantitative expansion of the
people management function but is qualitatively different.
36. Supportive Role of an HR professional in an organization include.
1) Strengthening of the operating and executive levels and consolidating the strengths in an organization.
2) Developing Systems that deal with people, their problems and organizational dynamics
3) Developing technical, managerial and processing competence
4) None of these
37. Process Role of an HR professional in an organization include.
1) Creating necessary culture and values in the organization
2) :Develop coping Ski% to i apond to the chat iyir ly environment
3) Planning future manpower
4) 1)&2 5) 2&3 6) All the above
38. Managerial role and an HR professional in an organization include;
1) Planning future manpower
2) Performance and potential assessment
3) Planning the growth of individuals etc
4) All the above 5) 2&3
39. The critical attributes of HR Professional include:
1) Technical attributes 2) Managerial attributes
3) Personal attributes 4) 1) & 2 5) 2 & 3
6) All the above
40. Knowledge of various tests and measurement of behaviour come under ----------------------------------------attribute.
1) Technical attributes 2) Management attributes
3) Personal attribute 4) none of these
41. Knowledge of performance appraisal systems and their functioning come under
attribute.
42. Knowledge of potential appraisal and mechanism of developing a system come under
attribute.
43. Technical attribute of an HR Professional include;
1) Knowledge of behavioural sciences
2) Understanding of overall organizational culture
3) Ability to work as a team member
4) None of these 5) 1) & 2
47 .
44. Technical attributes of an HR professional includes:
1) Knowledge of career planning, Processes and Practices
2) Knowledge and skills in counselling
3) Imagination and creativity
4)1) & 2 5) 2 & 3
45. Managerial attributes of an HR professional include:
1) Organizing ability
2) System Development skills
3) Attitude for research and development work, 4) 1 & 2 5) 2 & 3, 6) All the above
Answer Keys
1 . 3 2 . 1 3 . 1 4 . 3 5 . 3 6 . 3 7 . 1 8 . 1 9 . 5 1 0 . 3 1 1 . 3 1 2 . 2 1 3 . 1 1 4 . 1
1 5 . 1 1 6 . 1 1 7 . 1 1 8 . 1 1 9 . 3 2 0 . 2 2 1 . 1 2 2 . 4 2 3 . 5 2 4 . 5 2 5 . 5 2 6 . 1 2 7 . F 2 8 . F 2 9 . F 3 0 . T 3 1 . F 3 2 . T
3 3 . F 3 4 . F 3 5 . T 3 6 . 1 3 7 . 3 8 . 5 3 9 . 6 4 0 . 1 4 1 . T e c h n i c a l , 42. Technical 43. 5 44.4 45.4
6. MCQs ON MODULE - D: CREDIT MANAGEMENT
ADVANCES : MCQ ON MCLR
1 Which of the following is not a component of marginal cost of funds based lending rate (MCLR) which is an internal benchmark:
(a)marginal cost of funds (b) negative carry on account of CRR and SLR (c) operating cost (d) tenor premium
2 Negative carry on the mandatory CRR which arises due to return on CRR balances being nil, is calculated as under for the purpose of marginal
cost of funds based lending rate (MCLR): (a)required CRR x marginal cost / (1 – CRR) (b) required CRR / marginal cost / (1 – CRR)
(c) required CRR + marginal cost / (1 – CRR) (d) required CRR x marginal cost / (1 + CRR)
3 Under the marginal cost of funds based lending rate (MCLR), the banks are required to publish the internal benchmark for the following
maturities (1) overnight MCLR (2) one-month MCLR (3) three month MCLR (4) six month MCLR
(a)1 only (b) 1 and 3 only (c) 1, 3 and 4 only (d) 1 to 4 all
4 The following categories of loans can be priced without being linked to MCLR as the benchmark for determining interest rate: (1)
Advances to banks’ depositors against their own deposits. (2) Advances to banks’ own employees including retired employees. (3)
Advances granted to the Chief Executive Officer / Whole Time Directors. (4) Loans linked to a market determined external benchmark.
(a)1 only (b) 1 and 3 only (c) 1, 3 and 4 only (d) 1 to 4 all
5. Banks are to review and publish their Marginal Cost of Funds based Lending Rate (MCLR) of different maturities every ___ on a
pre-announced date with the approval of the Board or any other committee to which powers have been delegated.
(a)fortnight (b) month (c) quarter (d) six months
6 Banks can reset the interest rates under Marginal Cost of Funds based Lending Rate (MCLR) system, for which the periodicity can be:
(a)one year or lower (b) 6 months or lower (c) 3 months or lower (d) 1 month or lower
7.Under Marginal Cost of Funds based Lending Rate (MCLR) system, the marginal cost of borrowings shall have a weightage of ___ % of
Marginal Cost of Funds while return on networth will have the balance weightage of ___%. (a) 50%, 50% (b) 75%, 25
(c) 90% , 10% (d) 92%, 8%
8. Govt. of India has established Central KYC Records Registry (CKYCR) under provisions of which of the following Act, as amended
from time to time? (a)RBI Act 1934 (b) Prevention of Money Laundering Act 2002 (c) Banking Regulation Act 1949 (d)
Negotiable Instruments Act 1881
9 Banks can extend financial assistance to support the factoring business of Factoring Companies complying with certain criteria, which,
inter-alia states that they derive at least ____ of their income from factoring activity.
(a) 80% (b) 75% (c) 60% (d) 50%
10. ECS (Credit) payments can be initiated by any institution (called ECS user) : (a)which has to make small payments (b) which has to
recover amount of bills repeatedly (c) which has to make large size payments in small numbers (d) which has to make bulk or repetitive
payments of small amounts to a number of beneficiaries.
FINANCIAL INCLUSION & GOVT. SCHEMES
11 Under the structure of Financial Literacy Centre (FLC) Scheme, the FLC and rural branches are to arrange ____ outdoor
special camps for newly included persons: (a) minimum one camp per fortnight (b) minimum one camp per month
(c) minimum one camp per quarter (d) minimum one camp per half-year
48 .
12 Under the structure of Financial Literacy Centre (FLC) Scheme, the FLC and rural branches are to arrange ____ camps for target group
persons such as farmers, SHG, MSEs, school children etc: (a) minimum one camp per fortnight (b) minimum one camp per month
(c) minimum one camp per quarter (d) minimum one camp per half-year
13 Report about activities of financial literacy centres (FLC) is to be sent to Regional Office RBI, within :
(a) 20 days from end of each month (b) 20 days from end of each quarter
(c) one month from end of each half-year (d) one month from end of each financial year
14 SLBC Convenor banks are to identify villages with population _____ without a bank branch of a scheduled commercial bank in their State
to ensure that opening of bank branches should be completed by March 31, 2017.
(a) below 2000 (b) above 2000 (c) below 5000 (d) above 5000
NULM
15 Under DDU – National Rural Livelihood Mission, interest subvention is available to a bank for lending to women self group in 250
specified districts, if the rate of interest charged from borrower is: \
a) 4% (b) 7% (c) base rate of the bank (d) MCLR of the bank
16 Under DDU – National Rural Livelihood Mission, interest subvention is available to a bank for lending to women self group in 250
specified districts, for loan amount up to : - (a) Rs.2 lac (b) Rs.3 lac (c) Rs.5 lac (d) bank discretion
17 Under DDU – National Rural Livelihood Mission, interest subvention is available @ _____ to a bank for lending to women self
group in 250 specified districts, if other conditions such as rate of interest and amount of loan are satisfied:
(a) rate of interest of the bank less 7% subject to maximum of 3%
(b) weighted average rate of interest as determined by the bank less 7% subject to maximum of 5%
(c) weighted average rate of interest as determined by the bank less 7% subject to maximum of 5.5%
(d) weighted average rate of interest as determined by Ministry of Finance less 7% subject to maximum of 5.5%
18 Under DDU – National Rural Livelihood Mission, special interest subvention is available for prompt payment @ _____ to women
self group in 250 specified districts. In such cases, the effective interest rate for the borrower shall be:
(a) 3%, 2% (b) 3%, 4% (c) 2%, 3% (d) 2%, 4%
CGTMSE & MSME
19 Under CGTMSE guarantee scheme for MSE, the maximum amount of eligible loan is ___ wef 01.01.17:
(a) Rs.200 lac (b) Rs.100 lac (c) Rs.50 lac (d) Rs.25 lac
20 Under CGTMSE guarantee scheme for MSE, the maximum amount of claim payable by CGTMSE is restricted to ___ wef 01.01.17:
(a) Rs.200 lac (b) Rs.100 lac (c) Rs.50 lac (d) Rs.25 lac
21 Under CGTMSE guarantee scheme for MSE, the guarantee cover available for a loan up to Rs.50 lac to women enterprises or loan
in NE States is ___ wef 01.01.17: (a) 85% of amount in default max Rs.42.50 lac (b) 80% of amount in default max Rs.40 lac (c) 75%
of amount in default max Rs.37.50 lac (d) 50% of amount in default max Rs.25 lac
22 Under CGTMSE guarantee scheme for MSE, the guarantee cover available for a loan above Rs.50 lac up to Rs.200 lac to women
enterprises or loan in NE States is ___ wef 01.01.17:
(a) 85% of amount in default (b) 80% of amount in default (c) 75% of amount in default (d) 50% of amount in default
23 Under CGTMSE guarantee scheme for MSE, the guarantee cover available for a loan up to Rs.5 lac to a micro enterprises, is ___
wef 01.01.17: (a) 85% of amount in default max Rs.4.25 lac (b).80% of amount in default max Rs.4 lac
(c).75% of amount in default max Rs.3.75 lac (d).50% of amount in default max Rs.2.50 lac
24 Under CGTMSE guarantee scheme for MSE, the guarantee cover available for a loan up toRs. 50 lac to a micro enterprises, is ___
wef 01.01.17: (a).85% of amount in default max Rs.42.50 lac (b).80% of amount in default max Rs.40 lac
(c).75% of amount in default max Rs.37.50 lac (d). 50% of amount in default max Rs.25 lac
25 Under CGTMSE guarantee scheme for MSE, the rate of interest (including cost of guarantee cover) on an eligible
loan can be max ___ wef 01.01.17: (a).14% p.a. (b).12% p.a. (c).MCLR + 3% (d). MCLR + 4%
PSLC
26 Priority sector lending certificates (PSLC) can be issued by banks in respect of their (1) eligible agriculture loans (2) eligible loans to
small and marginal farmers (3) all loans to MSME sector (4) priority sector loans other than agriculture and MSME
(a) 1 to 4 all (b) 1 and 3 only (c) 1, 2 and 3 only (d) 1, 3 and 4 only
27 Normally Priority sector lending certificates can issued against the underlying assets. But a bank is permitted by to issue PSLCs
upto ___ of previous year’s PSL achievement without having the underlying in its books.
( a ) 1 0% ( b ) 2 5% ( c ) 3 3% ( d ) 5 0%
28 Priority sector lending certificates (PSLC) will expire _____ irrespective of the date it was first sold.
(a) within 3 months (b) within 6 months (c) within 9 months (d) by 31st March
29 Priority sector lending certificates (PSLC) can be issued with a standard lot size of ___ and multiples thereof.
(a) Rs.10 lac (b) Rs.25 lac (c) Rs.50 lac (d) Rs.100 lac
30 In case of cash credit which of the following is correct statement:
(a) in hypothecation ownership is with the bank. (b) in cash credit pledge, the possession with the borrower
49 .
(c) in case of hypothecation the possession is with the bank (d) in case of pledge the ownership remains with the borrower
(e) in case of hypothecation ownership and possession is with the bank
MCQ on PM Fasal Bima Yojna
31 The implementing agency of Pradhan Mantri Fasal Bima Yojna is : (a) Ministry of Rural Development, Govt.of India (b) Ministry
of Agriculture, Govt. of India (c) Agriculture Insurance Co. Limited (d) Commercial banks
32 Unit area of insurance under Pradhan Mantri Fasal Bima Yojna is: (a) Farmer land holding (b) village (c)district ( d ) S t a t e
33 Which crops are covered by Pradhan Mantri Fasal Bima Yojna :(a) all crops (b) notified crops
(c) all crops in notified areas where yield data is available (d) discretion of insurance company
34 Which farmers are covered by Pradhan Mantri Fasal Bima Yojna :
(a) farmers who have raised crop loans and renewed their limit (b) farmers who have raised crop loans
and not renewed their limit (c) farmers who have not raised loans (d) all farmers
35 Which of the following risk is covered by PM Fasal Bima Yojna : (1) yield losses (2) prevented sowing losses (3) post harvest losses (4)
localized calamities (5) war and nuclear risk -- (a) 1 to 5 all (b) 1 to 4 only (c) 1 to 3 only (d) 1 only
36 Which risk out of the following is not covered by PM Fasal Bima Yojna :
(a) war and kindred perils (b) nuclear risk, (c) riot, theft, malicious damages, act of enmity (d) all the above
37 What is the amount of insurance where farmer is a loanee farmer under Pradhan Mantri Fasal Bima Yojna :
(a) value of crop (b) threshold yield x MSP or gate price of the insured crop
(c) scale of finance (d) scale of finance or up to value of threshold yield at option of the farmer
38 What is the amount of insurance where farmer is not a loanee farmer under PM Fasal Bima Yojna :
(a) value of crop (b) threshold yield x MSP or gate price of the insured crop
(c) scale of finance (d) scale of finance or up to value of threshold yield at option of the farmer
39 Actuarial premium rate (APR) is charged under Pradhan Mantri Fasal Bima Yojna, which is presently fixed at ___ in case of Annual
commercial or horticulture Crops:
(a) 2% of sum insured or actuarial rate whichever is less (b) 1.5% of sum insured or actuarial rate whichever is less
(c) 5% of sum insured or actuarial rate whichever is less (d) at rates negotiated by the bank and insurance company
40 Actuarial premium rate (APR) is charged under Pradhan Mantri Fasal Bima Yojna, which is presently fixed at ___ in case of Rabi
Crops:
(A) 2% of sum insured or actuarial rate whichever is less (b) 1.5% of sum insured or actuarial rate whichever is less
(c) 5% of sum insured or actuarial rate whichever is less (d) at rates negotiated by the bank and insurance company
41 Actuarial premium rate (APR) is charged under Pradhan Mantri Fasal Bima Yojna, which is presently fixed at ___ in case of Khariff
Crops: (a) 2% of sum insured or actuarial rate whichever is less (b) 1.5% of sum insured or actuarial rate whichever is less (c)
5% of sum insured or actuarial rate whichever is less (d) at rates negotiated by the bank and insurance company
42 Under Pradhan Mantri Fasal Bima Yojna, the risk to be shared by the Insurance agency is:
(a) 150% of total premium collected or 35% of total sum insured whichever is higher
(b) 250% of total premium collected or 25% of total sum insured whichever is higher
(c) 350% of total premium collected or 35% of total sum insured whichever is higher
(d) 50% of total premium collected or 25% of total sum insured whichever is higher
43 Under Pradhan Mantri Fasal Bima Yojna, the risk sharing ratio between Central and State Govt. is:
( a ) 7 5 : 2 5 ( b ) 6 0 : 4 0 ( c ) 5 0 : 5 0 ( d ) 3 3 : 6 7
44 There are 3 indemnity levels under Pradhan Mantri Fasal Bima Yojna :
(a) 70%, 80%, 90% (b) 60%, 70%, 80% (c) 50%, 60%, 70% (d) 40%, 50%, 60%
MCQ on Credit Guarantee Fund Scheme for Education Loans
45 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, the amount of
eligible education loan is up to : (a) Rs.5 lac (b) Rs.7.50 lac (c) Rs.10 lac(d) Rs.15 lac
46 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, the margin on
eligible education loan is (find the correct): (a) Nil for loan up to Rs.4 lac (b)5% for loan above Rs.4 lac for education in India
(c) 15% for loan above Rs.4 lac for education in India (d) all the above
47 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, to be eligible for
guarantee, the rate of interest on the loan can be maximum :
(a) base rate + 2% (b) base rate + 4% c bank rate + 2% (d) bank rate + 4%
48 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, the annual
guarantee fee is ___ of outstanding balance on date of application for guarantee cover.
( a ) 0 . 2 5 % ( b ) 0 . 5 % (c) 0.75% (d) 1%
49 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, the prescribed
annual guarantee fee is payable within ___ from the date of Credit Guarantee Demand Advice Notice of guarantee fee: (a) 10 days
(b) 15 days (c) 20 days (d) 30 days
50 .
50 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, ___ amount of
the claim payable is to be paid within 30 days -- ( a ) 7 0 % ( b ) 7 5 % ( c ) 8 0 % ( d ) 8 5 %
MCQ on Interest Subvention
51 On short term crop loans, interest subvention of 2% is available to ___ :
(a) public sector banks (b) private sector banks
(c) public sector banks and loans in rural and semi-branches given by Private sector banks (d) farmers
52 For availing short term crop loan interest subsidy, the eligible loan amount is:
(a) up to Rs.3 lac (b) up to Rs.2 lac (c) up to Rs.1 lac (d) any amount
53 To avail short term crop loan interest subsidy, the rate of interest from borrower should be:
(a) 4% pa (b) 5% pa (c) 6% pa (d) 7% pa
54 Additional interest subvention of ___ % is available to prompt payee farmers from date of disbursement of crop loan up to actual
date of repayment by farmer or up to due date fixed by bank, whichever is earlier:
(a) 1% (b) 2% (c) 3% (d) 4%
55 If additional interest subvention is available to prompt payee farmers for short term crop loan, the effective interest rate shall be:
(a) 1% (b) 2% (c) 3% (d) 4%
56 In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses against warehouse
receipts, the benefit of interest subvention will be available to small and marginal farmers having Kisan Credit Card for a further
period of upto ____ post¬harvest on the same rate as available to crop loan against negotiable warehouse receipt for keeping their
produce in warehouses.
(a) 3 months (b) 6 months (c) 9 months (d) 12 months
57 To provide relief to farmers affected by natural calamities, the interest subvention of 2% will continue to be available to banks for
the _____ on the restructured amount.
(a) 1st six months (b) 1st year (c) 1st 2 years (d) moratorium period
58 Banks are required to submit their claims for interest subvention of 2% and 3% on:
(a) half yearly basis (b) yearly basis
(c) half yearly for 2% and yearly for 3% subvention (d) half yearly for 3% and yearly for 2% subvention
ANSWER
1 B 2 A 3 A 4 D 5 D
6 B 7 D 8 B 9 D 10 D
11 B 12 B 13 A 14 D 15 B
16 B 17 C 18 B 19 A 20 B
21 B 22 D 23 A 24 C 25 A
26 A 27 D 28 D 29 B 30 D
31 B 32 B 33 C 34 D 35 B
36 D 37 D 38 B 39 C 40 B
41 A 42 C 43 C 44 A 45 B
46 D 47 A 48 B 49 D 50 B
51 C 52 A 53 D 54 C 55 D
56 B 57 B 58 C



NPA & RECOVERY MANAGEMENT
1 With a view to monitoring the performance of banks in providing credit to the specified minority communities, data on credit
assistance provided to members of minority communities is to be furnished to RBIand to the Govt. of India, on half yearly basis as on
the last Friday of March and September every year within ___ from the close of each half year.
(a) 10 days (b) 15 days (c) one month (d) two months
2 A lending institution can consider publication of the photographs of borrowers/ proprietors/ partners / directors / guarantors of
borrower firms/ companies:(a) who have defaulted in loan repayment (b) whose accounts have been classified as Red Flagged
accounts (c) who have been declared willful defaulters (d) all the above
3 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016, the Distt. Magistrate when approached by a bank under SARFAESI Act shall complete the process of possession of charged
security within: (a) 10 days (b) 20 days (c) 30 days (d) 45 days
4 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016, RBI can impose penalty of on an Asset _____ Reconstruction Company for non-compliance of RBI directions:
(a) up to Rs.5 cr (b) up to Rs.1 cr (c) up to Rs.50 lac(d) up to Rs.10 lac
5 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
51 .
2016, the govt. can create a central database of charges by integrating the registration records under (1) Companies Act 2013 (2)
Registration Act 1908 (3) Merchant Shipping Act 1958 (4) Motor Vehicles Act etc.
(a) 1 to 4 all (b) 1 to 3 only (c) 1 and 4 only (d) 1 only
6 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016, the age limit of Presiding Officer of Debt Recovery Tribunal (under RDDBFI Act) has been raised from :
(a) 60 to 62 years (b) 62 to 63 years (c) 62 to 65 years (d) 62 to 67 years
7 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016, the age limit of Chairperson of Debt Recovery Appellate Tribunal (under RDDBFI Act) has been raised from:
(a) 62 to 65 years (b) 62 to 65 years (c) 65 to 67 years (d) 65 to 70 years
8 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016 amending the RDDBFI Act, the defendant is required to submit a statement of defence in writing within a period of ____ from
date of receipt of summons from Debt Recovery Tribunal:
(a) 45 days (b) 30 days (c) 25 days (d) 15 days
9 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016 amending the RDDBFI Act, the time available for making appeal against order of DRT to DRAT has been reduced from: (a) 60
days to 45 days (b) 60 days to 30 days (c) 45 days to 30 days (d) 45 days to 15 days
10. According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment)
Act 2016 amending the RDDBFI Act, the amount which is required to be deposited by defendant borrower before making appeal
against order of DRT to DRAT has been reduced from:
(a) 75% of amount of debt due to 50% of amount due
(b) 75% of amount of debt due to 60% of amount due
(c) 75% of amount of debt due to 25% of amount due
(d) 75% of amount of debt due to 0% of amount due
11 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016 amending the RDDBFI Act, the amount which is required to be deposited by defendant borrower before making appeal against
order of DRT to DRAT can be reduced by DRAT, which should not be less than __ after such reduction:
(a) 75% of amount of debt due (b) 50% of amount of debt due
(c) 25% of amount of debt due (d) 0% of amount of debt due
12 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016 amending the RDDBFI Act, Presiding Officer of DRT, after issue of recovery certificate, can allow extra time, if acceptable to
bank/FI, for payment by defendant, where he makes payment of at least ___ of amount specified in the Recovery Certificate. (a)
10% (b) 25% (c) 40% (d)50%
13 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016 amending the RDDBFI Act, where the borrower wants to make an appeal to DRT against order of Recovery Officer, he has to
deposit ____ of amount due, before the appeal is entertained by DRT.
(a) 10% (b)25% (c) 40% (d)50%
MCQ on MSME Rehabilitation Framework
14 The Framework notified by RBI during March 2016 for revival and rehabilitation of MSMEs can be used for MSME loans for limit up to:
(a) Rs.50 cr (b) Rs.25 cr (c) Rs.10 cr (d) Rs.5 cr
15 Restructuring of loans of _____ relating to MSME will be governed by the extant guidelines on Corporate Debt Restructuring / Joint
Lenders’ Forum mechanism: (a) above Rs.50 cr (b) above Rs.25 cr (c) above Rs.10 cr (d) above Rs.5 cr
16 Under the Framework for Revival & Rehabilitation of MSMEs mechanism, the branch maintaining the account should forward the
details of stressed account with loan limits _____ to the Committee constituted under the mechanism, for suitable corrective action plan
(CAP)? (a) above Rs.50 lac (b) above Rs.25 lac (c) above Rs.10 lac (d) above Rs.5 lac
17 Under the Framework for Revival & Rehabilitation of MSMEs mechanism, the branch maintaining the account should forward the
details of stressed account with loan limits falling under the prescribed cut off celing, to internal Committee at Distt/Regional/ Zonal level
constituted under the mechanism within a period of ___ for suitable corrective action plan (CAP)?
(a) 5 banking days (b) 10 banking days (c) 15 banking days (d) 25 banking days
18 A borrower can voluntarily initiate the proceedings under the Framework for Revival & Rehabilitation of MSMEs mechanism if any of
the following condition is satisfied: (a) apprehension about failure of business (b) inability or likely inability to pay debts
(c) erosion in net worth due to accumulated loss to the extent of 50% of NW (d) any of the above
19 When a request is received from borrower to initiate the proceedings under the Framework for Revival & Rehabilitation of
MSMEs mechanism by the Standing Committee for Stressed Assets, it should convene a meeting for corrective action plan (CAP)
within: (a) 5 banking days (b) 10 banking days (c) 15 banking days (d) 30 banking days
20 When a request is received under the Framework for Revival & Rehabilitation of MSMEs mechanism by the Standing Committee
for Stressed Assets, it has to write to statutory creditors regarding outstanding liabilities for making claim within a period of: (a)
52 .
5 banking days (b) 10 banking days (c) 15 banking days (d) 30 banking days
21 For consortium or MBA loans Under the Framework for Revival & Rehabilitation of MSMEs mechanism, the Standing Committee for
Stressed Assets shall take a decision about corrective action plan (CAP) within:
(a) 5 days (b) 15 days (c) 20 days (d) 30 days
22 For consortium or MBA loans under the Framework for Revival & Rehabilitation of MSMEs mechanism, if Techno-Economic
Viability (TEV) is to be conducted, the Standing Committee for Stressed Assets shall finalize the terms of restructuring within ___ when
the amount is up to Rs.10 cr: a) 5 working days (b) 15 working days (c) 20 working days (d) 30 working days
23 Under the Framework for Revival & Rehabilitation of MSMEs mechanism, upon finalization of terms of corrective action plan, the
implementation will be completed within ____ if CAP is restructuring and within ___ if CAP is rectification:
(a) 60 days and 30 days (b) 90 days and 30 days (c) 90 days and 60 days (d) 60 days and 90 days
24 Under the Framework for Revival & Rehabilitation of MSMEs mechanism, the basis for proceeding with a decision is agreement of the
majority of banks which means ___ majority by amount and ___ by no. of banks.
(a) 50%, 60% (b) 60%, 75% ( c ) 80%, 60% (d) 75%, 50%
25 You are incharge of loans department in your branch. In which situation, in the loan accounts the interest can be debited and taken
to income to in-crease the profits:
(a) It has become due (b) It has become due and stands recovered if it is NPA account
(c) It has become due and account has not been a non-performing account (d) b and c above (e): None of the above
ANSWER
1 C 2 C 3 C 4 B 5 A
6 C 7 D 8 B 9 C 10 A
11 C 12 B 13 D 14 B 15 B
16 C 17 A 18 D 19 A 20 C
21 D 22 C 23 B 24 D 25 D
TEST YOURSELF : MEMORY BASED QUESTIONS
1. As per RBI guidelines, the turnover method of assessment should be applied for working capital limits of up to Rsin case of SSI
units. (a) One Crore (b) Two Crore (c) Five Crore (d) Ten Crore
2. Interest rates, regulated by RBI, are applicable for credit limits up to Rs._____________________lakh
(a) One (b) Two (c) Five (d) Ten *(e) None of these
3. The total priority sector target for foreign banks, operating in India, with less than 20 branches is_________________% of
ANBC or credit equivalent of Off Balance Sheet Exposure whichever is higher.
(a) 20% *(b) 32% (c) 40% (d) 18%
4. Net working capital meas which of the following?
(a) Total current assets minus bank finance
(b) Total current assets minus credit from suppliers
*(c) Total current assets minus total current liabilities , (d) Short term sources brought in by promoters
5. Which of the following statements is not true for efficient inventory management?
(a) It results in reduction in inventory, (b) It reduces the working capital requirements of the enterprise. *(c) It reduces the NWC
available with the enterprise. (d) It increases the Inventory Turnover Ratio if the level of sales remains the same.
6. Which of the following is not a source for meeting working capital requirements?
(a) Suppliers Credit (b) Bank Finance (c) Other current liabilities *(d) Advance payment to suppliers
7. Which of the following is a liquidity ratio? -*(a) Quick Ratio (b) TOL/TNW (c) DSCR (d) DER
8. Which of the following is not correct regarding Current Ratio?
(a) For same level of current assets, increase in NWC results in increased current ratio.
(b) The current ratio can be less than one *(c) The current ratio can be negative. (d) Current ratio is an indicator of liquidity.
9. The commercial paper can be issued by which of the following?
*(a) Corporates (b) Corporates and partnership firms (c) Any Business Entity (d) None
10.Which of the following is not correct regarding forfeiting?
(a) It is a form of working capital finance
(b) It is used in export finance
*(c) It is with recourse to the drawer of the bill.
(d) Under this financier discounts the bills drawn on buyer. 11.Which of the
53 .
following is correct regarding Letters of Credit?
(a) These are opened by a bank for export sales by the client
(b) These are opened by a bank for local sales by the client.
(c) Letters of Credit do not carry much risk for the opening bank.
*(d) Letters of Credit are opened by a bank for purchase of goods by' the client.
12.Under Turnover method of assessment, the limit is sanctioned at per Cent of the projected turnover.
(a) 25 *(b) 20 (c) 30 (d) 35
13. Cash Budget Method of assessment is more suitable for those business enterprises which have
(a) uniform level of operations (b) High level of operations (c) Low level of operations *(d) Seasonal Operations
14.A DPG is issued by the bank for____________________, by its client
(a) Sale of goods (b) Purchase of goods (c) Sale of capital goods *(d) Purchase of capital goods
15.Which of the following statements is not true for an infrastructure project? (a) It has long gestation period
*(b) It reduces the risk for the lender as his funds get assure deployment for a long time.
(c) The debt equity ratio is normally high for an infrastructure project. (d) The implementation period is usually long
16.Which of the following is not a source of funds for meeting the cost of purchase of fixed assets by an enterprise?
(a) Credit by supplier of assets (b) Internal accruals (c) Debentures *(d) DPG
17.Which of the following is a ratio indicative of the repayment capacity of a borrower?
(a) Quick ratio (b) TOLJTNW *(c) DSCR (d) DER
18.Which of the following is not correct regarding term loans by the banks?
(a) Asset liability matching is an important consideration in term financing
b) Instalment•of term loan, payable within one year is considered as current liablility
c)Repayment of a term loan can be in equated monthly instalments. *(d) Current ratio is the most important ratio in appraisal of a
term loan
19. Project loans can be given by the bank to (a) Only corporate (b) Only corporate and partnership firms
(c) Only corporate, partnership firms and societies *(d) Any business entity
20.Which of the following is not correct regarding infrastructure project by the banks?
(a) Banks are allowed to funds promoters' equity in certain circumstances
(b) Exposure norms are relaxed by RBI
*(c) Asset liability mismatch has been permitted by RBI
(d) MFG provides liquidity support to banks
21. Which of the following statements is not correct for project appraisal?
(a) Examination of technical feasibility is carried out
(b) The contribution of promoters forms a part of economic appraisal
(c) Promoters' background is part of the management appraisal
*(d) Capacity of promoters to arrange for additional funds, in case of contingencies, forms a part of
economic appraisal
22.Which of the following is not a purpose of credit monitoring
(a) To ensure end use of the funds by the borrower
(a) To detect any deterioration in the security charged to the bank
(b) *To comply with the guidelines of the RBI
(b) To ascertain that the business continues to run on the projected lines
23.Which of the following is not a tool available to the bank for credit monitoring?
(a) *Sending regular reminders to the borrower
(b) Periodic visits to the business place for inspection
(c) Analysis of financial statements
(d) Examine conduct of borrower's account
24.Which of the following is not a method of detecting wrong mention of inventory in a stock statement?
(a) Stock audit
(b) Inspection of stocks
(c) *Analysis of financial statements
(d) Cross-check from the balance sheet figure
25.Which of the following is not a method of detecting wrong mention of receivables in statement submitted by the borrower?
(a) *Analysis of financial statements
(b) Cross check from the balance sheet figure
(c) Receivables audit
(d) Inspection of books of account
54 .
26.Which of the following is not a danger sign about the direction of business of the borrower?
(a) Devolvement of LCs, invocation of Bank Guarantees
(b) Demand for higher limit
(c) Delays in submission of stock/receivables statements
(d) *Return of cheques/bills
27.Which of the following is not an unsatisfactory sign in conduct of the account of the borrower?
(a) Delay in payment of interest/instalments,
(b) Routing of transacrions with some other bank
(c) Frequent over drawings
(d) *High turnover
28.Which of the following is not the purpose of credit audit?
(a) Improvement in the quality of credit portfolio
(b) Review sanction process and compliance status of large loans
(c) Feedback on regulatory compliance
(d) *Stock inspection
29. Purpose of appointing bank's nominee on company's board of borrowing company is:
(a) *To keep a tab on the important decisions of the board
(a) To be a part of the management
(b) To guide the company for better working
(b) To safeguard the securities charged to the bank 30.Which of the following
is not a risk mentioned in the Basel II Accord
(a) Operational risk (b) Market risk *(C) Default risk (d) Credit risk
31.Which of the following is not a credit risk?
(a) Unwillingness of a customer to meet his commitment relating to a financial transaction with the bank.
(b) Inability of the customer to reimburse the bank in case of invocation of a guarantee or devolvement of an L.C.
(c) Inability of a customer to meet his commitment relating to a financial transaction with the bank.
(d) *Loss to the bank due to fraud.
32.Which of the following is an external factor affecting credit risk
(a) *Government policies
(b) Faulty loan and repayment structuring
(c) Overexposure (concentration) of credit to a particular segment
(d) Lack of an efficient recovery machinery
33.Which of the following is not an internal factor affecting credit risk
(a) Excessive lending to cyclical industries
(b) Low quality of credit appraisal and monitoring
(c) Deficiencies in the loan policy of the bank
(d) *Protectionist policies of other countries.
34.Which of the following is not a macro level action for mitigation of credit risk/
(a) Periodically reviews of the exposure norms for single and group borrowers
(a) *Improving appraisal standards of credit proposals
(b) Frequent reviews of norms and fixing internal limits for aggregate commitments to specific sectors of the
industry/business
(a) Periodic review of total credit portfolio based on quality parameters 35.Which of the following
is not a micro level action for mitigation of credit risk?
(a) Improving sanctioning and delivering process
(a) Obtention of collateral security
(b) Monitoring and review of individual proposals/categories of proposals
(b) *Periodical reviews of the exposure limits for business/industry segment 36.Which of the following
statements is not true regarding credit derivative products?
(a) These are used to hedge credit risk to the bank
(a) The protection buyer is the lending bank
(b) The protection seller can be another bank or any other organization
(b) *The credit asset is transferred in case of derivatives 37.Credit rating is a
system of
(a) *Measuring risk
55 .
(a) Mitigating risk
(b) Migrating risk
(b) Credit appraisal 38.Internal
rating means:
(a) Rating the project
(b) Rating the promoters
(c) Rating the risk for internal use.
(d) *None of the above
.39.For external credit rating, banks depend on
(a) *Rating agencies
(b) Experienced staff of the bank
(c) Banking consultants
(d) None of the above
40.Which of the following is not an approach for assessment of credit risks, laid down under Basel II Accord?
(a) Standardised approach
(b) Foundation Internal Rating Based (IRBO approach
(c) Advanced Internal Rating Based (IRB) approach
(d) *Simplified Internal Rating Based (IRB) approach
41.Which of the following statements is true regarding Standardised approach?
(a) *It has already been adopted by all the banks
(b) It has been adopted only foreign banks operating in India.
(c) It has been adopted by the foreign banks operating in India and some of the Indian banks
(d) It has to be adopted by the all the banks by March 2010
42.RB1 has suggested which of the following earliest date of making application by banks to RBI regarding implementation of the
advanced approaches (Foundation as well as Advanced IRB)?
(a) *1, April 2012
(b) 1, April 2013
(c) 1, April 2014
(d) 1, April 2015
43.The aim of a rehabilitation programme is:
(a) *To make the operations of the enterprise viable again
(b) To help in employment generation
(c) To comply with RBI guidelines
(d) To increase bank's-advances
44. Banks enter into compromise with borrowers in case of default, because:
(a) Recovery through legal action is time consuming
(b) Adequate security is not available
(c) Realisation or security may be difficult3 (d)- *All the above ( ANSWER IS - * MARKS )
TEST YOUR SELF: PRIORITY SECTOR ADVANCES
01 RBI has revised the priority sector lending guidelines with effect from April 23, 2015 on the basis of recommendations of an Internal
Working Group (IWG) headed by: a) Ms Lily Vadera b) M. V. Nair c) C S Murthy d) R. Gandhi
02 Which of the following has/have been included as part of priority sector?
a) Medium enterprises b) Social Infrastructure c) Renewable Energy, d) None of these, e) All of these
03 Which of these has been added in the list of priority sector?
a) Agriculture b) Small Enterprises c) Medium Enterprises d) Educational Loan
04 As per April 15 guidelines on Priority Sector, which of the following distinctions have been dispensed with?
a) Micro and Small Enterprises
b) Marginal and Small farmers
c) Direct and indirect agricultural advances d)Self Help Group and Joint Liability Group
05 Within agriculture, the target for lending to small and marginal farmers has been prescribed as ___% of ANBC or CEOBE whichever
is higher. a) 5% b) 6% c) 7.5% d) 8%
06 The target for lending to Micro enterprises has been prescribed as ___% of ANBC or CEOBE whichever is higher. a) 5% b) 6%
c) 7.5% d) 8%
56 .
07 As per April 15 guidelines on Priority Sector, the target for lending to weaker sections has been increased to of ANBC or
CEOBE, whichever is higher. a) 8% b) 10% c) 12% ,d) There is no change in the target for weaker sections.
08 Foreign Banks with 20 branches and above in India are required to achieve priority sector targets and sub-targets for Agriculture
and Weaker Sections by ___. a) March 31, 2018 b) 2019-20 c) 2020-21 d) 2015-16
09 Foreign Banks with less than 20 branches in India are required to achieve priority sector targets and sub-targets for Agriculture and
Weaker Sections by ___. a) 2018-19 b) 2019-20 c) 2020-21 d) 2015-16
10 Bank loans to food and agro processing units will form part of _____.
a) Agriculture b) Small Enterprises c) Indirect agriculture d) Medium enterprises
11 Export credit upto ____% of ANBC or CEOBE, whichever is higher, will be eligible as part of priority sector for foreign banks with less
than 20 branches. a) 10% b) 25% c) 32% d) 40%
12 For domestic commercial banks and foreign banks with 20 or more branches in India, the incremental export credit over
corresponding date of the preceding year will be reckoned as priority sector upto ____% of ANBC or CEOBE, whichever is higher. a) 1%
b) 2% c) 5% d) 10%
13 The priority sector non-achievement will be assessed on _____ average basis at the end of the respective year from 2016-17
onwards. a)fortnightly b) monthly c) quarterly d) half yearly e) yearly
14.As per revised guidelines on PS (April 15), for domestic commercial banks, the target for Priority sector will be _____of Adjusted
Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE), whichever is higher.
a)32% b) 40% c) 42% d) 25%
15. Within the 18% target for agriculture, target for Small and Marginal Farmers will be 8% of ANBC or CEOBE, whichever is higher.
This target to be achieved in a phased manner i.e., 7% by _____and 8% by
a)March 2017, March 2018 ; b) March 2018, March 2019 c)March 2016, March 2017 ; d)March 2015, March 2016
16.The target for Micro Enterprises i.e. 7.5% of ANBC or CEOBE, whichever is higher to be achieved in a
phased manner i.e. 7% by ______and 7.5% by _____ a)March 2017, March 2018 ; b) March 2018, March
2019 c)March 2016, March 2017 ; d)March 2015, March 2016
17. For computation of Adjusted Net Bank Credit, following components are considered – (1) Bank Credit in India; (2) Bills
Rediscounted with RBI and other approved Financial Institutions; (3) Bonds/debentures in Non-SLR categories under HTM category+
other investments eligible to be treated as priority sector +Outstanding Deposits under RIDF and other eligible funds with NABARD,
NHB and SIDBI on account of priority sector shortfall + outstanding PSLCs; (4) Eligible amount for exemptions on issuance of long-term
bonds for infrastructure and affordable housing; (5) Eligible advances extended in India against the incremental FCNR (B)/NRE
deposits, qualifying for exemption from CRR/SLR requirements. Which of the following is correct regarding calculation of ANBC? : a)
1–2+3-4-5 b) 1+2+3-4-5 ; c) 1-2+3+4-5 d) 1-2-3+4+5
18. Lending to agriculture sector has been re-defined to include which of the following? : a) Farm Credit ; b) Agriculture
Infrastructure , c) Ancillary activities d) Both (a) and (b) only & e) All of these
19. Which of the following is not part of agricultural advance?
a) Crop loans to farmers, which will include traditional/non-traditional plantations and horticulture, and, loans for allied activities.
b) Housing Loan to farmers for their own residence. ;
c) Medium and long-term loans to farmers for agriculture and allied activities
d) Loans to farmers for pre and post-harvest activities, viz., spraying, weeding, harvesting, sorting, grading and transporting of their
own farm produce
20.As per revised guidelines on PS (April 15), loans to farmers up to _____ against pledge/hypothecation of agricultural produce
(including warehouse receipts) for a period not exceeding 12 months ; a) Rs 10 lakh b) Rs 20 lakh; c) Rs 50 lakh d) Rs 100 lakh
21 Which of the following is not an agricultural advance?
a) Loans to distressed farmers indebted to non-institutional lenders.
b) Loans to farmers under the Kisan Credit Card Scheme.
c) Loans to all farmers for purchase of land for agricultural purposes.
d) None of these
22 Loans to corporate farmers, farmers' producer organizations/companies of individual farmers, partnership firms and co-operatives
of farmers directly engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and
sericulture will be part of priority sector provided loan is up to _____ per borrower. a) Rs 2 crore b) Rs 5 crore c) Rs 10 crore
d) None of these
23 Loans for construction of storage facilities (warehouses, market yards, godowns and silos) including cold storage units/ cold storage
chains designed to store agriculture produce/products, irrespective of their location will be part of priority sector provided aggregate
57 .
sanctioned limit from the banking system is
up to Rs_____________per borrower -a) Rs 10 crore b) Rs 20 crore c) Rs 50 crore d) 100 crore
24 Which of the following is not part of agriculture infrastructure as per PS guidelines issued in April 15?
a) Loans for construction of storage facilities to store agriculture produce/products.
b) Soil conservation and watershed development.
c) Plant tissue culture and agri-biotechnology, seed production, production of bio-pesticides, bio-fertilizer, and vermi composting.
d) None of these
25 Loans to co-operative societies of farmers for disposing of the produce of members will be part of agriculture provided loan is up to
Rs. a) Rs 1 crore b) Rs 2 crore c) Rs 5 crore d) Rs 10 crore
26 Loan for Food and Agro-processing will be part of Agricultural advance provided sanctioned limit from the banking system is up to
_____ per borrower ; a) Rs 10 crore b) Rs 20 crore c) Rs 50 crore d) Rs 100 crore
27 Which of the following is not part of agricultural advance?
a) Loans for setting up of Agriclinics and Agribusiness Centres.
b) Bank loans to Primary Agricultural Credit Societies (PACS), Farmers’ Service Societies (FSS) and Large-sized Adivasi Multi-Purpose
Societies (LAMPS) for on-lending to agriculture
c) Loans sanctioned by banks to MFIs for on-lending to agriculture sector.
d) Outstanding deposits under SEDF and other eligible funds with SIDBI on account of priority sector shortfall.
28 Farmers with landholding of up to ______ are considered as Marginal Farmers and farmers with a landholding upto ____ are
considered as Small Farmers
a) 1 hectare, 2 hectares b) 2.5 hectare, 5 hectare c) 1 hectare, 2.5 hectare,d) 5 hectare, 10 hectare
29 Loans to farmers' producer companies of individual farmers, and co-operatives of farmers directly engaged in Agriculture and Allied
Activities, is classified as Small and Marginal farmer where the membership of Small and Marginal Farmers is not less than ____ by
number and whose land-holding share is also not less than ____of the total land-holding
a) 50%; 50% b) 50%; 75% c) 75%; 75% d) 75%; 50%
30 Which of the following will not be classified as priority sector advance?
a) Loan to Micro manufacturing enterprises
b) Loan to Small manufacturing enterprises
c) Loan to Medium manufacturing enterprises, d) None of these
31 Bank loan to Micro, Small and Medium manufacturing Enterprises will be part of priority sector provided the loan is up to _____. a)
Rs 5 crore,b) Rs 10 crore c) Rs 20 crore d) Irrespective of amount of loan
32 Bank loan to Micro and Small service Enterprises will be part of priority sector provided the loan is up to _____. a) Rs 2 crore b) Rs 5
crore c) Rs 10 crore d) Rs 20 crore e) None of these
33 Bank loan to Medium service Enterprises will be part of priority sector provided the loan is up to _____.
a) Rs 2 crore b) Rs 5 crore c) Rs 10 crore d) Rs 20 crore e) None of these
34 Loans to units in the Khadi and Village Industries sector will be eligible for classification as Micro enterprise under the sub-target of
7%/7.5% prescribed for Micro Enterprises under priority sector provided the investment in plant and machinery is up to _____.
a) Rs 10 lakh b) Rs 25 lakh c) Rs 2 crore d) Rs 5 crore e) None of these
35 Credit outstanding under General Credit Cards (including Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card, and
Weaver’s Card etc. catering to the non-farm entrepreneurial credit needs of individuals) will be part of advance to Micro and Small
enterprises provided the loan is up to _____. a) Rs 50,000 b) Rs 500,000 c) Rs 10,00,000 d) None of these
36 Which of the following is not part of Micro, Small and Medium enterprises under priority sector advance?
a) Loans to entities involved in assisting the decentralized sector in the supply of inputs to and marketing of outputs of artisans,
village and cottage industries.
b) Loans to co-operatives of producers in the decentralized sector viz. artisans, village and cottage industries.
c) Loans sanctioned by banks to MFIs for on-lending to MSME sector.
d) Outstanding deposits with SIDBI on account of priority sector shortfall. e)None of these
37 As per revised PS guidelines (April 15) banks are required to lend 40% of advance to Micro and Small enterprises to units with
investment in plant and machinery up to_____. a) Rs 2 lakh, b) Rs 4 lakh c) Rs 10 lakh d) None of these as there is no such target.
38 The MSME units will continue to enjoy the priority sector lending status up to _____years after they grow out of the MSME
category concerned. a) one b) two c) three d) four e) None of these
39 Incremental export credit over corresponding date of the preceding year, up to 2% of ANBC or CEOBE, whichever is higher,
effective from April 1, 2015 will be part of priority sector provided sanctioned limit is up to ___per borrower and annual turnover of
58 .
up to ______.
a) Rs 5 crore; Rs 10 crore b)Rs 10 crore; Rs 25 crore c) Rs 25 crore; 100 crore d) Rs 50 crore; Rs 100 Cr.
40 Loans to individuals for educational purposes including vocational courses in India will be part of Priority sector provided loan is up
to _____. a) Rs 5 lakh b) Rs 10 lakh c) Rs 20 lakh d) Rs 25 lakh
40 Loans to individuals for educational purposes for studies abroad will be part of Priority sector provided loan is up to _____. a) Rs 5
lakh b) Rs 10 lakh c) Rs 20 lakh Rs 25 lakh e) None of these
41 A loan of Rs 20 lakh has been sanctioned to an individual for studies in India. How much of it will be part of priority sector? a) Rs 5
lakh b) Rs 10 lakh c) Rs 20 lakh d) None of these
42 Loan for purchase/construction of a dwelling unit per family in a metropolitan area will be classified as priority sector provided loan
is up to _____ and the overall cost of the dwelling unit does not exceed ____.
a) Rs 28 lakh; Rs 35 lakh,b) Rs 24 lakh; Rs 30 lakh c) Rs 20 lakh; Rs 25 lakhd) Rs 32 lakh; Rs 40 lakh
43 Loan for purchase/construction of a dwelling unit per family in a place with population less than 10 lakh will be classified as priority
sector provided loan is up to _____ and the overall cost of the dwelling unit does not exceed ____.
a) Rs 28 lakh; Rs 35 lakh, b) Rs 24 lakh; Rs 30 lakh, c) Rs 20 lakh; Rs 25 lakh, d) Rs 32 lakh; Rs 40 lakh
44 Loans for repairs to damaged dwelling units will be part of priority sector provided loan is up to ____in metropolitan centres and up
to _____ in other centres.
a) Rs 2 lakh, Rs 1 lakh b) Rs 5 lakh, Rs 2 lakh ,c) Rs 4 lakh; Rs 2 lakh d) Rs 10 lakh; Rs 5 lakh
45 Bank loans to any governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum dwellers
will be part of priority sector provide loan is up to ______ per dwelling unit.
a) Rs 2 lakh b) Rs 5 lakh c) Rs 10 lakh ,d) Rs 20 lakh e) None of these
46 Loans for housing projects exclusively for the purpose of construction of houses for economically weaker sections and low income
groups, will be part of priority sector provide the total cost of the house does not exceed _____ per dwelling unit a) Rs 1 lakh b) Rs 2
lakh c) Rs 5 lakh d) Rs 10 lakh
47 Loans for housing projects exclusively for the purpose of construction of houses for economically weaker sections and low income
groups, the total cost of which does not exceed Rs 10 lakh per dwelling unit for the purpose of identifying the economically weaker
sections and low income groups, the annual family income should not be more than_____.
a) Rs 50,000 in rural areas and Rs 100,000 in other areas
b) Rs 100,000 in rural area and Rs 200,000 in other areas
c) Rs 160,000 irrespective of location d) Rs 200,000 irrespective of location
48 Bank loans to Housing Finance Companies (HFCs), approved by NHB for their refinance, for on-lending for the purpose of
purchase/construction/reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers, will be
part of priority sector provided aggregate loan limit is up to _____ per borrower. a) Rs 10 lakh b) Rs 5 lakh , c) Rs 2 lakh d) Rs 20
lakh
49 Bank loans for building social infrastructure for activities namely schools, health care facilities, drinking water facilities and
sanitation facilities in Tier II to Tier VI centres will be part of priority sector provided loan is up to ____per borrower.
a) Rs 5 crore b) Rs 1 crore , c) Rs 2 crore d) Rs 10 crore
50 Bank loans to borrowers for purposes like solar based power generators, biomass based power generators, wind mills, micro-hydel
plants and for non-conventional energy based public utilities viz. street lighting systems, and remote village electrification will be part
of priority sector provided loan amount is up to______.
a) Rs 5 crore b) Rs 10 crore c) Rs 15 crore d) Rs 20 crore e) Rs 25 crore
51 Bank loans to individual households for purposes like solar based power generators, biomass based power generators, will be part
of priority sector provide the loan is up to ______ per borrower.
a) Rs 10 lakh b) Rs 20 lakh , c) Rs 25 lakh d) Rs 30 lakh
52 Loans to distressed persons other than farmers to prepay their debt to non-institutional lenders will be treated as other priority
sector provided loan per borrower is limited up to _____
a) Rs 25000 b) Rs 50,000 c) Rs 100,000 d) Rs 200,000
53 Overdrafts upto Rs 5,000/- under Pradhan Mantri JanDhanYojana (PMJDY) accounts will be classified as other priority sector
provided the borrowers household annual income does not exceed ____for rural areas and for non-rural areas.
a) Rs 60,000; Rs 120,000 b) Rs 80,000; Rs 160,000 ,
c) Rs 100,000; Rs 1,60,000 d) Rs 100,000; Rs 200,000
54 Artisans, village and cottage industries are classified as weaker section provided individual credit limits do not exceed _____.
a. Rs. 50,000 ; b. Rs. 1.00 lac ; c. Rs. 2.00 lacs & d. Rs.5.00 lacs
59 .
ANSWER
1 A 11 C 21 C 31 D 41 B 51 A
2 E 12 B 22 A 32 B 42 A 52 C
3 C 13 C 23 D 33 C 43 C 53 C
4 C 14 B 24 D 34 E 44 B 54 B
5 D 15 C 25 C 35 D 45 C
6 C 16 C 26 D 36 E 46 D
7 D 17 A 27 D 37 D 47 D
8 A 18 E 28 A 38 C 48 A
9 B 19 C 29 C 39 C 49 A
10 A 20 C 30 D 40 B 50 C
FINANCIAL STATEMENT ANALYSIS
1. Balance Sheet is a statement of Assets and Liabilities or statement of Sources and Uses
*(a) as on a date (b) as on 31st March (c) for 12 months (d) for a particular period (e) none of these
2. Assets can be represented as :
(a) uses of funds (b) sources of funds (c)what the business owns *(d) both (a) and (c) above
3. Liabilities can be represented as :
(a) sources of funds (b) uses of funds (c) what the business owes *(d) both (a) and (c) above
4. Current assets are defined as :
(a) assets which are expected to be consumed within one year
(b) assets which are expected to be converted into cash within one year
*(c) either (a) or (b) (d) assets which are to paid out of current liabilities (e) none of the above
5. Fixed assets are defined as :
(a) assets which are fixed to the land *(b)assets which are acquired for production and not meant for sale
(c) assets which have a fixed value (d) assets which can not be sold easily (e) none of the above
6. Term liabilities are one :
(a) which are to be met within one year from the date of balance sheet
*(b) which are not payable within one year from the date of balance sheet
(c) which were raised for more than one year (d) which are not payable immediately (e) none of these
7. Current Liabilities are those liabilities
(a) which are payable within one year (b) which are expected to be met from proceeds of current assets
(c) which are payable after one year *(d) both (a) & (b) (e) both (b) & (c)
8. Which of the following is not classified as current asset?
(a) stocks (b) prepaid expenses *(c) pre operative expenses (d) book debts (e) none
Which of the following is classified as intangible or fictitious asset?
(a) Goodwill (b) Preliminary expenses (c) Accumulated losses (d) Deferred Revenue Expenses
*(e) All of these
10. Which of the following is a current liability for calculation of current ratio?
(a) Sundry creditors (b) Borrowings from banks (c) Provision for tax
(d) Instalment of term loan payable within one year *(e) All of these
11. Debtors which are old for more than 6 months are to be classified as
(a) Current Assets (b) Intangible Assets (c) Non Current Assets (d) Fixed Assets
12. Instalments of term loan falling due within a year are treated as_____________for calculation of current ratio :
*(a) current liability (b) current asset (c) term liability (d) net worth
13. Quick assets mean:
(a) all assets minus inventory (b) all current assets minus inventory
(c) assets other than cash (d) all current assets minus inventory and prepaid expenses
14. Sales minus cost of sales is referred to as :
(a) operating profit (b) net profit (c) profit before tax (d) profit after tax *(e) gross profit
15. Operating profit is arrived at by :
*(a) reducing administrative, general and selling expenses from gross profit
(b) adding back depreciation to gross profit (c) adding back depreciation and interest to net profit
(d) adding back interest expenses to gross profit (e) none of the above
16. Cash profit is:
(a) gross profit before depreciation (b) net profit after depreciation
60 .
(c) net profit before depreciation (d) gross profit after depreciation (e) none of these
17. Cash loss is:
(a) gross loss before depreciation (b) net loss after depreciation (c) net loss before depreciation
(d) gross loss after depreciation (e) none of these
18. Tangible net worth means :
*(a) Paid up capital and reserves minus intangible assets (b) Net worth minus investment in fixed assets
(c) Paid up capital and reserves minus instalment of term loan payable within one year
(d) Net worth minus current liabilities (e) Total Assets minus intangible assets
19. The term Liquid Surplus or Net working capital refers to :
(a) total investment in current assets (b) excess of current liabilities over current assets
*(c) excess of current assets over current liabilities
(d) excess of capital plus free reserves over term liabilities (e) none of the above
20. Net working capital will be positive when :
(a) current assets are more than current liabilities (b) current liabilities are more than current assets
(c) current ratio is more than one (d) when current ratio is less than one *(e) both (a) & (c)
21. Liquidity ratios include :
(a) Current Ratio (b) Quick Ratio (c) Debt equity ratio *(d) Both (a) & (b) (e) all above
22. Current Ratio is obtained by :
(a) reducing current liabilities from current assets and dividing the resultant figures by current liabilities
(b) dividing current liabilities by current assets *(c) dividing current assets by current liabilities
(d) dividing outside liabilities by net worth (e) none of the above
23. Current Ratio is an indicator of________________________of the borrower:
*(a) liquidity position (b) solvency (c) profitability (d) all above (e) none of the above
24. Current Ratio of less than 1 indicates that the borrower:
(a) has sufficient current assets to meet current liabilities (b) may be unable to pay current dues
(c) has borrowed excessively from outsiders (d) any of the above (e) none of the above
25. Current ratio as per second method of lending given by Tandon Committee works out to :
(a) 1:1- (b) 2:1 (c) 1.17:1 (d) 1.33 : 1 (e)none of these
26. Acid Test Ratio is supportive ratio for________________
(a) Debt-Equity Ratio (b) Current Ratio (c) Gross Profit Ratio
(d) Net Profit Ratio (e) Debt-Service Coverage Ratio
27. The following are the Current and Quick Ratio of a firm for two consecutive years
Current Ratio 1.6:1 & 2.3:1; Quick Ratio 1.1:1 & 1:1. The trend indicates that :
(a) the borrower is relying heavily on term loans
(b) there is reasonable investment from current liabilities in current assets
(c) there is excessive investment in inventory and prepaid expenses
(d) more sales are being effected on credit than before (e) none of the above
28. Debt Equity Ratio is relationship between :
(a) total liability and net worth (b) current assets and current liabilities
(c) term liabilities to total net worth *(d) term liabilities to tangible net worth (e) either (a) or (d)
29. A decreasing Debt Equity Ratio means :
*(a) higher stake of owners (b) lower stake of owners (c) decrease in profitability of the business
(d) sharp increase in profitability of the concern . (e) none of the above
30. Profit & Loss account helps in computing
(a) Profitability Ratio (b) Solvency Ratio (c) Turnover Ratio (d) Liquidity Ratio
31. Return on Investment (ROI) falls in the category of :
*(a) Profitability Ratios (b) Solvency Ratios (c) Liquidity Ratios (d) all above
32. Gross Profit Ratio is obtained by :
(a) dividing gross profits by net sales and multiplying it with 100
(b) dividing net profit by gross sales and multiplying it with 100
(c) dividing gross profit by gross sales and multiplying it with 100
(d) net sales by net profit (e) none of the above
33. Which of the following ratios is one of the most important ratios to ascertain the profitability ?
(a) Debt Equity Ratio (b) Return on Investment (c) Working Capital Turnover Ratio
(d)Gross Profit Ratio (e) Quick Ratio
34. 'Activity Ratios' or 'Turnover Ratios' indicate :
61 .
(a) extent of profitability *(b) efficiency of the concern in the utilisation of assets
(c) stake of owners' funds (d) stake of term lending institutions (e) none of the above
35. Debtors Velocity Ratio indicates :
(a) proportion of credit sales to annual sales (b) proportion of credit sales to fixed assets
(c) average time-lag between sales and the collection of debts
(d) average time taken in effecting sales to customers (e) none of the above
36. A decreasing trend of Debtors Velocity Ratio implies :
(a) more credit being extended (b) less likelihood of bad and doubtful debts (c) poor debt collection
(d) more demand for product of the seller (e) none of the above
37. Debt Service Coverage Ratio (DSCR) indicates :
*(a) capability of unit to generate adequate cash accruals to pay instalments of term loans and interest
thereon (b) knowing short term liquidity of borrower (c) overall profitability of the unit
(d) ascertaining borrower's stake in business (e) none of the above
38. Debt Service Coverage Ratio is used for sanction of :
(a) Working Capital Facilities *(b) Term Loans (c) Bank Guarantee (d) Letter of Credit
39. Ideal DSCR is
a) 1:1 (b) 1.33:1 (c) 1.5:1 *(d) 2:1 (e) None of these
40. Short term solvency of a unit is indicted by
a) Debt equity Ratio b) Total indebtedness ratio c) proprietary ratio *d) Current ratio
41. A very high Current Ratio of say 4:1 is :
(a) highly desirable as it shows capacity of the borrower to repay current dues without difficulty
*(b) not desirable as it means less efficient use of funds
(c) desirable as it means that the borrower is relying more on capital and reserves than on outside
borrowings (d) desirable as it ensures safety of bank funds in the long run (e)none of the above
42. Proprietory Ratio is the relationship between :
(a) total assets to tangible net worth *(b) capital or shareholders' funds to total tangible assets
(c) net fixed assets to long-term debts (d).either (a) or (b) (e) none of the above
43. For calculating Debt Service Coverage Ratio (DSCR), the numerator will be :
*(a) Profit after tax plus depreciation plus interest on term borrowings
(b) Profit before tax plus depreciation plus interest on term borrowings
(c) Profit after tax plus interest on term borrowings (d) Profit before tax plus interest on term'borrowings
44. Which of the following is incorrect?
(a) For a dealer of cars, a car is a current asset
(b) Security deposits for electricity or telephone is a non current asset.
(c) Prepaid rent is a current asset
*(d) For a transport operator, a car is a current asset (e)Pre expenses is a fictitious asset
45. The short term solvency of a unit can be judged by
a) Debt Equity Ratio *b) Current Ratio c) Debt collection period
d) Gross profit margin e) None of these
46. Debt Equity Ratio is calculated by dividing
*(a) Long term liability by tangible net worth b) Long term liability by paid up capital and reserves
(c) Tangible net worth by long term liability d) Paid up capital and reserves by long term liability
(e) Total outside liability by paid up capital
47. Working capital gap means
(a) Current Assets minus Current Liability
*(b) Current Asset minus Current Liability other than bank borrowing (c) Current Assets
minus inventory & prepaid expenses
(d) Current Assets minus paid up Stocks
(e) Quick Assets minus Current Liability other than bank borrowing
48. Which of the_following is not a fixed cost of a manufacturing unit? a) raw material
consumed b) rent paid for factory shed c) consumption of power
d) salary of the office staff e) commission paid to salesman f) salary of manager
g) wages paid to production staff based on production *(h) a,c,g & e (1) none
49. Break even point in a production process is the point where:
a) fixed costs equal variable costs (b) fixed costs start rising on further production
62 .
*(c) total of fixed and variable costs just equals the total revenue (d) both (a) and (c)
50. Break Even Point represent a level of sales at which :
(a) there is no profit or loss (b) sales revenue is equal to total cost
(c) a firm is able to recover both fixed and variable costs *(d) all of these (e) none of these
51. Operating cycle in an industrial concern means
a) Conversion of raw materials into semi-finished goods
b) *Conversion of raw materials into finished goods sundry debtors and back into cash
c) Conversion of raw materials into finished goods
d) Conversion of sundry debtors into cash e) none
52. As per first method of lending of Tendon Committee bank should finance 75% of:
*a) working-capital gap (b) total current assets (c) net working capital
d) lower of (a) or (b) above (e) none
53. In the second method of lending under Tendon Committee:
(a) Bank should finance 75% of working capital gap
(b) Bank should finance 50% of the current assets
*(c) Borrower should contribute 25% of total current assets and total current liabilities including bank
borrowing should not exceed 75% of current assets
(d) Lower of (a) & (b) e) none
54. As per Nayak Committee recommendations as modified from time to time, 20% of projected sales are to be sanctioned as
working capital to SSI units with WC limits up to
a) Rs. 50 lakh b) Rs. 100 lakh c) Rs. 200 lakh *d) Rs. 500 lakh e) none
55. Funds flow statement means:
(a) operating statement for a period (b) statement of sources and use of funds as on a date
*(c) statement of sources and use of funds for a period (d) statement of assets and liabilities as on a date
56. Which of the following is a long term source?
a) Paid up capital and reserves b) Term loan from financial institution
c) Plant and machinery *d) Both (a) & (b) e) Both (b) & (c)
57. Which of the following is not a long term use?
a) Goodwill b) Land & Building c) Investment in subsidiaries
*d) Debentures e) Pre operative expense
58. The profit retained in the business are classified as
b) Current asset as these are easily realizable (b)Current liability as these are payable to shareholders
c) Assets as these are owned by business *(d) Liabilities as this represent as a source of funds
e) Long term liability as these are payable to shareholders after one year
59. Which of the following is incorrect?
c) Increase in liabilities is a source of funds b) Decline in assets is a source of funds
c) Increase in assets is a use of funds d) Decline in liabilities is a use of funds *e) None of these
NON PERFORMING ASSETS
1. What is the objective of introducing prudential norms for income recognition, asset classification and Provisioning for the
advances portfolio of the banks by RBI?
(a) for greater consistency in the published accounts (b) for transparency in the published accounts
(c) to apply principle of conservatism *(d) Both (a) & (b) (e) All of these
2. Non Performing Assets (N PAs) are categorized as:
(a) Sub Standard Assets (b) Doubtful Assets (c) Loss Assets *(d) any one of the above
3. With effect from the year ending 31.03.2004, a term loan is treated as non-performing asset (NPA) if : (a) the balance
outstanding is more than the loan amount originally sanctioned
(6) interest remains overdue for more than 90 days
(c) installment remains overdue for more than 90 days
*(d) interest and/or installment remain overdue for more than 90 days (e) both (a) and (d) above
4. As from the year ending 31.03.2004, a cash credit/overdraft account is classified as NPA if :
(a) balance.is beyond the sanctioned limit / D.P (b) interest has not been serviced for 4 quarters
*(c) the account remains out of order (d) both (b) and (c) (e) none of these
5. Crop loan granted for long duration crop becomes NPA if :
(a) interest remains unpaid after it has become overdue for two years
(a) interest and /or installment remains unpaid after it has become overdue for two crop seasons
63 .
(b) interest and/or installment of principal remains unpaid after it has become overdue for two half years
(b) interest and/or installment of principal remains unpaid after it has become overdue for two crop seasons but for a period
not exceeding two half years
*(e) interest or instalment is overdue for one crop season.
6. Crop loan granted for short duration crop will become NPA if:
(a) the loan is overdue for 6 months (b) the loan is overdue for 12 months
*(c) the loan is overdue for two crop season (d) the loan is overdue for more than 2 crop seasons
7. Out of order account means an account where:
(a) the balance is continuously more than the sanctioned limit or drawing power
(b) where as on the date of Balance Sheet, there is no credit in the account continuously for 90 days or credit is less than
interest debited
(c) where stock statement has not been received for 3 months or more.
*(d) any of these (e) only (a) or (b)
8. In case of cash credit and overdraft, the account will be treated as NPA if
(a) the limit is not renewed/reviewed within 6 months from the due date of renewal.
(b) account remains out of order.
(c) the limit is not renewed within 3 months from the due date of renewal
*(d) Either (a) or (b) (e) none of these
9. Which of the following accounts will be classified as NPA?
(a) Loan against LIP when the balance outstanding is more than the limit sanctioned for 6 months but within surrender
value of LIP
(b) Interest debited in the educational loan account during moratorium period has not been recovered
simultaneously.
(c) Interest debited in a housing loan account for last 6 mouths has not been recovered from the date of sanction and
repayment was to start after 12 months from sanction.
(d) Loan is guaranteed by Central Govt and is overdue for more than 90 days. *(e) None of these
10. Which of the following is not correct regarding income recognition in respect of NPA accounts?
(a) Banks should not charge and take to income account interest on any NPA.
(b) Interest on advances against term deposits, NSCs, IVPs, KVPs and Life policies may be taken to income account
on the due date, provided adequate margin is available in the accounts.
(a) If Central Government guaranteed advances become NPA, the interest on such advances should not be
taken to income account unless the interest has been realised. *(d) None of these
11. As per RBI guidelines, w.e.f the year ending 31.03.2005 when an asset is identified as NPA it will be classified as sub-standard up
to a period not exceeding :
(a) 18 months (b) 5 years (c) 6 months *(d) 12 months (e) None of these
12. As per RBI guidelines, w.e.f the year ending 31.03.2005, an account will be classified as Doubtful if it is NPA or sub standard for
more than:
(a) 6 months *(b) 12 months (c) 18 months (d) 24 months (e) None of these3 years
13. An NPA account is straightaway classified as doubtful without waiting for 12 months if the security deteriorates so much that its
realizable value is:
(a) less than 10% of the outstanding balance (b) 10% or above the outstanding balance
*(c) 10% or above but less than 50% of the outstanding balance
(d) 10% or below the outstanding balance (e) None of these
14.An NPA account is straightaway classified as loss . if the security deteriorates so much that its realizable value is:
*(a) less than 10% of the outstanding balance (b) 10% or above the outstanding balance
(c) 10% or above but less than 50% of the outstanding balance
(d) 10% or below the outstanding balance (e) None of these
15. In an NPA account, interest or any other charge will be recognized as income as per which of the following:
(a) on accrual basis (b) when borrower gives a firm commitment to regularize the account
*(c) when it is actually realised (d) (a) or (c) as per policy of the bank (e) None of these
16. A crop is considered as long duration crop if crop season is more than 12 months. The crop season for each crop which means
the period up to harvesting of the crops raised, is determined by:
(a) Banks themselves *(b) State Level Banker's Committee (c) NABARD (d) RBI
17. Provisioning is required to be made in the case of______________assets.
a) Standard b) Sub standard c) Doubtful d) Only (b) & (c) *e) All of these
18. On which of the following types of loans, provision is required to be made at the rate of 0.25% of the outstanding if the advance
64 .
is classified in the standard category?
*a) Direct advance to agriculture (b) Direct advance to SME
c)All advances to Agriculture & SME (d) Both (a) & (b) (e) None of these
19. The provision on standard assets made to a person other than Direct advance to agriculture and SME and for commercial real
estate are to be made at the rate of of the outstanding balance on global basis.
a) 0.25% *b) 0.40% c) 1% d) 0.50% e) None of these
20. Which of the following is correct regarding provision on standard assets in the following categories? *a) Commercial
Real estate: 1% of outstanding balance
b) Housing loan more than 30 lakh: 1% of the outstanding balance
c) Capital market exposure: 2% of the outstanding balance d) Both (a) & (b) only (e)-None of these
21. In the case of advances classified as sub standard assets other than those which were unsecured abinitio, the provision is
required to be made as per which of the following?
a) For unsecured portion 100% and on secured portion 10%.
b) For unsecured portion 100% and on secured portion 20%.
*c) 15% of the outstanding balance without reference to security d) None of these
22. In the case of sub standard assets which were unsecured abinitio, the provisioning is required to be made at the rate of of
outstanding balance.
*a) 25% b) 50% c) 75% d) 100% e) None of these
23. A clean overdraft has become NPA and the outstanding is Rs 100,000. How much provision is to be made? (a) Rsl 0,000 *(b) Rs
25,000 (c) Rs 50,000 (d) Rs 100,000 (e) None of these
24. An advance was granted to farmer for poultry. Account is standard and outstanding in the_account is Rs 100,000 whereas
realizable value of security is Rs 60,000 only. How much provision is to be made?
(a) Rs 10,000 *(b) Rs 250 (c) Rs 40,150 (d) Rs 400 (e) None of these
25. An advance has been granted to a farmer for construction of house. The account is standard and outstanding in the account is Rs
100,000. How much provision is to be made on this account?
(a) Rs 250 *(b) Rs 400 (c) Rs 1000 (d) None of these
26. In the case of doubtful accounts, provision on unsecured portion is made at the rate of 100%. For secured portion, the provision
is made as a percentage of realizable value of security depending upon the period for which the account is doubtful. For which of the
following, the rate of provision for secured portion is not correct?
a) DF1: 25% b) DF2: 40% *c) DF3: 50% d) DF3: 100% e) None of these
27. A loan has become more than 3 years old in the doubtful category. In this case, the provision on secured portion as on 31.3.10
will be:
a) 50% b) 60% c) 75% *d) 100% e) None of these
28. An advance of Rs. 2,00,000 has been declared sub standard on 31.10.2011. It is covered by securities with realizable value of
Rs. 1,50,000 . Total provision in the account as on 31.03.2012 will amount to:
*(a) Rs. 30000 (b) Rs. 30,200 (c) Rs. 47,000 (d) Rs. 83,800 (e) none
29. The unsecured exposure which are classified as sub standard attract a provision of 25% of the outstanding balance. For this
purpose, unsecured exposure means an exposure where the realisable value of the security, as assessed by the bank/approved
valuers/Reserve Bank's inspecting officers, is , ab--initio, of the outstanding exposure.
*(a) not more than 10% (b) not less than 10% (c) less than 10% (d) None of these
30. A cash credit account other than agriculture and commercial state became out of order on 5.3.12. Balance outstanding in the
account is Rs 200,000. Value of security in the account is Rs 150,000. How much provision is required to be made as on 31.3.12?
(a) Rs 20,000 (b) Rs 50,000 (c) Rs 15,000 *(d) Rs 800
31. An account became sub standard on 5.3.09. Balance outstanding in the account is Rs 5 lac and realizable value of security is Rs 4
lac. How much provision is required to be made as on 31.3.12.
(a) Rs 50,000 (b) Rs 220,000 (c) Rs 100,000 *(d) Rs 500,000 (e) None of these
32. How is the provision on standard assets treated?
(a) it is deducted from Gross NPA (ii) it is deducted from Gross advances
*(c) shown as 'Contingent Provisions against Standard Assets' under 'Other Liabilities and Provisions -Others' in Schedule 5 of the
balance sheet.
(d) any of these but accounting practice should be followed consistently. (e) None of these
33. An advance has been made by 3 banks under a consortium arrangement. The account becomes NPA with one of the banks, What
should be done by other banks?
(a) classify the account as NPA (b) classify the account as NPA but provision not to be made
*(c) the account will be classified as per record of recovery of each bank
(d) classify the account as NPA if the same is NPA with the leader bank (e) None of these
65 .
34. Advance against which of the following will be subject to provisions of Asset classification, income Recognition and Provisioning
even if sufficient margin is available?
(a) own deposit (b) NSC *(c) government securities (d) LIP (e) None of these
35. RBI has proposed that total provisioning coverage ratio of banks, including floating provisions, should not
be less than __________________. Banks should achieve this norm not later than end-September 2010
(a) 30% (b) 40% (c) 50 *(d) 70% (e) None of these
36. Which of the following is true about treatment of floating provisions?
(a) Floating provisions can be deducted from gross NPAs to arrive at net NPAs
(b) Floating provisions can be treated as part of Tier II capital
'lc) Either (a) or (b) (d) Both (a) & (b) (e) None of these
37. Cases with claims of_______________are filed with DRT and not with normal courts.
(a) less than Rs 10 lakh (b) Rs 10 lakh *(c) Rs 10 lakh and above (d) Rs 20 lakh
38. Choose incorrect statement(s) regarding appeal to the Appellate Tribunal against the order of the Debt Recovery Tribunal :
(a) When a Debt Recovery Tribunal has passed an order with the consent of the parties, no appeal lies with the Appellate
Tribunal.
*(b) An appeal to the Apellate Tribunal is required to be preferred within 90 days from the date of receipt of order of the Debt
Recovery Tribunal by the aggrieved party.
(c) When the aggrieved party is required to pay the amount to bank/financial institution, the Appellate Tribunal will
entertain appeal only when 75% of the amount ordered to be paid by the Debt Recovery Tribunal is deposited by him which can be
reduced to 0% by DRAT.
(d) all of these (e) only (b) and (c)
39. Appeal against the judgement of DRT can be made to DRAT within how many days?
(a) 30 days of judgement (b) 45 days of judgement *(c) 45 days of receiving copy of judgement
(d) 30 days of receiving copy of judgement. (e) None of these
40. Lok Adalats are set up under provisions of
(a) Debt Recovery Act 1993 *(b) Legal Services Authority Act 1987 (c) Indian Contract Act 1872
(d) General Clauses Act (e) None of these
41. Which type of accounts can be taken to Lok Adalat?
(a) Sub standard (b) Doubtful (c) Loss accounts *(d) Only (b) & (c) (e) All of these
42. Cases covered under Lok Adalats are both suit filed and non-suit filed accounts, which are in 'doubtful' and 'loss' categories with
outstandings up to:
(a) Rs. 2 lacs (b) Rs. 5 lacs (c) Rs.10 lacs *(d) Rs. 20 lacs (e) Rs. 7.5 lacs
43. Banks prefer filing cases with Lok Adalats because:
*a) No court fees is payable (b) this is an informal arrangement
c) Bank can recover loss assets d) Only (a) & (b) e) None of these
44. Which of the following is not correct regarding Lok Adalat?
(a) Since its decisions are consent decree, no appeal can be filed against decision of Lok Adalat.
(b) If Lok Adalat is arranged by DRT, .cases involving amount of more than Rs 20 lakh can also be filed
(c) Filing a case with Lok Adalat does not extend limitation period.
(d) Its awards are deemed to be decrees of civil courts. *(e) None of these
45. To enforce its rights under SARFAESI Act,2002, a bank is required to give--------days notice to borrower.
(a) 30 (b) 45. (c) 90 *(d) 60 (e) 120
46. To enforce its rights under SARFAESI Act,2002, minimum outstanding in the account should be:
(a) Rs 1 lac *(b) more than Rs 1 lac (c) Rs 10 lakh (d) More than Rs 10 lakh
47. Provisions of Sarfaesi Act are not applicable in the case of:
(a) securities under lien or pledge (b) agricultural land *(c) Both (a) & (b) (d) None
48. Provisions of Sarfaesi Act are not applicable and securities can not be acquired if___________________% of the principal
amount has been paid.
(a) 50% (b) 60% (c) 75% *(d) 80% (e) None of these
49. In the case of consortium accounts, for enforcing rights under Sarfaesi Act, consent of _ lenders is required.
*(a) 75% lenders by value (b) 60% lenders by number (c) Both (a) and (b) (d) None
50. For enforcing rights under SARFAESI Act, the action can be initiated by:
(a) Chief Manager & above (B) AGM & above (c) Senior Manager or above
*(d) Chief Manager & above or any authority approved by Board of Directors of the Bank
51.Which of the following is correct regarding enforcing rights under Sarfaesi Act?
(a) Minimum outstanding in the account should be Rs 1 lac or above
66 .
(b) Possession of security can not be taken over if loan is raised for any agricultural purpose.
(c) Action can be taken even if limitation has expired
*(d) Objective of the Act is speedy recovery of NPAs (e) Both (a) & (b) only
52. Bank has initiated action under Sarfaesi Act. The borrower objects to bank's action. With whom, he can file application against the
action of the bank, if the outstanding in the account is Rs 2,00,000.
(a) District Court (b) High Court *(c) DRT (d) DRAT (e) None of these
53. For selling goods acquired by enforcing rights under Sarfaesi Act, ___________________ days notice is to be given to the
borrower/guarantor:
*a) 30 (b) 45 (c) 90 (d) 60 (e) 120
54. If a borrower makes a representation to bank against action taken by bank under Sarfaesi Act, bank is required to reply with
in days.
a) 30 (b) 45 lc) 7 (d) 60. (e) 120
55. A borrower who wants to file an application with DRT in respect of action initiated by the bank under SARFAESI Act, 2002 is
required to deposit with DRT
(a) 50% of the amount due to the bank (b) 75% of the suit amount due to the bank
(c) 50% of the amount due to the bank which can be reduced to 25% by the Presiding Officer
(d) 25% of the amount due to the bank *(e) No amount to be deposited.
56. The validity of the SARFAESI Act was challenged before Supreme Court in the case of :
(a) Union of India versus Mardia Chemicals Ltd *b) Mardia Chemicals Ltd versus Union of India & Others
c) Mardia Chemicals Ltd versus ICICI Bank d) Mardia Cements Ltd versus ICICI e) None of these
57. For making appeal to DRAT, under SARFAESI Act, the borrower is required to deposit ____________________of the dues
which can be reduced to_______________by the DRAT.
a) 75%, 0% b) 50%, 0% *c) 50%, 25% d) 75%, 25% e) None of these
58. As per decision of Supreme Court in the case of___________________, bank can take action simultaneously under
Sarfaesi and also file case with DRT or normal court for recovery.
(a) Union of India versus Mardia Chemicals Ltd b) Mardia Chemicals Ltd versus Union of India & Others
*c) Transcore Ltd versus Union of India & others d) None of these
59. An account will be eligible for Corporate Debt Restructuring if:
a) the limit has been availed from more than one bank b) minimum outstanding is Rs 10 crore
c) account is standard, sub standard or doubtful d) Only (a) & (b) *e) All of these
60. When an account is restructured, it will be upgraded after 12 months from the due date of first instalment
provided instalments are paid regularly for_________________after restructuring.
a) 3 months b) 6 months *c) 1 year d) 2 year e) None of these
61. An account will be eligible for Corporate Debt Restructuring if:
a) the loan has been raised by corporate i.e. limited company or co-operative society
b) the loan has been raised for manufacturing or any other activity
c) no fraud is involved *(d) all of these (e) None of these
62. Which of the following is not correct regarding CDR?
(a) CDR Il is applicable to Doubtful accounts *(b) CDR is applicable to all type of NPA
(c) Proposals under CDR I can be referred if 20% of lenders by value agree. (d) None of these
63. CDR 1 is applicable to:
a) Standard accounts (b) sub standard accounts (c) Doubtful accounts *d) Both (a) and (b)
64. Which of the following factors is not taken into account while considering a proposal for CDR?
(a) Return on capital employed (b) gap between internal rate of return and cost of funds
(c) Debt Service Coverage Ratio (d) extent of sacrifice *(e) None of these
65. Which of the following is the main criteria for decision relating to restructuring of a unit?
— (a) unit should be able to become viable in 7 years (b) restructured debt should be paid within 10 years
(c) unit should be able to become viable in 5 years *(d) Both (a) & (b) (e) Both (b) & (c)
66. Which of the following is not correct regarding eligibility under CDR?
(a) Minimum outstanding should be more than Rs 10 core
(b) CDR is available for single lender and multiple lender accounts
(c) Wilful defaulters can be considered if bank is satisfied *(d) Both (a) & (b) only (e) All of these
67. Which of the following conditions have to be satisfied for SME being eligible for restructuring:
a) Account should be standard, sub standard or doubtful.
Outstanding balance is Rs 10 crore or below in case of advance by more than one bank to a corporate account became NPA not due to
fraud d)Only (a) & (b), *e) All of these ( ANSWER IS - * MARKS )
67 .
INTEREST RATES
t The monetary and credit policy statement of RBI is called:
*(a) Annual Policy Statement (b) Credit policy of RBI (c) Economic Policy (d) None of these
2. Base rate is fixed by:
(a) RBI (b) IBA (c) Ministry of Finance *(d) Asset Liability Management Committee of Bank
3. Interest rate on which of the following have not been deregulated by RBI and decided by RBI?
*(a) DRI (b) Ceiling rate on export credit (c) Ceiling rate on educational loans
(d) Both (b) and (c) only (e) All of these
4. The Working Group on BPLR headed by Mr Deepak Mohanty has suggested replacing BPLR with:
(a) Prime rate *(b) Base rate (c) Reference rate (d) Basis rate (e) None of these
5. What is the objective of introduction of Base Rate system in banks?
(a) Enhancing transparency in lending rates of banks
(b) Enabling better assessment of transmission of monetary policy
(c) To prevent monopoly and restrictive trade practices.
*(d) Both (a) and (b) only (e) All of these
Exposure Ceilings
6. The basic objective of prudential norms for exposure are:
(a) better risk management (b) avoidance of credit risk (c) higher profitability
*(d) Both (a) & (b) (c) All of these
7. In case of single borrowers, other than in infrastructure, the exposure ceiling is_________________% of capital funds and
for borrower group, the exposure ceiling is_____________% of capital funds.
*(a) 15%, 40% (b) 20%, 40% (C) 15%, 50% (d) 20%, 50%
8. Credit Exposure ceiling for borrowers is linked to:
(a) Paid up capital of bank (b) Net worth of bank *(c) Capital fund of the bank (d) None of these
9. For the purpose of exposure norms, what is the meaning of capital fund?
(a) paid up capital and reserves (b) Tier I capital *(c) Tier I & Tier II capital (d) None of these
10. In case of infrastructure projects, the exposure ceiling in case of individual borrowers is_____________% of capital
funds and in case of borrower group it is______________% of capital funds provided additional exposure is in respect
of infrastructure project.
(a) 15%, 40% (b) 20%, 40% (c) 15%, 50% *(d) 20%; 50% (e) None of these
11. How much additional exposure is permitted in exceptional circumstances with the permission of the Board of Directors of the
bank in case of exposure to single borrower or group?
*(a)5%,5% (b) 10%, 10% (c) 5%, 10% (d) No additional exposure without RBI approval
12. Exposure norms are applicable to which of the following types of exposures?
(a) Credit facilities to weak/sick industrial units under rehabilitation packages (b) Food credit
*(c) Loans guaranteed by State Government (d) Both (a) & (b) only (e) None of these
13. Exposure norms are not applicable to which of the following?
*(a) Advance against Bank's own deposit (b) Advance against LIP (c) Advance against NSC
(d) Seasonal Industries .(e) All of these
14. For the purpose of exposure norms, which of the following is true for inclusion under exposure?
(a) 100% of both fund based and non fund based credit limits
(b) Sanctioned limit or outstanding whichever is higher shall be considered.
(c) In case of fully drawn term loans outstanding and not the limit sanctioned will be considered.
(d) Both (a) & (b) only *(e) All of these
15. For the purpose of exposure norms, what is the meaning of 'Group'?
(a) Majority of the directors should be common (b) The Managing Director should be same
*.(c) Commonality of Management and effective control (d) All of these
16. Which of the following is not treated as infrastructure for exposure norrhs?
(a) construction of cold storage for fruits, vegetables (b) laying down of gas pipeline •
(c) construction of educational institutions and hospitals *(d) None of these (e) Only (a) & (b)
. Capital Market Exposure
17. The aggregate exposure of a bank to the capital markets in all forms (both fund based and non-fund based)
on solo basis as well as consolidated basis should not exceed__________________% of its net worth as on March 31 of
the previous year and the bank's direct investment in shares, convertible bonds / debentures, units of equity-oriented mutual funds
and all exposures to Venture Capital Funds (VCFs) should not exceed
____________% of its net worth.
68 .
(a) 20%; 40% (b) 15%; 40% *(c) 40%; 20% (d) 50%; 20% (e) None of these
18. As per Section 19(2) of the Banking Regulation Act, 1949, a banking company can hold shares in any company, whether as
pledgee, mortgagee or absolute owner, up to:
(a) 30% of the paid-up share capital of that company
(b) 30% of paid-up share capital and reserves of the bank
(c) 30% of paid-up share capital and reserves of that company
*(d) (a) or (b) whichever is less (e) (a) or (c) whichever is less
19. Maximum advance from the banking system that can be allowed to an individual against shares, convertible bonds, convertible
debentures and units of equity oriented mutual funds is restricted to:
(a) Rs.10 Iakh if the securities are held in physical form
(b) Rs. 20 lakhs if the securities are held in demat form.
(c) Rs 20 lakhs whether securities are in physical or demat form
(d) Rs 10 lakhs whether securities are in physical or demat form *(e) Both (a) & (b) only
20. What is the minimum margin for financing against physical and demat shares?
(a) 50%, 25% *(b) 50%, 50% (C) 50%, 40% (d) 25%, 50% (e) None of these
21. How much minimum margin should be kept by banks while issuing guarantees on behalf of stock brokers or brokers in commodity
exchange?
*(a) 50% of which cash margin should be minimum 25% (b) 25% with no sub limit for cash margin
(c) 100% of which cash margin should be minimum 50%(d) 50% with no sub limit for cash margin
22. Bank's investment in equity shares, Preference shares eligible for capital status, Subordinated debt instruments, Hybrid
debt capital instruments issued by other banks should not exceed % of the
investing bank's capital funds (Tier I plus Tier II).
(a) 5% *(b) 10% (c) 15% (d) 20% (e) None of these
23. Banks have to limit their commitment by way of unsecured guarantees in such a manner that __________________of the
bank's outstanding unsecured guarantees plus the total of outstanding unsecured advances do not exceed
___________%of total outstanding advances.
(a) 10%, 15% (b) 15%, 20% (c) 15%, 40% (d) 20%, 50%
*(e) None of these as there is no such stipulation.
24. Banks can not grant advance against their own shares as per provisions of:
(a) Section 20 (1) of RBI Act (b) Section 19(2) of Banking Regulation Act
(c) RBI guidelines *(d) Section 20 (1) of Banking Regulation Act (e) None of these
Loans to Directors of Banks
25. Banks can not grant any loans or advances to any of its directors except as permitted by RBI. This is as per provisions of :
(a) Section 20 (1) of RBI Act (b) Section 19(2) of Banking Regulation Act
(c) RBI guidelines Id) Section 20 (1) of Banking Regulation Act (e) None of these
26. Banks can not grant loans to any of its directors against which of the following securities?
(a) Government Securities (b) Life insurance policies (c) bank's own deposit
*(d) shares (e) Both (c) & (d)
27. As per Section 20A of the Banking Regulation Act, 1949, whose permission is required for remitting in whole or in part any debt
due to a bank by any of its directors, or any firm or company in which any of its directors is interested as director, partner, managing
agent or guarantor, or any individual, if any of its directors is his partner or guarantor.
*(a) Reserve Bank (b) Board of Directors of the Bank (c) SERI (d) Company Law Board
(e) None of these as loan given to a director can not be remitted at all.
28. Upto how much amount loan can be sanctioned by appropriate authority within powers delegated to him to any relative of their
own director or directors of other banks or relative of director of other bank?
(a) up to Rs 25 lakh (b) Rs 25 lakh and above *(c) Less than Rs 25 lakh
(d) None of these as loan'to relatives of bank's directors can not be granted without RBI permission
29. Which of the following is correct regarding loan to directors of other banks or relatives of directors of own bank or directors of
other banks?
(a) In all cases, loan can be sanctioned by appropriate authority but it should be reported to Board of Directors of
sanctioning Bank
(b) In all cases, loan can not be granted without sanction of the Board of Directors of lending Bank.
(c) Loan of Rs 25 Iakh and above can be granted only after obtaining sanction of the Board of Directors of lending bank
(d) Loan of less than Rs 25 lakh can be sanctioned by appropriate authority but it should be reported to
Board of Directors of sanctioning Bank le) Both (c) and (d)
69 .
Miscellaneous Instructions
30. Which of the following is not sensitive commodity for purpose of Selective Credit Control?
(a) food grains i.e. cereals and pulses (b) major oil seeds and oils thereof (c) raw cotton and kapas
*(d) Tea and Coffee (e) None of these
31. Which of the following commodities are presently covered under stipulations of Selective Credit Control? a) food grains i.e.
cereals and pulses (b) major oil seeds and oils thereof (c) raw cotton and kapas
*(d) Buffer stock of sugar with sugar mills, unreleased stocks of sugar with sugar mills (e) None of these
32. Which of the following is correct regarding RBI guidelines on various types of loans?
(a) Banks will not grant loan against partly paid shares
(b) Banks will not grant loan to partnership/proprietorship concerns against the primary security of shares and debentures.
(c) Banks cannot grant loans against CDs or buy-back their own CDs before maturity except in respect of CDs held by mutual
funds *(d) All of these (e) Only (a) and (b)
33.Why RBI has advised banks to desist from sanctioning advances against FDRs, of other banks?
(a) Other bank will not mark lien of lending bank *(b) It may result in double financing
(c) There may be possibility of fake term deposit receipts being used for obtaining advance
(d) All of these (e) Only (a) & (b)
34. As per Fair Practice Code, in case of receipt of request for transfer of borrowal account, either from the borrower or from a bank/financial
institution, which proposes to take- over the account, the consent or
objection of the lender, if any, should be conveyed within____________________from the date of receipt of request.
*(a) 21 days (b) 15 days (c) 7 days (d) one month (e0 None
35. Which of the following is not correct?
(a) Banks may negotiate bills drawn under LCs, on 'with recourse 'or 'without recourse 'basis
*(b) Banks can not purchase/discount the bills drawn otherwise than under LC on 'without recourse 'basis
(c) Banks should not rediscount bills earlier discounted by non-bank financial companies (NBFCs) except in respect of bills arising from
sale of light commercial vehicles and two / three wheelers.
(c) Banks can not negotiate bills drawn under LCs, on 'with recourse 'or 'without recourse 'basis Loan system for
delivery of bank credit
36. Loan Delivery System was recommended by Committee headed by
*(a) Rashid Jilani (b) N. Vaghul (c) K. Kannan (d) C Rangarajan (e) None of these
37. Working Capital Demand Loan was recommended by:
*(a) Rashid Jilani (b) N. Vaghul (c) K. Kannan (d) C Rangarajan (e) None of these
38. Loan Delivery System is applicable in case of borrowers enjoying :
*(a) working capital credit limits of Rs. 10 crore and above from the banking system
(b) working capital credit limits of Rs 10 crore and above from a bank.
(c) fund based limits of Rs 10 crore and above from the banking system
(d) fund based limits of Rs 10 crore and above from a bank. --
39_ As per RBI, for borrowers availing working capital credit facilities of Rs 10 crore and above from the banking
system, the loan component should normally be______________% and cash credit component should be %.
*(a) 80%, 20% (b) 20%, 80% (c) 75%, 25% (d) 60%, 40% (e) None of these
40. Which of the following is true regarding freedom to banks in respect of Loan Delivery System?
(a) Banks can increase the cash credit component beyond 20% but up to a maximum of 50%.
(b) Banks can increase the 'Loan Component' beyond 80% but up to a maximum of 90%
*(c) Banks can increase the Loan component or cash credit component up to any limit.
(d) Both (a) & (b) only (e) None of these
41. Loan Delivery System is not applicable in respect of which of the following type of business activities?
(a) which are cyclical (b) which are seasonal (c) which have inherent volatility *(d) all of these
42. Loan Delivery System is not applicable in respect of which of following-type of facilities?
(a) Bill finance (b) export credit (c) sick units (d) seasonal industries *(e) all of these
43. Which of the following is not correct regarding Loan system of credit delivery?
(a) Interest on loan portion and cash credit portion of limit can be different.
(a) Security is common for Loan portion and Cash credit portion.
(b) Demand Loan can be paid in lump sum or in instalments (e) All of these *(e) None of these
Consortium Loans and Multiple Banking Arrangement
44. As per RBI guidelines, a bank must lend through a consortium when credit facilities are more than:
(a) Rs 5 crore (b) Rs 50 crore (c) Rs 100 crore *(d) None of these
70 .
45. When is it necessary for a bank to form consortium for lending a borrower though RBI has waived requirement for the same?
(a) When credit facilities are more than 15% of capital fund of the financing bank in case of single borrowers
(b) When credit facilities are more than 40% of capital fund of the financing bank in case of group.
(c) When financing an infrastructure project Id) Only (a) and (b) (e) All of these
46. Which of the following is correct about consortium financing by banks?
(a) Minimum number of consortium members should be 2 and maximum number should be 4.
(b) Every bank will have same asset classification
(c) Minimum share of a bank in the consortium should be 10%
*(d) The banks will have a pari passu charge on the securities charged to them.
47. At the time of granting fresh facilities, which type of declarations is to be obtained from the borrowers?
(a) that they are not availing credit facilities from other bank
(b) that they are not availing working capital facilities from other bank
*(c) details about the credit facilities already enjoyed by them from other banks (d) None of these
48. When a borrower has availed credit facilities from more than one bank, banks should exchange information
about the conduct of the borrowers' accounts with other banks at least at___________________intervals.
(a) monthly *(b) quarterly (c) half yearly (d) yearly (e) None of these
49. In the case of existing lenders, all the banks may seek a declaration from their existing borrowers availing
sanctioned limits of___________________and above regarding credit facilities enjoyed by them from other banks.
(a) Rs 1 crore *(b) Rs 5 crore (c) Rs 10 crore (d) None of these ( ANSWER IS - * MARKS )
MEMORY BASED RECALLED QUESTIONS
BALANCE SHEET ANALYSIS
1. Current Ratio is 1.33:1, Current Assets is 100, what will be the amount of Current Liability: 75 lakhs
2. XYZ Limited are sanctioned a CC limit of Rs.50 lac. The drawing power in the account calculated on the basis of available
security and margin, is Rs.54 lac. How much drawings in the account will be allowed?: sanctioned limit of DP whichever is lower
3. Projected Turnover is Rs.400 lacs, margin by promoter is Rs. 20 lacs. What is maximum bank finance as per Annual Projected
Turnover method: 80 lakhs.
4. If Break Even Point is high, it can be construed that the margin of safety is ____: Low.
5. Working Capital Means_______: Current Assets.
6. If Net Working Capital is 48 and Current Liabilities are 12, what is the Current Ratio: 5:1 (Current assets 60; Current liability
12).
7. To improve Current Ratio of 2:1, what has to be done?: a) Recover cash from Receivables b) Cash sales c) Decrease the Bills
payables*
8. Banks undertake BEP analysis to assess: Margin for safety.
9. Net working capital means: Current assets minus current liabilities.
10. Receivables 20 and sales 120. Find the Receivables turnover turnover ratio in months: 2 months (20/120 x12)
11. CC limit sanctioned is Rs 4 lacs and Stocks are valued at Rs. 6 lacs. If the margin to be maintained is 25% , what is drawing
power? : NOTIONAL - 4.5 lacs, BUT ACTUAL Rs. 4 LAC.
12. What is the operating cycle average period for turnover in Annual Projected Turnover method: 3 months of annual sales.
13. A unit is having Current Assets of Rs.400, & the Current Ratio is 2:1, Quick Ratio 1:1. What is the level of Inventories: 200.
14. Which of the following is the Solvency / Leverage ratio: Debt Equity Ratio (options viz., DSCR, Debtors Turnover ratio and these
3 combined ratios were given).
15. Profit before Tax is 75, Tax is 30, Depreciation is 25, Term Loan installments is 25, Interest on Term Loan is 15. Calculate DSCR
_____: 2.12
16. Current Assets is 600, Long Term sources is 600, Total Assets is 1,000. What is NWC and Current Ratio: Current Ratio is 1.5 : 1;
NWC = 200.
17. Current liability means: Liability towards outsiders payable within 1 year.
18. Current ratio indicates: Liquidity position of the firm ability of firm to pay short term liabilities on time.
19. Current Ratio is 1.75:1, NWC is 30, what will be Current Assets and Current Liability? : 70 and 40.
20. A firm has total liabilities of 120. The long term sources are 80 and long term uses are 40. The current ratio is 2:1.
21. A firm has current assets of 200 which among others include, stocks and pre-paid expenses of 125. The current liabilities are 160
which also include short term bank borrowing of 40. What is the amount of working capital gap : 80 (Rs 200 minus Rs 120 i.e.
current liabilities except bank borrowing)
22. Profit after tax is 60. Interest on Term Loan is 20 and depreciation 20. For a target debt service coverage ratio of 2, what is
amount of term loan instalment: 30 ( i.e. 2 = (60 + 20 + 20) / ? + 20)
23. What is a Contingent liability?: Bank Guarantee, Letter of Credit and Forward Contracts
71 .
24. Which of the following is Variable cost? Raw Material, wages, power, fuel etc ( not salaries, rent which are fixed costs)
25. Accrual Accounting means: Expenses and revenues are recorded in the period they occur, whether or not cash is paid or
received.
26. Contingent liability is shown in Balance Sheet as: Footnote to the Balance sheet.
27. On which one of the following assets, depreciation is applied on Straight line method: Computers.
28. Meaning of accrual concept: Mercantile system.
29. Accrual concept means: This concept takes into account the accounting of receipt or payment or otherwise recording a
transaction (which actually might have taken place/ materilised or not), to be considered as part of and relating to the
accounting period. For example, the business may raise a loan from a bank, the interest on which is payable to the bank
immediately after the close of the accounting period. In the accounting period, a provision on accrual basis would be required to
be made irrespective of the fact that the payment would be made after the close of accounting period.
30. Accrued expenses are recorded under which head of balance sheet? Current Liabilities.
31. Variable cost means: Which varies with level of production.
32. Break Even Point: Point of no profit no loss. ( TR-TC=Zero)
33. Operating expenses include: Expenses other than interest paid on deposits and borrowings
34. Which of the following is Variable cost? Raw Material, wages, power, fuel etc
PRIORITY SECTOR - GENERAL
1.A housing loan in metro area will be classified as Priority Sector, provided maximum amount of loan is up to ___ and maximum
cost of house is up to: Rs. 28 lac; Rs 35 lac.
2.In case of House loan where loan amount is above Rs. 75 lac, Loan to value is 75% the risk weight is _____: 75 %.
3.What is the risk weight in case of Staff loan secured by mortgage or superannuation benefits: 20%
4.As per LTV guidelines, what is the risk weight for housing loan up to 30 lakhs with LTV of 75%: 35%
5.As per the moratorium guidelines, the repayment of education loan should start from: 12 months on completion of course or 6
months after getting job, whichever is earlier.
6.Maximum finance for repair and renovation of house in metro under priority sector: Rs. 5 lac
7.What should be annual income of a BPL family to be eligible for getting interest subvention under educational loan? Rs 4.50 lac.
8.Loans to individuals for educational purpose India for how much amt will be under priority sector: Rs.10 lacs for inland studies &
abroad.
9.How much Education loan is allowed for vocational purpose in India?: For course duration upto 3 months Rs. 20,000/-; for 3 to 6
months – Rs. 50,000; 6 months to 1 year- Rs. 75,000 & Above one year- Rs. 1.5 lac.
10. What is the target in DRI scheme for women: No Target for women.
11. Business correspondent is: Agent of Banker.
12. Priority Sector : Maximum loan in Social Infrastructure : Rs.5 crore
13. Priority Sector : Maximum loan in Renewable Energy : Rs.15 crore
14. Provision on Commercial Real Estate in Residential Housing: 0.75% of outstanding
15. What is the target for weaker sections as part of PS?: 10% of ANBC or CEOBE whichever is lower.
16. Target of RRB Has been revised for priority sector and the revised target is 75%.what was the earlier target of RRB for priority
sector?: 60% of total advances
17. Loans to individual whose income is less than 1.00 lac in rural area up to what limit comes under priority sector: Rs. 50,000
18. Target of RRB has been revised for priority sector and the revised target is 75%. What was the earlier target of RRB for priority
sector?: 60% of total advances
19. Loan review mechanism is done for the loans Rs.______ & above: Rs. 10 Cr & above.
20. What is the maximum amount of finance under Shishu category of MUDRA: Rs. 50,000.
21. Weaker section Target as per Priority Sector guidelines: 10% of ANBC or CEOBE whichever is higher. In terms of total Priority
sector it is 25%.
22. Rajeev Rinn Yojana how much maximum loan w/o collateral security: EWS- 5 lacs; LIG- 8 lacs.
23. Under Priority sector, maximum loan for Renewable Energy: Rs. 15 crore.
AGRICULTURE
1.Blue revolution refer to: Fish breeding.
2.When a farmer in addition to agriculture is engaged in rearing of farm stock, it is called: Mixed farming.
3.Debt Swap meaning: To extend finance to farmers for repayment of loan taken from non-institution lenders.
72 .
4.Shortfall in PS advance target, amount to be deposited in: RIDF.
5.Long duration crop means a crop with harvest season of: More than 12 months.
6.What is the premium in case of PMFSY : 1.5% Rabi 2% Kharif. 5% for commercial and horticulture crop.
7.Food & Processing Industry up to what amount can be given under priority sector: Rs. 100 crores.
8.No dues Certificate in agriculture finance: not required
9.In case of KCC, no interest subvention is available if loan is: overdue. Available for short duration loans up to 1 year. Not available
in respect of overdue loans.
10. What is the target for financing of agriculture?: 18% of ANBC or CEOBE whichever is higher.
11. What is the rate of interest subvention in crop loans up to Rs 3 lac?: 2%
12. Loan to Agri Clinic and agri business centre is classified as: Ancillary activities as part of Agriculture.
13. In case of KCC, no interest subvention is available if loan is: overdue. Available for short duration loans up to 1 year. Not
available in respect of overdue loans.
14. In Kisan Credit Card Scheme, to calculate the limit for 5 years, the cost escalation is to be built in, for assessing the limit for a
subsequent year at: 10% of previous year limit.
15. Max amount of crop loan under KCC for claiming Interest subvention: Rs. 3 lac.
16. Under interest subvention scheme, farmers are given some additional concession for prompt repayment. What is the
percentage of additional interest subvention: 3% and net interest to borrower is 4%
17. Loans to farmer against pledge / hyp of agriculture produce ( post harvest marketing scheme ): Rs.50 lakh for a period of 12
months.
18. What is the maximum loan amount permitted under KCC?: No upper limit. It is at the discretion of the bank.
19. A loan up to Rs 50,000 will be covered under Priority Sector Others provided Annual Household income for non rural borrower
does not exceed: Rs.1,60,000/-
20. Under Agri Clinic scheme the maximum loan limit for individual is: 20 lac. And group 100Lac.
21. When a farmer in addition to agriculture is engaged in rearing of farm stock, it is called: Mixed farming.
22. Limit sanctioned to Food Processing and Allied Activities upto ___will be eligible for priority sector: Rs 100 crore from banking
system.
23. What is the target for financing of agriculture?: 18% of ANBC or CEOBE whichever is higher.
24. What is the rate of interest subvention in crop loans up to Rs 3 lac?: 2%
25. Post harvest loan against Pledge / Hypothecation of crop produce is provided upto Rs. _______ and for ____ months: Loan
upto Rs. 50.00 lac period not extending 12 months.
GOVT. SPONSERED AND FINANCIAL INCLUSION
1.What will be the rate of interest and tenure for gold bonds? (2.5%, 8 yrs)
2.The balance in Small SB A/c at any point should not exceed: Rs. 50000/
3.What is initiative of Government to provide banking services to BPL people? Financial Inclusion.
4.APY belongs to: Un organized sector
5.Income Criteria in PMEGP: No ceiling
6. Under SHG-Bank Linkage Program the ratio of savings linked loans to SHGs by banks can vary from a saving to loan ratio of 1:1
to: 1:4.
7.For being eligible for Revolving Fund under NRLM, Self Help Group is required to follow Panch Sutras. What are these Panch
Sutras?: Regular Saving, Regular internal lending, Regular recovery, Regular Meetings and Regular accounts.
8.What is not the objective of Self Help Groups? Marking Super profit or raising loan from banks.
9.What extent SHG finance can be refinanced by NABARD?: 100%.
10. Number of members in a Joint Liability Group (JLG) can be: 4 to 10.
11. In case of NRLM, how much loan is given under 2nd dose?: 5-10 times of the savings and revolving fund or Rs 100000
whichever is higher.
12. NULM Funding sharing ratio: 75% by Central Govt. and 25% by State Govt.
13. Under PMEGP scheme maximum project cost for Business / Service sector is: Rs 10 lacs.
14. Minimum Education qualification for PMEGP: For Mfg projects upto 10 lac and Business/service sector upto 5 lacs: Nil
15. What is the reservation/target for Woman beneficiaries in SHG in the NULM scheme: 30%
16. Min members in SHG in remote area/ or members with Disability: 5 Members
17. JLG (Joint Liability Group); maximum finance per person: Rs 50000
18. Atal Pension Yojna: Maximum contribution by GOI: 50% of the amount of contribution with a maximum of Rs 1000 p.a. for 5
years.
19. Sukanya Smridiy yojana – maximum amount of deposit in a financial year: Rs 150,000
73 .
20. Personal Accident cover for death and permanent disability in PMJDY: Rs.1.00 Lac.
21. In Small Saving Bank Account all credits in a financial year should not exceed : Rs. 1 lac
22. PMSBY insurance cover in accident: Max Rs. 2 lac
23. What is the maximum number of withdrawals in a month from Basic Saving Bank Deposit account? : 4.
24. What is rate of premium in Pradhan Mantri Suraksha Bima Yojana (PMSBY): Premium payable Rs.12 per annum per member;
sum insured Death/ permanent disability Rs.2 lacs; partial disability Rs. 1 lac.
25. What is age limit in PM Jeeven Jyoti Yojna?: Eligible all saving accounts holder in the age of 18 to 50 years; Benefits Rs. 2 lac
on death due to any reason; Premium-Rs. 330 per annum per member.
26. Business Correspondent agent uses which machine for transactions: Biometric Machine.
27. PMJDY - overdrafts extended by banks up to Rs 5,000 in PMJDY accounts will be eligible for classification under priority sector
advances as also weaker sections, provided the borrowers household annual income does not exceed: Rs 60,000 for rural areas
and Rs 1,20,000 for non-rural areas
28. Atal pension Yojana: Contribution of Govt: 50% of the premium subject to a maximum of Rs 1000 every year for 5 years
provided enrolment up to 31.3.2016. Maximum Rs 5000 in 5 years.
29. What is the maximum amount of loan to SC/ST for construction of house under DRI scheme: Rs.20,000/-
30. OD in PMJDY account upto: Rs. 5,000/-.
31. Difference between import and export is called: Balance of Trade
32. Maximum amount of loan for coverage under Priority Sector in respect of Housing Loan at Metro cities with population of 10
lac or above: Rs.28 lac
33. What is the maximum amount of loan to SC/ST for construction of house under DRI scheme: Rs.20,000/-
34. Who fixes scale of finance for short term crops : Distt. Technical Committee
35. BSBDA a/c holder should close all other saving bank accounts in that bank within: 30 days
36. SHG comes under : Micro Financing
37. Maximum age of girl child for opening account in Sukanya samridhi yojna: 10 yrs.
38. What is the rate of Swachh Bharat Cess as part of Service tax?: 0.5% from 15 Nov 2015.
39. What is full form of USB: Ultra Small Branch
40. Sukanya Smridiy yojana – maximum amount of deposit in a financial year: Rs 150,000
MSME
1. CGTMSE cover eligible for loan upto: Rs.100.00 Lac. (Now `200.00 Lacs)
2. Loan to MSME without collateral: Rs.10.00 Lac.
3. CGTMSE set up by: Govt. of India and SIDBI.
4. Trade e-Receivable Discounting System: Joint bid by NSE with SIDBI
5. The RBI revised guidelines for rehabilitation of MSMEs are applicable for exposure up to: Rs 25 cr.
6. A unit in service sector will be classified as Medium enterprise if investment in equipment is : More than Rs 2 crore and up to Rs
5 crore.
7. What is the full form of CGTMSE?: Credit Guarantee Trust for Micro and Small Enterprise.
8. What is the Standard rate of Guarantee fees for loans more than Rs 5 lac made to micro enterprises under CGTMSE?: 0.85%
p.a. of limit sanctioned.
9. What is the maximum amount of finance under Shishu category of MUDRA: Rs.50,000
10. What is finance limit as per Nayak committee recommendation under MSME?: Up to Rs. 5 Cr.
11. Which of the following is not part of Plant and machinery?: Land, Building, Fire Equipment, Electrical fitting, Furniture, None: All
of the above.
12. For MSE units, no collateral security / third party guarantee is to be taken for loans upto Rs. _____: Rs.10 lakhs. (For Good
track record unit upto Rs 25 lacs).
13. What is guarantee corpus in MUDRA Bank or funds allocated for MUDRA: Rs.20,000 crore.
14. SMERA stands for : Small & Medium Enterprises Rating Agency.
15. START-UP INDIA: Under this plan the government will set up a fund with an initial corpus of 2,500 crore and a total corpus of
10,000 crore over a period of four years.
16. Cluster based approach is applicable for: a) Priority credit advance b) SME* c) SHG.
17. As per the Task Force committee headed by T.K.A. Nair, the banks to achieve annual growth of _____% in Micro enterprise
accounts: 10% p.a. Annual growth target of outstanding advance to Micro & Small Enterprises: 20%
18. For MSE units, no collateral security/third party guarantee is to be taken for loans upto Rs. _____ : Rs. 10 lakhs. (For Good track
record unit upto Rs 25 lacs).
19. For financing MSE, cluster approach & 4-c approach suggested by: Ganguli Committee
74 .
20. Maximum number of vehicles that can be owned by an SRTO to be treated as priority sector lending is : Now,
no stipulation regarding no of vehicles; investment not to exceed Rs.2 crore
21. MUDRA Bank: Micro units Development Refinance Agency-Corpus Rs.20,000 cr.
22. What is the Standard rate of Guarantee fees for loans more than Rs 5 lac made to micro enterprises under CGTMSE?: 0.85%
p.a. of limit sanctioned.
23. CGTMSE has been set up by: Govt of India and SIDBI.
24. Annual growth target of outstanding advance to Micro & Small Enterprises: 20% on year to year basis.
25. Under Mudra loan scheme, up to how much amount of loan can be sanctioned under Shishu category: Rs 50000
26. Micro Enterprise target for 2016-17: 7.5%
NPA & RECOVERY MANAGEMENT
1. Under OTS, the compromise amount is calculated after taking in _______: Opportunity Cost.
2. What is the limitation period when Govt. wants to take legal action for recovery of its dues: 30 years.
3. Provision on Commercial Real Estate in Residential Housing: 0.75% of outstanding
4. CGTSME guarantee fee for NPA level below 6%: Standard rate minus 25bps
5. For how much period the account should be irregular for being classified as SMA-2 : 61 days to 90 days.
6. What is the amount of fees for registration with CERSAI?: Rs 50 for loan up to Rs 5 lakh and Rs 100 for loan more than Rs 5
lakh.
7. Provision on secured Sub-Standard Loan: 15% of outstanding.
8. Maximum amount of claim that can be filed Lok Adalat: Rs. 20.00 Lac and above Rs.20 lac in Lok Adalat formed by DRT.
9. Eligible Amount of suit in DRT: Rs.10.00 Lac & above.
10. Time Limit for registration of equitable mortgage with CERSAI: 30 days from date of deposit of title deeds.
11. In case of equitable mortgage, the deposit of title deeds has to be at ______: Any notified town notified by the State Govt.
12. CGTSME guarantee fee for NPA level below 6%: Standard rate – 25bps
13. Loan given for short duration crop becomes NPA when it is overdue for: two crop seasons
14. Borrower should be given .... days notice prior to possession and .... days notice prior to sale of property under Sarfesi Act: 60
days; 30 days.
15. NPA - D3 Category (Beyond three years): 100% Provision both on secured and unsecured.
16. SARFAESI is applicable to what type of a/cs: Secured NPA Accounts.
17. Which is the latest recovery channel made available to the banks for speedy recovery of NPAs backed by security : Action can be
taken under SARFAESI.
18. For declaring a borrower as non cooperative the cut off total fund based and non fund based facility is above: Rs 5 cr.
19. Whether premium of CGTMSE as per NPA category relates to loan upto 5 lac: no. Applicable for loan above Rs 5 lac
20. Pari Passu charge means: Sale proceeds of security shared by different banks in the ratio of their outstanding loans.
21. NPA norms are not applicable to which type of loans?: Loan against deposits, life insurance policy and NSC’s.
22. CC account will become NPA if limit is not reviewed for how many days: 6 months from due date of renewal.
23. Which is the latest recovery channel made available to the banks for speedy recovery of NPAs backed by security: Action can
be taken under SARFAESI.
24. What is the % age of provision on Standard assets in case of Direct Agriculture and Direct MSE advances: 0.25% of outstanding
25. Classification of NPA in case of consortium advances: Each bank will classify according to its own record of recovery
26. Sarfaesi proceeding in a case of consortium advance: If 60% of creditors due agree.
27. Total number of Banking Ombudsman in India: 15.
28. Agency which purchases NPA from banks is called: Assets Reconstruction company.
29. NPA norms are not applicable to which type of loans?: Loan against deposits, life insurance policy, NSC.
30. CC account will be NPA if limit is not reviewed for how many days: 180 days from due date of renewal.
31. Appeal against Award given by Lok Adalat can be made to: No Appeal to any court against decision of Lok Adalat
40. Features of CDR Mechanism: It is for restructuring of corporate loans with outstanding of Rs. 10 Cr or above in a multiple
lender case.
41. Features of CDR Mechanism: It is for restructuring of corporate loans with outstanding of Rs. 10 Cr or above in a
multiple/consortium lender case.
42. SARFAESI Act is not applicable if security is: Agriculture Land
43. Cut off limit for reporting of non co-operative borrower: Rs.5 crore
44. An account guaranteed by Central Govt. will become NPA: As per prudential norms of RBI, when the Central Govt. repudiates
its guarantee.
75 .
45. What is the % age of provision on Standard assets in case of Direct Agriculture and Direct MSE advances: 0.25% of outstanding.
46. Which of the following can purchase NPA? a) ARC b) Banks c) Financial Institutions d) NBFC e) All of the above*
47. Name the scheme approved by Union Government for financial restructuring of debt of power distribution companies with the
key aim for financial turnaround and revival of Power Distribution Companies. (Ujwal DISCOM Assurance Yojana (UDAY))
Ombudsman
1. A Bank can prefer appeal on the award passed by Banking Ombudsman to Deputy Governor within _____ from the date on
which the bank receives letter of acceptance of Award by complainant: 30 days
2. Banks are required to implement the award of Ombudsman unless a decision is taken to appeal against the same within one
month from the date of receipt of acceptance of the award by the complainant
3. For its implementation, the complainant should accept the award given by Ombudsman within: 30 days of the receipt of the
copy of the award.
4. If a complainant is not satisfied with the award or his complaint is rejected by the Banking ombudsmen, he can prefer an
appeal to Deputy Governor, RBI within: 30 days of the of the date of receipt of communication regarding award or rejection
of the complaint.
5. Ombudsman Award - Max for credit card: Rs. 1,00,000.
6. Total number of Banking Ombudsman in India: 15
7. Under Ombudsman scheme, the authority for appeal is: Dy Gov. RBI
8. Under Ombudsman scheme, which type of case not entertained?: advocate representing the customer
9. Under the Ombudsmen scheme, the Bank has to reply to the objection of the complainant within: one month
10. What is the maximum amount of Award that can be given by an Ombudsman under RBI's Ombudsman scheme? Rs. 10 lacs.
11. When an order passed by Banking Ombudsman is accepted by the complainant, the same should be complied within: 1
month from the date of receipt of acceptance from the complainant.
12. Whether a customer can approach Ombudsman without first approaching the Bank : Approaching the bank first is a precondition
13. Who is appointed to tackle public complaints against the public authorities : Ombudsman
14. Within how many days of filing a complaint with the bank, the complainant can approach the Ombudsman: One year from
the date of the receipt of the reply from the bank. If no reply received then it is one year and one month.
Companies
1. A bank cannot acquire either as owner or as pledgee shares in a company more than:. 10 % of paid capital of the company or
10% of the paid up capital and reserves of the bank, whichever is lower.
2. A limited company has registered office at Chennai whereas loan has been raised from bank branch at Mumbai. The charge
will be registered with the ROC at: Chennai
3. A private limited company with Registered office at Bangalore has raised loan from a branch located at Mumbai. For creating
equitable mortgage, title deeds can be deposited at: Mumbai, Kolkatta, Chennal or any other notified place.
4. Board of Directors want to borrow money in excess of paid up capital and reserves of the company: can be done through a
resolution passed by shareholders in the general meeting
5. CIN in case of a company indicates: Corporate Identity Number.
6. Company is in liquidation, funds are at the disposal of : Liquidator
7. For formation of a company, Registrar of Companies will issue : certificate of incorporation
8. In the case of IPO, the company is required to allot shares or make refund within: 30 days of the closure of the issue in case of
fixed price public issues; 15 days in case of book built issues and 15 days in case of right issues
9. Objectives for which a company has been formed are given in: Memorandum of Association
10. On repayment of_debt of a company, satisfaction of charge shbuld be filed with ROC within: 30 days
11. The Articles of Association mention that the minimum quorum for passing a resolution is 5 directors. However a resolution
is received which was signed by four directors only with a request to open the current account: All the 5 Directors should
sign the resolution for opening of the account
12. The legal liability to file charges with ROC in case of lending to a Company is that of ______: Borrowing Company
13. What is the Doctrine of Ultra Vires in the context of a limited company?: Any act by the directors beyond the object of the
company is considered ultra vires the company and company is not bound by such act.
14. When a company is financed against the security of hypothecation or mortgage of its movable property, the company is
required to file particulars of charge with: Registrar of Companies
76 .
Charges on Securities
1. Bailment of goods to secure payment of a debt is called – Lien, Pledge, Negative Lien, Hypothecation: Pledge
2. Bank retain possession of goods of the borrower in which of the following – lien, set off, appropriation: Lien
3. Banks are required to maintain secrecy of a customer’s account as per – Indian contract Act; Implied obligation; Implied right:
implied obligation.
4. Documents executed in India are required to be as per Indian stamp act/ State
Stamp Act: Stamped
5. Guarantee claim period when period is not mentioned in the bank guarantee document: 3 years
6. Limitation period for execution of decree: 12 years. (For filing suit for financial decree it is 3 years)
7. Limitation period for filling suit in respect of mortgage is: 12 yrs
8. Power of Attorney is stamped under which act – Indian Contract Act; Banking Regulation Act, State Stamp Act, Indian Stamp Act:
State Stamp Act
9. Relation of banker customer in case of deposit of money for a specific purpose: Bank is Trustee and Customer is beneficiary.
10. Right of a nominee begins when: on death of all account holders except in case of jointly operated locker accounts.
11. What is a General crossing?: Writing two parallel lines on the face of the cheque with or without and company or any
abbreviation thereof.
12. What is a Promissory note?: Unconditional undertaking
13. What is conversion?: Dealing with others property without their consent.
14. What is lien? Right of creditor to retain possession of goods and securities of debtor till creditor’s dues are paid.
15. What is mortgage: Transfer of interest in specific immovable property to create security for a debt
16. What is noting: Recording the fact of dishonor of a bill or promissory note with Notary public
17. What is Pari-Passu Charge when loan has been sanctioned by more than one bank in consortium?: In case of default, the sale
proceeds of security will be shared in the ratio of outstanding within sanctioned limits.
18. What is the Limitation period of a demand Promissory Note?: 3 Year from date of DPN
19. What is the relation between bank and customer in case of receipt of Garnishee order?: Debtor and creditor
20. When liability of partners is limited it is called?: Limited Liability Partnership (LLP)
21. When on a promissory note or Bill of Exchange period is not mentioned it is called as: Demand Bill or Demand Promissory Note
22. When on default by Principal Debtor, guarantor pays dues of borrower, he is entitled to all rights and remedies which the
creditor had against the borrower. This right of guarantor is called: Right of Subrogation
23. When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of
negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped
paper intended to be completed as a negotiable instrument, it is called: Endorsement.
24. Which of the following cannot be endorsed – Cheque/DD/Bill of Exchange/Promissory Note/Fixed Deposit Receipt: FDR
NPA - RECOVERY MANAGEMENT & SARFAESI
1. As per a recent judgement of the Supreme Court, while initiating action under SARFAESI, the position in case of suit filed in
DRT would be: that no permission is required from DRT and action under SARFAESI can be initiated as both the cases can
run together.
2. As per provisions of Sarfaesi Act, after taking possession, for making sale, how many days notice is required to be given to
borrower?: 30 days.
3. Bank has served the possession notice under Sarfeasi. The borrower has raised any query. The bank has to reply within: 15
days.
4. Central Registry provision when started: 31-3-11 under SARFAESI Act.
5. Charge where SARFAESI action can not be taken: Pledge
6. For acquiring securities charged to the bank under SARFAESI, notice of __ days is required to be given to the borrower u/s
13(2) of the Act and for sale of securities so acquired notice of__ days is required.: 60 days, 30 days
7. For enforcing right under SARFESAI Act, in the case of consortium advances, consent of which bankers is required?: consent
of 60% bankers by value is required
8. For taking action under SARFAESI, the outstanding should be: More than Rs.1.00 lac
9. In case of SARFAESI Act, before preferring appeal to DRAT, how much amount is to be deposited by the borrower with DRAT?:
50% of the claim amount which can be reduced to 25% by the DRAT. For making application to DRT, no amount is to be deposited.
10. NBFC with assets size of Rs.500 Crore and registered with RBI can take action under: Sarfaesi.
11.Under SARFAESI Act, in the case of Consortium lending, % of creditors to agree to bring the action under SARFAESI:
60% of creditors by value.
12. Under SARFESAI, appeal against decision of DRT can be made to DRAT within_____ days and if appeal by borrower, he
should deposit % of bank’s claim with DRAT: 30 days; 50%
77 .
13. Which is the latest recovery channel made available to the banks for speedy recovery of NPAs backed by security: Action
can be taken under SARFAESI.
DRT / Lok Adalat
1. Limit for filing suit in DRT: Rs.10 lacs and above
2. For referring cases to Lok Adalat, the cut-off limit is: Upto 20 lacs. More than 20 lacs Lok Adalat set up under DRT.
RISK MANAGEMNET
1.Minimum total capital + CCB up to 31.03.2019: 11.50%
2. Revaluation reserve can be included in Tier-I capital to the extent of: 45% of its value.
3. Bank's will be monitored on excessive leverage build up leverage ratio of: 4.5%
4. By 31 March 2019, the Basel capital + counter cyclical buffer will stand at: 11.5% of RWA (9% + 2.5% for CCB)
5.What is the exposure ceiling fixed by RBI for IBU’s( IFSC’s Banking Units)? (Single Borrowers: 5% of the parent bank’s Tier 1
capital and for group borrowers: 10%)
6.Which of the following does not come under Tier II capital? a) Capital reserves b) Undisclosed reserves c) Revaluation reserves d)
Cumulative Perpetual shares: Capital Reserves.
7. Leverage ratio as per Basel-3 = 3 %
8.What is the date for final implementation of Basel III? 31.03.2019.
9.Rating of Bank is carried by RBI on CAMELS criteria, what do “C” stands for? Capital Adequacy.
10. Under the Risk Based Audit, what is the maximum aggregates scoring given: 1000.
11. Under the Risk Based Audit which parameter is given the highest scoring: Credit Management
12. Which of the following does not come under Tier II capital? Capital reserves / Undisclosed reserves / Revaluation reserves /
Non cumulative perpetual shares: Capital Reserves.
13. Which of the following is not part of Operational risk? Fraud / Documentation failure / failure of systems / none: None.
14. Full form of ICAAP: Internal Capital Adequacy Assessment Process
15. Which of the following does not come under Tier II capital? a) Capital reserves b) Undisclosed reserves c) Revaluation reserves
d) Cumulative Perpetual shares: Capital Reserves.
7. MCQs ON MEMORY BASED QUESTIONS
RECALLED & EXPECTED QUESTIONS: TEST YOURSELF
Latest RBI POLICY BASED Questions ( 01.04.2017 to 30.09.2017)
1 What is the number of digits in UIDAI Aadhaar number : a 10 b 11 c 12 d 14
2 Model Bank sanctioned working capital limits of Rs.30 lac to M/s Janardhan & Co. for which a guarantee was given by Mr.
Satyanarayana, the father of managing partner Mr. Janardhan. Due to some dispute amongst the father and son, Mr. Satyanarayana
gave a notice to the bank withdrawing his guarantee when the balance in the account was Rs.27.60 lac. The guarantee bond provide
for a notice of withdrawal of 2 months.
a With the issue of withdrawal notice the guarantor is totally absolved of his liability and he is no more liable for the outstanding
dues.
b After issue of the withdrawal notice, the guarantor will be liable for 2 months during which the bank can recover the loan from the
guarantor alognwith other parties.
c Bank will send a notice to the firm for arranging another guarantee during 2 months period and would continue with the
operations.
d Bank will stop debit operations in the account to determine the liability of the guarantor and inform the firm about withdrawals
and also for arranging another security as per satisfaction of the bank.
3 Which of the following represents the direct quotation in India, in the forex transactions:
a 1 US$ = 0.75 euro b Rs.100 = 2.10 US$ c 1 pound sterling = Rs.79.10 d all the above
4 The rates of interest on loans and advances given by banks w.e.f. 01.04.2016 are to be determined with reference to:
a bench mark prime lending rate, b marginal cost of funds based lending rate, c base rate, d bank rate
5 Which among the following instruments is not a negotiable instrument as per provisions of Section 13 of Negotiable
Instrument Act? a bill of lading, b commercial paper, c certificate of deposit ,d govt. treasury bill e all the above
78 .
6 No collateral security to be taken for loan up to Rs.10 lac in which of the following cases:
a MSE Loan and Agri-clinics and Agro Business Centres , b MSE Loan and PMEGP Loan, c PMEGP Loan and Agri-clinics
and Agro Business Centres d MSE Loan, Loans to individual persons under SGSY, Agri-clinics and Agro Business Centres
7 Bank has granted a loan of Rs.90 lac to an MSE in other than NE States and other than Women enterprise. In case the loan
becomes NPA, what is the amount of guarantee cover that would be available to this loan:
a Rs.65 lac b Rs.62.50 lac c Rs.60.00 lac d Rs.57.50 lac
What is the income ceiling for DRI loan eligibility: a Rs.12000 for rural areas and Rs.15000 for urban areas
b Rs.15000 for rural areas and Rs.20000 for urban areas, c Rs.18000 for rural areas and Rs.20000 for urban areas
d Rs.18000 for rural areas and Rs.24000 for urban areas
9 Where a bank is having unreconciled inter-branch entries old than ____, it has to make provision at ___%
a 6 months, 100%, b 6 months, 75%, c 12 months, 100% , d 18 months, 100%
e no provision is required, entries being intra-bank
10 A doubtful NPA account is purchased by Bank-B from Bank-A. What classification would be given by the Bank-B to this account: a
to be treated as substandard account, b to be treated as doubtful up to 12 months category irrespective of its classification with
Bank-A, c to be treated in the same category in which it had been classified by Bank-A
d to be treated standard account for initial period of 90 days, e to be treated standard account for 12 months.
11 Accumulated losses are shown by a joint stock company, in its balance sheet as: a footnote of the balance sheet
b deduction from the paid up capital, c deduction from the net worth, d intangible asset e non-current asset
12 In case of collection of cheques and bills, the relationship of bank with the customer is that of:
a Bank as agent and customer trustee, b Bank as trustee and customer debtor, c Banker as debtor and customer creditor
d Banker as bailor and customer bailee ,e bank as agent and customer principal
13 The following categories of loans can be priced without being linked to MCLR as the benchmark for determining interest rate: (1)
Advances to banks’ depositors against their own deposits. (2) Advances to banks’ own employees including retired employees.
(3) Advances granted to the Chief Executive Officer / Whole Time Directors. (4) Loans linked to a market determined external
benchmark. - a 1 only b 1 and 3 only c 1 to 4 all d. 1, 3 and 4 only
14 Banks are to review and publish their Marginal Cost of Funds based Lending Rate (MCLR) of different maturities every ___ on a
pre-announced date with the approval of the Board or any other committee to which powers have been delegated.
a fortnight , b month c quarter d six months
15 On comparison of balance sheet of firm for two years, it is observed that its debt equity ratio has increased from 1.5:1 to 2:1 but its
current ratio and the total of balance sheet has not changed. Which of the following is possibly true in this regard
a only the amount of net worth has increased, b only the amount of long term liabilities has declined
c only the amount of intangible assets has decreased , d the amount of long term liabilities has increased or amount of net worth
had declined or amount of intangible assets has increased
16 At the time of renewal of working capital limits of a partnership firm, it was observed by the appraising officer that the quick ratio of
the firm has declined substantially but the current ratio has not changed. Which among the following could be true:
a the amount of stocks has declined, b the firm has become slow in recovery of its book debts
c the firm’s stocks as percentage of current assets have increased , d the firm’s receivables as percentage of current assets have
declined , e c and d above
17 What is the maximum amount that can be remitted outside India, from NRO account, representing sale proceeds of the immovable
property in India - a Rs.10 lac in a calendar year, b Rs.1 lac in a calendar year , c 1 lac US $ per financial year
d 1 million US $ per financial year, e no such remittance is allowed.
18 Hindi day is observed on : a Jan 26 b Jun 22 c Sept 14 d Nov 11
19 The minimum paid up capital of a new Private Universal Bank has to be:
a Rs.100 cr b Rs.200 cr c Rs.300 cr d Rs.400 cr e Rs.500 cr
20 Loan under which of the following scheme/purpose, can be allowed within the DRI financing of 4%:
a housing loans up to Rs.20000 to poor families, b housing loans up to Rs.20000 under National Housing bank Scheme
c housing loans up to Rs.20000 under Indira Awas Yojna, d all the above
21 What is the maximum amount that banks can levy as penal charges for non-maintenance of minimum balances in any inoperative
account.
a no charges can be levied, b within the ceiling rate fixed by RBI, c not more than 1%
d at bank discretion under Board approved procedure and policy
22 HUF cannot be a partner in a partnership firm as per Supreme Court Judgments. The judgments in based on the premise that :
a HUF is a legal person with Karta as its head, but other coparceners are not liable
79 .
b HUF is not a legal person and cannot enter into such agreement that makes it liable for the action of others.
c HUF is not competent to enter into any contract with outsiders and make it liable for the actions of others
d HUF cannot enter into any contract with outsiders
23 A company has to make payment of dividend to large no. of its shareholders through electronic medium. It should use:
a RTGS system b EFT system c SWIFT system d ECS – Debit clearing system e ECS – Credit clearing system
24 A firm has obtained a term loan of Rs.12 lac and its capital is Rs.4 lac. The firm has created general reserve of Rs.3 lac while it has
been showing pre-paid expenses of Rs.1 lac in its balance sheet. The debt equity ratio is:
a 1.71:1 b 1.89:1 c 2.00:1 d data incomplete. Calculation not possible
25 Data Storage unit of a computer is called - a random access memory, b hard disk, c memory unit, d compact disk
26 X makes a request to the bank to write the name of his nominee on his pass book.
a This can be done as customer has given his consent
b This cannot be done, since it would amount to disclosure of customer account information
c This cannot be done, as it is a risk-prone proposal.
d Bank can make mention that it is a nomination account but name of the nominee cannot be written.
27 Which of the following is correct with regard to the interest on a saving bank deposit:
a it is paid for the average balance maintained during the month, but from 1.4.2009 it is payable on a daily product basis
b it is paid for the minimum balance maintained during 10th day to last day of the month, but from 1.4.2009 it is payable on a daily
product basis
c it is paid for the maximum balance maintained during the month, but from 1.4.2009 it is payable on a daily product basis
d from 1.4.2010 it is payable on a daily product basis
28 When book debts are realised by a firm, what is the effect: a current ratio increases, b current ratio decrease
c quick ratio increase, d quick ratio decreases e there is no effect
29 A bank has an oversold position in foreign exchange on a particular day. It has to square its position at the end of the day. The
foreign exchange rates are increasing: a the bank will gain substantially, b the bank will gain marginally
c there will be no effect on the bank , d the bank will incur loss
30 Form 15-H (in terms of Income Tax Act) is used in which of the following cases:
a issue of tax deduction certificate by the banks, b declaration by senior citizen for non-deduction of tax at source, c declaration by
an ordinary customer for non-deduction of tax at source, d exemption for non-quoting of PAN e: None of the above
31 Under RTGS the transactions time 8 am to 4.30 pm is in respect of which of the following category of transactions:
a inter-bank transactions, b intra-bank transactions, c all transactions d customer transactions
32 What is the time period of the notice which is required to be given by a bank for sale of security charged to the bank after taking
possession under the provision of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act
2002: a 15 days b 30 days c 45 days d 60 days e 90 days
33 As per extant instructions of RBI, what is the maximum amount limit that the bank can fix up to which minors may be allowed to
operate their deposit accounts independently. a max Rs.2 lac, b max Rs.1 lac, c max Rs.50000, d at discretion of banks
34 In a loan account, the Central Govt. has given guarantee. The loan account is overdue for the last 2 years and 5 months. What is the
provision %age on the loan: a. 0.40%, b.10% , c. 20%, d. 30% , e. No provision is to be made
35 A loan is guaranteed by the Guarantee of State govt. and it is running irregular for the last 5 months. The loan will be classified as ___:
a standard account, b special mention account, c sub-standard unsecured account
d sub-standard secured account e: None of the above
36 A monetary ceiling of Rs.20 lac has been imposed for entertaining cases by which of the following:
a Consumer Courts, b Lok Adalat, c District Courts, d Ombudsman Scheme
37 Which of the following in general, is eligible, as a borrower, under National Rural Livelihood Mission (NRLM)?
a SC/ST women and non-SC/ST/women, b women self help groups, c SC/ST and non-SC/ST men,d any of the above
38 A power of attorney executed by an NRI in favour of his mother for obtaining payment from the deceased account in the name of
his father has been received. This requires to be stamped as per rates prescribed by ___ , within a period of ___
a Central Govt., 4 months,b Central Govt., 3 months, c State Govt., 3 months,d State Govt., 4 months
e Not require stamping in India
39 An NPA has been sold by Bank-B to Bank-A. What is the minimum period for which the account should have been in the books of
Bank-B before sale to the bank:- a 12 months as NPA,b any NPA account, c 24 months as doubtful account
d 24 months as sub-standard including special mention account status, e sale of ARC is not permitted.
40 What will be due date for a bill dated 27.12.2016 payable 30 days after date:
80 .
a Jan 23, 2017, b Jan 25, 2017, c Jan 26, 2017, d Jan 27, 2017
41 What type of right the banks are having under SARFAESI Act in case of default by the borrower, in repayment of the loan:
a take possession of the secured assets, b takeover management of the assets, c to sell or lease the secured assets
d any of the above
42 Which of the following kinds of LCs, provides for storage of goods in warehouse:
a Back to back letter of credit, b Transferable letter of credit, c Irrevocable letter of credit
d Green Clause letter of credit, e Red clause letter of credit
43 What is the target for domestic banks for priority sector lending:
a 40% of adjusted net bank credit or credit equivalent of off-balance sheet exposure whichever is higher, as on 31st Mar of previous year,
b 40% of the adjusted net bank credit or credit equivalent of off-balance sheet exposure whichever is lower, as on 31st Mar of current year
c 32% of the adjusted net bank credit or credit equivalent of off-balance sheet exposure whichever is higher, as on 31st Mar of previous year
d 40% of the net bank credit or non-fund based limit whichever is higher, as on 31st Mar of previous year
44. Commercial paper is an unsecured money market instrument, which is issued in the form of:
a usance bill of exchange, b usance promissory note , c participatory note d transferable paper
45. Commercial paper can be issued with a minimum maturity period of:
a 7 days b 15 days c 30 days d at discretion of the issuer
46. Commercial paper can be issued with a maximum maturity period of:
a 6 months b 12 months c 3 years d at discretion of the issuer
47. Which of the following cannot issue a commercial paper?
a non-bank finance companies b all India financial institutions c companies d banks
48. If the issuer of a commercial paper is a trust or cooperative society or limited liability partnership, having presence in India, its
minimum networth must be: a Rs. 4 cr b Rs.10 cr c Rs.50 cr d Rs.100 cr
49 The minimum amount for which a commercial paper can be issued is: a Rs.1 lac, b Rs.2 lac, c Rs.5 lac, d Rs.10 lac
50. Which of the following statement about a commercial paper is not correct?
a it can be issued at a discount to face value, b call or put option is not allowed on commercial paper
c issue of commercial paper cannot be under-written or co-accepted , d banks cannot invest in a commercial paper
51. Credit rating from at least 2 SEBI approved credit rating agencies is mandatory, where the size of the issue is:
a Rs.1000 cr or above b Rs.500 cr and above c Rs.100 cr and above d mandatory in all cases
52. The minimum credit rating grade from SEBI approved credit rating agencies should be ___, for an issuer to be eligible to issue
commercial paper? - a triple-A b A-3 c A-1 d AA
53.The issuer of a commercial paper can give a buy back offer which can be made after ____ days from date of issue?
a 15 days b 30 days c 45 days d 60 days
54. The issuer of a commercial paper is required to make arrangement, so that the commercial paper is credited to demat account of
the investor within: a 7 days of issue b 10 days of issue c 14 days of issue d 30 days of issue
55. An instrument for borrowing funds by selling securities with an agreement to repurchase the securities on a mutually agreed
future date at an agreed price which includes interest for the funds borrowed, is called:
a commercial paper b promissory note c reverse repo d repo
56. An instrument for lending funds by purchasing securities with an agreement to resell the securities on a mutually agreed future
date at an agreed price which includes interest for the funds lent, is called:
a commercial paper b promissory note c reverse repo d repo
57. To be eligible to be a tri-party agent under Tri-party Repo Directions-2017 of RBI, the entity should have minimum paid up capital
of: a Rs.10 cr b Rs.15 cr c Rs.20 cr d Rs.25 cr
58. The tri-party agent under Tri¬party Repo Directions of RBI, is required to preserve the trade records for a period of:
a 3 year b 5 years c 8 years d 10 years
59. When a department of Govt. of India wants a letter of credit issued, it is issued by: a RBI ,b SBI c any commercial bank with
which govt. has made arrangement, d any commercial bank on behalf of RBI with which RBI has made arrangement
60. In respect of letter of credit or bank guarantee got issued by Central Govt. department, the role of RBI is :
a limited to advising the LCs/BGs , b limited to reimbursement of payments made by the banks for such LCs/BGs on behalf of the
government, after satisfying itself with the debit mandate given by the government.
c limited to confirming such LC or BGs, d none of the above, as RBI does not deal with LC/BG transactions.
61 As per Financial Literacy Camps guidelines of RBI of July 2017, FLCs and rural branches of banks are eligible for funding support
from the Financial Inclusion Fund for the financial literacy camps to the extent of 60% of the expenditure of the camp subject to a
maximum of ____ per camp - a Rs.5000, b Rs.10000, c Rs.15000, d Rs.20000
62 As per Financial Literacy Camps guidelines of RBI of July 2017, funding for handheld projectors and speakers would be provided
from FIF to the extent of 50% of the cost incurred on purchase of hand held projector and portable speaker (both put together)
subject to a maximum of ____ per rural branch / FLC on a reimbursement basis.
81 .
a Rs.5000 b Rs.10000 c Rs.15000 d Rs.20000
63 For ascertaining the investment in plant and machinery for classification of an enterprises as Micro, Small and Medium, which of
the following documents could be relied upon:
a A copy of the invoice of the purchase of plant and machinery,
b Gross block for investment in plant and machinery as shown in the audited accounts
c A certificate issued by a Chartered Accountant regarding purchase price of plant and machinery, d any of the above
64 For the investment in plant and machinery for the purpose of classification of an enterprise as Micro, Small or Medium, which of
the following is to be taken into account
a book value (purchase value minus depreciation) or the purchase value of the plant and machinery, whichever is higher
b book value (purchase value minus depreciation), c the purchase value of the plant and machinery
d book value (purchase value minus depreciation) or the purchase value of the plant and machinery, whichever is lower
65 The limits for investment by foreign portfolio investors (FPIs) in Central Government Securities and State Development
Loans (SDLs) has been increased from Rs.2580 billion to:
a Rs.2680 billion b Rs.2751 billion c Rs.2781 billion d Rs.2865 billion
66 An unauthorized electronic bank transaction has taken place by a 3rd party in the saving bank account of Mr. Z. After receipt of
bank notification about the transaction, the customer notifies the bank within 2 days. Who will bear the loss of this transaction? - a
bank concerned b customer concerned c bank and customer in the ratio of 50:50
d bank up to Rs.25000 and beyond that customer
67 If some unauthorized electronic bank transaction is noticed by the customer in his accounts, he can provide information to the
bank. Which of the following is not a correct channel for this?
a report through website of the bank b report to toll free helpline of the bank
c reporting to home branch d report to any branch of bank.
68 In cases where due to unauthorized electronic bank transaction, the loss is due to negligence by a customer, such as sharin the
payment credentials. Who will bear the loss:
a bank will bear the entire loss until he reports the unauthorised transaction to the bank
b loss occurring after the reporting of the unauthorised transaction shall be borne by the customer
c all loss will be born by the customer, d until report to bank, customer and loss occurring after reporting by customer, bank.
69 In cases where the responsibility for the unauthorised electronic banking transaction lies neither with the bank nor with the
customer, but lies elsewhere in the system and when there is a delay of 4 to 7 working days after receiving the communication from
the bank, on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be
limited to Rs._____ in case of a saving bank account? - a Rs.5000, b. Rs.10000, c Rs.25000 d no liability
70 In cases where the responsibility for the unauthorised electronic banking transaction lies neither with the bank nor with the
customer, but lies elsewhere in the system and when there is a delay of 4 to 7 working days after receiving the communication from
the bank, on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be
limited to Rs._____ in case of a basic saving bank deposit account?
a Rs.5000 b Rs.10000 c Rs.25000 d no liability
71 In cases where the responsibility for the unauthorised electronic banking transaction lies neither with the bank nor with the
customer, but lies elsewhere in the system and when there is a delay of 4 to 7 working days after receiving the communication from
the bank, on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be
limited to Rs._____ in case of a cash credit account with limit of Rs.40 lac.
a Rs.5000 b Rs.10000 c Rs.25000 d no liability
72 On being notified by the customer, the bank shall credit (shadow reversal) the amount involved in the unauthorised electronic
transaction to the customer’s account within ____ days from the date of such notification by the customer (without waiting for
settlement of insurance claim, if any).
a 7 calendar days b 10 calendar days c 7 working days d 10 working days
73 Banks are to ensure that a complaint is resolved and liability of the customer, if any, established within such time, as may be
specified in the bank’s Board approved policy, but not exceeding ____ days from the date of receipt of the complaint,
a 90 days b 60 days c 30 days d 10 days
74. Banking Ombudsman Scheme 2006 as modified w.e.f. July 01, 2017, covers:
a commercial banks and all financial entities ,b commercial banks, RRB and scheduled primary cooperative banks
c commercial banks, RRB and scheduled primary cooperative banks and all financial entities
d commercial banks only
75.Which of the following statement is not correct with reference to Banking Ombudsman Scheme 2006 as modified w.e.f. July 01,
2017: a Ombudsman can be GM or CGM of RBI, b Ombudsman’s term can be max 3 years, at a time
c expenses of Ombudsman Secretariat are borne by participanting banks, d Ombudsman is appointed by RBI
76. A customer can file complaint with Banking Ombudsman. In this respect which statement is not correct?
82 .
a complaint can be filed if bank rejects the complaint, b complaint can be filed if customer is not satisfied with bank reply
c complaint can be filed, if does not receive any replay within 15 days,
d complaint can be filed within one year, in the above circumstances.
77.Customer can appeal against grounds of rejection of complaint by Ombudsman to Deputy Governor, the Appellate Authority,
within ___ days of receipt of communication regarding rejection.- a 7 days b 10 days c 15 days d 30 days
78. Where a complaint could not be settled by Banking Ombudsman by agreement within ____ from the date of receipt of the
complaint, Ombudsman may pass an Award or reject the complaint
a 10 days b 15 days c one month d two months
79. Banking Ombudsman can award compensation to be paid by bank to the complainant, not more than actual loss suffered as
direct consequence of act of omission or commission of the bank OR _____, whichever is less:
a Rs.25 lac b Rs.20 lac c Rs.15 lac d Rs.10 lac
80. Banking Ombudsman can also award compensation to be paid by bank to the complainant up to Rs.____, on account of
expenses, mental agony etc. - a Rs.1 lac b Rs.2 lac c Rs.5 lac d Rs.10 lac
81. Banking Ombudsman can award compensation in case of Credit Card issue, to be paid by bank to the complainant, not more
than actual loss suffered as direct consequence of act of omission or commission of the bank OR _____, whichever is less:
a Rs.1 lac b Rs.2 lac c Rs.5 lac d Rs.10 lac
82. Customer is required to send acceptance of the award of Ombudsman within ____ days of date of receipt of the award.
a 7 days b 10 days c 15 days d 30 days
83. Bank is to implement the award of Ombudsman within _____ and intimate compliance to the Banking Ombudsman.
a one month from the date of receipt of the acceptance from the complainant
b two months from the date of receipt of the acceptance from the complainant
c one month from the date of receipt of the award of Ombudsman,
d two months from the date of receipt of the award of Ombudsman
84. The complainant can file an appeal to Appellate Authority (Dy. Governor RBI) againt Award of Ombudsman within ___ of date of
receipt of Award - a 3 months b 2 months c 30 days d 15 days
85. The Bank can file an appeal to Appellate Authority (Dy. Governor RBI) againt Award of Ombudsman within ___ of date of receipt
of acceptance of customer, with permission of CMD or MD or ED or CEO:
a 3 months b 2 months c 30 days d 15 days
86. The Appellate Authority (Dy. Governor RBI) can extend the specified period, to make appeal againt Award of Ombudsman by
complainant, by ___ : a 3 months b 2 monthz c 30 days d 15 days
87. Who can represent a bank before the Ombudsman on issues relating to complaints under Ombudsman Scheme?
a Chief Customer Service Officer , b Internal Ombudsman of the bank
c Nodal Officer at Regional/Zonal Office of the bank , d Any officer of the bank
88. As per RBI guidelines, what is the minimum original maturity period for Masala Bonds raised upto USD 50 million equivalent in
INR per financial year ? a 2 years b 3 years c 5 years d 7 years
89. As per RBI guidelines, what is the minimum original maturity period for Masala Bonds raised above USD 50 million equivalent in
INR per financial year ? a 2 years b 3 years c 5 years d 7 years
90. What is the risk weight for capital adequacy ratio purpose, of a home loan up to Rs.30 lac, where the loan to value ratio is max
80% : a 25% b 35% c 50% d 75%
91. What is the risk weight for capital adequacy ratio purpose, of a home loan up to Rs.30 lac, where the loan to value ratio is above
80% but max 90% : a 25% b 35% c 50% d 75%
92. What is the risk weight for capital adequacy ratio purpose, of a home loan above Rs.30 lac up to Rs.75 lac, where the loan to
value ratio is max 80% - a 25% b 35% c 50% d 75%
93. What is the risk weight for capital adequacy ratio purpose, of a home loan above Rs.75 lac, where the loan to value ratio is max
75% - a 25% b 35% c 50% d 75%
94. What is the rate of provision on a standard home loan, where the loan to value ratio is between 75% to 90% according to size of
the loan amount: a 25% b 35% c 50% d 75%
95. The State Level Bankers’ Committees are required to send a confirmation to RBI by ___, that that all unbanked rural centres in
villages with population above 5000 have been banked.
a 30.06.17 b 30.09.17 c 31.12.17 d 31.03.18
96. What is the no. of domestic credit rating agencies approved by RBI for prudential guidelines on capital adequacy ratio, as on
30.06.2017? - a 10 b 8 c 7 d 6
97. Which of the following is the latest credit rating agency approved by RBI for credit rating for the purpose of prudent guidelines
on capital adequacy ratio?
a SMERA b INFOMERICS c BRICKWORK RATING d FITCH Rating
98. The agency banks can furnish their claim on agency commission to Reserve Bank within ____ from the end of the quarter in
83 .
which the transactions have been conducted, starting with June 2017.
a 30 days b 60 days c 90 days d 180 days
99. With reference to the implementation of Goods and Service Tax (GST) regime, the term CPIN stands for :
a Common Portal Identification Number (CPIN), b Central Portal Identification Number (CPIN)
c Central Portal Information Number (CPIN), d Common Payment Identification Number (CPIN)
100. For the quarter July to September, what is the rate of interest on Senior Citizens Saving Scheme:
a 7.5% b 7.8% c 8.3% d 9.1%
101. For the quarter July to September, what is the rate of interest on Public Provident Fund Scheme:
a 7.5% b 7.8% c 8.3% d 9.1%
102. For the quarter July to September, what is the rate of interest on Sukanya Samridhi Account Scheme:
a 7.5% b 7.8% c 8.3% d 9.1%
103. For the quarter July to September, what is the rate of interest on Kissan Vikas Patra Scheme:
a 7.5% b 7.8% c 8.3% d 9.1%
104 With effect from July 10, 2017, what is the batch interval time in NEFT settlements:
a half-hour b an hour c two hours d three hours
105With effect from July 10, 2017, what is the no. of batches in NEFT settlements:
a 11 b 12 c 23 d 25
106.Under NEFT, all participating banks are required to give the credit to beneficiary customer :
a after the inter-bank settlement has been completed, b after inter-bank settlement has been completed and the End-of¬Batch
(EOB) message is received by them, c after the End-of-Batch (EOB) message is received by them,
d after all the settlements have been completed and there is return message
107 A Banking Outlet for a Domestic Scheduled Commercial Bank (DSCB), a Small Finance Bank (SFB) and a Payment Bank (PB) is a
fixed point service delivery unit, manned by either bank’s staff or its Business Correspondent where services of acceptance of
deposits, encashment of cheques/ cash withdrawal or lending of money are provided for a minimum of __ hours per day for at least
___ days a week.- a 5 hours and 5 days b 6 hours and 5 days, c 4 hours and 5 days d 4 hours and 6 days
108 A banking outlet which does not provide delivery of service for a minimum of 4 hours per day and for at least 5 days a week will
be considered a : a Banking unit b Unbanked rural centre c part-time banking outlet d Place of banking business
109. Which of the following is categorized as a banking outlet as per RBI branch authorization policy 2017?
a ATMs b Mobile branches c E-lobbies d none of the above
110 As per RBI’s Branch Authorization Policy 2017, ____ banking outlets opened duing a financial year, must be in rural areas?
a. 20%, b. 25%, c. 30%, d. 35%
111. Merger, Closure and shifting of any rural ‘Banking Outlet’ as well as a sole semi urban ‘Banking Outlet’ would require approval
of: a RBI b SLBC c DCC/DLRC d local administration
112. On short term crop loans, interest subvention of 2% is available to ___ during 2017-18 as an interim measure:
a public sector banks b private sector banks
c public sector banks and loans in rural and semi-branches given by Private sector banks , d farmers
113. For availing short term crop loan interest subsidy, the eligible loan amount is:
a up to Rs.3 lac b up to Rs.2 lac c up to Rs.1 lac d any amount
114 To avail short term crop loan interest subsidy, the rate of interest from borrower should be:
a 4% pa ,b 5% pa, c 6% pa ,d 7% pa
115 Additional interest subvention of ___ % is available to prompt payee farmers from date of disbursement of crop loan up to
actual date of repayment by farmer or up to due date fixed by bank, whichever is earlier: a 1% ,b 2% c 3% d 4%
116 If additional interest subvention is available to prompt payee farmers for short term crop loan, the effective interest rate shall
be: a 1% b 2% c 3% d 4%
117. In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses against warehouse
receipts, the benefit of interest subvention will be available to small and marginal farmers having Kisan Credit Card for a further
period of upto ____ post-harvest on the same rate as available to crop loan against negotiable warehouse receipt for keeping their
produce in warehouses.- a 3 months b 6 months c 9 months d 12 months
118 To provide relief to farmers affected by natural calamities, the interest subvention of 2% will continue to be available to banks
for the _____ on the restructured amount. - a 1st six months ,b 1st year, c 1st 2 years d moratorium period
119. Banks are required to submit their claims for interest subvention of 2% and 3% for short term crop loans on: a half yearly basis
b yearly basis, c half yearly for 2% and yearly for 3% subvention d half yearly for 3% and yearly for 2% subvention
120 Statement of Financial transactions is required to be submitted by banks to Income Tax Department. Which of the following is
not correct in this context: a it replaced the previous statement called Annual Financial Information
b it is required to be submitted by 31st May, c it is required to be submitted on Form 61A, d none of the above
121. Consequent to Enforcement of Security Interest and Recovery of Debts Laws & Misc. Provisions (Amendment) Act, 2016, Asset
84 .
Reconstruction Company can commence or carry on the business of securitisation or asset reconstruction only if its Net
Owned Fund are minimum : a Rs.1 crore or amount notified by RBI, b Rs.2 crore or amount notified by RBI
c Rs.5 crore or amount notified by RBI, d Rs.10 crore or amount notified by RBI
122. Keeping in view the greater role envisaged for ARCs in resolving stressed assets as also the recent regulatory changes governing
sale of stressed assets by banks to ARCs, RBI decided to fix the minimum NOF requirement for ARCs at ____crore on an ongoing
basis: a Rs.10 cr b Rs.50 cr c Rs.100 cr d Rs.200 cr
123 For effective risk management, banks are required to appoint Chief Risk Officer, who can be appointed / transferred /removed
only with permission of:
a Board of Directors, b Reserve Bank of India c Ministry of Finance, d Risk Management Committee
124Under Sovereign Gold Bond 2017¬ 18 (series-1), what is the price fixed for the purpose of issue:
a Rs.2951 b Rs.2901 c Rs.2881 d Rs.2811
125The Sovereign Gold Bond 2017¬ 18 (series-1), have a maturity period of: a 5 years b 6 years c 7 years d 8 years
126 The denomination of Sovereign Gold Bond 2017-18 (series-1), is:
a one gram of gold b two gram of gold c five gram of gold d ten gram of gold
127. The rate of interest offered on Sovereign Gold Bond 2017-18 (series-1) is: a 2.5% pa payable annually , b 2.5% pa payable halfyearly
, c 2.25% pa payable annually d 2.25% pa payable half-yearly
128 Sovereign Gold Bond 2017-18 (series-1), the payment can be accepted in Indian Rupees through cash up to a maximum of ?
a Rs.10000 b Rs.20000 c Rs.25000 d Rs.50000
129 Which of the following statement is not corrected with regard to Sovereign Gold Bond 2017-18 (series-1)?
a the bonds can be accepted as collateral security for loan b the loan to value ratio for loan is 80%
c the bonds can be traded on stock exchange d the bonds are transferable.
130 Banks are required to make suitable disclosures in their balance sheet w.e.f. 31.03.17, wherever the additional provisioning
requirements assessed by RBI exceed ____ percent of the published net profits after tax for the reference period.
a 5% b 10% c 15% d 20%
131 Banks are required to make suitable disclosures in their balance sheet w.e.f. 31.03.17, wherever the additional Gross NPAs
identified by RBI exceed ____ percent of the published incremental Gross NPAs for the reference period, or both.
a 5% b 10% c 15% d 20%
132 Banks are to put in place a Board–approved policy for making provisions for standard assets at rates higher than the regulatory
minimum, based on evaluation of risk and stress in various sectors. For this purpose, the policy shall require a review, at least on a
_____ basis, of the performance of various sectors of the economy to which the bank has an exposure to evaluate the present and
emerging risks and stress therein.- a monthly basis b quarterly basis c half-yearly basis d annual basis
133 Banks can participate up to ____ % of the unit capital of Real Estate Investment Trusts (REITs) and Infrastructure Investment
Trusts (InvITs) within the overall ceiling for direct investments in shares, convertible bonds/ debentures, units of equity-oriented
mutual funds and exposures to Venture Capital Funds (VCFs) ?- a 10% b 15% c 20% d. 25%
134 A Bank’s direct investment in shares, convertible bonds/ debentures, units of equity-oriented mutual funds and exposures to
Venture Capital Funds (VCFs) can be up to ?-
a 10% of its capital funds b 10% of its net worth c 20% of its capital funds d 20% of its net worth
135 RBI can invoke Prompt Corrective Action, if the capital adequacy ratio + capital conservation buffer ratio, of a bank in India, falls
below: - a 10.25% b 9.75% c 8.50% d 7.75%
136 RBI can invoke Prompt Corrective Action, if the Common Equity Tier-1 ratio + capital conservation buffer ratio, of a bank in India,
falls below: a 10.25% b 9.75% c 8.50% d 7.75%
137 RBI can invoke Prompt Corrective Action, if net NPA ratio of a bank crosses the following level ?
a 5% b 6% c 8% d 9%
138 RBI can invoke Prompt Corrective Action, if a bank has shown negative return on assets for:
a one year b two consecutive years c three consecutive years d four consecuitive years
139 RBI can invoke Prompt Corrective Action, if the Tier-1 leverage ratio of a bank, comes below:
a 4% b 3.5% c 3% d 2.5%
140 As per Monetary Policy 2017-18 announced in April 2017, RBI decided to narrow the policy rate corridor around the policy repo
rate to plus and minus _____ bps with immediate effect. - a 25 bps b 50 bps c 75 bps d 100 bps
141 As per Monetary Policy 2017-18 announced in April 2017, RBI decided to stipulate a minimum net owned funds of Rs.____ crore
for ARCs.- a 200 cr b 100 cr c 50 cr d 25 cr
142 As per Monetary Policy 2017-18 announced in April 2017, RBI decided to reduce the settlement cycle of NEFT from hourly batch
to half-hourly batch, thus increasing the batches from present ____ to ___ :
a 11 to 21 b 12 to 23 c 11 to 23 d 12 to 24
143. The return discipline under NEFT is settlement batch time plus ____ hours?
a half-hour b one-hour c two hours d two and half hour
85 .
144 Financial literacy centres are required to hold special camps for a period of one year beginning 01.04.2017, on the following
aspects: a small entrepreneurs and school children, b senior citizens and self help groups, c UPI and #99 (USSD),d all the above
145 Financial literacy centres are eligible for funding support of maximum Rs. ___ per financial literacy camps?
a Rs.10000 b Rs.15000 c Rs.20000 d Rs.25000
146. Under financial literacy, the rural branches of banks are required to conduct one camp per month on ____, after branch hours
beginning 01.04.2017: a last working day b last Friday c 3rd Friday d 1st Friday
147. SLBCs are required to submit to Regional Office of RBI, a ____ return on financial literacy centres, within ___ days.
a monthly, 7 days b monthly, 15 days c quarterly, 20 days d half-yearly, 20 days
148. According to RBI definition under RBI (Interest Rate on Deposits) Directions 2016, bulk deposit means:
a single rupee term deposit of Rs.15 lac and above, b single rupee deposit balance of Rs.15 lac and above
c single rupee term deposit of Rs.1 cr lac and above, d single rupee deposit balance of Rs.1 cr lac and above
149. According to RBI definition under RBI (Interest Rate on Deposits) Directions 2016, notice deposit means:
a deposit which is withdrawable on demand, b deposit which is withdrawable on one day notice
c deposit which is withdrawable on 3 days notice, d deposit which is withdrawable on 10 days notice
150. According to RBI definition under RBI (Interest Rate on Deposits) Directions 2016, the maximum maturity period of a term
deposit can be: a one year b five years c 10 years d at bank discretion
151. According to RBI definition under RBI (Interest Rate on Deposits) Directions 2016, the minimum maturity period of a term
deposit can be: a 7 days b 15 days c 30 days d at bank discretion
152. All transactions, involving payment of interest on deposits shall be rounded off to the ____ for rupee deposits:
a nearest 25 paise b nearest 50 paise c nearest one rupee d at bank discretion
153 All transactions, involving payment of interest on FCNR (B) deposits shall be rounded off to ____ decimal places:
a 4 decimal points b 3 decimal points c 2 decimal points d at bank discretion
154 A term deposit matured on July 12, being Sunday. It is presented for payment by the customer on Jul 13. The contracted rate of
interest is 8.5%. Bank changed the interest rate to 8% from Jul 11. In this connection which of the following option is appropriate? - a
bank shall pay interest till Jul 12 at 8.5% b bank shall pay interest till Jul 12 at 8.0%
c bank shall pay interest till Jul 13 at 8.5% d bank shall pay interest till Jul 13 at 8.0%
155 On credit balance of which of the following current account, the bank shall not pay interest in case of death of the customer:
a individual account of X b proprietorship account of Z, c joint account of P and Q d all the above
156 Interest on domestic rupee savings deposits shall be calculated on a daily product basis and a uniform interest rate shall be set
on balance up to _____ , irrespective of the amount in the account within this limit:
a Rs.10000 b Rs.50000 c Rs. 1 lac d Rs.10 lac
157 On domestic rupee savings deposits, banks can pay differential rates of interest for any end-of-day savings bank balance ____: a
of Rs.1 lac and above b exceeding Rs.1 lac c of Rs.15 lac and above d exceeding Rs.15 lac
158 All term deposits accepted from individuals (held singly or jointly) for amount of ____ must have premature-withdrawal-facility.-
a Rs.15 lac or below b less than Rs.15 lac c Rs.1 cr or above d less than Rs.1 cr
159 Banks can offer term deposits of without pre-mature withdrawal facility, on which they can offer differential rate of interest? - a
Rs.15 lac or above b above Rs.15 lac c Rs.1 cr or above only d above Rs.1 cr only
160 If a Term Deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as
applicable to ____: a FD on date of maturity b FD on date of original contract c saving bank d no interest
161 Interest on savings deposit shall be credited by banks at ____ :
a monthly or shorter intervals b quarterly or shorter intervals c half-yearly or shorter intervals d at discretion of banks
162 Interest on the minimum credit balance in the composite cash credit account of a farmer during the period from the ____ of
each calendar month shall be paid- a 10th to the last day b 1st to the last day c daily balance product d at bank discretion
163. Banks can offer inexpensive gifts at the time of accepting deposits, costing not more than ____ , to the depositor as per Indian
Banks’ Association.- a Rs.1000 b Rs.500 c Rs.250 d Rs.100
164. As per RBI guidelines, the banks should impose ‘partial freezing’ on KYC non-compliant accounts in a phased manner. Partial
freezing after the first 6 months period, includes: a transactions at the discretion of the bank
b only credits to be permitted, c only debits to be permitted, d no debit and no credit to be permitted
165 What is the minimum maturity period of a commercial paper ?-
a 7 days, b 15 days, c 29 days, d 45 days, e 60 days
166. In order to ensure that a coloured photo copy or scanned coloured image of the cheque is not used, which of the following
features is included in the cheque under CTS 2010 standards?
a ultra-violet ink, b intaglio, c void pantograph, d UV enabled scanning
167. What is the minimum value of stock of gold coins, bullion and foreign securities, which RBI has to maintain at any point of time,
against issue of currency?- a Rs.200 cr, b Rs.215 cr, c Rs.115 cr, d Rs.500 cr, e Rs.1000 cr
168. While renewing the working capital limits of a partnership firm, the loan officer observes that the long terms uses are 25% more
86 .
than the long terms sources during the previous year. This will lead to:
a improvement in the debt equity ratio, b deterioration in debt equity ratio, c deterioration in current ratio
d improvement in current ratio, e improvement in debt service coverage ratio
169. If the current assets are 36 and net working capital is 12, what is the current ratio:
a 1.17:1 b 1.25:1, c 1.33:1 d 1.50:1
170. Which of the following instruments represents the share in Indian companies in India and traded in America/Europe?
a GDR/ADR, b IDR/ADR, c GDR/IDR, d Zero Coupon Bonds, e. Debentures
Answers
1 C 2 D 3 C 4 B 5 E 6 B 7 C 8 D 9 A 10 D
11 D 12 E 13 C 14 B 15 D 16 E 17 D 18 C 19 E 20 C
21 D 22 B 23 E 24 A 25 B 26 A 27 D 28 E 29 D 30 B
31 D 32 B 33 D 34 E 35 D 36 B 37 B 38 C 39 B 40 C
41 D 42 D 43 A 44 B 45 A 46 B 47 D 48 D 49 C 50 D
51 A 52 B 53 B 54 A 55 D 56 C 57 D 58 C 59 C 60 B
61 A 62 A 63 D 64 C 65 B 66 A 67 D 68 D 69 B 70 A
71 C 72 D 73 A 74 B 75 C 76 C 77 D 78 C 79 B 80 A
81 A 82 D 83 A 84 C 85 C 86 C 87 C 88 B 89 C 90 B
91 C 92 B 93 C 94 A 95 C 96 C 97 B 98 C 99 A 100 C
101 B 102 C 103 A 104 A 105 C 106 B 107 C 108 C 109 D 110 B
111 C 112 C 113 A 114 D 115 C 116 D 117 B 118 B 119 C 120 D
121 B 122 C 123 A 124 B 125 D 126 A 127 B 128 B 129 B 130 C
131 C 132 B 133 A 134 D 135 A 136 D 137 B 138 B 139 A 140 A
141 B 142 B 143 C 144 C 145 B 146 C 147 C 148 C 149 B 150 D
151 A 152 C 153 C 154 C 155 C 156 C 157 B 158 A 159 B 160 C
161 B 162 A 163 C 164 D 165 A 166 C 167 C 168 C 169 D 170 A
LATEST BANKING & FINANCIAL DATA
Small Savings Interest Rates
Parameter end-Sep16 end-Sep17
Dollar-spot TT (Rs.) 66.61 65.50
BSE - Sensex (points) 27866 31497
NSE - Nifty(S&P CNX) 8611 9860
Foreign reserves
(Million $)
37076
6
402247
Gold /Oz in USD) 1324 1301
Important Banking Indicators
Statutory Liquidity Ratio 20.00% (24.06.2017)
Cash Reserve Ratio 04.00% (15.02.2013)
Overnight LAF (of NDTL) 0.25%
14-days term Repo(of NDTL)0.75%
Reverse Repo Rate 05.75% (02.08.2017)
Repo Rate 06.00% (02.08.2017)
87 .
(Rs.in cr) Mar31'17 Sep15'17
Aggregate deposits 10805150 10707370
Cash in hand/RBI 570490 531670
Investments 3043660 3334900
Bank Credit: 7881890 7781330
-Food 53930 53380
-Non-Food 7827960 7581530
Cash-Deposit Ratio 5.27 4.95
Investment-Deposit 28.14 31.09
Credit-Deposit 72.95 72.64
Money Stock
M3 (Out of which) 12844790 12974900
a. Currency with public 1263710 1504330
b. Demand deposits-Banks 1410630 1238330
c Time Deposits - Banks 10148950 10213670
d. Other deposits with RBI 21090 18570
Sources of Money Supply
Net Bank credit to Govt 3869090 4102890
Net Bank credit to Govt 8451430 8348940
2492010 2492010 2738900
MSF Rate 06.25% (02.08.2017)
Bank Rate 06.25% (02.08.2017)
INDIAN ECONOMY-IMPORTANT PARAMETERS
RBI's growth estimate for 2017-18 : 7.6%
GDP growth-2016-17 (revised estimate) : 7.1%
GDP@constant mkt prices (cr) : 10656925
GVA@2011-12 basic prices (cr) : 9857672
GDP projected by Govt. for 2017-18 : 16847455
Fiscal Deficit Target (2017-18) 3.2% of GDP : 546532 cr
Revenue Deficit Target (2017-18) 1.9.% 321163 cr
Wholesale Price Index : 1.5%
Money Supply (M3) expansion : 12.9%
Exports during 2016-17 : 274.0 bn
Imports during (2016-17) : 379.6 Bn
Export target - 2017-18 (in $) : 310 bn
India's share in world merchandise
export :
1.70%
India's currency rating (S&P) : BB Postv
India's external debt (Jun 2017) US $ : 485.8 Bn
Tax-GDP ratio (2014-15) : 9.93%
Apr- Aug17:Export $ 118.6 bn$ Imports : 181.7 bn
Per capita Income 2015-16 (Rs.) : 93293
Indian economy's ranking in PPP terms : 3rd
Indian economy's ranking in world in value: 10th
PRACTICE TEST PAPER NO. A (TEST YOUR SELF)
QUESTIONS BASED ON MEMORY
1) Net Interest income is: a)Interest earned on loans and advances only b)Interest earned on investments only c)Total interest
earned on advances and investment d)Difference between interest earned and interest paid
2) Investment made by a bank in its subsidiary is considered in the following category in its balance sheet: a) Secured advances
b)Other assets c)Investments d) Unsecured advances
3) Net Interest Income (NII) is calculated using the following formula : a) Interest income - Total expenses b)Total income -
Interest expenses c)Interest income - Interest expenses d) Total income - Total expenses
4) N.I.M. calculated using the following formula:a) Nil /Average total liabilities b)NII /Average Total Assets c)Total Interest
Income /Average Total Assets d)Total interest Income /Average Total Liability
5) Economic Equity Ratio is used to assess sustenance capacity of the,bank• It is calculated using the formula:
a) Net Interest Income / Shareholder Funds b)Total Income / Shareholder Funds
c)Shareholder Funds Total of Assets & Liabilities d)Shareholder Funds Total Assets
6) Risk of having to compensate for non-receipt of expected cash flows by a bank is called: a) Call risk b)Funding risk c)Time
risk d) Credit risk
7)'Time risk' in the context of liquidity risk of an institution is caused due to: a) Systematic risk
b)Swaps and options c)Loss of confidence d) Temporary problems in recovery
8)Crystallisation of contingent liabilities in a bank is called: a) Call risk b)Funding risk c)Time risk d) Credit risk
9) If the volatility per annum is 25% and the number of trading days per annum is 252, find the volatility per day.:
a) 58% b)1.60% c)158% d) 15.8% 10) RBI has put in
place real time gross settlement system (RIGS) to mitigate the following risk: a)Markel risk b)Settlement risk c)Operational risk
d) Strategic risk
11) A bank is having Rs 500 Crore liabilities @ 7% of one year maturity to fund Rs 500 Crore assets @ 9% with 2 year
maturity. The bank is exposed to: a) Gap Risk b)Basis Risk c)Price Risk d) Yield Curve Risk
88 .
12) In India, type of options are permitted now: a) American b)European c)Asian d) A & B
12) Interest rate risk is a type of :a) Credit risk b)Market risk c)Operational risk d) All the above
12) If Regulatory Authority of the country feels that the Capital held by a bank is not sufficient, it could require the bank to: a)
Reduce it's Risk b)Increase its Capital c)Both of these d) Either of these
13) When a bank sanctions a loan to a large borrower, which of the following risks it may not face: a) Liquidity
b)Market c)Credit d) Operational
14) A firm has an opening of stock of Rs.70,000. Closing stock of Rs.90,000 and Cost of goods sold Rs.2,40,000. What
the Inventory Turnover Ratio? a)5 b)4 c)3 d) 2
17-18 ) Based on the following information, solve questions number 17&18.
Credit Sales - Rs.3,00.000
Opening Balance of Accounts Receivable - Rs 40,000
Closing Balance of Accounts Receivable - Rs.60,000
Credit Purchases - Rs.1,80,000
Opening Balance of Account Payable - Rs 20,000
Closing Balance of Accounts Payable- Rs.40.000
17) The Debtors' Turnover Rati6 is: a) 6 b)8 c)10 d) 12
18) The Creditors' Turnover Ratio is: a) 8 b)6 c)4 d) 2
19) To solve a standard maximization problem using the Simplex method,we take the steps which are jumbled. Mark the correct
order of steps.
Step 1: Determine which variable to bring into solution Step 2: Determine which variable to replace
Step 3: Formulate problem in terms of an objective function and a set of constraints
Step 4: Update remaining Row values Compute new z
Step 5: Calculate new row values for entering variable and insert into new tableau.
Step 6: Set up initial Tableau with slack variables
Step 7: If there is no positive (c-z) value found, the solution is optimum. If there
is a positive value, then iterate again (repeal earlier three steps)
Choose the correct sequence of steps.: a) 3,5,4,5.7,1,2 b)3,6,2,1,5,4,7 c)3,6,2,1,4,5,7 d) 3,6,1,2,5,4,7
20) Which of the following is not a motive for the companies to hold cash?: a) Transaction motive b)Precautionary
motive c)Lack of proper synchronizationbetween cash inflows & outflows d)Capital Investments
21) VaR means:a) Volume of Business at Risk b)Value at Risk c)Volume on Risk d) Value as Risk
22) The maximum loan against NRE/FCNR Term deposit was Rs.20 lakh earlier. RBI has now increased it to:
a) Rs.25 lakh b)Rs. 1 crore c)Rs.50 lakh d) No change
23) Credit Risk Assessment of the borrowal units is for: a) Assessing the repayment capacity b)To fix the pcing of the product c)To
review the units performance d) None of the above
24) Pricing is equals to :a) Cost of the product b)Break Even Point of the firm
c)Function of Risk rating d) All of the above
25) The bond prices can be estimated using modified duration. The formula for calculating %age change in price of a
bond is: a)Modified duration x yield change b)Yield change /modified duration
c)Modified duration 1 Yield change d)Modified duration + Yield change
26) If both the Regression coefficients are negative, the correlationcoefficient would be : a)
Positive b)Negative c)Zero d) None
27) The most frequently used Average is: a) Mode b)Median c)Mean d) Geometric Mean
28) Advance in the form of Pledge cannot be granted in respect of a) Stockin-
process b)Raw material c)Finished goods d) Stores
29) In which of the following methods of capital budgeting annual returns of the future years are discounted to their present
value : a) Pay back period b)Internal rate of return c)Present value method d) Both 'a' & 'c'
30) Bonds may be secured by :a) Floating charge on assets b)Fixed charge on assets c)Without charge d) All of these
31) Which of the following statement is correct? :a)Forex markets are localized markets b)Forex markets are International markets only
c)Forex markets are dynamic & round the clock markets d)Forex markets are used only for trade transactions
32) If market quotes USD(INR as 53.61/63,at what rate can you buy USD at the given quote?:
a) 53 61 b)53 62 c)53 33 d)53 61
33) The main role function of the Welfare secretary was to meet the needs of the workers and prevent them from .: a)
Forming Unions b)Leaving the job c)Gossiping during duty d) Disturbing other workers
34) Union formations were seen in the_______phase of development of HRM:
a) First phase b)Second Phase c)Third phase d) Unions have been present even before HRM came in to existence
89 .
35) Climate Management is possible by using HRIT. Climate information is gathered using: a)Job satisfaction surveys b)Performance
appraisals by superiors c)Studying attendance patterns in different weathers d)AIL of the above
36) Job Analysis technique involves: a) Job Description b)Job Specification c)Job Evaluation d) All of the above
37) Mechanistic (or Behaviorist) theories, Cognitive theories and Organismic (humanistic)theories are three theories of
learning. Which one of these theories equates man with his brain? a) Behaviorist
or mechanistic theories b)Cognitive theories c)Organismic or humanistic theories d) All of the above
38) The Concept of Career path relates to _ of movements and deciding the_____for each stage.: a)
Sequence, time period b)Number, candidates c)Decision, number d) Type, time period
39) Johari Window is most useful for: a)
Understanding others b)Self-Awareness c)Working in Teams d) Improving inter-personal relations
40) The process of capturing the tacit knowledge of people in a systematic manner for future use is called: a) Data
entry b)Information technology c)Knowledge management d) All of the above together
41) Mandatory feature of a Letter of Credit: a)Must have an applicant and a beneficiary b)Should have an advising bank and a confirming
bank c)Should be confirmed to be operative d)Must be confirmed by the reimbursing bank
42-45)The top management of ABC Bank was in a triumphant mood after engaging XYZ Ltd, one of the top IT Companies as a consultant
for a massive technology upgradation in the Bank. Their enthusiasm was short lived, as the project did not progress well and the
consultants were not able to deliver the desired results even after several months. In fact the Consultants were of the view that it may
never be possible to implement the project with 100% success as they seemed to be facing resistance from the employees at multilevels.
The employees at all levels seemed reluctant to co-operate. Their fear of Role erosion seemed palpable.
42) What does "Role erosion" mean in this context?: a)The fear of the employee that he will be sent out b)Fear that the responsibility
and the power will reduce c)Fear that he will no more be an indispensable d) a & b
43) The critical issue in this case is:
a)Attitudes of individuals b)Training of people c)Group behavior due to a sense of the unknown d)All the above
44) How could this situation have been managed better?: a)By issuing project details and time frame mentioning punishments in case
of delay b)By roping in the HR professionals to act as coordinator c)By recognizing that any change brings its own reactions and coopting
the managers even before the Consultants moved in d)b & c
45) The Bank should deal with the employee resistance by: a)Co-opting the employees b)Communicating strategically about the potential
benefits c)Conducting simultaneous training to familiarize the staff with the new software d)All of the above
46) Mr. Ganguli is a brilliant manager in ABC Bank. He is one of the few persons picked up by the top management from an IIM after
MBA. Always on two phones at a time, he boasts about having no patience with tt laggards. Often, he can be heard aggressively
yelling at people on small issues. What type of person is Mr. Ganguli?:
a)Type B personality b)Type A personality c)Type C person d) Type D person
47) What is most essential for achieving Work-Life balance?: a) Time
management b)Efficiency c)Assertiveness d) Emotional maturity
48) A sales man in a shop showed a suit piece and told the customer that the cloth is very good, but costly. He was using the
following transaction: a) Duplex b)Angular c)Complementary d) None of the above
49) A prominent politician was heard saying that that people state was incapable of joining the army. He was :a)Stereotyping
b)Projecting c)Hallucinating d) All of the above
50) Mr. A is the Branch Manager in ABC Bank. He makes it a point to visit the prominent deposit customers himself to deliver their
deposit receipts. He does not even take the "Relationship Manager" appointed for this purpose. Mr. A believes that none of the new
generation staff is good enough to deal with such tasks. What is the "Life position" taken by Mr. A as regards the "Relationship
Manager" as per the "Theory of Lifr position" propounded by Dr. Thomas Harris?: a) I are OK, you are OK b)I am Ok, You are not OK c)I
am not OK, you are not Ok d) I am not OK, you are not OK
5 1) Translation losses are significant for banks as they affect the Bank's: a) Markel value b)Interest income c)Both (a) & (b)above
d) All of the above
ANSWER
1 D 2 C 3 C 4 B 5 D
6 C 7 D 8 A 9 A 10 B
11 A 12 D 13 B 14 C 15 B
16 C 17 A 18 B 19 D 20 D
21 B 22 B 23 B 24 C 25 A
26 B 27 C 28 A 29 0 30 D
31 C 32 C 33 A 34 A 35 A
36 D 37 B 38 A 39 B 40 C
90 .
41 A 42 D 43 C 44 D 45 0
46 A 47 D 48 B 49 A 50-B 51-A
PRACTICE TEST PAPER NO. B ( TEST YOUR SELF )
BASED ON RECOLLECTED QUESTIONS
1) As per RBI guidelines, Banks have to report their business, for public reporting purposes, based on segments, segments as and :a)
Locational; Domestic; Global b)Market; Domestic , International c)Price; Dollars; Euro. d) Value; Quantitative; Qualitative.e)
Geographical; Domestic, International
2) As per RBI guidelines, banks have adopted the _ business segments, for public reporting purposes: a) Treasury
b)Corporate! Wholesale Banking c)Retail banking d) Other Banking Business e) All of the above
3)is used for the purpose of segment reporting which includes the entire investment portfolio.: a) Treasury
b)Retail banking c)Wholesale banking d) Corporate banking
4) The Retail Banking would include exposures which fulfill the following four criteria:
a)Orientation b)Product, c)Granularity d)Low value of individual exposures. e) All of the above
5) BCBS stands for: a) Basel committee on banking supervision b)Blue cross blue shield
c)Basel centre on banking supervision d) None of these
6) What type of information is given by the financial statements of Auditor's report'? ': a) Diversion of funds b)Financial health
c)Realization of debts d) Profitability e) All of the above
7) Orientation Criterion is an exposure to the_____:a) Group of people b)Individuals c)Small business d) Both b&c
8) Annual turnover of the Small business is _ as per segment reporting: a) More than 80 crore b)Less than 50 crore
c)More than 50 crore d) Less than 80 crore
9) Product Criterion is the exposure which takes the form of________credits: a) Revolving credit b)Lines of credit c)Liquidity credit' d)
Both a & b e) All of the above
10) In case of Granularity Criterion, aggregate exposure to one counterpart should not exceed_____of the overall portfolio:a) .
5% b).2% c).10% d) .4% e) None of the above
11) Aggregate exposure means______of all forms of debt exposures: a)Net amountb)Gross amount c)Balance d) Net loss
12) Corporate Banking includes advances to the____firms: a)
Partnership firms b)Trusts c)Companies d) Statutory bodies e) All of the above
13) Which factors affect the probable consequences likely if a risk does occur: a) Risk cost b)Risk timing c)Risk scope d) Risk
resources e) Both b & c
14) The exposure of a bank to a single NBFC-AFC should not exceed____percentage: a) 20-25% b)15-20% c)10-15% d) 5-10%
15) What is the exemption limit for all MSME for obtaining collateral security? a) Rs 2 lakh b)Rs 5 lakh c)Rs.10 lakh d) Rs15 lakh
16) How much percentages of core assets are required in case of Third Method of Lending as proposed by Tandon committee: a) 100%
b)50% c)200% d) 80%
17) ABC analysis divides on-hand inventory into three classet, generally based upon:a) Item quality b)Unit price
c)The number of units on hand d) Annual demand e) Annual dollar volume
18) What are the objectives of Credit Audit? a) Improvement in the quality of credit portfolio b))Review sanction process and
compliance status of large loans c)Feedback on regulatory compliance d)Independent review of Credit Risk Assessment e) All of the
above
19) What are the methods of Return on Investment?:a) NPV b)IRR payback period c)Cost benefit ratio d) Accounting rate of return
e) All of the above
20) A project with a high Break-even point is considered_______risky compared to the one with lower break-even point: a) Less
b)More c)Equal d) None of the above
21)_ is the difference between gross fiscal deficit and net lending:
a) Gross fiscal deficit b)Net fiscal deficit c)Net primary deficit d) Revenue deficit
22) Which of the lending arrangement is called Consortium?:
a)When two or more banks get into a formal arrangement to finance the working capital needs of a borrower b)When two or more
banks get into a informal arrangement to finance the working capital needs of a borrower.c)When two or more banks get into a
informal arrangement to finance the basic needs of a borrower d) None of the above
23) Credit Default Swaps is a bilateral contract in which the risk seller pays a____to the buyer for protection against credit default.
a) Discount b)Premium c)Par d) None of the above
24) CDS is a standardized instruments of : a) Credit linked notes b)International Swaps & Derivatives Association
c)Internal Swaps and Derivatives Association d) Credit default swaps
25) As per RBI guidelines, only____CDSs are allowed:a) Double vanilla b)Plain vanilla c)Both d) None of the above
91 .
26) Stressed assets include which of the following:a) Exit from the accounts b)Rescheduling/Restructuring c)Rehabilitation d)
Compromise e) All of the above
27) Which of the following is a tool available to the bank for credit monitoring: a) Analysis of financial statements b)Examine
conduct of borrower a/c c)Periodic visits to the business place for inspection d) All of the above
28) What Is the main purpose of Stock audit? : a) To cross check the reliability of the statements b)To examine adequacy of
documentation c)To reduce the liquidity d) To increase the turnover e) All of the above
29) Which of the following is the guidelines of RBI for discounting Rediscounting of bills by bank: a)Bank should open LCs and
negotiate the bill under LC only b)Bank should mention working capital limit, Bills limit to borrowers after proper appraisal of there
credit needs c)Bank should provide credit requirements to the purchaser d)Both a & b
30) Which of the following are non-fund based facilities: a) Negotiate the bills b)Opening of LCs
c)Providing Guarantees d) b & c
31) Which of the following aspects covered under economic feasibility of the project: a)Return on investment b)Break even analysis
c)Marketing arrangements d) Both a & b
32) The stages of complete Business Cycle are: a)Boom, Recession, Depression, Recovery b)Boom, Depression, Recovery, Recession.
c)Peak, Contraction, Trough, Expansion.d) Both a and c.
33) One negative aspect of a Business cycle boom: a)A declining rate of inventory investment. b)A reduction in government budget
deficits. c)A declining rate of unemployment d) An increasing rale of inflation
34)is the excess of revenue expenditure over revenue receipts:a) Revenue deficit b)Capital deficit c)Gross fiscal deficit d) None of
these
35) The low point in the business cycle is referred to as the:a) Expansion b)Boom c)Depression d)Peak 36)The
trough of a business cycle occurs when______hits its lowest point.:a) Inflation b)The money supply c)Aggregate economic activity
d) The unemployment rate 37)T h e me a s u r e o f
p r o d u c t i o n t h a t v a l u e s p r o d u c t i o n u s i n g c u r r e n t p r i c e s i s c a l l e d : a ) Un d e r g r o u n d GD P b )Nomi n a l
GDP c ) R e a l GDP d ) V a l u e a d d e d GDP 38)_____= GDP + Non Resident:a) GNI
b)GNP c)GDP d) None of the above 39) C+I+G+(X-M) is the formulae for:a) GNP
b)GDP c)GNI d) NR 40)______ price is the nominal price for which a
good or services is offered in the market place:a) Market price b)Economic price c)Marginal price d) Deficit price
41) Which of the following is another derivative of GDP?:a)Income distribution b)Per capita Income c)Human development Index
42) HDI stands for:a) Human democracy Indexb)Human development Index c)Higher development Index d) None
43) Which of the following is newest concept of GDP:a) Green GDP b)Blue GDP c)Red GDP d) Yellow GDP
44) The National Income is equal to: a) GNP- Subsidies –Taxes b)NNP-Direct taxes+ Subsides c)NNP- Direct taxes - Subsidies d) GNPSubsidies
+Taxes
45) Which of the following is not true?:a) GNP=Depreciation = NNP b)GNP = GDP + Net income from abroad c)NNPat Factor
cost=NNPat Market price + Subsidies - Indirect taxes d)GNP=NNP-Depreciation
46) The difference between GNP and GDP is equal to : a) Gross domestic Investment b)Net foreign Investment
c)Net imports d) Net factor income from abroad
47) Net tax revenue + Total non tax revenue = a)Capital receipts b)Total revenuereceipts c)Debt receiptsd) None of these
48) Which of the following items comes under capital expenditure?:a) Defence b)Loan to foreign Governments c)Loan to public
enterprises d) All of the above
CASE STUDY - 01
Mr. Mihir is the AGM in charge of Bank street, Hyderabad branch of ABC Bank. He is approached by XYZ Company regarding a TT
remittance the Company has to make urgently in favour of Siemens, Singapore for USD One million on Thursday, the 250 of Oct.
This is the first time the Company is making such a remittance. it is an advance remittance for import of services. The Chairman of
XYZ Company is particular that the transaction should go through smoothly. In this regard, please answer the following: •
49) ABC Bank should call for and verify the IlE code of the Company. a) True b)False
50) The exchange rate that would be applicable for this transaction is: a)TT buying b)TT selling c)Bill buying d)Bill selling
51) The Company has to produce a Bank guarantee or Standby Letter of Credit from a First class Bank backing up the remittance
because: a)The Advance payment is for a sum exceeding USD 100,000 b)The Advance payment is for a sum exceeding USD 500,000
c)All Advance remittances require BG/SBLC d)BG/SBLC not required any more
52) What is the form that the Company has to submit to the Bank for such an Advance remittance?:
a) Form A-2b)Form A-1 c)Form A-3 d) Form ETX
CASE STUDY - 02
Mr. Mihir, AGM of ABC Bank has arranged for a "Customer Awareness" programme in his branch on 25th Oct. The meeting is
attended by customers from all categories such as Exporters, Importers, NRIs etc. A question answer session as follows takes place.
Please mark the answers that Mr. Mihir must give in correct response to the customers:
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53) Mr. Amrit, CEO of one of the big four auditing firms is a VIP customer residing in Hyderabad. He wishes to know whether he can
invest in a residential property in the USA as house prices have become very attractive there now: a)Yes, he can invest and buy the
house. b)No, he cannot invest in a house abroad. c)Yes, he can buy a house abroad but the maximum remittance per calendar year
is USD 100,000 under LRS. d)Yes, he can buy a house abroad. Maximum remittance per FY is USD 200,000 under LRS
54) Mr. Amrit says that he will definitely make a remittance in the next few months towards the house purchase within the permitted
limit. However, he is worried that the Dollar: Rupee rates are not moving in his favour:
a)He can book a forward contract for USD 200,000 b)He can book a forward contract for USD 100,000 c)The maximum tenor of the
contract is 12 months d)He should be informed of both a & c .
55) Mr. Anand is a NRI living in Richmond, U.S.A. Currently he is on a visit home. He has saved money in dollars in FCNR deposits
maturing in three months time. He wishes to know whether he can book a ForwarrtiF contract to receive the maturity proceeds in
GBP. He also wants to know whether the Bank can make a remittance in GBP on maturity date to a third party directly (to his son
studying in London School of Economics).: a)No, he cannot book a Forwara contract and has to receive the proceeds in dollars only.
b)Yes, he can book a Cross currency forward contract such that the proceeds can be paid in GBP. c)Bank can pay in GBP but to him
only.d)Bank can make a direct remittance to his son in GBP as third party remittances are now allowed. e)Mr. Anand has to be
informed of b & d
56) Mr. Mohandas from Omni exports wanted to know whether the interest subvention is applicable to his packing credit. His firm
deals with manufacture of pickles and has an original investment of Rs.4 crore in plant and machinery:a)Yes, interest subvention of
2% applicable because it is food-processing industry b)No, interest subvention not applicable. c)Yes, interest subvention is
applicable because it is a SME unit. d)Interest subvention scheme has been scrapped now.
57) Mr. Mohandas also wanted to know if he can give some credit (time to pay) to his buyers abroad. He has sent his export bill on
collection bask through the Bank. His unit is situated in the vicinity of the branch and not in SEZ:a)Yes, time limit for realization of
export proceeds is 180 days b)Yes, time limit for realization of export proceeds is 12 months c)Yes, time limit for realization of export
proceeds is 15 months. d)Yes, there is no time limit for realization of export proceeds now for all exporters.
ANSWER
1 E 2 E 3 A 4 E 5 A 6 E 7 D
8 B 9 D 10 B 11 B 12 E 13 A 14 C
15 C 16 A 17 E 18 E 19 E 20 B 21 B
22 A 23 B 24 B 25 B 26 E 27 D 28 A
29 D 30 D 31 D 32 D 33 D 34 A 35 C
36 C 37 B 38. B 39 B
,
40 A 41 B 42 B
43 A 44 B 45 D 46 D 47 B 48 D 49 A
50 B 51 B 52 B 53 D 54 D 55 E 56-C, 57-B
PRACTICE TEST PAPER NO. C ( TEST YOUR SELF )
( MEMORY BASED RECOLLECTED QUESTIONS PREVIOUS YEAR)
1) Banks must augment their provisioning cushions to ensure that their total provisioning coverage ratio, including floating provisions,
is not less than by September 2010. Provisioning Coverage Ratio (PCR)
is the ratio of provisioning to gross NPA and indicates the extent of funds a bank has kept aside for covering loan losses.: a) 50%
b)60% c) 70% d) 100%
2) As per current guidelines, the plan of realization for reconstruction of assets by a Securitization or Asset Reconstruction Company
should not exceed five years from the date of acquisition of asset. RBI in the revised guidelines has extended the time frame___years.:
a) 6 b)7 c) 9 d) 10
3) As per Nayak committee, the margin contribution of the Small Mfg Enterprises is % of annual projected turnover a) 5%
b)10% c)Rs 20%0) 25% e) None
4) As per the second method of lending of Tandon Committee, the Current ratio should be:
a) Less than 1 b)Exactly 1 c)More than 1.33 d) 1.33 e) 1.17:1
5) The Exposure Ceiling limits for banks would be______percent of capital funds in case of single borrower and______ % of capital
funds in the case of a borrower group.:(a) 40, 15 b)15, 40 c)20, 50 d) 50, 20
6) On scrutiny of a Balance Sheet of Mis Techno Inc, you observe that the long term uses of funds are more than long term sources.
The position of the Balance Sheet indicates: a) Negative Net Working Capital b)Positive Net Working Capital c)Negative Working Capital
Gap d) Positive Working Capital Gap e) None of the above
93 .
7) SARFAESI Act 2002 is not applicable in : a)Any security interest not exceeding Rs 1 lac. B)Any security interest in agriculture land c)Pledge
of movable as per Section 172 of Contract Act d)Rights of unpaid seller under Section 47 of Sales of Goods Act e)All of the above
The Balance Sheet of M/S Vipin & Co reveals that the capital and free reserves are Rs 12 lac, term loans from banks for Rs.22 lac, CC
(Nye) limit from bank showing balance outstanding of Rs 10 lac, sundry creditors of Rs 10 lac and provisions of Rs 6 lac. On the assets
side. fixed assets are Rs 15 lac, non-Current assets are 3 lac, preliminary and pre-operative expenses Rs. 2 lacs and Current assets Rs 40
lac (cash Rs 2 lac, sundry debtors Rs 13 lac, stocks Rs 25 lac). The Profit & Loss statement shows following important operational
results:
-Sales : Rs 100 lac.
-Purchases : Rs 80 lac,
-Net profit : Rs 5 lac.
-Number of units sold : 1 lac units
-Total Fixed cost Rs 4.5 lac.
-Total Variable cost : Rs 90.5 lac
8) The Creditor's velocity ratio is: a) 1 monthb)1.5 months c)2 months d) 2.5 months
9) The Net Working Capital is : al Rs 10 lac b)14 lac c)Rs. 16 lac d) 18 lac
10) The Working Capital Gap is: a) Rs 20 lac b)Rs 24 lac c)Rs 26 lac d) Rs 28 lac
11) Working Capital turnover ratio is: al 1.5 times b)2 times c)2.5 times d) 3 5 times
12) Accumulated losses are to be classified as:
a) Fixed liability b)Rolling liability c)Concurrent liability d) Current liability e) Fictitious Assets
13) In the Keynes model above, which is independent?:
a) Investment b)Consumption c)National income d) Consumption and investment
14) The domestic Commercial Banks have a target of ____ % for total priority sector measured as a percentage of ANBC or CE-OBE
whichever is higher.: a) 32%_____________________ b)50% c)18% d) 40%
15)___of Small Enterprises advances should go to the Micro Enterprises: a) 60% b)40%c)25% d) 50%
16) In which of the following kinds of financing, the banks take up financing exposure for medium term (5.7 years) out of the very
longterm nature of the projects (15.20 years):
a) Take Out financing b)Securitisation c)Project participation d) Consortium
17) Debt Equity denotes position of the firm: a) Profitability b)Solvency c)Liquidity d) None
18) In a Balance Sheet, profit is shown under: a) Liabilities b)Current assets c)Fixed assets d) None
19) Limitation period in case of Cash Credit Pledge Aic is: a)3 years from the date of pledge
b)3 years from the date of documentation c)5 years from the date of legal notice d) No limit
20) A Micro Mfg Enterprise had been sanctioned CC(Hyp) limit of Rs 10 lac with 20% margin against paid stocks. The unit submits stock
statement, which indicates the value of stocks as Rs. 14 lac with sundry creditors to the extent of Rs 9 lac. What will be the drawing
power": a) Rs 1 50 lac b)Rs. 2 lac c)Rs 4 lac d) Rs. 6 lac
21) Accumulated loss will be deducted from: a) Paid-up capital b)Surplus capital c)Tier I capital d) Tier II capital
22) The Corporate Debt Restructuring Scheme (CDRS) introduced as per Vepa Kamesam committee has been modified under a special
group headed by RBI Dy Governor Smt S.Gopinath. Accordingly, the scheme's scope has now been extended to cover entities having
multiple banking exposure with outstanding exposure of Rs ______crores and above.: a) 10 b)20 c)5 d) 15
23) Category - Ii, CDR is meant for cases where the alcs have been classified as______in the books of creditors: a) Standard
b)Substandard c)Doubtful d) Loss
24) What is the minimum & maximum denomination amount for a Commercial Paper?: a) 5 lac. 5
lac b)10 lac. 5 lacc)10 lac, 10 lac d) 5 lac. 10 lac e) None of above
25) Recession is associated with fall in: a) Demand b)Supply c)Disinvestment d) Investment
26) Devaluation means: a) Fall in Marginal utility of Money b)Fall in printing of currency
c)Risk in black money d)Fall in the value of money in terms of foreign currency
27) From the Bank's perspective, the main difference between extending a Term loan and extending a Deferred Payment Guarantee
is: a)In Term loan, Bank faces outlay of funds b)In DPG Bank faces inflow of funds c)a & b d) Neither a nor b
28) Marginal utility curve of a given consumer is also his:
a) Indifference curve b)Demand curve c)Supply curve d) Total utility curve
29) The total utility is maximum when: a) MU is zero b)AU is the highest c)MU is the highest d) MU is equal to AU
30) How many motives for demanding money has been given by Keynes: a) 1 b)2 c)3 d) 4
31) In calculating a country's GNP at market prices one of the following is not included:
a) Depreciation b)Net factor income from abroad c)Net indirect taxes d) Transfer Payment
32) Indian Economy can be best described as:
a) Developed economy b)Undeveloped economy c)Developing economy d) Underdeveloped
94 .
33) The open market operations (0M0) refer to the sale and purchase by the RBI of:
a) Foreign exchange b)Gob c)Government securities d) All of the above
33) Which of the following is a direct tax?: a) Sales tax b)Entertainment tax c)Excise duty d) Estate duty
34) Capital deficit in India is: a) Positive b)Zero c)Negative d) None of the above
ANSWERS
1 C 2 B 3 A 4 A 5 B
6 A 7 E 8 B 9 B 10 B
11 C 12 E 13 A 14 D 15 A
16 A 17 B 18 A 19 D 20 C
21 C 22 A 23 C 24 A 25 A
26 D 27 A 28 B 29 A 30 C
31 D 32 C 33 D 34 B D 35 A
8. TEST YOURSELF: MODEL PRACTICE TEST PAPERS
1) Micro-economic theory studies how an economy determines.
a) The price of goods b)The price of services c)The price of economic resources d) All of the above.
2) A producer's positively sloped supply curve for a commodity represents.
a) In one sense a maximum and in another sense a minimum boundary of the.producer's intentions.A maximum boundary of the producer's
intentions. c)A minimum boundary of the producer's intentions. d) None of the above.
3) The theory of distribution refers to:
a) The distribution of income among various factors of the production. b)The distribution of income among different individuals in the
economy.c) Both of the above d) None of these)
4) Interest is reward for parting with liquidity according to:a) B. Ohlin b)Von Haberler c) J.M. Keynesd) Alfred Marshall
5) Economics may be divided into macro-economics and micro-economics. Among the subject matter of micro economics may be found:The
nature of value in exchange.b)The size of a country's national income c)The allocation of resources among competing uses d) The relative prices of
specific services.
6) The statement that 'economics is positive and not normative' means:
a) That economics can be used to prove that capitalism is better than socialism.
b) That economics tells us what kind of economic behaviour or policy is wholesome and what evil
c) That economics tells policy makers which alternative to choose from among several efficient ones.
d) That economics can only indicate consequences of policies, choices, or conditions.
7) Which of the following statements is incorrect?
a) Micro-economics is primarily concerned with the problem of what, how and for whom to produce.
b) Micro-economics is primarily concerned with the behaviour of individual decision making units when at equilibrium.
c) MiCro-economics is primarily concerned with the time path and process by which one equilibrium position evolves into another
d) Micro-economics is primarily concerned with comparative static rather dynamics.
8) Economic laws may be described as:
a) Principles derived from an o;-.alysis of price am/ output determination.
b)Generations concerning the economic behaviour of individuals and institutions.
c) Forecasts in quantitative terms of the economic development of society.
d) Expression of the basic features of competition.
9) The main difference between positive economics and normative economics is that the former.
a) Discusses the ethical implications of its laws. b)Concerns itself only with hypotheses which can generally be tested.
c)Is based on the value judgements of economists. D) Considers carefully the political significance of its laws for a democratic society.
10) Adam Singh advocates:
a) Laissez-faire b)Division of Labour c)Both of the above d) None of the above
11) The term 'consumer goods' is used by economists to refer to:
a) Goods produced for consumers in a free market only. b)Goods other than free goods, whose use directly satisfies consumers wants.
c)Goods produced by consumers in return for a wage. d) Goods which are used by consumers in order to earn their living
12) The basic characteristic of a C apitalistic economy is: a) Full employment b)The private ownership of the means of production.c)An absence of
monopoly d) Large-scale production in primary industries.
13) In a free capitalist society the allocation of the factors of production among the various productive activities is determined by:a) The pattern of
95 .
consumer's spending b)The traditional employment of facl= c)Decisions of the Government d) The wealth of the entrepreneurs.
14) Who believed that an automatic equilibrating mechanism of the perfectly competitive market, known as 'invisible hand' tended to maximize
national wealth: a) Adam Smith b)Keynes c)J.B. Say d) None of the above
15) The fundamental economic problem being faced is one of: a)Consumer's choice b)Decision-making by the government c)'Multiplicity of wants
and scarcity of resources. d) Shortage of labour.
16) Which one of the following is not directly the concern of the economist?
a) Aid to underdeveloped countries b)The effect of an increase in Bank rate c)The choice between alternative sites for a factory d) The use of
taxation to discourage smoking of cigarettes.
17) The meaning of the word 'economic' is most closely connected with the word:
a) Free b)Scarce c)Unlimited d) Restricted
18) Which of the following is not an economic problem?
a) Deciding between extra paid work and extra leisure. b)Deciding between different ways of spending leisure lime .
c);:eciding on the level and form of personal saving d) Deciding between expenditure on one good and another.
19) Which one of the following statement is not true? A) Exchange is one method of helping to solve the basic economic problem. b)The basic
ecolomic problem is one of choice. c)Choice is necessary because of Limited wants. d) The means to satisfy wants i.e., the factors of production, are
limited.
20) Who gave scarcity definition of economics? a) Adam Smith b)Robbins c)Keynes d) J.B. Say
21) Who is known as the Father of Economics? a) Keynes b)Ricardo c)Adam Smith d) J.S. Mill
22) Many of the basic problems of economics emerge from:
a) Unlimited resources b)Incompetent govt. c)The use of limited resources to satisfy human wants d) Unlimited wants
23) The utility may be defined as: a)The power of a commodity to satisfy wants b)The desire for a commodity
c)The usefulness of a commodity d) The necessity of a commodity
24) The utility of a commodity is: a) Its expected social value b)Its relative scarcity c)he extent of its practical use d) The degree of its fashion
25) Marginal utility curve of a given consumer is also his:
a) Indifference curve b)Demand curve c)Supply curve d) Total utility curve
26) The total utility is maximum when: a) MU is zero b)AU is the highest c)MU is the highest d) MU is equal to AU
27) The law of diminishing marginal utility states that:
a) As more of a commodity is consumed total satisfaction diminishes.
b) The more you have of a particular commodity the less you want more of it.
c) As more units of a commodity are produced the price of the commodity will fall
d) The consumption of further units of a commodity will bring a steady thcrease in the amount of satisfaction obtained.
28) The law of diminishing returns or increasing cost will operate at an earlier level, in agriculture than in industry because:
a) More mechanization is applicable to agriculture b)Agriculture is an industry where land is used extensively
c)Less mechanization is applicable to agriculture. d) More labour is used in agriculture.
29) Opportunity costs are also known as: a) Spillover costs b)Alternative cost c)Social costs d) Money costs
30) An increase in the price‘of a commodity, other things remaining same, results in:
a) Increase in pricina b)Increases in quantity supplied c)Increase in demand d) Taxes
31) Supply remaining constant, if demand increases, price will
a) Rise b)Remains constant c)Fluctuate d) Fall
32) Perfect competition is said to exist if: a)There are homogenous products b)Each firm in the industry accepts the market price because it has to
accept it. c)Price is fixed not by a firm d) All of the above
33) Consumer's surplus is highest in case of: a) Luxuries b)Necessities c)Comforts d) Conventional necessities.
34) A "Giffen Goods" is one for which, in response to a small change in price. A) A zero income effect is just outweighed by a positive
substitution effect. b)A negative income effect is just outweighed by a positive substitution effect. c)A zero income effect is matched by a zero
substitution effect. d) A negative income effect outweighed any 'substitution effect.
35) Which is correct?
a) An "increase of demand" is not the same thing as an "extension of demand". b) An "increase of demand is the same thing as an
"extension of demand". c) An increase of demand is just equal to the extension of demand. d) All the above statements are wrong e) An increase
of demand invariably reduces the extension of demand.
36) Demand means:
a) The desire and willingness of an individual for all goods and services for his standard of living.
b) The desire, ability and willingness of an individual to purchase goods and services at a given time and price
c) Both A and B d) None of the above
37) The demand function for a commodity is defined as: a) Quantity demanded as a function of the goods, own price, the price of the substitute
and the buyer's income b) Price of Substitutes as a functions of the goods own prices c) Quantity demanded as a function of tne price of other
goods d) d) All the above
96 .
38) In the typical demand schedule, quantity demanded.
a) Varies directly with price. b) Varies proportionately with price c) Is independent of price d) Varies inversely with price
39) Law of demand states that when:
A) Income rises demand rises. b)Price rises demand rises. c)Price falls demand falls. d) Price falls demand rises
40) The law of demand indicates: a) The relationship between income and quantity demanded b) The relationship between price of a commodity
and price of ifs cubstitutes c) The relationship between price of two commodity. d) The relationship between the price of commodity and the
quantity demanded.
41) Which of the following conditions is required condition for the operation of law of demand? a) Price of subStitute change b) Income and Taste of
consumer remains constant c) Production does not increase d) Taste of the consumer change
42) Demand curve shows:
a) Inverse relationship between quiantitydemailed and its cost of production.
b) Inverse relationship between the rate of change of demand and price.
c) Inverse relationship between the rate of change in demand and cost of production at a given times.
d) Direct relationship between the demand and the price of a commodity at a given time.
43) When we say that a demand curve for a commodity slopes downwards to the right we mean:
a) More of the commodity will be demanded as income increase
b) More of the commodity will be demanded as the price of the substitutes falls.
c) More of the commodity will be demanded as population rise.
d) More of the commodity will be demanded as its own price falls.
44) A fall in the price of a commodity leads to:
a) A shift in demand b)A fall in demand c)A fall in the consumers real income d)A rise in the consumers real income
45) An exceptional demand curve is one that slopes:
a) Upward to the lift b)Upward to the right c)DoWnward to the right d)Horizontal
46) Which one is not an exception to the Law of Demand?
a) Ignorance b)Inferior good c)Normal good d) Articles of Distinction
47) Demand for a commodity is elastic when has:
a) Only one use b)Many Use c)Uses, which cannot be postponed d) Uses very essential for the consumer
48) Which of the following pairs of commodities is an example of substitute:
a) Coffee and milk b)Mustard oil and coconut oil c)Diamond and cow d) Pen and ink
49) For most customers apples and oranges are substitute goods. Therefore, we would expect a rise in the price of apples to lead to: a) A rightward
shift in the supply curve of oranges b)A leftward shift in the supply curve of oranges.
C)A fall in the price of oranges d) An upward change in the demand curve of oranges.
50) A change in climate,conditions resulting in hot weather, price remaining the same, would cause a consumer of cold drinks: a) To move to a
lower demand curve b)To move lower down the demand curve c)To move to a higher demand curve d)To move up the same demand curve
51) When an individual's income falls (while everything else remains the same) his demand for an inferior goods:
a) Increase b)Remaining unchanged c)We cannot say without additional information d) Decrease
52) A fall in the price of a commodity whose demand curve is a rectangular hyperbola causes total expenditure on the commodity to:
a) Remain unchanged b)Increase c)Decrease d) Any of the above
53) The relationship between demand for a commodity and price, ceteris paribus, is:
%a) Negative b)Positive c)Non-negative d) Non-positive
54) Other things being equal a decrease in the quantity supplied to the market at given prices leads to:
a) A higher price and a contraction of demand b)A higher price and an expansion of demand. c)A higher price and an expansion of demand d)
A lower price and a contraction of demand.
55) Law of demand explains:
a) Quantitative relationship between price and demand b)Qualitative relationship between price and demand c)Relationship between
demand and supply d) Rate of change in price and demand
56) We can say with certainty that when the demand for TVs increases in the long run, prices:
a) Will go down b)Will go up c)Change proportionately d) Cannot be predicted with the knowledge of elasticity of demand
57) In the normal demand schedule, quantity demanded:
a) Varies directly with price b)Is independent of price c)Varies inversely with price d) Varies proportionately with price
58) An example of derived demand is demand for: a) Pen and ink b)Wool and mutton c)Petrol and Car d) None of the above
59) By increase in demand we mean: a) Movement upwards on a demand curve b)Movement downwards on demand curve c)Shifting upwards of
a demand curve d)None of these
60) Law of demand operates because of a) Price changes b)The principle of different income c)Changes in advertisement
expenses d) None of the above
97 .
61) Multiple uses of a commodity will make the demand go up when:
a) Price increases b)Price remains the samec)Price falls down d) None of the above
62) Status symbol goods are:
a) Veblen goods, b)Exception to law of demand, c)Goods of conspicuous consumption,d) ALL OF THE ABOVE
63) Price - demand relationship in the case of Giffen goods is: a) Inverse•b)Direct c)Absent d) None of the above
64) The downward sloping demand curve may be partly explained by the "income effect" which refers to:
a) People's tendency to save more as their real incomes fall in the short period.
b) An increase or decrease in the amount of a good purchased because of a price-induced change in the purchasing power of a fixed
income.
c) Changes in the relative importance of good purchased because of changes in the con imunity's tastes resulting from adverting.
d) Changes in the distribution of income in a community.
65) The demand curve for a commodity is generally drawn on the assumption that:
a) The commodity has no substitutes b)Tastes, income and aii other prices remain constant. c)The average household consist of two persons
d) Purchases of the commodity are made by a free market.
66) A fall in the price of a commodity leads to:
a) A shift in demand b)A fall in demand c)A rise in consumer's real income d) A fall in the consumer's real income.
67) In the case of Giffin good like Bajra a fall in its price tends to: a) Make the demand remain constant b)Reduce the demand c)Increase the
demand d) Li) Change demand in an abnormal way.
68) Which of the following pairs of commodities is an example of substitutes:
a) Coffee and milk b)Diamond and cow c)Pen and ink d) Mustard oil and coconut oil.
69) For most consumers apples and oranges are substitute goods. Therefore, we would expect a rise in the price of apples to lead to: a) A
rightward shift in the demand curve of oranges b) A leftward shift in the supply curve of apples
c) A downward change in the demand curve of oranges d) A fall in the price of oranges
70) A change in climatic conditions resulting in hot weather, price remaining the same, would cause a consumer of cold drink: a) To move to a
higher demand curve b) To move up the same demand curve
c) 1 o move lower down the curve d) To move to a lower demand curve.
71) If two goods are complementary, this means that a rise in the price of one commodity will induce:
a) An upward shift in demand for the other commodity b) A rise in the price of the other commodity
c) A downward shift in demand for other commodity d) No shift in demand for the other commodity.
72) If more is demanded at the same price or same quantity at a higher price, this fact of demand is known as:
a) Extension of demand b)Increase of demand c)Contraction of demand d) Decrease of demand.
73) Other things being equal a decrease in demand can be caused by:
a) A rise in the price of the commodity b) A rise in the income of the consumer c) A fall in the price of the commodity
d) A fall in the income of the consumer
74) An increase in demand can result from:
a) A decline in market price b) An increase in income c) A reduction in the price of substitutes d) An increase in the price of complementary
goods e) All the above
75) Which of the following circumstances would be likoly to bring about a change in the demand schedule for a product?
a) A fall in the price of the product b) An increase in the number of potential consumers
c) A new method of producing the product d) An increase in the quantity produced. E) Both a &b
76) If the price of good A affects the demand for good B, then:
a) A is a substitute for B b) B is complement of A c) Changes in the price of A will cause movement along the demand schedule for A d)
Changes in the price of B will not change the demand for A. e) Changes in the price of A will shift or change the demand for B.
77) Cross demand is the change in the quantity demanded of a given commodity in response to the:
a) Change in the utility of another commodity b) Change in the price of another commodity
c) Change in the nature of another commodity d) Change in the size of another commodity.
78) The law of demand states that:
a) Demand increases with increase in income b) When income and prices rise. the demand also rises
c) When income and prices rise. the demand also rises d) When price increases, demand increases
79) A consumer's equilibrium choice or position is one at which:
a) His savings are maximized b) His assets are maximized
c) His satisfaction is maximum d) Price of goods is maximised
80) For most consumers, milk and tea are substitute goods. Ther-fore, we should expect a rise in price of milk to lead to:
a) A rightward shift in the supply curve of tea. b) A leftward shift in the supply curve of tea.
c) A fall in the price of tea. d) An upward shift in the demand curve for tea.
98 .
81) Other things being equal, a fall I contraction in demand can be caused by a:
a) Rise in prices of the substitute b) Rise in prices of the substitute c) Rise in prices of the substitute d) Rise in the income of the consumer
e) Rise in the price of the commodity
82) The demand for a good is elastic if:
a) The demand for that good increases when price falls b) A decrease in price results in a decrease in total expenditure
c) The quantity demanded increases less than proportionately with the decrease in price level
83) A rightwards shifts in supply schedule indicates:
a) A decrease in Supply b)A decrease in quantity supply c) An increase in quantity supply d) An increase in supply.
84) A rightwards shift in supply curve indicates:
a) A decrease in supply b)An increase in quantity supplied c) An increase in supply d) None of the above
85) A supply curve will generally take an upwardsslopin9 form left to right because:
a) Market price is normally above total costs of production. b)Consumers' income tend to increase in the long period.
c) Producers' costs tend 'to increase as their output expands d) Supply of most goods is essentially a short-term phenomenon.
86) Other things being equal an increase in supply can cause by:
a) A rise in the price of the commodity b)An improvement in the techniques of production
c) A rise in the income of the consumer d) An increase in the income of the seller.
87) The shift of the supply curve for a commodity to the left may indicate, other things being equal, that:
a) Shares in the producing firms are in great demand on the Stock Exchange. b) Producers of the commodity wish to make and sell less at
same price. c) Prices raw materials used in the production of the
commodity have fallen. d) Wages paid to the producers' employees have fallen.
88) Ceteris paribus, a decrease in quantity supplied of a commodity can be caused by:
a) A fall in its price b)Fall in income c)Rise in price d) Fall in raw material
89) The supply schedule for a commodity is usually assumed to be directly open to influence by all the following except:
a) The quantity demanded b)The prices of the factors of production c)The costs of production d) The prices of other goods
90) Which of the following could explain why the supply curve for a commodity slopes downwards?
a) Producers do not like increasing production. b)Producers have to lower price to induce consumers to buy more c)Costs fall as
production increases d) Diminishing marginal utility is in operation
91) "Free Trade Area" denotes:
a) Pitlicy of Laissez faire
b) A group of countries which have decided to impose no duties of any kind on imports from other members of the group
c) Free Exports & Imports d) All the above
92) Temporary control of inflation can be effected by:
a) Lowering Bank Rate b)Purchasing of securities by RBI c) Restraint on the growth of money supply d) None of these
93) The term "hyper-inflation" is used to denote:
a) Creeping inflation b)Step by step inflation c) A "Runaway" or "galloping" inflationary situation where the monetary unit becomes almost
worthless d) None of these
. 94) In calculating a country's GNP at market prices one of the following is not included:
a) Depreciation b)Net factor income from abroad c)Net indirect taxes d) Transfer Payment
95) Indian Economy can be best described as:
a) Developed economy b)Undeveloped economy c)Developing economy d) Underdeveloped
96) The term "balance of trade" means:
a) Difference between exports & imports b)Net Exports including merchandise c)The difference between the cost of the imports and
exports of a country. d) a and c
97) The open market operations refer to the sale and purchase by the RBI of:
a) Foreign exchange b)Gold c)Government securities d) All c' the above
98) At full employment level, which of the following would be most likely to lead to inflation?
a) A fall in taxation with no changes in gevemment expenditure b)An increase in productivity without any increase in wages c)A fall in
investment with no change in prosperity to consumer d) A rise in the prosperity to save with no change in investment
99) Deflation is:
a) Deficit budget b)Reduction in taxation c)Contraction in volume of money or credit that results in a decline of price level d) Increase in
public expenditure
100) Bank rate means:
a) Interest rate charged by moneylenders, b)Interest rate charged by the scheduled banks c)Rate of profit of the banking institution d) The
official rate of interest charged by the central bank of the country
ANSWER
99 .
1 D 2 A 3 B 4 C 5 C 6 D 7 A 8 B 9 B 10 C
11 B 12 B 13 A 14 C 15 C 16 C 17 C 18 B 19 C 20 B
21 C 22 C 23 A 24 B 25 B 26 A 27 B 28 B 29 B 30 B
31 A 32 D 33 B 34 B 35 A 36 B 37 A 38 D 39 D 40 D
41 B 42 B 43 D 44 D 45 B 46 C 47 B 48 B 49 D 50 C
51 C 52 A 53 A 54 B 55 C 56 D 57 C 58 D 59 C 60 A
61 C 62 D 63 B 64 B 65 B 66 C 67 B 68 D 69 A 70 A
71 A 72 B 73 D 74 B 75 E 76 E 77 B 78 C 79 C 80 D
81 D 82 C 83 D 84 C 85 C 86 D 87 B 88 A 89 A 90 C
91 B 92 C 93 C 94 D 95 C 96 D 97 D 98 A 99 C 100 D
TEST YOURSELF : PRACTICE PAPER NO. : 2
1) In the Keynes model above, which is independent:
a) Investment b)Consumption c)National income d) Consumption and investment
2) How many motives for demanding money has been given by Keynes:
a) 1 b)2 c)3 d) 4
3) Recession is associated with fall in:
a) Demand b)Supply c)Disinvestment d) Investment
4) Devaluation means:
a) Fall in Marginal utility of Money b)Fall in printing of currency c)Risk in black money d) Fall in the value of money in terms of foreign currency
5) Acute inflationary situation:
a) Makes savings in the form of bank deposits less attractive b)Makes savings more attractive
c) Arises due to liquidity trap d) All the above
6) Inflation means:
a) Increase in price b)Decrease in value of money c)Boom d) All of the above
7) The problem of unemployment in rural areas is mainly due to:
a) Seasonal and under employment b)Frictional unemployment c)Structural unemployment
d) Technical Lriernpleyrnent
8) NNP for a given year can be defined as:
a) Market value of final goods only b)The market value of all final goods and services c)The market value of all final services only d) None
of the above
9) LiqUidity preference is the term, which is used to refer to:
a) The Reserve Bank of India's shareholdings in other financial institutions
b) The extent to which investors prefer to keep their assets in money
c) The community's preference for a gold-backed currency
d) An inducement to save.
10) Which of the following are among the major determinants of the interest rate in the Keynesian theory?
a) People's desire to hold money and to keep their wealth in liquid form b)The available stock of money
c)The intensity of speculation on the stock exchange d) The value of gold and silver on the world's markets
11) The famous book written by J.M. Keynes is entitled:
a) Principles of Economics b)Law of Markets c)The General Theory of Employment, Interest and Money d)None of the above.
12) To's layman, investment means putting his money in a financial asset like bonds, fixed deposit etc. What does it mean to an economist:
a) Purchase of machines b)Stock of durable goods c)Purchase of real capital assets d) All of the above
13) The liquidity preference arises due to:
a) Transaction Motive b)Precautionary Motive c)Speculative Motive d) All of these
14) Liquidity trap is likely to result when:
a) Rate of Interest at its lowest b)Rate of Interest at its highest c)No change in supply of money d) When an increase in the supply of
money fails to reduce the rate of interest
15) Which theory is called the Neo-Classical theory of rate of interest?
a) Risk Theory b)Liquidity Preference Theory c)a and b d) Loanable Funds Theory.
100 .
16) The agency estimating the National Income of India is:
a) Reserve Bank of India b)Planning Commission c)Ministry of Finance d) Central Statistical Organisation
17) The goals of monetary policy do not include
a) Maximum output b)Full ernploymeot c)Price stability ,d) Maximum tax revenue
18) Gross National Product (GNP) is:
a) The total output of goods and services produced by the country's economy
b) The total domestic and foreign output claimed by residents of the country
c) The sum of gross domestic product and investment
d) National income minus national expenditure
19) If an economy is in equilibrium at the point where plans to save and to invest are equal, then government expenditure must be:
a) Curtailed b)Equal to government income c)Increased d) None of the above
20) Which of the following is correct regarding the gross domestic savings in India?
a) Contribution of corporate sector is largest b)Contribution of government sector is the largest
c)Contribution of household sector is the largest d) None of these
21) NNP (Net National Product) or National Income is the money value of
a) Final goods and services produced annually in the economy b)Annual service generation in the .economy
c)Tangible goods produced annually in the economy d) Tangible goods available in the economy
22) Which of the following is included in the calculation of gross domestic product?
a) Personal consumption expenditure b)Gross domestic investment c)Purchase by the government d) All of the above
23) Gross National Product is greater than gross domestic product when:
a) NFI (from abroad) > 0 b)NFI < 0 c)NFI = 0 d) NFI = -1
24) Which of the following is deducted from gross national product in order to estimate net national product?
a) Depreciation b)compensation of employees c)expenditure on buildings d) expenditure on raw material
25) Changes in the standard of living in a country are best reflected in changes in the:
a) Social Welfare b)Economic Welfare c)Per capita income at current prices d) Per capital income at constant prices
26) Whicl: is the primary indicator to recognise a country's rate of economic growth?
a) Increase inter per capita income b)Setting of more industries c)Rate of growth in national income d) More exports
27) National Income is based on:
a) Total Production x prices b)Rent + wages + Interest ,+ Profit c)Domestic Income + NFI d) The sum of all factor incomes e) All the above
28) Net National Production excludes:
a) Gross Investment b)Net investment c)Foreign Investment d) Replacement investment
29) Here are four statements about various national income / expenditure I product relationships. Which one of the following is true:
a) GNP less NIT = NNP b)GNP less NFI = NNP c)GNP plus depreciation = NNP d) GNP less depreciation allowances = NNP
30) The term GDP incorporates the economic activity:
a) Taking place within the geographical boundary of the country, b)Within the land territorial
c)Within water territorial, d) Within air space
31) The term "Hindu rate of growth" refers to the 3.5% per annum growth rate achieved by the Indian economy over the first
six Five-Year Plans. The term was coined by
a) Chakravaty b)J.N. Bhagwati c)Raj Krishna d) K.N. Raj
32) Essential services owned and controlled by government is called:
a) Public monopoly b)Public utility c)Public Sector d) All of the above
33) Which of the following is not a fiscal monopoly?
a) Printing of currency b)Minting of coins c) Electricity supply d) None of the above
34) In a planned economy the economic problem of what shall be produced is determined primarily by:
a) Computers deciding what consumers want. b)Direction by the oovernment.c)The pattern of consumer's spending d) The independent
decisions of entrepreneurs.
35) Development means economic growth plus: a) Price stability b)Social change c)Inflation d) Deflation
36) Which Plan recommended Zero-Based Budgeting (ZBB)as a step to control public expenditure?
a) Fifth Plan b)Sixth Plan c)Seventh Plan d) Eighth plan
37) All revenues received, loans raised and money received in repayment of loans by the Union Government go into.
a) Public Account of India b)Contingency Fund in India c)Consolidated fund in India d) none of the above
38) Which one of the following is not directly the concern of the economist?
.a) Choices relating to location of a steel plant b)Bargaining between the workers' unions and the employers c)Effects of a change in money
supply. d) Imposition of tax to discourage cigarette smoking
39) Customs duties, export duties, corporation taxes, taxes on capital value of assets (excluding agricultural land of individuals and companies)
are:
101 .
a) Taxes and duties levied by the Centre but wholly appropriated by the States
b) Taxes and duties levied by the Centre but collected by the States
c) Taxes and duties that accrue wholly to the Union Government
d) Taxes levied and collected by the Union but which are shared with the States.
40) "Funded debt" means:
a) All Government securities which are marketable on the stock exchange market b)All private securities ,
c)Shares of Companies d) KisanVikasPatras
41) "Annual Financial Statement" is another name of:
a) Balance of payment b)Fiscal Budget ,c)Budget d) Debt & Credit
42) "Multi-Currency Basket" means:
a) Relationship with world bank b)Currency + coins c)Number of major international currencies to which the external value of the
Indian rupee is linked d) None of the above
43) Which of the following is not a seiective credit control measure?
a) Rationalizing of Credit b)Open market observations c)Changes in the statutory liquidity ratio d) a and c
44) Public finance is said to be:
a) Science of taxes and pending b)Science of demand and supply of money
c)Science of money and cost d) Science of income and expenditure
45) One of the distinctions between public finance and private finance is that:
a) The State adjusts "income to expenditure' while an individual adjusts "expenditure to income"
b) The State maximizes the general welfare of the public while an individual maximizes his own satisfaction
c) The State has no coercive powers while the individual has
d) The State cannot borrow money while the individual can get loans
46) A tax takes away a higher proportion of one's income rise is termed is:
a) Proportional Tax b)Indirect Tax c)Regressive Tax d) Progressive Tax
47) Corporate tax is imposed by: -
a) Local Government b)Central Government c)State Government d) Both Central and State Government
48) Which of the following are direct taxes?
a) Gift tax b)Income tax c)Corporation tax d) All of the above
49) From the following, which is not a direct tax?
a) Tax on wealth b)Tax on entertainment c)Tax income d) Tax on expenditure
50) An Direct tax is one where:
a) Tax is levied always on property b)Points of impact and incidence are different
c)Tax is levied on wealth d) Points of impact and incidence are the same
51) The name of Indirect tax is:
a) Income tax b)Sale tax c)Corporate tax d) Wealth tax
52) A regressive tax will tend to redistribute income more:
a) Equally b)Equitably c)Unequally d) Inequitably
53) Which of the following does not grant any tax rebate?
a) Indira VikasPatra b)Public Provident Fund c)National Saving Scheme d) National SavingCertificate
54) The Indian Income tax is:
a) Direct and progressive b) id re arid oevu;essive c)Indirect and proportional d) Direct and proportional
55) Temporary tax levied to obtain additional revenue is called:
a) Fee b)Surcharge c)Cess d) Rate
56) Which of the following taxes is/are levied by the Central Govt. and collected appropriated by the States?
a) Estate Duty b)Stamp Duties c)Passenger and goods tax d) Taxes on Newspaper
57) Taxes raised are credited into:
a) Consolidated Fund b)Public Accounts c)Contingency Accounts , d) Private Accounts
58) Generally tax on production are: a) Indirect taxes b)Both A and B c)Direct taxes d) None of the above
59) Tax on incomes is: a) Indirect b)Both A and B c)Direct d) None of the above
60) Which of the following taxes is levied on services?
a) Personal tax b)Value added tax c)Capital gains tax d) Corporate tax
61) Income tax is raised by: a) Local Government b)Central Government c)Municipality d) State Government
62) Sales tax is levied by: a) Local government b)State government c)Central government d) None of the above
63) Union Excise Duties are a part of Central Government's:
a) Tax revenue b)Capital receipts c)Non-tax revenue d) None of the above
64) All taxes come under: a) Capital receipts b)Revenue receipts c)Public debt d) Both A and C
102 .
65) In India, the States gets maximum income from: a) Sales tax b)State Excise duties c)Land Revenue d) Agricultural Income tax
66) Progressive tax in India is: a) Income tax b)Wealth tax c)Corporate tax d) Sales tax
67) Which of the following is a direct tax? a) Sales tax b)Entertainment tax c)Excise duty d) Estate duty
68) Which of the most important source of revenue to the State Government of India ?
a) Land Revenue b)Agriculture Income-tax c)State excise duties d) Sales tax
69) A budget is the summary of:
a) Proper allocation of resources b)Income reallocation c)Resource reallocation d) Revenue and expenditure
70) The budget deficit refers to the difference between all-revenue and expenditure of:
a) Revenue account only b)Increased government expenditure c)Capital account only d) Both revenue and capital accounts
71) Borrowing from capital market is a part of: a) Revenue budget b)Capital budget c)Both a and b d) None of these
72) Revenue deficit in India is: a) Negative b)Positive c)Zero d) None of 'he above
73) Capital deficit in India is: a) Positive b)Zer,.3 c)Negative d) None of the above
74) Funds, which do not belong to the government, are?
a) Consolidated fund b)Contingency fund c)Public accounts d) None of the above
75) Which budget in India is passed separately? a) Airlines b)Railways c)Defence d) Atomic energy
76) Which one of the following cannot be influenced by budgetary policy?
a) Power of private monopolies b)Balance of trade c)General level of prices d) Regional distribution of employment
77) Which budget is measured in financial terms only?
a) Dominance budget b)Programme performance budget c)Zero-base budget d) Central budget
78) Deficit Financing means:
a) Government spends in excess of revenue and capital receipt to that budget deficit in incurred which is financed by borrowing from
the RBI. b)niffpropra of total expenditure income anti.. income by revenue from all sources. c)Difference in borrowing an
internal and external resources d) Capital expenditure on items of public construction, public enterprises and public borrowings.
79) The need for deficit financing in India arises due:
a) Failure of the government to mobilize the desired volume of surplus for the public sector plans.
b) The rapidly growing expenditure incurred by the government c) Neither A nor B. ' d) Both A and B
80) Deficit financing leads to: a) Inflation b)Capital formation ,c)Neither A nor B d) Both A and B
81) Deficit financing means:
a) Difference in borrowing and internal and external resources
b) Capital expenditure on items of public construction, public enterprises and public borrowings
c) Government spends in excess of revenue and capital receipts so that budget deficit is incurred which is financed by
borrowing from the RBI.
d) Difference of total expenditure and income by revenue from all sources
82) The effect of deficit financing is:
a) Never inflationary b)Always inflationary c)Sometimes inflationary and sometimes not so depending cn conditions of the
economy and the dose of deficit financing. d) None of these
83) The direct effect of deficit financing is:
a) Deficit financing leads to extra money supply which in turn pushes up prices
b) Demand and supply both increase c)The price situation comes under complete control d) Deficit financing leads to extra
money supply, which in turn makes market more & more competitive.
84) Fiscal policy is related to:
a) Exports and Imports b)Public revenue and expenditure c)Issues and circulation of currencies d) Monetary Control measures
85) A restrictive monetary-fiscal policy is a good way to deal with:
a) Demand — shift inflation b)Any short of inflation that occurs when the economy falls below full employment
c)Demand — pull inflation, d) Cost — push inflation
86) Grants—in-aid given by the Centre to the states is meant:
a) To cover the gaps on revenue accounts. b)For flood control
c)Po( boosting agriculture in the State. d) For financing State plan projects
87) The finance commission is appointed every:
a) 7 years b)6 years,'C)5 years d) 3 years
88) The Narsimham Committee submitted its report to the government on:
a) Depoliticising appointments in public sector undertakes Import and eYportrestrnrtliring '-'d) Banking structure
89) "Interest is the reward for pure waiting." Which theory of interest explains it?
a)Time Preference Theory b)Classical Theory c)Liquidity Preference Theory d) Loanable Funds Theory
90) What is not true for the Classical theory of interest?
a) Demand and Supply Theory b)Saving-Investment Theory c)Non-monetary Theory d) Monetary Theory of Interest
103 .
91) The Loanable Funds Theory of interest is also known as:
a) The neo-classical theory of interest,b)The classical theory of interest c)The real theory of interest,d)The modern theory of interest
92) Rate of interest is a function of I, S, M, r = f (I, S, M, L) is explained by which of the following theories? A)Liquidity Preference
Theory, b)Saving-Investment Theory c)Loanable Funds Theory d) Modern Theory
93) For which of the following motives for liquidity preference, the demand for liquidity is determined by the rate of interest? a)
Transaction motive b)Precautionary motive c)Speculative motive d) All the three motives.
94) Which of the following is known as monetary theory of interest?
a) Loanable Funds Theory b)Modern Theory, c)Liquidity Pi eference Theory,d) Saving-Investment Theory
95) What is not true of the modern theory of interest?
a) Neo-Keynesian Theory b)Hicks and Hansen's synthesis c)Monetary Theory d) IS-LM Curves Analysis
96) Which of the following is not a characteristic of business cycles?
a) Recurrent in nature b)Periodicity ,c)Regular d) Cumulative
97) Who gave innovation theory of business cycles ?
a) Pigou b)I. A. Hobson, c)Schumpeter d) J. Tinbergen
98) Which of the following assumptions is not correct in relation to Hicks' theory of business cycle ?
a) The equilibrium of the economy is influenced by changes in consumption and investment
b) Fall employment is the ceiling of expansion c) Autonomous investment increases at some constant rate even during
depression d) Accelerator remains operative in all phases of business cycle, but the multiplier stops operating during depression
99) Economic growth refers to :
a) An increase in per capita income at current prices, b)A sustained increase in per capita output
c) An increase in income and output in real terms and not in money d) An increase in economic welfare
100) National income differs from NNP at market prices by the amount of :
a) Current transfers from the rest of the world, b)Net indirect taxes, c)National debt interest, d) It does not differ
ANSWER
1 A 2 C 3 A 4 D 5 A 6 B 7 A 8 B 9 B 10 C
11 C 12 C 13 D 14 A 15 D 16 D 17 D 18 B 19 B 20 C
21 A 22 D 23 A 24 A 25 D 26 C 27 E 28 D 29 D 30 A
31 C 32 D 33 C 34 B 35 B 36 C 37 C 38 A 39 C 40 A
41 C 42 C 43 D 44 D 45 A 46 D 47 B 48 D 49 B 50 B
51 B 52 C 53 A 54 A 55 B 56 A 57 A 58 C 59 C 60 B
61 B 62 B 63 A 64 B 65 A 66 A 67 D 68 D 69 D 70 D
71 B 72 A 73 A 74 C 75 B 76 A 77 B 78 A 79 D 80 D
81 C 82 C 83 A 84 B 85 B 86 A 87 C 88 D 89 B 90 D
91 A 92 C 93 C 94 C 95 C 96 C 97 C 98 D 99 B 100 B