Banking Awareness Book

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BANK A bank is an institution which deals with money and credit. It accepts deposits from the public, makes the funds available to those who need them, and helps in the remittance of money from one place to another. In fact, a modem bank performs such a variety of functions that it is difficult to give a precise and general definition of it. It is because of this reason that different economists give different definitions of the bank.

According to Crowther, a bank "collects money from those who have it to spare or who are saving it out of their incomes, and it lends this money to those who require it.”

In the words of Kinley, “A bank is an establishment which makes to individuals such advances of money as may be required and safely made, and to which individuals entrust money when not required by them for use."

According to John Paget, "Nobody can be a banker who does not (i) take deposit accounts, (h) take current accounts, (iii) issue and pay cheques, and (iv) collects cheques-crossed and uncrossed-for its customers,"

Prof. Sayers defines the terms bank and banking distinctly. He defines a bank as "an institution whose debts (bank deposits) are widely accepted in settlement of other people's debts to each other."

Again, according to Sayers, "Ordinary banking business consists cash for bank deposits and bank deposits for cash; transferring bank deposits from one person or corporation to another; giving bank deposits in exchange for bills of exchange, government bonds, the secured promises of businessmen to repay and so forth".

According to the Indian Companies Act, 1949, banking means "the accepting for the purpose of Indian Companies lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft or otherwise."

In short, the term bank in the modern times refers to an institution having the following features:

(i) It deals with money; it accepts deposits and advances loans.

(ii) It also deals with credit; it has the ability to create credit, i.e., the ability to expand its liabilities as a multiple of its reserves.

(iii) It is commercial institution; it aims at earning profit.



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(iv) It is a unique financial institution that creates demand deposits which serve as a medium of exchange and, as a result, the banks manage the payment system of the country.

TYPES OF BANKS :

The banks today offer various kinds of services to their customers and are not limited to just lending and borrowing of money to individuals and organizations. Banks can be classified into various types on the basis of their functions, ownership, domicile, etc. The following are the various types of banks: 1. Commercial Banks:

The banks, which perform all kinds of banking business and generally finance trade and commerce, are called commercial banks. Since their deposits are for a short period, these banks normally advance short-term loans to the businessmen and traders and avoid medium-term and long-term lending. However, recently, the commercial banks have also extended their areas of operation to medium-term and long-term finance. Majority of the commercial banks are in the public sector. However, there are certain private sector banks operating as joint stock companies. Hence, the commercial banks are also called joint stock banks. 2. Industrial Banks:

Industrial banks, also known as investment banks, mainly meet the medium-term and long-term financial needs of the industries. Such long-term needs cannot be met by the commercial banks, which generally deal with short-term lending. The main functions of the industrial banks are: (a) They accept long-term deposits. (b) They grant long-term loans to the industrialists to enable them to purchase land, construct factory building, purchase heavy machinery, etc. (c) They help selling or even underwrite the debentures and shares of industrial firms, (d) They can also provide information regarding the general economic position of the economy. In India, industrial hanks, like Industrial Development Bank of India,



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Industrial Finance Corporation of India, Slate Finance Corporations, are playing significant role in the industrial development of the country. 3. Agricultural Banks: Agricultural credit needs are different from those of industry and trade. Industrial and commercial banks normally do not deal with agricultural finance. The agriculturists require: (a) short-term credit to buy seeds, fertilizers and other inputs, and (b) long-term credit to purchase land, to make permanent improvements on land, to purchase agricultural machinery and equipment, etc. In India, agricultural finance is generally provided by co-operative institutions. Agricultural co-operatives provide short-term loans and Land Development Banks provide the long-term credit to the agriculturists. 4. Exchange Banks: Exchange banks deal in foreign exchange and specialise in financing foreign trade. They facilitate international payments through the sale, purchase of bills of exchange, and thus play an important role in promoting foreign trade. 5. Saving Banks: The main purpose of saving banks is to promote saving habits among the general public and mobilise their small savings. In India, postal saving banks do this job. They open accounts and issue postal cash certificates. 6. Central Bank: Central bank is the apex institution, which controls, regulates and supervises the monetary and credit system of the country. Important functions of the central bank are: (a) It has the monopoly of note issue; (b) It acts as the banker, agent and financial adviser to the state; (c) It is the custodian of member banks reserves; (d) It is the custodian of nation's reserves of international currency;



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(e) It serves as the lender of the last resort; (f) It functions as the bank of central clearance, settlement and transfer; and (g) It acts as the controller of credit. Besides these functions, India's central bank, i.e., the Reserve Bank of India, also performs many developmental functions to promote economic development in the country. 7. Classification on the Basis of Ownership: On the basis of ownership, banks can be classified into three categories: (a) Public Sector Banks: These arc owned and controlled by the government. In India, the nationalized banks and the regional rural banks come under these categories, (b) Private Sector Banks: These banks are owned by the private individuals or corporations and not by the government or co-operative societies, (c) Cooperative Banks: Cooperative banks are operated on the cooperative lines. In India, cooperative credit institutions are organised under the cooperative societies law and play an important role in meeting financial needs in the rural areas. 8. Classification on the Basis of Domicile: On the basis of domicile, the banks are divided into two categories: (a) Domestic Banks: These are registered and incorporated within the country, (b) Foreign Banks: These are foreign in origin and have their head offices in the country of origin. 9. Scheduled and Non-Scheduled Banks:



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In India, banks have been broadly classified into scheduled and non-scheduled banks. A Scheduled Bank is that which has been included in the Second Schedule of the Reserve Bank of India Act, 1934 and fulfills the three conditions (a) it has paid-up capital and reserves of at least Rs. 5 lakhs. It ensures the Reserve Bank that its operations are not detrimental to the interest of the depositors; (c) It is a corporation or a cooperative society and not a partnership or a single owner firm. The banks which are not included in the Second Schedule of the Reserve Bank of India Act are non-scheduled banks.

FUNCTIONS OF COMMERCIAL BANKS

The commercial banks serve as the king pin of the financial system of the country. They render many valuable services. The important functions of the Commercial banks can be explained with the help of the following chart.

PRIMARY FUNCTIONS

The primary functions of the commercial banks include the following:

A. Acceptance of Deposits 1. Time Deposits:

These are deposits repayable after a certain fixed period. These deposits are not withdrawn able by cheque, draft or by other means. It includes the following.

(a) Fixed Deposits:

The deposits can be withdrawn only after expiry of certain period say 3 years, 5 years or 10 years. The banker allows a higher rate of interest depending upon the amount and period of time. Previously the rates of interest payable on fixed deposits were determined by Reserve Bank.

Presently banks are permitted to offer interest as determined by each bank. However, banks are not permitted to offer different interest rates to different customers for deposits of same maturity period, except in the case of deposits of Rs. 15 lakhs and above.

These days the banks accept deposits even for 15 days or one month etc. In times of

urgent need for money, the bank allows premature closure of fixed deposits by paying interest at reduced rate. Depositors can also avail of loans against Fixed Deposits. The Fixed Deposit Receipt cannot be transferred to other persons.

(b) Recurring Deposits:



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In recurring deposit, the customer opens an account and deposit a certain sum of money every month. After a certain period, say 1 year or 3 years or 5 years, the accumulated amount along with interest is paid to the customer. It is very helpful to the middle and poor sections of the people. The interest paid on such deposits is generally on cumulative basis. This deposit system is a useful mechanism for regular savers of money.

(c) Cash Certificates:

Cash certificates are issued to the public for a longer period of time. It attracts the people because its maturity value is in multiples of the sum invested. It is an attractive and high yielding investment for those who can keep the funds for a long time.

It is a very useful account for meeting future financial requirements at the occasion of marriage, education of children etc. Cash certificates are generally issued at discount to face value. It means a cash certificate of Rs. 1, 00,000 payable after 10 years can be purchased now, say for Rs. 20,000.

2. Demand Deposits:

These are the deposits which may be withdrawn by the depositor at any time without previous notice. It is withdraw able by cheque/draft. It includes the following:

(a) Savings Deposits:

The savings deposit promotes thrift among people. The savings deposits can only be held by individuals and non-profit institutions. The rate of interest paid on savings deposits is lower than that of time deposits. The savings account holder gets the advantage of liquidity (as in current a/c) and small income in the form of interests.

But there are some restrictions on withdrawals. Corporate bodies and business firms are not allowed to open SB Accounts. Presently interest on SB Accounts is determined by RBI. It is 4.5 per cent per annum. Co-operative banks are allowed to pay an extra 0.5 per cent on its savings bank deposits.

(b) Current Account Deposits:

These accounts are maintained by the people who need to have a liquid balance. Current account offers high liquidity. No interest is paid on current deposits and there are no restrictions on withdrawals from the current account.

These accounts are generally in the case of business firms, institutions and co-operative bodies. Nowadays, banks are designing and offering various investment schemes for deposit of money. These schemes vary from bank to bank.



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It may be stated that the banks are currently working out with different innovative schemes for deposits. Such deposit accounts offer better interest rate and at the same time withdraw able facility also. These schemes are mostly offered by foreign banks. In USA, Current Accounts are known as 'Checking Accounts' as a cheque is equivalent to check in America.

B. Advancing of Loans

The commercial banks provide loans and advances in various forms. They are given below:

1. Overdraft:

This facility is given to holders of current accounts only. This is an arrangement with

the bankers thereby the customer is allowed to draw money over and above the balance in his/her account. This facility of overdrawing his account is generally pre-arranged with the bank up to a certain limit.

It is a short-term temporary fund facility from bank and the bank will charge interest over the amount overdrawn. This facility is generally available to business firms and companies.

2. Cash Credit:

Cash credit is a form of working capital credit given to the business firms. Under this arrangement, the customer opens an account and the sanctioned amount is credited with that account. The customer can operate that account within the sanctioned limit as and when required.

It is made against security of goods, personal security etc. On the basis of operation, the period of credit facility may be extended further. One advantage under this method is that bank charges interest only on the amount utilized and not on total amount sanctioned or credited to the account.

Reserve Bank discourages this type of facility to business firms as it imposes an uncertainty on money supply. Hence this method of lending is slowly phased out from banks and replaced by loan accounts. Cash credit system is not in use in developed countries.

3. Discounting of Bills:

Discounting of Bills may be another form of bank credit. The bank may purchase inland and foreign bills before these are due for payment by the drawer debtors, at discounted values, i.e., values a little lower than the face values.



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The Banker's discount is generally the interest on the full amount for the unexpired period of the bill. The banks reserve the right of debiting the accounts of the customers in case the bills are ultimately not paid, i.e., dishonored.

The bill passes to the Banker after endorsement. Discounting of bills by banks provide immediate finance to sellers of goods. This helps them to carry on their business. Banks can discount only genuine commercial bills i.e., those drawn against sale of goods on Credit. Banks will not discount Accommodation Bills.

4. Loans and Advances:

It includes both demand and term loans, direct loans and advances given to all type of customers mainly to businessmen and investors against personal security or goods of movable or immovable in nature. The loan amount is paid in cash or by credit to customer account which the customer can draw at any time.

The interest is charged for the full amount whether he withdraws the money from his account or not. Short-term loans are granted to meet the working capital requirements where as long-term loans are granted to meet capital expenditure.

Previously interest on loan was also regulated by RBI. Currently, banks can determine the rate themselves. Each bank is, however required to fix a minimum rate known as Prime Lending Rate (PLR).

Classification of Loans and Advances

Loans and advances given by bankers can be classified broadly into the following categories:

(i) Advances which are given on the personal security of the debtor, and for which no tangible or collateral security is taken; this type of advance is given either when the amount of the advance is very small, or when the borrower is known to the Banker and the Banker has complete confidence in him (Clean Advance).

(ii) Advances which are covered by tangible or collateral security. In this section of the study we are concerned with this type of advance and with different types of securities which a Banker may accept for such advances (Secured Advance). (iii) Advances which are given against the personal security of the debtor but for which the Banker also holds in addition the guarantee of one or more sureties. This type of advance is often given by Banker to persons who are not known to them but whose surety is known to the Banker. Bankers also often take the personal guarantee of the Directors of a company to whom they agree to advance a clean or unsecured loan.

(iv) Loans are also given against the security of Fixed Deposit receipts.



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5. Housing Finance:

Nowadays the commercial banks are competing among themselves in providing housing finance facilities to their customers. It is mainly to increase the housing facilities in the country. State Bank of India, Indian Bank, Canara Bank, Punjab National Bank, has formed housing subsidiaries to provide housing finance.

The other banks are also providing housing finances to the public. Government of India also encourages banks to provide adequate housing finance.

Borrowers of housing finance get tax exemption benefits on interest paid. Further housing finance up to Rs. 5 lakh is treated as priority sector advances for banks. The limit has been raised to Rs. 10 lakhs per borrower in cities.

6. Educational Loan Scheme:

The Reserve Bank of India, from August, 1999 introduced a new Educational Loan Scheme for students of full time graduate/post-graduate professional courses in private professional colleges.

Under the scheme all public sector banks have been directed to provide educational loan up to Rs. 15,000 for free seat and Rs. 50,000 for payment seat student at interest not more than 12 per cent per annum. This loan is on clean basis i.e., without calling for security.

This loan is available only for students whose annual family income does not exceed Rs. 1, 00,000. The loan has to be repaid together with interest within five years from the date of completion of the course. Studies in respect of the following subjects/areas are covered under the scheme.

(a) Medical and dental course. (b) Engineering course. (c) Chemical Technology. (d) Management courses like MBA. (e) Law studies.

(f) Computer Science and Applications.

This apart, some of the banks have other educational loan schemes against security etc., one can check up the details with the banks.

7. Loans against Shares/Securities:

Commercial banks provide loans against the security of shares/debentures of reputed companies. Loans are usually given only up to 50% value (Market Value) of the shares



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subject to a maximum amount permissible as per RBI directives. Presently one can obtain a loan up to Rs.10 lakhs against the physical shares and up to Rs. 20 lakhs against dematerialized shares.

8. Loans against Savings Certificates:

Banks are also providing loans up to certain value of savings certificates like National Savings Certificate, Fixed Deposit Receipt, Indira Vikas Patra, etc. The loan may be obtained for personal or business purposes.

9. Consumer Loans and Advances:

One of the important areas for bank financing in recent years is towards purchase of consumer durables like TV sets, Washing Machines, Micro Oven, etc. Banks also provide liberal Car finance.

These days banks are competing with one another to lend money for these purposes as default of payment is not high in these areas as the borrowers are usually salaried persons having regular income? Further, bank's interest rate is also higher. Hence, banks improve their profit through such profitable loans.

10. Securitization of Loans:

Banks are recently trying to securities a part of their part of loan portfolio and sell it to

another investor. Under this method, banks will convert their business loans into a security or a document and sell it to some Investment or Fund Manager for cash to enhance their liquidity position.

It is a process of transferring credit risk from the banker to the buyer of securitized loans. It involves a cost to the banker but it helps the bank to ensure proper recovery of loan. Accordingly, securitization is the process of changing an illiquid asset into a liquid asset.

11. Others:

Commercial banks provide other types of advances such as venture capital advances, jewel loans, etc.

1. Effective October 18, 1994 banks were free to determine their own prime lending rates (PLRs) for credit limit over Rs. 2 lakh. Data relate to public sector banks.

2. The stipulation of minimum maturity period of term deposits was reduced from 30 days to 15 days, effective April 29, 1998. Data relate to public sector banks.



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3. The change in the Bank Rate was made effective from the close of business of respective dates of change except April 29, 1998.

4. Effective April 29, 1998.

C. Credit Creation

Credit creation is one of the primary functions of commercial banks. When a bank sanctions a loan to the customer, it does not give cash to him. But, a deposit account is opened in his name and the amount is credited to his account. He can withdraw the money whenever he needs.

Thus, whenever a bank sanctions a loan it creates a deposit. In this way the bank increases the money supply of the economy. Such functions are known as credit creation.

Secondary Functions

The secondary functions of the banks consist of agency functions and general utility functions.

A. Agency Functions

Agency functions include the following:

(i) Collection of cheques, dividends, and interests:

As an agent the bank collects cheques, drafts, promissory notes, interest, dividends etc., on behalf of its customers and credit the amounts to their accounts.

Customers may furnish their bank details to corporate where investment is made in shares, debentures, etc. As and when dividend, interest, is due, the companies directly send the warrants/cheques to the bank for credit to customer account.

(ii) Payment of rent, insurance premiums:

The bank makes the payments such as rent, insurance premiums, subscriptions, on standing instructions until further notice. Till the order is revoked, the bank will continue to make such payments regularly by debiting the customer's account.

(iii) Dealing in foreign exchange:

As an agent the commercial banks purchase and sell foreign exchange as well for customers as per RBI Exchange Control Regulations.

(iv) Purchase and sale of securities:



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Commercial banks undertake the purchase and sale of different securities such as shares, debentures, bonds etc., on behalf of their customers. They run a separate 'Portfolio Management Scheme' for their big customers.

(v) Act as trustee, executor, attorney, etc:

The banks act as executors of Will, trustees and attorneys. It is safe to appoint a bank as a trustee than to appoint an individual. Acting as attorneys of their customers, they receive payments and sign transfer deeds of the properties of their customers.

(vi) Act as correspondent:

The commercial banks act as a correspondent of their customers. Small banks even get travel tickets, book vehicles; receive letters etc. on behalf of the customers.

(vii) Preparations of Income-Tax returns:

They prepare income-tax returns and provide advices on tax matters for their customers. For this purpose, they employ tax experts and make their services, available to their customers.

B. General Utility Services

The General utility services include the following:

(i) Safety Locker facility:

Safekeeping of important documents, valuables like jewels are one of the oldest services provided by commercial banks. 'Lockers' are small receptacles which are fitted in steel racks and kept inside strong rooms known as vaults. These lockers are available on half-yearly or annual rental basis.

The bank merely provides lockers and the key but the valuables are always under the control of its users. Any customer cannot have access to vault.

Only customers of safety lockers after entering into a register his name account number and time can enter into the vault. Because the vault is holding important valuables of customers in lockers, it is also known as 'Strong Room'.

(ii) Payment Mechanism or Money Transfer:

Transfer of funds is one of the important functions performed by commercial banks. Cheques and credit cards are two important payment mechanisms through banks. Despite an increase in financial transactions, banks are managing the transfer of funds process very efficiently.



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Cheques are also cleared through the banking system. Correspondent banking is another method of transferring funds over long distance, usually from one country to another. Banks, these days employ computers to speed up money transfer and to reduce cost of transferring funds.

Electronic Transfer of funds is also known as 'Chequeless banking' where funds are transferred through computers and sophisticated electronic system by using code words. They offer Mail Transfer, Telegraphic Transfer (TT) facility also.

(iii) Travelers' cheques:

Travelers Cheques are used by domestic travelers as well as by international travelers. However the use of traveler's cheques is more common by international travelers because of their safety and convenience. These can be also termed as a modified form of traveler's letter of credit.

A bank issuing travelers cheques usually have banking arrangement with many of the foreign banks abroad, known as correspondent banks. The purchaser of traveler's cheques can encase the cheques from all the overseas banks with whom the issuing bank has such an arrangement.

Thus traveler's cheques are not drawn on specific bank abroad. The cheques are issued in foreign currency and in convenient denominations of ten, twenty, fifty, one hundred dollar, etc. The signature of the buyer/traveler is written on the face of the cheques at the time of their purchase.

The cheques also provide blank space for the signature of the traveler to be signed at the time of encashment of each cheque. A traveler has to sign in the blank space at the time of drawing money and in the presence of the paying banker.

The paying banker will pay the money only when the signature of the traveler tallies with the signature already available on the cheque.

A traveler should never sign the cheque except in the presence of paying banker and only when the traveler desires to encash the cheque. Otherwise it may be misused. The cheques are also accepted by hotels, restaurants, shops, airlines companies for respectable persons.

Encashment of a traveler cheque abroad is tantamount to a foreign exchange transaction as it involves conversion of domestic currency into a foreign currency.

When a traveller cheque is lost or stolen, the buyer of the cheques has to give a notice to the issuing bank so that stop order can be issued against such lost/stolen cheques to the banks where they are permitted to be encased.



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It is also difficult to the finder of the cheque to draw cash against it since the encasher has to sign the cheque in the presence of the paying banker. Unused travellers cheques can be surrendered to the issuing bank and balance of cash obtained.

The issuing bank levies certain commission depending upon the number and value of travellers cheques issued.

(iv) Circular Notes or Circular Letters of Credit:

Under Circular Letters of Credit, the customer/traveller negotiates the drafts with any of the various branches to which they are addressed. Thus the traveller can obtain funds from many of the branches of banks instead only from a particular branch. Circular Letters of Credit are therefore a more useful method for obtaining funds while travelling to many countries.

It may be noted that travellers letter of credit are usually paid for in advance. In other words, the traveller first makes payments to the issuing bank before obtaining the Circular Notes.

(v) Issue "Travellers Cheques":

Banks issue travellers cheques to help carry money safely while travelling within India or abroad. Thus, the customers can travel without fear, theft or loss of money.

(vi) Letters of Credit:

Letter of Credit is a payment document provided by the buyer's banker in favour of seller. This document guarantees payment to the seller upon production of document mentioned in the Letter of Credit evidencing dispatch of goods to the buyer.

The Letter of Credit is an assurance of payment upon fulfilling conditions mentioned in the Letter of Credit. The letter of credit is an important method of payment in international trade. There are primarily 4 parties to a letter of credit.

The buyer or importer, the bank which issues the letter of credit, known as opening bank, the person in whose favour the letter of credit is issued or opened (The seller or exporter, known as 'Beneficiary of Letter of Credit'), and the credit receiving/advising bank.

The Letter of Credit is generally advised/sent through the seller's bank, known as Negotiating or Advising bank. This is done because the conditions mentioned in the Letter of Credit are, in the first instance; have to be verified by the Negotiating Bank. It is mostly used in international trade.

(vii) Acting as Referees:



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The banks act as referees and supply information about the business transactions and financial standing of their customers on enquiries made by third parties. This is done on the acceptance of the customers and help to increase the business activity in general.

(viii) Provides Trade Information:

The commercial banks collect information on business and financial conditions etc., and make it available to their customers to help plan their strategy. Trade information service is very useful for those customers going for cross-border business. It will help traders to know the exact business conditions, payment rules and buyers' financial status in other countries.

(ix) ATM facilities:

The banks today have ATM facilities. Under this system the customers can withdraw their money easily and quickly and 24 hours a day. This is also known as 'Any Time Money'. Customers under this system can withdraw funds i.e., currency notes with a help of certain magnetic card issued by the bank and similarly deposit cash/cheque for credit to account.

(x) Credit cards:

Banks have introduced credit card system. Credit cards enable a customer to purchase

goods and services from certain specified retail and service establishments up to a limit without making immediate payment. In other words, purchases can be made on credit basis on the strength of the credit card.

The establishments like Hotels, Shops, Airline Companies, Railways etc., which sell the goods or services on credit forward a monthly or fortnightly statements to the bank.

The amount is paid to these establishments by the bank. The bank subsequently collects the dues from the customers by debit to their accounts. Usually, the bank receives certain service charges for every credit card issued. Visa Card, BOB card are some examples of credit cards.

(xi) Gift Cheques:

The commercial banks offer Gift cheque facilities to the general public. These cheques

received a wider acceptance in India. Under this system by paying equivalent amount one can buy gift cheque for presentation on occasions like Wedding, Birthday.

(xii) Accepting Bills:



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On behalf of their customers, the banks accept bills drawn by third parties on its customers. This resembles the letter of credit. While banks accept bills, they provide a better security for payment to seller of goods or drawer of bills.

(xiii) Merchant Banking:

The commercial banks provide valuable services through their merchant banking divisions or through their subsidiaries to the traders. This is the function of underwriting of securities. They underwrite a portion of the Public issue of shares, Debentures and Bonds of Joint Stock Companies.

Such underwriting ensures the expected minimum subscription and also convey to the investing public about the quality of the company issuing the securities. Currently, this type of services can be provided only by separate subsidiaries, known as Merchant Bankers as per SEBI regulations.

(xiv) Advice on Financial Matters:

The commercial banks also give advice to their customers on financial matters particularly on investment decisions such as expansion, diversification, new ventures, rising of funds etc.

(xv) Factoring Service:

Today the commercial banks provide factoring service to their customers. It is very much helpful in the development of trade and industry as immediate cash flow and administration of debtors' accounts are taken care of by factors. This service is again provided only by a separate subsidiary as per RBI regulations.

Balance sheet is a statement of assets and liabilities on a given date. In India, banks have to publish their balance sheets according to the preformed i.e., 'Form A' given in the III schedule of the Banking Regulation Act, 1949. The study of the balance sheet along with its profit and loss account reveals its financial soundness.

A customer has to carefully study these statements to choose his banks. The combined balance sheet of all banks in the country reveals certain economic trends. A specimen of a Bank's Balance Sheet is given at the end of this chapter.

CHEQUE is an important document that an individual, companies, governments and many others use to transact their business. By definition, cheque can be termed as a negotiable document to transfer money either in physical form or to effect inter account transfer.



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Unless or otherwise stated, a cheque is a signed unconditional order addressing the bank to credit it by the issuer. The issuer of the cheque will have an account with the bank to which it is connected. The account can be either savings type or a current account. A cheque transaction is one of the safest ways of conducting the business because it leaves an entry against the cheque honoured by the bank in the banking transactions conducted by you which can be traced back in case of necessity. There are various types of cheques and various ways of issuing a cheque. Different types of cheques based on methods of issuing Open cheque or bearer cheque: The issuer of the cheque would just fill the name of the person to whom the cheque is issued, writes the amount and attaches his signature and nothing else. This type of issuing a cheque is also called bearer type cheque also known as open cheque or uncrossed cheque. The cheque is negotiable from the date of issue to three months. The issued cheque turns stale after the completion of three months. It has to be revalidated before presenting to the bank. A crossed cheque or an account payee cheque: It is written in the same as that of bearer cheque but issuer specifically specifies it as account payee on the left hand top corner or simply crosses it twice with two parallel lines on the right hand top corner. The bearer of the cheque presenting it to the bank should have an account in the branch to which the written sum is deposited. It is safest type of cheques. A self cheque: A self cheque is written by the account holder as pay self to receive the money in the physical form from the branch where he holds his account. Pay yourself cheque: The account holder issues this type of crossed cheque to the bank asking the bank deduct money from his account into bank’s own account for the purpose buying banking products like drafts, pay orders, fixed deposit receipts or for



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depositing money into other accounts held by him like recurring deposits and loan accounts. Post dated cheque (PDC): A PDC is a form of a crossed or account payee bearer cheque but post dated to meet the said financial obligation at a future date. Various types of cheques based on their functionality Local Cheque: A local cheque is a type of cheque which is valid in the given city and a given branch in which the issuer has an account and to which it is connected. The producer of the cheque in whose name it is issued can directly go to the designated bank and receive the money in the physical form. If a given city’s local cheque is presented elsewhere shall attract some fixed banking charges. Although these type of cheques are still prevalent, especially with nationalised banks, it is slowly slated to be removed with at par cheque type. At par cheque: With the computerisation and networking of bank branches with its headquarters, a variation to the local cheque has become common place in the name of at par cheque. At par cheque is a cheque which is accepted at par at all its branches across the country. Unlike local cheque it can be present across the country without attracting additional banking charges. Banker’s cheque: It is a kind of cheque issued by the bank itself connected to its own funds. It is a kind of assurance given by the issuer to the client to alley your fears. The personal account connected cheques may bounce for want of funds in his account. To avoid such hurdles, sometimes, the receiver seeks banker’s cheque. Travelers’ cheques: They are a kind of an open type bearer cheque issued by the bank which can be used by the user for withdrawal of money while touring. It is equivalent to carrying cash but in a safe form without fear of losing it. Gift cheque: This is another banking instrument introduced for gifting money to the loved ones instead of hard cash. Cheques per se have been around since the inception of banking system. The cheque transactions are one of the safest ways of conducting business. Although cheque is going to be still the mainstay of banking transactions, it leaves a good amount of paper usage. With net banking becoming popular and made secure, more and more people are looking forward to transacting their business using net banking. ATMs are slowly replacing the self cheques for withdrawal of money. Post dated cheques are getting replaced by periodic electronic clearing instructions .



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RESERVE BANK OF INDIA

01. Central bank is a bank which acts as a banker to the government;

has monopoly of note issue and controls the entire banking

system

02. RBI is the central bank in India

03. RBI was established by an act of Parliament in 1934

04. The initial share capital for RBI was Rs. 5 crores

05. RBI was nationalized under (transfer of public ownership) act

1948 06. Its affairs are regulated by central board of directors

07. It has four regional centres at Mumbai, Kolkatta, Chennai and

Delhi

08. The central office of the bank is at Mumbai

09. RBI is note issuing authority; banker, agent and financial

adviser to the government; custodian of cash reserves of

banks; custodian of nation‟s reserves of foreign exchange;

lender of the last resort; controller of credit etc.

10. Currency notes other than one rupee notes are issued by RBI

11. RBI has credit control – regulation of cash reserves of commercial banks, regulating the flow of credit, qualitative

control and open market operations

12. Handles all government transactions

13. It is a banker‘s bank

14. It maintains the exchange rate for the Indian rupee; hold the

country‟s reserves in foreign currencies and administration

of the exchange management regulations

Scheduled commercial banks

15. They are included in the second schedule to the RBI act, 1934

16. They can avail facilities from RBI – accommodation in the form

of refinance and loans and advances; remittance facility at

concessive rates as also grant of authorized dealer‟s license

to handle foreign exchange business.

17. Have paid up capital and reserves – aggregate value of not less

than Rs. 5 lakhs.

18. It can be a state cooperative bank or company registered under the companies act



20

19. Scheduled commercial banks are – State Bank of India and

associates, nationalized banks, private sector banks,

regional rural banks, urban cooperative banks, state

cooperative banks

20. Scheduled Commercial Banks to maintain CRR up to 3 percent of their demand and time liabilities which can go upto a

maximum of 15 percent

Public sector banks

21. State Bank of India and associate banks

22. Nationalized banks – 20

23. Banks were nationalized on 19.07.1969 - fourteen banks

24. Nationalised banks are: Central Bank of India, Bank of India,

Bank of Baroda, Allahabad Bank, Union Bank of India, United Commercial Bank, Indian Overseas Bank, Indian Bank, Canara

Bank, Syndicate Bank, Punjab National Bank, United Bank of India,

Dena Bank, Bank of Maharashtra, Andhra Bank, Corporation Bank,

Oriental Bank of Commerce, Punjab and Sind Bank and Vijaya

Bank. (19) and Industrial Development Bank of India = 20

Development banks

25. Industrial Finance Corporation of India is a development bank

26. Its operations are project finance, financial services and

corporate advisory services

27. Industrial Investment Bank of India was set up in 1971 for

rehabilitation of sick industrial companies.

28. Reconstituted as Industrial Reconstruction Bank of India in 1985

under the IRBI act, 1984

29. IRBI was incorporated in March, 1997 as Industrial Investment

Bank of India Limited under the companies act, 1956

30. SIDBI was set up in 1990 under an act of parliament (SIDBI) act 1989 as a wholly owned subsidiary of IDBI

31. It is the principal financial institution for promoting and financing

development of industry in the small scale sector

32. 14 banks were nationalized on 19th July 1969



21

New Private sector banks

33. New private sector banks were formed as per RBI guidelines

1993

34. They were registered under companies act 1956 35. They were included in second schedule to the RBI act, 1934

36. The minimum paid up capital of a new bank shall be Rs. 100

crores

37. Priority sector lending norms should be adopted by these banks

38. The banks are governed by the provisions of the RBI act, 1934, the

Banking regulation act, 1949 and other relevant statutes.

39. They are not allowed to set up a subsidiary or mutual fund for at

least three years after their establishment

Regional Rural banks

40. Regional Rural banks were established on 2.10.1975

41. To develop rural economy by providing credit and other facilities

for the purpose of development of agriculture, trade, commerce,

industry and other productive activities in rural areas, particularly

to the small and marginal farmers, agricultural laborers, artisans

and small entrepreneurs

42. They are scheduled commercial banks

43. Included in second schedule to RBI act, 1934 44. The gross NPAs of regional rural banks should not be more than

10 percent.

45. The banks should comply with the IRDA regulations for acting as a

corporate agent

46. The authorized capital of a regional rural bank is Rs. 5 crore and

issued/paid up capital minimum of Rs. 25 lakhs and

maximum of Rs. 100 lakhs

47. The prescribed minimum level of share holding should be 51

percent for sponsor institutions

Local Area banks

48. Local area banks were established on 24.08.1996



22

49. They were set up in the private sector to cater to credit needs of

the local people and to provide efficient and competitive financial

intermediation services in their area of operation

50. They are required to observe the priority sector lending target of

40 percent of net bank credit, as applicable to other domestic banks, out of which 25 percent shall be given to weaker sections

51. They were registered as public limited companies as per

Companies act, 1956.

52. They got licence as per Banking regulation act 1949

53. Included in the second schedule to RBI act, 1934

54. They have the minimum paid up capital of Rs. 5 crore

55. Promoters‘ contribution to be Rs 2 crores.

56. They can be promoted by individuals, corporate entities, trusts and

societies

57. The area of operation of local area bank shall be a maximum of three geographically contiguous districts.

58. To comply with the provisions of the Banking Regulation act, 1949,

RBI act, 1934 and other statutes

59. They are subject to prudential norms, accounting policies and other

policies laid down by RBI

Non Banking Finance Companies

60. NBFCs consist of eight categories – each one of them conducting a particular business activity

61. Equipment leasing company undertakes equipment leasing or the

financing of such activity

62. Hire purchase finance company is engaged in hire purchase

transaction or the financing of such transactions

63. Loan company provides finance by making loans or advances or

otherwise for any activity other than its own.

64. The main business of any investment company is the acquisition of

securities and trading in such securities to earn a profit

65. Mutual Benefit Financial Company are the companies which are notified by the Central Government under section 620 A of the

companies act 1956

66. Miscellaneous non banking company – the principal business of

such company is managing, conducting or supervising as a



23

promoter, foreman or agent of any transaction or arrangement by

which the company enters into an agreement

67. Housing finance company – acquisition of construction of houses

including the acquisition or development of plots of land

68. Residuary non banking company – receives deposits under any scheme or arrangement by whatever name called in one lump sum

or in installments by way of contributions or subscriptions or by

sale of units or certificates or other instruments or in any manner.

69. Effective 4.3.2003, NBFCs are not allowed to offer more than 11

percent per annum interest on public deposit

70. No official agency guarantees or undertakes the repayment of

deposits or interest

71. NBFC deposits are uninsured and not backed by security

72. They are not allowed to offer more than 2 percent brokerage

73. They are not allowed to offer gifts or incentives 74. All depositors must be issued proper receipts for deposits

75. NBFCs having track record of less than 2 years is not eligible to

accept public deposits

76. NBFCs seeking public deposit should be a profit making company

Life Insurance corporation of India

77. LIC was established in 1956 as wholly owned corporation of the

Government of India 78. LIC came into being from 1.9.1956

79. To spread life insurance across the country, particularly in the rural

areas and to the socially and economically backward classes.

80. Besides insurance business, LIC in pursuance of Government of

India guidelines invests a major portion of its funds in central and

state government securities and other approved securities

including special deposits with Government of India.

81. Extends assistance to develop infrastructure facilities like housing,

rural electrification, water supply and sewerage and provides

financial assistance to the corporate sector by way of term loans, underwriting off and direct subscription to shares and debentures.

82. It also provides resource support to financial institutions through

subscription to their shares/bonds and by way of term loans.

83. UTI - the largest mutual fund organization in India was set up in

1964 by an act of parliament.



24

84. Established to fulfill the objectives of mobilizing of retail savings,

investing them in the capital market and passing on the benefits

accrued from the acquisition, holding, management and disposal of

securities to the small investors.

85. General Insurance Corporation of India was formed and registered on January, 1973 under the insurance act 1938 in accordance with

the provisions of the General Insurance Business (Nationalization)

act, 1972

86. The New India Assurance Company Limited; The United India

Insurance Company Limited, The Oriental Insurance Company

Limited and National Insurance Company Limited are government

owned insurance companies doing general insurance business

87. Need based insurance companies to meet the diverse and

emerging needs of various segments of society and provides

financial assistance to industrial projects by way of term loans, short term loans and direct subscription to shares/debentures of

new and existing industrial enterprise.

NATIONAL BANK FOR AGRICULTURE AND RURAL

DEVELOPMENT

88. NABARD was established in 1982 under an act of parliament

89. It is the apex development bank for promotion and development bank for promotion and development of agriculture, small scale

industries, cottage and village industries, handicrafts and other

rural crafts and other allied economic activities in rural areas

90. It serves as an apex financing agency for the institutions providing

investment and production credit for promoting the various

developmental activities in rural areas

91. Takes measures towards institution building for improving

absorptive capacity of the credit delivery system, including

monitoring, formulation of rehabilitation schemes, restricting of

credit institutions, training of personnel etc. 92. Coordinates the rural financing activities of all institutions engaged

in developmental work at the field level and maintains liaison with

Government of India, state governments, RBI and other national

level institutions concerned with policy formulation



25

EXPORT AND IMPORT BANK OF INDIA

93. Export and Import Bank of India - EXIM bank was established in

1982

94. Public sector financial institution created by an act of Parliament vide - the Export and Import Bank of India act 1981.

95. Principal financial institution for – financing, facilitating and

promoting India‘s foreign trade

96. They provide Indian exporters with investment loans, export

product development loans, loans for export marketing, pre

shipment credit, suppliers credit for exports or projects and

advisory services.

97. Equity finance available for acquiring of setting up companies

abroad for manufacturing, marketing, trading etc.

98. It offers buyers credit and lines of credit to foreign governments and banks

99. It has facilities to provide advance information and business

advisory services to Indian exporters in respect of multilaterally

funded projects overseas.

100. It offers advisory and information services to exporters and

sponsors

01. EXIM bank operates various lending programs for promotion of

exports of engineering and capital goods and related services from India

02. EXIM - Direct financial assistance to exporters of plant, equipment,

machinery and related services in the form of medium term

credit

03. EXIM -Overseas investment finance to Indian promoters of

overseas joint ventures to support their equity investments.

04. EXIM - Overseas buyers‘ credit to foreign importers for import of

Indian capital goods and related services

05. National Housing bank was established on 9.7.1988 06. Vide National housing bank act, 1987 to function as a principal

agency to promote housing finance institutions and to provide

financial and other support to such institutions.



26

07. NHB – issues directions to housing finance institutions to

ensure their growth on sound lines

08. Make loans and advances and render any other form of financial

assistance to scheduled banks and housing finance institutions or

to any authority established by or under any central, state or provincial act and engaged in slum improvement

09. Formulate schemes for the purpose of mobilization of resources

and extension of credit for housing.

10. Banks can accept both demand and time deposits from the

public

11. Interest payable on savings bank accounts is not regulated by

Reserve Bank of India

12. RBI is the sole authority to issue and manage currency in India

13. Accounts are allowed to be operated by cheques in respect of

both savings bank accounts and current accounts 14. Normally no interest is paid on current deposit accounts

15. The usual deposit schemes of the banks are current accounts,

savings bank accounts and term deposit accounts

16. Fixed deposits and recurring deposits are repayable after an

agreed period

17. Financial inclusion means provision of financial services namely,

payments, remittances, savings, loans and insurance at

affordable cost to persons not yet given the same

18. Sale of insurance policy to a depositor is known as cross selling by banks

19. When a bank returns a cheque unpaid, it is called as dishonor of

the cheque

20. Mortgage is a security on immovable property for a deposit

received by a bank

21. Accounts in which shares of various companies are traded in

electronic form is called as demat accounts

22. NABARD has sought an emergency fund of Rs. 1000 crore from

banks to tackle acute liquidity crisis, which is coming in the way

to give loans to micro borrowers 23. Distribution of insurance products and insurance policies by the

banks as corporate agencies is known as bankassurance

24. The term L denote ―Liquidity‖ in term ―LAF‖ as referred every now

and then in relation to monetary policy of RBI – liquidity



27

25. The full form of FINO – a term frequently used in newspapers is

called as – Financial Information Network and Operation

Limited

26. The rate of inflation increases when the purchasing power of

money decreases 27. Interest on savings bank account is now calculated by banks on

daily product basis

28. A centralized data base with online connectivity to branches

through internet as well as ATM network which has been

adopted by almost all major banks of the country is known

as core banking

29. Treasury bills, commercial paper, certificate of deposit, shares and

bonds are called as money market instruments

30. Repurchase agreement is not money market instrument

31. With a view to facilitate payment of balance in the deposit account to the person named by the depositor without any hassles in the

event of death of the account holder, the following facility has been

introduced for bank accounts in our country – nomination

32. Banks in our country normally publicize that additional interest rate

is allowed on retail domestic term deposits of – senior citizens

33. CRR – cash reserve ratio

34. SLR – statutory reserve ratio

35. EXIM bank – export and import bank of India

36. NABARD – National Bank for Agriculture and Rural development 37. SIDBI – small industries development bank of India

38. EDP – entrepreneurship development programme

39. SMERA – SME rating agency of India Limited

40. NBFC – Non banking finance companies

41. NEFT – National electronic funds transfer

42. RTGS – real time gross settlement

43. Narrow banking is a system of banking under which a bank places

its funds only in 100 percent risk free assets with maturity

matching for its liabilities.

44. NPA – non performing assets 45. CAR means capital adequacy ratio

46. KYC means know your customer guidelines

47. IPO – Initial public offer

48. QIB – qualified institutional buyers

49. SEBI – securities and exchange board of India



28

50. MICR – magnetic ink character recognition

51. NSE – national stock exchange

52. BCSBI – Banking codes and standards board of India

53. FEDAI – Foreign exchange dealers association of India

54. ALCO – asset liability committee 55. ALM – asset liability management

56. FCNR – foreign currency non resident deposit accounts

57. CDRS – Corporate debt restructuring

58. IDRBT – Institute for development and research of banking

technology

59. YTM – yield to maturity

60. IRDA – Insurance Regulatory and Development Authority of India

POINTS

01. The bank branches which can undertake foreign exchange business directly are known as approved dealers in foreign exchange

02. Insurance cover for bank deposits in the country is provided by

DICGC

03. Deposit Insurance and Credit Guarantee Corporation of India

Limited is called as DICGC

04. The financial literacy includes the following namely; how to invest

the funds; how to use the limited funds carefully; how to minimize

the risks and how to reinvest the money earned

05. The loans of very small amounts given to low income group is

called as – Micro credit 06. When a banker talks about CDR, CDR is meant – Corporate Debt

Restructuring.

07. ALM is called as Asset Liability Management

08. Cash Reserve Ratio and Statutory Liquidity Ratio are terms most

closely related to the following industries/markets – Banking

industry

09. CRR and SLR are not related to capital market, commodities

market, money market and mutual fund industry



29

10. The letter ―L‖ available in the term LAF commonly used in

financial/economic news is called as– Liquidity

11. LAF means liquidity adjustment facility

12. The banking ombudsman resolves the complaints of the customers

in regard to services provided by the banks 13. Public sector bank, foreign bank, private sector bank and regional

rural bank are classified as commercial banks

14. Urban cooperative bank is not a commercial bank

15. SEBI means Securities and Exchange Board of India.

16. Money laundering means – the process of conversion of money

obtained illegally to appear to have originated from legitimate

sources

17. Monetary policy as an arm of the economic policy is administered

by – Reserve Bank of India

18. The following is not a primary function of a bank – Facilitating import of goods

19. The following are the functions of banks – accepting deposits;

granting loans; collecting cheques; issuing drafts; selling

gold/silver coins

20. The following represent the correct meaning of Repo rate – Rate

for borrowing rupees by banks from RBI

21. The reserves which can act as a liquidity buffer for commercial

banks during crisis times are CRR and SLR

22. Savings bank accounts are opened by individuals for savings purposes

23. A customer drawing a cheque on a bank has the right to stop

payment of the cheque before it is paid

24. The following are the functions of a commercial bank namely;

providing project finance; settlement of payments on behalf of the

customers; issuing credit and debit cards to the customers and

providing services such as locker facilities and remittances

25. Commercial banks do not undertake the following functions:

deciding policy rates like CRR, SLR and repo rates

26. Reserve Bank of India undertakes the following rates: CRR; SLR and repo rates

27. The conversion of money which is illegally obtained is called as –

money laundering

28. For purchase of white goods, the following loan is granted by the

banks – consumer durables loan



30

29. A cheque which has completed the stipulated validity period of the

cheque is called as – stale cheque (The validity period is 3

months as at present)

30. Ganesh has been nominated in the savings bank account of Vijaya

and Ganesh requests the bank authorities to allow him to operate Vijaya‘s account as she is found to be unwell. What will the bank

do? – As nomination will come into effect only after the death of

the depositor, the bank will not permit

31. The following is a measure taken by RBI in order to control inflation

in the country – raising of Repo and Reverse Repo rates.

32. What do you understand by the term called as mortgage ?– Making

the security of immovable property available as a cover for a home

loan availed by the borrower

33. The following constitutes the largest percentage of retail loans in

the country – Home loans 34. The credit risk to the bank is high from which of these cards –

Credit cards

35. Depreciation of an asset does not occur on account of the following

namely; fire in the unit; theft; labour trouble; wear and tear;

36. The following are the sources of finance for any commercial bank –

capital, borrowings from RBI, deposits and cash reserves with RBI

37. Call money borrowings – is not the source of finance for any

commercial bank

38. The rate at which the domestic currency can be converted into foreign currency and vice versa is known as the – exchange rate

39. ARCIL – is the asset reconstruction company

40. IRDA – Insurance Regulatory Development Authority

41. BCSBI – Banking Codes and Standards Board of India

42. CIBIL – Credit Information Bureau of India Limited

43. Exchange rate is the term used in the field of economics

44. The non performing assets of any bank are called as – sub

standard assets, doubtful assets and loss assets

45. The performing assets of any bank are called as – standard assets

46. The crossing on a cheque can be cancelled by the drawer of the cheque under his full signature

47. Banks can accept both demand and time deposits from the public

48. Interest payable on savings bank is not regulated by RBI

49. The usual deposit accounts of the banks are – current accounts,

savings accounts and term deposit accounts



31

50. The fixed deposits, reinvestment deposits and recurring deposits

are repayable after an agreed period.

POINTS


current and savings accounts

02. Interest is not paid in current accounts

03. Mortgage is a security on immovable property for loan given by the bank

04. Financial inclusion means provision of – financial services namely;

payments, remittances, savings, loans and insurance at affordable

cost to persons not yet given the same

05. When a bank returns a cheque unpaid, it is called as – dishonor of

the cheque

06. Demat accounts are accounts in which the shares of various

companies are traded in electronic form

07. NEFT means – National Electronic Funds Transfer 08. No upper limit has been prescribed for RTGS

09. RTGS means – Real Time Gross Settlement

10. Distribution of insurance products and insurance policies by banks

as corporate agents is known as – bankassurance

11. Interest on savings bank account is now calculated by the banks on

daily product basis

12. Government of India is the largest shareholder (in percentage

shareholding) of a nationalized bank

13. Banks in the country normally publicise that additional interest

rate is allowed in retail domestic term deposits held by– senior citizens

14. A centralized database with online connectivity to branches,

internet as well as ATM network which has been adopted by almost

all major banks of the country is known as – core banking

15. Commercial paper is not considered as the money market

instrument

16. With a view to facilitate payment of balance in the deposit account

to the person named by the depositor without any hassles in the

event of death of the account holder, the following facility was introduced for bank accounts in the country – Nomination



32

17. ATM cards are issued to a person who maintains any of the

following accounts namely – savings bank accounts and current

accounts

18. ATM is a computer which is dedicated to perform certain specific

jobs only 19. ATM is a user friendly machine and the customer does not require

any training for using it

20. ATM is totally menu driven which displays instructions to the

customer step by step for operating the same

21. A working croup on cheque truncation and E-cheques was

constituted by RBI under the chairmanship of Dr. R.B. Barman and

major recommendations of group include – the physical cheque will

be truncated within the presenting bank; settlement will be

generated on the basis of current MICR code line data and

electronic images will be used for payment processing 22. RTGS benefits the customer and the bank

23. RTGS means a payment system in which – both processing and

final settlement of funds transfer instructions can take place

continuously

24. RBI in regard to RTGS has decided that – RTGS would be

accessible to all retail customers and there would be no floor ceiling

for routing the transactions through RTGS and settlement of

transactions.

25. State Bank of India is considered to be the first bank to launch a mutual fund

26. In commercial paper the following parties can invest – individuals,

banking companies and corporate bodies registered or incorporated

in the county and unincorporated bodies, Non Resident Indians and

foreign Institutional Investors.

27. The commercial paper may be issued in multiples of Rs. 5 lakhs

subject to the minimum size of an issue to a single investor being –

Rs. 5 lakhs

28. Commercial paper may be issued for period ranging from seven

days to one year 29. Commercial paper is essentially – unsecured money market

instrument

30. Social control was imposed on commercial banks effective from –

1st February, 1969



33

31. Fourteen major Indian banks having deposits of more than Rs. 50

crores were nationalized on 19.07.1969

32. With effect from 19.07.1969, the fourteen major Indian banks were

nationalized by the Government of India under – the banking

companies (acquisition and transfer of undertakings) act 1970 33. Effective from 15.04.1980, six banks with demand and time

liabilities exceeding Rs. 200 crores were nationalized

34. In the wake of Narasimhan committee recommendations the banks

which entered into the capital markets – State Bank of India,

Oriental Bank of Commerce and Bank of India.

35. In the wake of Narasimhan Committee recommendations, the

financial sector reforms were implemented by the government of

India

36. Financial sector reforms aim towards introduction of capital

adequacy norms, based upon capital to risk weighted asset ratios; prudential norms relating to classification of assets, income

recognition and provisioning; setting up of a strong supervisory

and surveillance mechanism for the banking system and financial

sector through the Board for financial supervision in RBI

37. According to Hilton Young Commission, the RBI act, 1934 was

enacted

38. The Banking Commission was appointed by the Government of

India in January, 1969 under the chairmanship of R.G. Saraiya

39. In order to study the functioning of Public Sector banks, James Raj Committee was appointed

40. Kamath working group was appointed to study the problems

arising out of the adoption of multi agency in agricultural banking

41. The banking laws committee was headed by – P.V. Rajamannar

42. The National Credit Council which symbolized the role of credit

planning in development was set up in the year – 1968

43. During the year-1966, RBI set up the All India Rural Credit Review

Committee in order to – reassess the developments that have

taken place in the field of rural credit since 1954, that is

subsequent to submission of the report of the All India Rural Credit Survey Commission

44. Talwar committee submitted its report in the year 1977

45. Talwar committee was appointed by Government of India to –

submit recommendations on customer service on banks



34

46. In order to review the existing system of inspection of banks by

RBI, Pendarkar working group was appointed

47. Under the chairmanship of H.N. Sinor, the working group to

examine various issues concerning the deposit rates including

floating rate of interest on fixed deposits was constituted by RBI 48. RBI had constituted the working group on flow of credit to SSI

sector under the chairmainship of A.S. Ganguly

49. The Joint stock banking system started in the late 18th

century/early 19th century

50. The Bank of Bengal got its charter in 1809

POINTS

01. The first bank in India was set up on modern lines in 1770 by an

agency house

02. Bombay stock exchange was made functional as early as 1870

03. The first life insurance company in the country – Oriental Life

Insurance company

04. Oriental Life insurance company was established in 1818

05. First General (non life) Insurance company was set up in 1850 06. There were 566 private commercial banks in the country with 4151

branches in 1951

07. There are 32 foreign banks in the country

08. Foreign banks have around 310 branches all over the country

09. The Unit trust of India came into existence in 1964

10. Export Risk Insurance Corporation was set up in July 1957

11. Export Risk Insurance Corporation was converted as ECGC in

January 1964

12. ECGC – Export Credit Guarantee Corporation

13. The deposit insurance corporation was set up in 1962 14. The fourteen banks which were nationalized on 19.7.1969 were –

Central Bank of India; Bank of Maharashtra; Dena Bank; Punjab

National Bank; Syndicate Bank; Canara Bank; Indian Bank; Indian

Overseas Bank; Bank of Baroda; Union Bank; Allahabad Bank;

United Bank of India; United Commercial Bank and Bank of India

15. Six banks were nationalized during the second stage on 15.4.1980

16. Regional Rural Banks were set up in 1975

17. NABARD was established in 1982



35

18. NABARD – National Bank for Agriculture and Rural Development

19. Securities and Exchange Board of India was established in 1988

20. Licensing for new private sector banks was issued in 1993

21. Indian financial system is composed of three components –

financial assets, financial markets and financial intermediaries or institutions

22. Financial assets are classified into primary or direct securities and

secondary or indirect securities

23. Financial markets can be classified into money market and capital

market

24. Financial intermediaries can be classified into organized and

unorganized

25. Organized financial intermediaries can be classified into banking

institutions and non banking financial institutions

26. Primary securities are those securities which represent financial claims against real sectors

27. Real sectors represent bills, bonds, shares, book debts etc.

28. National savings certificates, infrastructure bonds, Indira Vikas

Patras, Krishi Vikas Patra etc. are examples of financial assets

29. Money market is the center of dealings mainly of short term

character in monetary assets

30. The capital market deals in long term funds, both debt and equity

31. Financial instruments of the capital market are classified into the

following two categories namely; government or gilt edged securities and corporate securities

32. The main financial instruments of corporate sector are – shares,

debentures, public deposits and loan from institutions

33. Banking commission was established in 1972

34. Capital market is a market which deals in long term funds

35. Regional Rural Banks fall within supervisory purview of RBI

36. IRDA is the regulatory authority for all insurance companies in the

country including LIC of India

37. IRDA has its headquarters at Hyderabad

38. Mutual funds fall within the supervisory purview of SEBI 39. Export and Import Bank of India does not fall within the purview of

development banks

40. State Bank of India was formulated as per SBI act 1955

41. ICICI Bank Limited is the first Universal Bank established in the

country



36

42. New Bank of India merged with Punjab National Bank

43. The central monetary authority of the country is Reserve Bank of

India

44. Scheduled commercial banks are banks which have been included

in the second schedule of RBI act, 1934; registered under companies act and got licence as per Banking Regulations act 1949

45. When the banks entertain in dealing with insurance business, it is

called as bankassurance

46. Universal banking is the roof under which various banking products

are available

47. When the repayment period of any loan is upto 36 months, the

loan is called as short term loan

48. When the repayment period is between 37 to 84 months, such

loans are called as medium term loans

49. When the repayment period is more than 84 months, they are called as long term loans

50. In the case of Regional Rural Banks, the contribution structure

between Government of India, State Government and Sponsoring

banks are in the ratio of 50:15:35

POINTS

01. Laxmi Commercial Bank merged with Canara Bank

02. CAMEL denotes – capital adequacy, asset quality, management,

efficiency and liquidity

03. Banks are subject to operational risk, credit risk, market risk,

liquidity risk

04. When the ATM machine installed in the bank is out of order, it is called as operational risk

05. When the computers are not functioning, it is called as operational

risk

06. When the loans are not repaid in time, it is called as credit risk

07. When the banks products fail to survive in the market, it is called

market risk

08. When the banks are not able to pay the amount to the depositors,

it is called as liquidity risk

09. IFSC code denotes the branch code of any bank 10. IFSC code consists of eleven digits

11. Tissue culture denotes propagation of cells

12. Aqua culture denotes shrimp farming and fish production



37

13. Horticulture means fruit production

14. Sericulture means silk production

15. Pisciculture means fish farming

16. Apiculture means honeybee rearing

17. Sylvi culture means cultivation of fodder crops 18. Moriculture means cultivation of mulberry

19. Olericulture means vegetable cultivation

20. Increase in agriculture production is called as green revolution

21. When the activity relates to milk production, it is called as white

revolution

22. When the activity relates to meat production, it is called as red

revolution

23. When the activity relates to cocoa production, it is called as brown

revolution

24. When the activity relates to rubber production, it is called as black revolution

25. When the activity relates to fish farming, it is called as blue

revolution

26. When the activity relates to cultivation of oil seeds and pulse

production, it is called as yellow revolution

27. When the activity relates to flower production, it is called as

rainbow revolution

28. Marginal farmer is one who has irrigated lands less than 1.25 acres

or non irrigated lands less than 2.5 acres 29. Small farmer is one who has irrigated lands less than 2.50 acres or

non irrigated lands less than 5.00 acres

30. Agricultural laborer is one whose 50 percent of income is from

agriculture

31. The old private sector banks in the country are: City Union Bank,

Tamilnadu Mercantile Bank, SBI commercial Bank, Catholic Syrian

Bank, Dhanalakshmi Bank, Federal Bank, Jammu and Kashmir

Bank, Karnataka Bank, Karur Vysya Bank, Lakshmi Vilas Bank,

Nainital Bank, Ratnakar Bank, South Indian Bank Limited, ING

Vysya Bank Limited 32. The new private sector banks in the country are: Axis Bank,

Development credit bank, HDFC Bank, ICICI Bank, Indus Ind Bank,

Kotak Mahindra Bank, Yes Bank



38

33. The subsidiaries of State Bank of India are; State Bank of Patiala;

State Bank of Hyderabad; State Bank of Travancore; State Bank of

Bikaneer and Jaipur and State Bank of Mysore.

34. Oriental Bank of Commerce has taken over Global Trust Bank

35. For charging interest on loans/advances from July 2010, RBI introduced the following system namely; Base lending rate system

in the place of Benchmark Prime Lending Rate system

36. Money laundering refers to conversion of money which is legally

obtained

37. The account in which trading of shares in their electronic form is

called as DEMAT account

38. Reserve Bank of India issues all the currency notes except one

rupee note

39. RBI does not transact the business of the following state

government namely – Jammu and Kashmir 40. The first Indian bank to open a branch outside India in London in

1946 is Bank of India

41. NRI deposits are called as hot money

42. Euro Bond is an instrument issued in a country other than the

country of the currency of the bond

43. National Income Estimates in India are prepared by Central

Statistics Commission

44. Full convertibility of a rupee means determination of rate of

exchange between rupee and foreign currencies freely by the market forces of demand and supply

45. RBI has prescribed that all scheduled commercial banks should

maintain their SLRs in dated securities notified by RBI; treasury

bills of Government of India and State Development Loans

46. The following category of banks were mooted with a view to

providing an Institutional mechanism for promoting rural and semi

urban savings as well as for the provision of credit for viable

economic activities in local areas – Local area banks in the private

sector

47. LAB means local area banks 48. The first Private bank in India to receive an in principle approval

from Reserve Bank of India was Housing Development Finance

Corporation Limited



39

49. The actual return of an investor is reduced sometimes as the prices

of the commodities go up all of a sudden. In financial sector, this

type of phenomenon is known as – market risk

50. Rashtriya Swastiya Bima Yojana started rolling from 1.4.2008

POINTS

01. Banking regulation act, 1949 does not at all apply to – primary agricultural credit societies and cooperative land mortgage banks

02. As per the provisions of section 12 of the Banking Regulations act,

1949, the minimum ratio between the authorized, subscribed and

paid up capital of a banking company should be 4:2:1

03. Under the provisions of section 35(b) (ii) of the Banking Regulation

Act, 1949, inspection of branches of Indian banks situated abroad

is to be carried out by – RBI

04. The first public sector bank to issue capital to public is – Oriental

Bank of Commerce 05. The New Private Sector Banks have been authorized to be set up

under the new liberalization policy and the minimum paid up

capital should be – Rs. 200 Crore

06. The Banking Companies act, 1949 was enacted to consolidate and

amend the law relating to banking companies with effect from

1.3.1966 and the name of the act has been changed to – The

banking regulation act

07. The management of SEBI consists of – chairman and five members

08. The following is the reason for the success of mutual fund – mutual

fund scheme offers to every investor security, steady growth, regular income and easy liquidity; a small investor gets the

professional expertise of the fund managers of the mutual fund and

it carries tax breaks and this benefit is passed on to the investor

09. The individual investor can claim tax exemption for both principal

amount and income from these units under – Sec 80 E of the

information technology act

10. The main objectives of special electronic fund transfer scheme –

SEFT – it is safe; secure and same day electronic interbank transfer

of funds across the country 11. Treasury bill is – negotiable security

12. RBI functions as the agent of the central government issues –

treasury bills



40

13. The treasury bills are issued at a – discount

14. NABARD extends refinance to – State Land Development Banks,

State Cooperative Banks; Regional Rural Banks and Commercial

Banks and other financial institutions approved by RBI

15. Automatic refinance scheme is available to the persons financed under – the scheme of setting up of agriclinic and agribusiness

centers; rural non farm sector (investment credit) upto Rs. 15

lakhs and composite loan scheme

16. The objectives and functions of IDBI include – to provide technical

and administrative assistance for promotion or expansion of

industry; to undertake market and investment research and survey

technical and economic studies in connection with development of

industry and to act as lender of last resort and to finance projects

that are in conformity with national priorities

17. For availing refinance from IDBI – the industrial unit should not be SSI; promoter‘s contribution should be 25% of project cost and

debt equity ratio should not be more than 2:1

18. Central Cooperative Banks – serve as the connecting links between

State Cooperative Banks and Primary Credit Societies; finance the

primary credit societies which balance the excess and deficiency in

their resources but do little commercial banking and are closer to

the primary societies than an apex bank

19. The primary function of a central cooperative bank is – to mobilize

the resources in the district for financing its members; to channelize the flow of funds from the state cooperative banks and

to mobilize deposit from state government

20. Diversification refers to entering into attractive opportunities.

21. Diversification means the activities outside the existing businesses

of the firm

22. The various types of diversification generally observed by the

business – concentric diversification, horizontal diversification and

conglomerate diversification

23. The world over most of the supervisory authorities have adopted

the following as the basis of assessment of capital adequacy – risk assets ratio system

24. The committee on Banking and Regulations and Supervisory

practices which released the agreed frame work on international

convergence of capital measures and capital standards in July,

1988 is popularly known as – Basle committee



41

25. Basle committee adopted weighted risk assets approach which

assigns weights to – on balance sheet exposure of a bank and off

balance sheet exposure of a bank

26. CBS – Core Banking Solution

27. The benefits of Core Banking Solutions – benefit of not carrying the cash from one place to another; depositing money anywhere in the

country where the bank is present and instant updating of the

accounts

28. Network can be defined as – a system of communication between

various computers used by different users.

29. Retail banking refers to provision of the basic services of a bank to

the individuals

30. The following are categorized under retail banking – personal loans

to individuals; vehicle loans; home loans and credit cards

31. The reduction in the SLR by RBI – will augment the resources of scheduled commercial banks

32. Under sections 20, 21 and 21A of the RBI act, 1934, RBI manages

the public debt and issues new loans on behalf of the central and

state governments

33. Social control of banks was introduced during the year – 1967

34. The following form the part of general insurance – fire, burglary,

theft, marine, household, vehicles etc

35. FDMA means – Frequency Division Multiple Access

36. Full form of ERNET – Educational and Research Network 37. Application of VSAT in bank is – inter branch reconciliation; funds

and securities movement; payment system and monitoring and

MIS reporting

38. The various facilities offered by banks through tele banking –

balance enquiry; enquiry about collection or specific credit/debit

transactions; transfer of funds and request for statement of

accounts etc.

39. Home banking refers to – how banking is an extended version of

tele banking; in home banking the customer is able to access his

bank account from his home for availing a variety of services which is made available and home banking is availed through the

customer‘s personal computer attached to a telephone line and

modem.

40. For availing home banking facility, a client should have the

following – personal computer, modem and telephone line



42

41. The functions of IRDA – it has the power to specify the code of

conduct for surveyors and loss assessors; it has power to regulate

investment of funds by insurance companies; it has power to

supervise the functioning of tariff advisory committee and it has

the duty to regulate, promote and ensure orderly growth of the insurance and re-insurance business in the country

42. The compelling reasons for bank nationalization are – concentration

of which and economic power in the hands of industrialists and

businessmen; branch expansion was confined to urban areas and

rural areas were being neglected; sectors like agriculture, small

scale industries and the other deserving sectors were outside the

purview of bank lending operations and various malpractices

indulged in by banks under private ownership

43. Regional Rural Banks are allowed to pay half per cent additional

interest on savings accounts and time deposits less than three years

44. The regulatory authority for Regional Rural Banks is RBI and

NABARD

45. Bank rate means the standard rate at which the RBI is prepared to

buy or rediscount bills of exchange and other commercial paper

eligible for purchase under the RBI act 1934

46. When RBI desires to restrict expansion of credit it raises the bank

rate

47. In periods of depression, when the Reserve Bank of India desires to encourage the banking system to create more credit, it reduces

the bank rate

48. Sub section 12 AB of system 17 of the RBI act, 1934 defines the

term: Repo

49. Repo is an instrument for borrowing the funds by selling securities

of the central government or a state government or of such

securities of a local authority as may be specified in this behalf by

the central government or foreign securities, with an agreement to

repurchase the said securities on a mutually agreed future date at

an agreed price which includes interest for the funds borrowed 50. Sub section 12AB of section 17 of the RBI act 1934 defines the

term – Reverse repo rate

POINTS



43

01. Financial instruments of the capital market are classified into the

following two categories namely; government or gilt edged

securities and corporate securities.

02. The financial instruments of corporate sector are: shares,

debentures, public deposits and loans from institutions. 03. Financial intermediaries are those institutions which collect savings

from those who save and make it available to the investors for

their use.

04. The financial intermediaries or institutions are mainly classified into

two categories namely; institutional or organized; non institutional

or unorganized.

05. Institutional or organized are mainly divided into two parts namely;

banking institutions and non banking financial intermediaries.

06. The financial regulatory authorities in India are: Reserve Bank of

India, Securities and Exchange Board of India and Insurance Regulatory and Development authority.

07. SEBI – securities and exchange board of India

08. IRDA – Insurance Regulatory and Development Authority

09. IRDA was established in 1990

10. IRDA has its headquarters at Hyderabad

11. The financial institutions perform a number of functions: promoting

savings, mobilizing savings and allocate it among different users

and facilitating capital formation, production and economic

development 12. The financial markets in the country can be divided into money

markets and capital markets

13. Money market refers to that market wherein short term monetary

assets are bought and sold

14. Financial institutions can be either in the organized sector or

unorganized sector

15. RBI, Commercial Banks, Cooperative Banks are in organized sector

16. Indigenous banks, money lenders, chit funds etc are in the

unorganized sector.

17. Financial instruments include bills, treasury bills, promissory notes, hundies, certificate of deposits etc.

18. The important terms which relate to money market are: money

market, call money, notice money, term money, held till maturity,

yield to maturity, coupon rate, treasury operations and gild edged

security



44

19. Under call money market, funds are transacted on overnight basis

and under notice money, market funds are transacted for the

period between 2 days and 14 days.

20. The participants in call/notice money market currently include

banks, primary dealers, development finance institutions, insurance companies and select mutual funds.

21. Treasury bills are money market instruments used to finance the

short term requirements of the Government of India.

22. There are different types of treasury bills based on the maturity

period and utility of the issuances like, ad-hoc treasury bills, 3

months, 6 months and 12 months treasury bills

23. Treasury bills etc. in India at present are issued for the following

periods namely; 91 days, 182 days and 364 days

24. Call money is an amount borrowed or lent on demand for very

short period 25. When the period of call money is more than one day; however,

lesser than 14 days, it is called as notice money

26. Certificate of deposit is a negotiable promissory note, secure and

short term of up to a year in nature.

27. Commercial paper is freely negotiable by endorsement and

delivery.

28. An inter corporate deposit or ICD is an unsecured loan extended

by the corporate to another.

29. Ready forward contracts are transactions in which two parties agree to sell and repurchase the same security.

30. Bills of exchange are negotiable instruments drawn by the seller or

drawer of the goods on the buyer or drawee of the goods for the

value of the goods delivered.

31. Pass through certificate is an instrument with cash flows derived

from the cash flow of another underlying instrument or loan.

32. Pass through certificates have two to three year maturity because

the issuance stamp duty rate makes shorter duration PTCs

unviable.

33. A bill market is the market which deals in short term bills. 34. The bills may be of two types i) bills of exchange or commercial

bills and ii) finance bills or treasury bills.

35. Bill market scheme was introduced by Reserve Bank of India in

1952.

36. New Bill market scheme was introduced by RBI in 1970.



45

37. The gilt edged market refers to the market for government and

semi government securities, backed by RBI.

38. The industrial securities market refers to the market which deals in

equities and debentures of the corporate.

39. Industrial securities market is divided into primary market and secondary market.

40. Securities and Exchange Board of India was established during the

year - 1988

41. In India, there are 23 stock exchanges

42. Securities and Exchange Board of India got its legal status in 1992.

43. CRISIL – Credit Rating Information Services of India – was

established in 1988

44. ICRA – Investment Information and Credit Rating Agency of India

Limited – was established on 1991

45. CARE – Credit Analysis and Research Limited – was established in 1991

46. IEPF – Investors Education and Protection Fund was set up by SEBI

in 2001

47. NSE has introduced the derivatives trading in the equities in

November, 2001

48. IRDA – Insurance Regulatory and Development Authority was set

up in 2000

49. CCIL – Clearing Corporation of India Limited

50. OTCEI – Over the counter exchange of India – was incorporated in

1990 under the companies act 1956

BANKING TERMS - ABBREVIATIONS

01. ISCI – International Standard Industrial Classification

02. KCC – Kisan Credit Card

03. KVIC – Khadi and Village Industries Corporation

04. KYC – Know your customer

05. LAMPS – Large Sized Adivasi Multipurpose societies

06. LERMS – Liberalised Exchange Rate Management System 07. LIC – Life Insurance Corporation of India

08. MCA – Ministry of Company affairs

09. MIS – Management Information System



46

10. MICR – Magnetic Ink Character Recognition

11. NABARD – National Bank for Agriculture and Rural Development

12. NBFC – Non Banking Finance Companies

13. NEFT – National Electronic Funds Transfer

14. NPA – Non Performing assets 15. NRE – Non Resident External account

16. NRI – Non Resident Indian

17. NSE – National Stock Exchange

18. OLTAS – Online tax accounting system

19. OMO – Open market operations

20. PACS – Primary Agricultural Credit Societies

21. PDO – Public Debt Office

22. PIN – Personal Identification Number

23. QIB – Qualified Institutional Buyers

24. RBI – Reserve Bank of India 25. RDBMS – Relational Database Management System

26. REC – Rural Electrification Corporation

27. RFC – Resident Foreign Currency

28. RIDF – Rural Infrastructure Development Fund

29. RRB – Regional Rural Bank

30. RTGS – Real Time Gross Settlement

31. RWA – Risk Weighted Assets

32. SBI – State Bank of India

33. SCB – Scheduled Commercial Bank 34. SDR – Special Drawing Rights

35. SEBI – Securities and Exchange Board of India

36. SFMS - Structured Financial Messaging Services

37. SHG – Self Help Group

38. SIDBI – Small Industries Development Bank of India

39. SIDC – State Industrial Development Corporation

40. SJSRY –Swarna Jayanthi Shahari Rozgar Yojana

41. SLR – Statutory Liquidity Ratio

42. SLRS – Scheme for Liberation and Rehabilitation of Scavangers

43. SMERA – SME rating agency of India Limited 44. SSI – Small Scale Industries

45. SME – Small and Medium Industries

46. SSSBE – Small Scale Service and Business Enterprises

47. UTI – Unit Trust of India

48. WPI – Wholesale Price Index



47

49. YTM – Yield to maturity

50. LAB – Local Area Banks

01. ALM – Asset Liability Management

02. ANBC – Adjusted Net Bank Credit

03. ASBA – Applications supported Bank accounts

04. BOE – Bill of Exchange

05. CASA – Current and savings accounts 06. CBLO – Collateralised Bank Lending Obligations

07. CIBIL – Credit Information Bureau of India Limited

08. DPG – Deferred Payment Guarantee

09. DPN – Demand Promissory Note

10. DRAT – Debt Recovery Appellate tribunal

11. DRI – Differential Rate of Interest

12. DSCR – Debt Service Coverage Ratio

13. EDI – Electronic Data Interchange

14. EMI – Equated Monthly Instalments 15. EPS – Earnings Per Share

16. ESOP – Employee Stock Options

17. FEDAI – Foreign Exchange Dealers Association of India

18. FFMC – Full Fledged Money Changers

19. FOB – Free on Board

20. LIBOR – London Inter Bank Operations Rate

21. MIBOR – Mumbai Inter Bank Operations Rate

22. MOU – Memorandum of Understanding

23. MCA – Ministry of Company Affairs

24. NPV – Net Present Value 25. OCB – Overseas Corporate Bodies

26. POA – Power of Attorney

27. RKBY – Rashtriya Krishi Bima Yojana

28. SEBI – Securities and Exchange Board of India

29. LAF – Liquidity Adjustment Facility

30. IDBI – Industrial Development Bank of India

31. BCSBI – Banking Codes and Standards Board of India

32. IRDA – Insurance Regulatory Development Authority



48

33. DICGC – Deposit Insurance and Credit Guarantee Corporation

34. SPV – Special Purpose Vehicle

35. CRISIL – Credit Rating Information Services of India Limited

36. ICRA – Investment Information and Credit Rating Agency of India

Limited 37. CARE – Credit Analysis and Research Limited

38. MCX – Multi Commodity Exchange

39. CCIL – Clearing Corporation of India Limited

40. OTCEI – Over the Counter Exchange of India

41. EFT – Electronic Funds Transfer

42. ARF – Asset Reconstruction Fund

43. MSS – Market Stabilisation Scheme

44. CRAR – Capital to Risk Assets Ratio

45. FSDC – Financial Stability and Development Council

46. SCARDB – State Cooperative Agriculture and Rural Development Banks

47. LERMS – Liberalised Exchange Rate Management System

48. BOT – Balance of Trade

49. CAC – Capital account convertibility

50. NDS – Negotiated Dealing System

BANKS – PUNCHLINES

01. Allahabad Bank – A tradition of trust

02. Andhra Bank – For all your needs

03. Bank of Baroda – India‘s International Bank

04. Bank of Maharashtra – One family one bank

05. Bank of India – Relationship beyond banking

06. Canara Bank – Together we can 07. Central Bank Of India – Build a better life around us

08. Corporation Bank – Prosperity for all

09. Dena Bank – Trusted Family Bank

10. Indian Bank – Your tech friendly Bank

11. Indian Overseas Bank – Good people to grow with

12. Oriental Bank of Commerce – Where every individual is committed

13. Punjab National Bank – The name you can bank upon



49

14. Punjab and Sind Bank – To strive to achieve excellence in customer

service

15. Syndicate Bank – Faithful and friendly

16. United Commercial Bank – Honours your trust

17. Union Bank of India – Good people to bank with 18. United Bank of India – The bank that begins with ―U‖

19. Vijaya Bank – A friend you can bank on

20. State Bank of India – With you all the way

21. State Bank of Hyderabad – Modern Innovative dependable

22. State Bank of Mysore – Working for a better tomorrow

23. State Bank of Patiala – Blending modernity with tradition

24. State Bank of Travancore – Since 1945 – a long tradition of trust

25. ICICI Bank – Hum Hai Na

26. IDBI Bank – Banking for all

27. HSBC bank – World‘s local bank 28. HDFC Bank – We understand your world

29. Bank of Rajasthan – Together we prosper

30. Federal Bank – Your perfect Banking partner

31. Yes Bank – Experience our expertise

32. Jammu and Kashmir Bank – Serving to empower

33. Lakshmi Vilas Bank Limited – The changing face of prosperity

34. Karur Vysya Bank – Smart way to Bank

35. Deutshe Bank – A passion to perform

36. South Indian Bank Limited – Experience Next Generation Banking

Important Foreign Banks in India

37. Standard and Chartered Bank – United Kingdom

38. HSBC – United Kingdom

39. Royal Bank of Scotland – United Kingdom

40. Barclays Bank – United Kingdom

41. Citi Bank – United States of America

42. Citi Bank – USA

43. JP Morgan chase bank – USA

44. Bank of America – USA 45. ABN AMRO Bank – The Netherlands

46. ABU Dhabi Commercial Bank – UAE

47. Bank of Ceylon – Sri Lanka

48. BNP Paribas Bank – France

49. Societe Generale – France



50

50. China Trust Commercial Bank – Taiwan

51. Deutsche Bank – Germany

52. Scotta Bank – Canada

53. DBS Bank – Singapore

01. The administrative heads of the department heads are

responsible for compliance of Official Language Policy of Government of India

03. The locker holder is sick and as such he gives an authority in favor of

the minor son to operate the locker and in this case, the bank can

allow the minor to operate the locker

04. A – a minor endorses a cheque in favour of B. In the case of

dishonour, A - cannot be held liable- as when a minor endorses a

cheque all parties are liable except the minor

05. You come across a cheque on which neither the words bearer nor

order are written. You will make the payment of this cheque by treating it as an order cheque

06. Debt Service Coverage Ratio denotes solvency position of the

firm

07. Shroff committee had recommended that companies entering into

merger and acquisition transactions, making preferential allotment of

shares to related parties and proposing buyback of shares must

appoint registered valuer for independent valuation of shares

and assets

08. Debt equity ratio denotes the solvency position of the firm

09. The accountholder is the drawer of the cheque 10. Not negotiable crossing means that the holder in due course will

not get the better title

11. Account opening form is a very important document because it

forms the basis of contract between the bank and the customer and it

contains the offer of the customer to enter into a contract with

the bank

12. The following are not abound on a negotiable instrument as drawer,

acceptor or endorser –a lunatic, an alien enemy and an insolvent

13. An order cheque is transferable only by endorsement and delivery 14. The term – ―allonge‖ refers to a plain sheet appended to a

negotiable instrument for the purpose of making endorsement

thereon



51

15. The following endorsements are invalid – endorsement after

maturity of the instrument, partial endorsement, endorsement

on a discharged instrument and endorsement in the case of

negotiation

16. ―Account Payee‖ crossing is not mentioned in the Negotiable Instruments Act – 1881

17. The ―protest‖ is the formal notarial certificate attesting the

dishonour of the bill, and based upon the noting.

18. Service Area Approach is a result of recommendation of

committees headed by P D Ojha

19. A person who owns unirrigated land of 3 acres will be

classified as a small farmer

20. A foreign traveller encashes travellers cheques for $1000 at Rs.

47.25. It is a purchase transaction

21. A restricted letter of credit is one in which the negotiation is restricted to a specific bank

22. Red Clause letter of credit is one which authorizes release of

preshipment finance to the beneficiary

23. Limited company means – limited liability clause in

memorandum of association.

24. Garnishee Order is issued under Rule 46 of Order XXI of the

schedule to the code of Civil Procedure - 1908

25. A contract of guarantee is defined as – a contract to perform

or discharge the liability of the principal debtor in the case of his default

26. To be a valid acceptance, the drawee shall affix his signature

with or without the words – „Accepted”

27. A Government Company means 51% of the paid up share

capital is held by State Government and/or Central

Government

28. If the registrar of DRT refuses to file the suit due to discrepancies

in copybook, the bank can file the appeal before presiding

officer of DRT within 15 days

29. Lok adalats are constituted under Legal Services Authorities act

30. Stamp duty earned by the government on demand promissory

note goes to the state government



52

31. When the bill becomes due for payment – it is the starting

point of limitation on a bill of exchange payable at a fixed time

after date

32. Cash Reserve Ratio is maintained by the banks by keeping cash

balance with Reserve Bank of India 33. Nomination facility can be allowed in the following cases –

deposit account of individuals, articles kept in safe custody

and lockers

34. A certificate of deposit is an usance promissory note

35. Subordinated debt is an element of tier II capital

36. Accumulated loss will be deducted from tier I capital

37. Vaghul Committee had recommended the introduction of

Certificate of Deposits

38. The basic nature of a Commercial Paper is – it is usance

promissory note 39. ―A pass through certificate‖ - PTC can be of the following

nature in securitization transactions – with recourse and

without recourse

40. Global depository receipt is listed on Stock Exchange outside

USA

41. Current Ratio denotes liquidity

42. Simultaneous Sale and Purchase of a share to take the benefit of

the variation in prices in two different markets is called – Arbitrage

43. Current Ratio denotes – liquidity 44. Debt Recovery Tribunals have been created by the Government

as a result of the recommendations of Narasimhan Committee

45. When a bill matures on a public holiday, the maturity date of

the bill falls on the next preceding business day

46. A negotiable instrument can always be negotiated until it has

been paid up or satisfied

47. In the case of dishonor of a foreign bill, protest is compulsory

when it is required by the law of the place where it is drawn

48. An engineer is financed for the purchase of a car. The same can

be classified as Non priority sector 49. Under drip irrigation system water is used very economically and

supplied drop by drop to the roof zone of crop

50. ―Yellow Revolution‖ is in connection with growing of fruits

specially banana

51. The economic life of a tractor is - 10 years



53

52. The natural guardian of a married minor girl is her husband

53. The minimum number of share holders in a Private Limited

Company – two members

54. To open an ―Administrator account‖ the bank requires letter of

administration 55. Karta has the absolute authority to appoint any person as an

agent and the agent need not to be a family member

56. Garnishee Order – is the court order obtained by judgment

creditor attaching funds with Bank of judgment debtor

57. Indemnity means to make good the loss to the

promise/indemnity holder

58. A bearer who takes a bearer cheque bonafide and for value will

be a holder in due course

59. Mortgage is defined in – Section 58 of transfer of property act

– 1882 60. A banker can exercise the right of set-off only in respect of

debts due and determined

61. Banks are restricted to advance against its own shares – as per

“Banking Regulation Act”

62. The recovery of dues after issuance of recovery certificate by

Presiding Officer of DRT can be made through – Recovery Officer of

DRT

63. The roles of Lok Adalat – to arrive at compromise or

settlement; issue final judgment and to give the consented decree

64. The remedy under Section 138 of Negotiable Instruments Act is

available – when the cheque is presented to paying banker

within a period of six months or within the period of its

validity whichever is earlier

65. In case a document travels from higher stamp area to lower

stamp area, additional stamps are not required to be affixed

66. The purpose of maintaining a ―documents execution register‖ is

that it is a prima facie evidence of execution of documents

67. One rupee note bears the signature of the Secretary, Ministry of Finance

68. Nomination facility is not allowed in joint safe custody

accounts

69. Free capital is a part of tier I capital



54

70. Kumar Mangalam Birla is the architect of SEBI‟s Corporate

Governance Code

71. Malhotra Committee had suggested to establish an “Insurance

Regulatory Authority”

72. The minimum denomination for a Commercial Paper is Rs.5.00 lakhs

73. The maximum period for which a Certificate of Deposit can be

issued – not more than 12 months

74. Capitalisation of reserves leads to issue of bonus shares

75. 1,2,3,4,5,6,7,8,9 – numerals are called International form of

Indian numerical

76. Key-board is an input device

77. MS - DOS is a system software

78. Dear money policy is meant to control inflation

79. Since an illiterate borrower cannot sign acknowledgment of debt, he affixes his thumb impression on it. The limitation period will be

extended by this action

80. Section 45 Z of Banking Regulation Act relates to handing over

of original paid cheques to the corporate customer

81. As per the Prompt Corrective Action scheme, RBI can initiate

certain structured actions in respect of the banks which have hit the

trigger points in terms of CRAR, Non performing advances and

Return on advances

82. Under Know Your Customer guidelines, the identification and reporting of suspicious transactions are to be done on quarterly basis

to Audit Committee of the board of directors

83. To prevent slippage of accounts to NPA category, RBI has

designed broad framework detailing preventive and corrective

measures. One of the measures is the introduction of new asset

category between ―standard‖ and ―sub standard‖. This new

category is called Special mention accounts

84. While opening accounts of Executors and Trustees to the estate of a

deceased person, bank should scrutinize the trust deed, order of

charity commissioner and probate 85. Stamp duty on which of the following documents does not vary

from state to state – Mortgage agreements, hypothecation

agreements, guarantee agreements and bills of exchange.



55

86. If no time for payment is specified in a promissory note or bill of

exchange, such an instrument is considered as – instrument

payable on demand

87. Acceptance is not required in the case of promissory note and

demand bill of exchange 88. To open an executor account the bank should insist on probate

89. The following do not fall within the implied powers of a partner

under section 19(2) of the Partnership act, 1932 – opening a

banking account on behalf of the firm in his own name,

compromising or relinquishing any claim or portion of a claim

by the firm and withdrawing suit or proceedings filed on

behalf of the firm

90. In a balance sheet, profit is shown under liabilities side

91. The term – preshipment advances is used to describe

advances granted to exporters for the purpose of manufacturing, processing, packaging etc. or simply procuring

goods meant for export

92. In an account of a minor operated by the guardian, after the

death of the guardian, the balance cannot be paid to the minor

even though he has completed the age of 10 years

93. On the death of a partner, the firm having credit balance stands

dissolved and to wind up the affairs of the firm the surviving partners

are allowed to jointly operate the account and if it decides to continue

after registering the Municipal Death certificate recording fresh mandate for operation, the existing account can be continued

and operation allowed

94. Opening a banking account on behalf of the firm in his own name,

compromising or relinquishing any claim or portion of the claim by the

firm, withdrawing suit or processing filed on behalf of the firm do not

fall within the implied powers of a partner under Section 19(2) of

the Partnership act – 1932.

95. Garnishee order attaches debts due or accruing due. This means

deposits payable on demand and payable at a future date

96. Parties to a guarantee are Principal debtor, surety and creditor

97. A cheque may be crossed by drawer or holder

98. The purpose of mortgage is to possess the ownership of

others property



56

99. A banker can set-off the amount held in the time deposit account

of customer against the debit balance of the same customer in

overdraft account only after maturity of the fixed deposit

100. Civil Procedure code provides the provision exemption for arrest

in execution of a decree for money under Section 56

::::::::::::::

POINTS

01. Money laundering prevention act 2002 became effective since

1.7.2005

02. Cooperative Bank organization in India has three tier set up –

Primary credit society; district cooperative bank and state

cooperative bank 03. The foreign direct investment limit in private sector bank is 74%

04. RBI has partial control on – cooperative bank

05. The committee which has proposed National Rural Bank is – N.

Janardhan Reddy committee

06. The organization whose functions has been taken over by NABARD

from RBI are – Agricultural Refinance and Development

Corporation; National Agricultural Credit Fund (long term

operation) and National Agricultural credit fund (stabilization)

07. The first modern bank in India – Presidency Bank and it was established during 1806

08. International Monetary Fund was established on 27.12.1945

09. International Monetary Fund has its headquarters at Washington

DC

10. World Bank was established during the year 1944 and it has its

head office at Washington DC

11. World Bank is a group of International Bank for Reconstruction and

Development; International Development Agency; Multi lateral

Investment of Guarantee Agency and International Centre of

Settlement Investment Dispute 12. IBRD – International Bank for Reconstruction and Development

was established in 1945

13. IDA – International Development Association was established in

1960

14. IFC was established in 1956



57

15. ICSID – International Centre for Settlement and Industrial Disputes

was established in 1966

16. MIGA – The Multilateral Investment Guarantee Agency was

established in 1988

17. Asian Development Bank was established in December, 1966 18. Asian Development Bank has its head office at Manila

19. World Trade Organization – WTO was established during the year,

1995 and it has head office at Geneva

20. OPEC – Organization of the Petroleum Exporting Countries was

established in 1960

21. Association of South East Asian Nations was established on

8.8.1967 and it has head office at Jakarta

22. Imperial Bank was established during the year, 1921

23. Reserve Bank of India was established in 1.4.1935

24. RBI was nationalized on 1.1.1949 25. Industrial Finance Corporation of India was established during

year, 1948

26. ICICI was established during January, 1955

27. Unit Trust of India was established on 1.2.1964

28. Industrial Development Bank of India was established during July,

1964

29. NABARD was established on 12.7.1982

30. IRBI – Industrial Reconstruction Bank of India was established on

20.3.1985 31. IRBI has been renamed as IIBIL since 6.3.1997

32. SIDBI was established during 1990

33. SIDBI – Small Industries Development Bank of India

34. ICICI – Industrial Credit and Investment Corporation of India

35. EXIM Bank was established on 1.1.1982

36. National Housing Bank was established during July, 1988

37. Life Insurance corporation of India was established during

September, 1956

38. General Insurance Corporation was established during November,

1972 39. Regional Rural Banks were established during 2.2.1975

40. Risk Capital and technology Finance Corporation Limited was

established during March 1975

41. Technology Development Information Company of India Limited

was established during the year 1989



58

42. Infrastructure Leasing and Financial Services Limited during the

year, 1988

43. Housing Development Finance Corporation Limited was established

during the year, 1977

44. State Bank of India was established during the year, 1955 45. Securities and Exchange Board of India was established during the

year, 1988

46. Asian Development Bank – ADB established during the year 1966

has its head office at Manila – Phillipines

47. Asian Pacific Economic Cooperation – APEC established during the

year, 1989 has its headquarters at Singapore

48. Shanghai Cooperation Organization – SCO established during the

year, 1966 has its headquarters at Beijing – China

49. African Union established during the year, 2001 has its head office

at Addis Ababa – Ethiopia 50. European Union established during the year, 1991 has its

headquarters at Brussels (Belgium)

51. Caribbean Development Bank – CDB established during the year,

1969 has its headquarters at St. Michael – Barbados

POINTS

01. Shiksha Sahyog Yojana – SSY was launched during the year

2001-2002 with an objective to provide education for children

living below poverty line

02. Sampoorna Gramin Rojgar Yojana - SJRY was launched during

the year, 2001 for providing employment and food security

03. Jai Prakash Rojgar Guarantee Yojana- JPRGY was launched

during the year 2002-2003 to provide employment guarantee to unemployed in the most backward districts in the country

04. National Food for work programme – NFFWP was launched

during the year 2004 – to intensify the generation of

supplementary wage employment

05. Bharat Nirman Programme - BNP was launched during the year

2005 – for the development of rural infrastructure including six

components: irrigation, water supply, housing, road, telephone and

electricity



59

06. National Rural Health Mission - NRHM was launched during the

year 2005 to provide accessible, affordable and accountable quality

health services to the poorest households in the remotest rural

regions

07. Jawaharlal Nehru National Urban Renewal Mission was launched during the year, 2005-2006 to assist cities and towns in

taking up housing and infrastructural facilities to the urban poor

08. National Rural Employment Guarantee Act – NREGA was

launched during the year, 2006 to provide at least 100 days wage

employment in rural areas

09. Ujjwala scheme was launched during the year, 2007 for the

prevention of trafficking and rescue, rehabilitation and

reintegration of victims of trafficking for commercial sexual

exploitation

10. Aam Aadmi Bhima Yojana – AABY was launched during the year, 2007 – to provide insurance to the head of the family of rural

landless households in the country against death and disability

11. Rashtriya Swasthiya Bima Yojana – RSBY was launched during

the year, 2007. As per the scheme the workers and their family

members in the unorganized sector, living below poverty line will

be covered for health care, smart cards to be issued to the

beneficiaries to enable cash less transaction – the total sum

assured is Rs. 30000 per family per annum. Central and state

share is 75:25 12. Indira Gandhi National Old Age Pension Scheme – IGNOAPS

was launched during the year, 2007 to provide monthly pension of

Rs. 200 to those people living below poverty line, who has crossed

65 years of age

13. Unorganised workers social security act was launched during the

year 2008 to provide social security to the poor workers and their

families working in un-organised sector

14. Indira Gandhi National Widow Pension Scheme and Indira

Gandhi National Disability Pension Scheme were launched during

the year, 2009 to provide pension of Rs. 200 to widows between the age group 40-64 years and disability pension scheme aims to

provide pension to severely disabled persons.

15. Pradhana Mantri Adarsh Gram Yojana was launched during the

year, 2009 – with the main objective for integrated development of

1000 villages having population of scheduled castes above 50%



60

16. Sarva Siksha Abyan was launched during the year 2010-2011 to

provide scholarship for SC/ST students of classes IX and X

17. MGNREGA was launched during the year 2011 – to increase the

remuneration of Anganwadee workers from Rs. 1500 to 3000 per

month and for Anganwadee helpers from Rs. 750 to Rs. 1500 per month

18. BSE – is situated at Mumbai

19. NSE – National Stock Exchange was incorporated in 1992

20. NSE was incorporated by Industrial Development Bank of India,

Industrial Credit and Investment Corporation of India, Industrial

Finance Corporation of India, all insurance corporations, selected

commercial banks and others.

21. NSE provides exposure to investors in two types of markets

namely; wholesale debt market and capital market

22. Capital market is the market for long term funds 23. A savings bank is a financial institution whose primary purpose is

to accept savings deposits

24. A commercial bank is an institution which accepts deposits, makes

business loans and offers related services.

25. Development Banks are those financial institutions engaged in the

promotion and development of industry, agriculture and other key

sectors

26. Development banks are IFCI; ICICI and IDBI

27. IFCI – Industrial Finance Corporation of India 28. ICICI – Industrial Credit and Investment Corporation of India

29. IDBI – Industrial Development Bank of India

30. Cooperative Banks are registered under the Cooperative Societies

act, 1912

31. The following are the functions of exchange banks – remitting

money from one country to another country, discounting of foreign

bills, buying and selling gold and silver and helping import and

export trade

32. The functions of banks can be classified into three parts namely;

primary functions, secondary functions and social/development functions

33. The primary functions are – accepting deposits and advancing

loans



61

34. The different types of deposit accounts are: Term deposits namely

– Fixed deposit, Reinvestment deposit and Recurring deposit;

current account; savings deposit and demat account

35. The different types of loans are – cash credit, overdraft, loans and

advances, discounting of the bill of exchange and investment in government securities

36. The secondary functions can be classified into agency or

representative functions, general utility services and

social/developmental functions

37. Agency or representative functions include – collection and

payment of various items; purchase and sale of securities; trustee

and executor services; remitting money; purchase and sale of

foreign exchange; letter of references and other agency functions

38. General utility services include – locker facilities, business

information and statistics; help in transportation of goods; acting as a referee; issuing letters of credit; acting as underwriters;

issuing of travelers cheques and credit cards; issuing gift cheques,

dealing in foreign exchange and merchant banking services.

39. The social development functions include – capital formation,

inducement to innovations, impact on the rate of interest, role in

the development of rural sector and helpful in pushing up the

demand

40. E-banking is also called as virtual banking

41. The popular services which are covered under e-banking are: automated teller machine, debit card, electronic funds transfer,

mobile banking, telephone banking, credit card, smart card,

cheques truncation payment and internet banking

42. Securities and Exchange Board of India – SEBI was established in

1992

43. Control of capital issues was the regulatory authority before SEBI

came into existence

44. SEBI has to be responsive to three groups namely; the issues of

securities; the investors and the market intermediaries

45. PMAC – Primary Market Advisory Committee 46. SMAC – Secondary market advisory committee

47. SCODA – SEBI committee on disclosures and accounting standards

48. SIDBI – Small Industries Development Bank of India – SEBI was

established in 1989



62

49. IRBI – Industrial Reconstruction Bank of India has been

reconstituted into a full fledged all purpose development bank on

27.03.1997 under the companies act and it is now known as

Industrial Investment Bank of India Limited.

50. National Housing Bank was established in July 1988 under National Housing Bank act 1987

POINTS

01. In the case of a bearer cheque, the identity is not necessary

02. When an order cheque is endorsed in blank, it becomes payable to bearer and transferable by mere delivery

03. A cheque crossed ―Not Negotiable‖ is still transferable

04. As per section 138 of Negotiable Instruments Act, there is a provision

of penalty when the cheque issued in discharge of a liability is

dishonoured due to insufficient funds in the account and if the cheque

has been presented to the bank within a period of six months

and is not honoured due to insufficient funds

05. A fixed deposit receipt cannot be endorsed

06. A cheque is presented in an account but there is no sufficient balance to meet the same. The cheque will be returned with the remarks

– insufficient funds

07. The cheque on behalf of a partnership firm can be stopped for

payment by any partner whether authorized to operate the

account or not

08. The marginal farmer is one who possesses agriculture land up to

1.25 acres of irrigated or 2.5 acres of non-irrigated land

09. Registration of charge is not required in the case of pledge, lien,

set-off and appropriation

10. Loans for construction of godown for own use of farmers is not part of indirect finance to agriculture

11. Olericulture is cultivation of vegetables

12. Agriculture labourer is a labourer whose income from agriculture

is more than 50%

13. Nostro account is an account of Indian Bank with a Foreign

Bank in foreign currency

14. Resident Foreign Currency (RFC) account scheme is available

for Home Returned NRI



63

15. Under packing credit limit, the extent of finance is computed on

the basis of FOB

16. Forfaiting refers to discounting of export bill without recourse to

the seller

17. In an overdraft account, when the death notice of partner is received the bank should stop the operations to avoid application of

Clayton‟s case

18. A company is not dissolved by lunacy of a director or bankruptcy

of a director or death of a director

19. In the case of insolvency, the banker‟s obligation to honour

customers‟ cheques comes to an end when the customer is

adjudged insolvent

20. A lien is the right to retain goods or securities belonging to a

debtor until he has discharged a debt due to the retainer

thereof 21. The shareholders of a Private Limited Co cannot transfer the

shares to other public

22. The rule in Clayton‘s case applies in the case of running accounts

having debit balances

23. The term banking has been defined by Banking Regulation act –

1949

24. Bills drawn in respect of goods delivered by parties to various

Government/Semi Government departments are known as

supply bills 25.Goiporia committee has made the recommendation –

Commencement of employee working hours should be 15

minutes before commencement of business hours

26. Banking companies are registered under – Banking Regulation act

27. Bipartite settlements are registered under Industrial Disputes Act

28. Financial products, whose prices are derived from the price of the

underlying currency, interest rate, stocks etc. are called –

securitization

29. Revaluation reserves is a part of subsidiary capital/tier II capital

30. Y V Reddy – committee had revised the concept of liquidity and monetary aggregates

31. Verma Committee was appointed to examine the

restructuring of weak banks

32. The process through which any member-owned organization

becomes a shareholder-owned company is called demutualization



64

33. Official Language deals with the following articles of constitution –

343 to 351

34. Hindi was declared as the official language of the union on 14-09-

1949

35. The system of electronic funds transfer was suggested by the committee headed by – B D Shah

36. INFINET is – RBI‟s VSAT based communication system

37. The negotiable instruments act is applicable in the entire part of

the country

38. If the cheque is drawn in favour of ―Mother God‖ or order, the

cheque is to be returned since drawn on fictitious name

39. A cheque payable to Rohit is endorsed as follows – Pay to “Kabil on

his marriage”. This endorsement is conditional endorsement

40. The cheque crossed – account payee drawn in favour of Mr Brij

Nand is presented by Ramana Nand in his account and in this case the bank should not make the payment

41. The following are not negotiable instruments – airway bill, a

currency note, a letter of credit and lorry receipt

42. Under section 25 of Negotiable Instruments Act, public holidays are

declared by – the state government by notification in the official

gazette

43. Conversion means – not crediting the amount in the account of

true owner

44. By ―General Crossing‖ we mean two transverse parallel lines on a cheque

45. Forward exchange contract is an agreement where the foreign

exchange is delivered at predetermined future date at a

contracted date

46. Unless otherwise specified in the letter of credit, the insurance

amount should be expressed in the currency of the letter of

credit

47. On the death of the partner, bank opens a new account to rule-of

the existing account to avoid application of Clayton‟s case

48. Executor – in banking means a person named by the deceased in his will and for which probate is obtained

49. The partnership firm doing the banking business cannot have more

than 10 partners, and other business not more than 20 partners

otherwise it will become illegal association. It is provided in

Companies act



65

50. Prospectus is an invitation to the public to subscribe shares or

debentures or deposits

51. According to the rule in Clayton‘s case, the money paid in by a

customer has to be applied towards adjustment in overdraft account in

order of time in which the debits were incurred 52. Banking company is prohibited for undertaking business like trading

of goods etc under – Banking Regulation act 1949

53. In the case of return of cheque for availing remedy under section 138

of Negotiable Instruments act, the holder will have to give notice

to the drawer within 30 days of return of cheque

54. When a firm has branches at different places and wishes to avail the

loan at all stations, the documents will be executed at its Head

Office and sub limits will be allocated to branches at different

places

55. In case of any doubt about stamp duty, clarification can be sought from State Stamp Authority and Controller of stamp duty

56. Banks were nationalized under – Banking Company (Acquisition

and transfer of undertaking) act-1970

57. When an account shows debit balance, the banker is a creditor

and when the account shows credit balance, the banker is the

debtor

58. Partnership firms cannot do the business of banking and it is

provided under the banking regulation act

59. The concept of authorized deduction and illegal deduction is mentioned in the act – Payment of wages act

60. The process of replacing paper securities into electronic holding of

shares is known as – dematerialization

61. Official Language policy came into force from 16.01.1950

62. The Central Processing Unit – CPU- consists of control unit and

arithmetic logic unit

63. When the price of a dollar is raised from Rs. 48 to Rs. 55, the

exporter will be benefited in terms of rupee

64. A cheque is the mandate of the accountholder

65. When a cheque without a date is presented for payment, the banker should return the cheque

66. In a cheque the name of the banker had been written with or

without the words – ―Not negotiable‖ – In this case, it is called as a

special crossing

67. For negotiating a negotiable instrument there are no limits



66

68. A bearer cheque is transferable only by delivery

69.A bill drawn in Paris and drawn in favour of a trader in Mumbai and

payable in Chennai is called a foreign bill

70. The Negotiable Instruments Act provides protection to the collecting

banker in respect of Conversion 71. Crossing of a cheque denotes that it should be paid to a banker

only

72. By noting, it is meant that the fact of dishonour has been

recorded by the notary public on a dishonoured bill or/and on a

plain paper attached to the bill

73. Sericulture is classified under – direct agriculture advance

74. Mahima relates to refinance by NABARD to banks for onlending

to agencies for marketing of non farm products of rural women

75. Foreign exchange transactions are viewed always from the

angle of the bank 76. The responsibility of managing the foreign exchange resources

lies with – Reserve Bank of India

77. EXIM policy is announced by the Ministry of Commerce

78. In a Free on Board contract, freight and insurance will be

borne by the importer

79. If a letter of credit is slient about the revocability, then the

letter of credit is irrevocable

80. Crystalisation of sight export bills purchased/negotiated will be

done on the expiry of transit period plus 30 days 81. A transferable letter of credit can be transferred only once

82. Natural guardian under Hindu Minority and guardianship act,

1956 will be – his father and after him the mother

83. For banking transactions, an administrator is one who is

appointed by the court if the deceased has died intestate

84. Banker‘s lien is an implied pledge

85. A contract of insurance is a contract of indemnity

86. Acceptance of an usance bill will be made on the face of the

bill

87. The right of set-off can be exercised by the banker only when the relationship between the customer and the banker is that of

debtor and creditor

88. Bank must create reserve fund and 25% of the profits should be

transferred to this fund before any dividend declared is contained in

Banking Regulation act



67

89. Limitation period for availing the remedy under Section 138 of

Negotiable Instruments Act is one month from the date of cause of

action

90. In case the amount of loan to a company is decreased or

increased, the memorandum of modification or charge is submitted to the Registrar of companies

91. The rate of revenue stamp is the same throughout India

except in Jammu and Kashmir

92. When articles are kept in safe custody, the relationship between

banker and customer is that of bailee and bailor

93. In the case of minor‘s joint account with the guardian and when

the minor attains majority, the guardian should not be allowed to

operate the account

94. Wages of employees are settled under Minimum wages act

95. CB Bhave committee has looked into ways to reduce cost of demat operations and the said companies should bear a

substantial part of dematerialization costs

96. Basle committee relates to Capital Adequacy

97. In Camel‘s rating – E stands for earnings

98. The revised definition of a sick SSI unit has been given by

Kohli committee

99. Greenshoe option is retaining the full/part of equity

subscribed by investing public over and above that issued

100.Hindi is accepted as an official language of the union under Devanagiri script

:::::::::::::::::::::

POINTS

01. RBI was established during the year, 1935 02. RBI act was enacted during 1934

03. RBI has three main functions namely; traditional functions,

development functions and regulatory functions

04. The traditional functions consist of issue of currency, forex

management and miscellaneous functions.

05. The miscellaneous functions include export assistance, clearing

house functions, change of currency, transfer of currency, publication

of statistics and other information, training in banking



68

06. The development functions mainly consist of agriculture

development, promotion of industrial finance, promotion of export

through refinance, development of bill market and development of

banking system

07. The regulatory functions mainly consist of qualitative credit control, bank rate, differential rate of interest, open market operations,

CRR, SLR, direct action, credit authorization scheme and moral

persuasion

08. The financial system comprises of– financial markets, financial

assets and financial intermediaries and institutions

09. Financial markets are classified into money market and capital

market

10. The capital market consists of the following financial instruments

namely; government or gilt edged securities, corporate securities,

shares, debentures, public deposits and loan from institutions 11. The financial regulatory authorities in India consist of RBI, SEBI

and IRDA

12. The money market terms are: money market, call money, notice

money, term money, held till maturity, yield to maturity, coupon rate,

treasury operations and gilt edged securities

13. The financial instruments consist of bills, treasury bills,

promissory notes, hundies, certificate of deposits and commercial

papers.

14. Stock exchanges are available in important cities in the country 15. Mumbai stock exchange – Mumbai

16. National stock exchange – Mumbai

17. Ahmedabad stock exchange – Ahmedabad

18. Bangalore stock exchange – Bangalore

19. Bhubaneswar stock exchange – Bhubaneswar

20. Kolkatta stock exchange – Kolkatta

21. Cochin stock exchange – Cochin

22. Coimbatore stock exchange – Coimbatore

23. Delhi stock exchange – Delhi

24. Guwahati stock exchange – Guwahati 25. Hyderabad stock exchange - Hyderabad

26. Jaipur stock exchange – Jaipur

27. Ludhina stock exchange – Ludhiana

28. Madhya Pradesh stock exchange – Indore

29. Chennai stock exchange – Chennai



69

30. Magadh stock exchange – Patna

31. Mangalore stock exchange – Mangalore

32. Meerut shah stock exchange – Meerut

33. OTC Exchange of India – Mumbai

34. Pune stock exchange – Pune 35. Capital stock exchange of India – Trivandrum

36. Uttar Pradesh stock exchange – Kanpur

37. Vadodara stock exchange – Vadodara

38. There are different types of banks namely; savings bank,

commercial bank, Industrial bank, development bank, Land

development bank, indigenous bank, central bank, cooperative bank,

exchange bank, consumer bank

39. Banks have the following functions namely; primary functions,

secondary functions and social development functions

40. The primary functions consist of accepting deposits namely; fixed deposit, savings bank, current account, recurring deposit, demat

account

41. The primary functions consist of granting different categories of

loans namely; cash credit, overdraft, loans and advances, discounting

of bill of exchange, investment in government securities

42. The secondary functions can be classified into agency or

representative functions and general utility services

43. The agency or representative functions consist of – collection and

payment of various items; purchase and sale of securities; trustee and executor business; remitting money; purchase and sale of foreign

exchange; issue of letter of references and other agency functions

44. The general utility services consist of locker facilities, business

information, help in transportation of goods, acting as a referee,

issuing of letters of credit, acting as underwriters, issue of traveler

cheques, issue of gift cheques and dealing in merchant banking

45. The social development functions consist of capital formation,

inducement to innovations, impact on the rate of interest, role on the

development of rural sector and helpful in pushing up the demand

46. The popular services covered under e-banking are; automated teller machine, debit card, credit card, smart card, EFT, cheque

truncation payment, mobile banking, internet banking and telephone

banking

47. The services of e-banking include bill payment service, funds

transfer, credit card customers, railway pass, investing through



70

internet banking, recharging prepaid mobile connections, shopping,

RTGS funds transfer and online payment of taxes

48. The Narasimhan committee report I pertains to 1991 consisting of

reduction in SLR/CRR; phasing out of directed credit program; interest

rate determination; structured reorganization of the banking sector, establishment of ARF tribunal, removal of dual control and banking

autonomy

49. The second Narasimhan committee report pertains to the year,

1998 consisting of strengthening of banks in India, narrow banking,

Capital adequacy ratio, bank ownership and review of banking laws

50. The cooperative banking structure consists of five categories

namely; primary agricultural credit society; district central cooperative

banks; state cooperative banks or apex banks, Land Development

Banks, SCARDB and Primary Urban Cooperative banks

POINTS

01. The following are covered in negotiable instruments act: promissory note, bill of exchange, cheque, exchequer bill, circular note,

dividend warrant, share warrant, bearer debenture, bank note, bank

draft

02. The following are not negotiable instruments: money order,

postal order, deposit receipt and share certificate

03. The following are semi negotiable instruments: bill of lading, dock

warrant, carriers‘ receipt, letters of credit, railway receipt and

wharefinger‘s certificate

04. The bill of exchange consists of three parties namely; drawer,

drawee and payee 05. There are four categories of cheques namely; open cheque,

crossed cheque, bearer cheque and order cheque.

06. Open cheque is un crossed cheque or is called as blank cheque

07. Two parallel transverse lines on the face of the cheque denotes

crossing of the cheque

08. When the name of any bank is written between the two

transverse lines, it is called as special crossing



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09. Normally all cheques are bearer cheques. It means that it can be

payable to the payee or to the bearer of the cheque

10. By striking the words ―bearer‖ in the cheque, the cheque can be

made payable to order

11. Cheques can also be categorized into ante dated cheque, stale cheque, mutilated cheque and post dated cheque

12. When the cheque is out of date, it is said to be a stale one

13. When the cheque contains unwanted words or figures in the

chque and some portion of the cheque is found missing, it is said to be

mutilated

14. Post dated cheques are cheques where the date of the cheque is

found to be the future date

15. The following are the varieties of hundies namely; darshani

hundi, mitti hundi or muddati hundi, nam-jog hundi, furman jog hundi,

dhani jog hundi, shah jog hundi, jokhim hundi, jawabi hundi, khaka hundi and khoti hundi

16. Dharshani hundi is payable immediately on demand

17. Mitti hundi is payable after the expiry of some period

18. Nam jog hundi is payable only to person named in the hundi

19. Furman jog hundi is payable to person the named in the hundi or

any other person

20. Dhani jog hundi is payable to holder or bearer

21. Shah jog hundi is payable to shahs in the area

22. Johim hundi consists of conditions 23. Jawabi hundi invites acknowledgment from the person on

acceptance

24. Khaka hundi is one which has been paid already

25. Khoti hundi is a defective hundi

26. In the case of deposit, the customer is creditor and the banker is

debtor

27. In the case of overdraft account, the banker is creditor and the

customer is debtor

28. A person who makes deposit with the bank is called as the

depositor 29. A person who avails loan from the bank is called as the borrower

30. When any loan is backed by any immovable security like land,

house, factory, it is said to be under mortgage

31. The person who mortgages the security is called as the

mortgagor and the banker is called as the mortgagee



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32. When any loan is backed by any movable security like auto,

truck, computer etc. it is said to be under hypothecation

33. The person who hypothecates the security is called as the

hypothecator and the banker is called as the hypothecatee

34. When a person avails any loan against the security of LIC policy, it is said to be under assignment

35. When a person offers a fixed deposit as security for a loan, it is

treated as pledge

36. The customer who pledges the deposit is called as pledgor

37. The banker on whom the deposit is pledged is called as the

pledge

38. In the case of locker, the customer is lessee and the banker is

called as lessor

39. In the case of safe custody receipt, the customer is called as

bailor and the banker is called as the bailee 40. The different types of customers are – individuals and others

41. The individuals can be single individuals, joint individuals, minors,

married woman, pardanashin woman, illiterate person and lunatic

42. In the case of hindu undivided family, the senior most male

member is called as the karta

43. The business accounts can be opened by partnership firm,

trustees, societies, charitable institutions and clubs

44. The person named in the will to receive the properties in the will

is called as executor 45. In the absence of will, the person who is appointed by the court

to receive the money is called as the administrator

46. Proprietorship firm is an account managed by a single individual

called as proprietor

47. Companies can be divided into private limited company and

public limited company

48. When the bank in India opens an account with a bank in a foreign

country it is called as nostro account

49. When the bank in a foreign country opens an account with a bank

in India, it is called as vostro account 50. When a bank in one foreign country opens an account with

another bank in another country it is called as Loro account

POINTS -



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01. When a company wants to open an account with a bank, they

have to produce the following namely; memorandum of association,

articles of association, certificate of incorporation, board resolution and

certificate of commencement of business

02. Banks are subjected to the following risks namely; credit risk, liquidity risk, operations risk and market risk

03. Account to KYC guidelines, customers are classified into low risk

customers, medium risk customers and high risk customers

04. Low risk clients are – salaried customers, government

departments, government owned companies, regulatory and statutory

bodies

05. Medium risk clients are – High net worth individuals, Non

Resident individuals, blind people and pardanashin women

06. High risk clients are – trusts, charities, NGOs receiving donations,

sleeping partners, persons who are covered under foreign contribution act, politically exposed persons of foreign origin, non face to face

customers, high net worth NRI clients and bullion dealers and jewelers

07. Agriculture advances can be classified into direct agriculture and

indirect agriculture

08. The following are considered to be the direct agriculture activities

namely; finance to individual farmers, self help groups and joint liability

groups who avail loan for agricultural purpose, crop production,

investment loans, pre harvest and post harvest activity related loans

09. Indirect finance comprises of 2/3 rd loans to corporate, partnership firms, agro clinics and agribusiness centre, credit to

fertilizers and pesticide and seed dealers, drip irrigation activities and

sprinkler activities

10. Priority sector loans consist of retail trade, small business,

professional and self employed, agriculture, small scale industries, self

help groups, DRI loans, SC/ST beneficiaries

11. The following are considered to be weaker sections as per RBI

guidelines – small business, marginal farmers, artisans/village and

cottage industries for whom loans were granted up to Rs. 50000; SGSY

beneficiaries, SC/ST beneficiaries, DIR, SJSRY beneficiaries, self help groups and minority community beneficiaries

12. In the case of deposits, father and mother are called as natural

guardians

13. Savings bank account is termed as mother of deposits



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14. The following security provisions are available in a currency note

namely; security thread, latest image, micro letterings, identification

mark, intaglio printing, fluorescence, optically variable ink

15. The different categories of cooperative banks in the country are –

primary agricultural credit societies, district central cooperative banks, state cooperative banks or apex banks, land development banks,

SCARDB and primary urban cooperative banks

16. The rights of customers are – right to line, right to set off, right

to appropriation, right to charge interest, commission and service

charges

17. Lien is classified into particular lien and general lien

18. Different types of NBFC companies are – equipment leasing, hire

purchase company, loan company, asset finance company, residuary

non banking company, mutual benefit financial company, mutual

benefit company and miscellaneous non banking company 19. The following private insurance companies are available in the

country namely; HDFC standard life insurance co limited, MAX New

York Life Insurance Co. Limited, ING Vysya Life Insurance Co Private

Limited, ICICI prudential life insurance co limited, Kotak Mahindra life

insurance co limited, Iffko Tokyo General Insurance co limited, Metlife

India Insurance co limited, SBI life insurance co limited.

20. The specific principles of insurance business are – utmost good

faith, insurable interest, indemnity, proximate cause and subrogation

21. The various products of Life Insurance corporation of India are – Term Insurance, whole life, endowment plans, money back, children‘s

assurance plan and unit linked insurance plan

22. PMAC – Primary market advisory committee

23. SMAC – Secondary Market advisory committee

24. SCODA – SEBI committee on disclosures and accounting

standards

25. TDICI – Technology development and Information company of

India Limited

26. CFC – Credit capital finance corporation

27. VCF – venture capital fund 28. GVCFL – Gujarat venture finance company limited

29. GIIC – Gujarat Industrial Investment Corporation Limited

30. RCTFC – Risk capital and technology finance corporation Limited

31. RNBC – Residuary non banking company

32. MBC – Mutual benefit company



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33. MNBC – miscellaneous non banking company

34. ARWIND – Assistance to rural women in non farm development

35. NABCONS – NABARD consultancy services

36. STCC – short term rural cooperative society

37. FSDC – financial stability and development council 38. PCR – Partial rupee convertibility

39. CAC – Capital account convertibility

40. GST – goods and services tax has been replaced by VAT

41. Investor protection fund was established by BSE

42. FRBM – Fiscal responsibility and budget management

43. Yuan is the currency of China

44. Credit cards and debit cards are called as plastic money

45. IFRS – International finance reporting standards

46. The different types of credit are cash credit, micro credit, simple

overdraft, no frill loans and rural credit 47. IPR – Intellectual property rights

48. State Bank of Indore was merged with State Bank of India

49. Banking services fall under service sector

50. Laxmi commercial Bank merged with Canara Bank

POINT

01. The first private bank in India to receive an in principle approval

from Reserve Bank of India was Housing Development Finance

Corporation

02. The actual return of an investor is reduced sometimes as the

prices of the commodities go up all of a sudden. In financial sector this

type of phenomenon is known as market risk

03. The Narasimhan committee for financial sector reforms suggested

reduction in statutory liquidity ratio and cash reserve ratio 04. The Global enabling trade report is released by world economic forum

05. Coins are minted at Mumbai, Hyderabad, Noida and Kolkatta

06. The set of directive principles issued by the central bank of a country

or the process adopted by it to control the supply of money, availability

of money, cost of money and rate of interest, etc in order to bring

stability and growth of the economy are commonly known as –

monetary policy of the central bank of the country



76

07. Deciding policy rates like cash reserve ratio, repo rate and statutory

liquidity ratio are not the functions of a commercial bank

08. Banks do not issue pan cards

09. Petro dollar means – money owned by oil rich countries invested in

United States of America 10. Banking regulation act was framed specially to deal more effectively

with the problem of non- performing assets in banking system

11. The new capital adequacy framework prescribed for the banks is

commonly known as basel accord

12. PFRDA stands for – Pension Fund Regulatory and Development

Authority

13. Indian Bank Association recently prepared a charter of the banking

codes and services

14. SEBI is called as Securities and Exchange Board of India

15. SEBI has asked all foreign funds to come forward and register themselves as foreign institutional investors prior to any investment in

India

16. PMGSY – Pradhan Mantri Gram Sadak Yojana

17. PMGSY was launched in 2000

18. As compared to traditional budgeting, the performance and

programme budgeting system stresses more an outcome and less on

expenditure allocation

19. Regional Rural Banks are empowered to transact the business of

banking as defined under Banking Regulation act 1949 20. According to the Securities and Insurance Laws (Amendment) Bill

2010, RBI Governor will be the vice chairman of joint commission to

resolve differences amongst the financial regulators

21. Adjustment credit is used in the field of finance and banking

22. Increase in interest rates is found to be the best option when RBI

wants to block/hinder capital outflows and contain currency

depreciation.

23. Globalisation means – the growth of a single united world market

24. The inflationary impact of the inflow of foreign capital in India is

neutralized by RBI by sale of securities in the open market 25. The main function of International Monetary Fund is to help to solve

balance of payment problems at member countries

26. Bank of Baroda is having the largest number of branches in foreign

countries



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27. The documents which are considered as officially valid document to

satisfy KYC guidelines for opening one bank account – pass port, PAN

card, aadhar number issued by Unique Identification Authority of India

28. The standard of living in a country is represented by its per capita

income 29. Phishing means – fraudulent way of acquiring PIN and bank

passwords using email

30. State Bank of Mysore merged with State Bank of India during 2010

31. Prudential ICICI Mutual fund has been renamed as ICICI Prudential

Mutual Fund

32. Government of India is in the process of the establishment of SROs

for various market participants in the capital market

33. SRO means Small Regulatory Organisation

34. Micro credit or micro finance is novel approach to banking with the

poor. In the approach bank credit is extended to the poor through self help groups

35. Reserve Bank of India prepares the balance of payments accounts in

the country

36. An over valued currency in the foreign exchange market will have the

following impacts in the country namely – make imports cheaper and

exports costlier

37. When a large number of investors in a country transfer investments

elsewhere because of disturbed economic conditions, it is called as

flight of capital 38. Government of India promulgated Banking Companies (acquisition

and transfer of undertaking) ordinance to acquire 14 commercial banks

on 19.7.1969

39. On the current account balances maintained by the Regional Rural

Banks with them, the commercial banks may pay interest at such rates

as may be mutually agreed to

40. Bank rate signals the Reserve Bank of India‘s long term outlook on

interest rates

41. In deposit accounts KYC (Know Your Customer) has been

implemented in 2002 as per the directive of RBI 42. FRBM – Fiscal Responsibility and Budget Management

43. As national initiative which allows pregnant women to undergo

delivery free of cost in government health institutions was recently

launched and the name of the scheme is Janani Shishu Suraksha

Yojana



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44. The following assets are considered as near money – bonds, time

deposits, equity shares and travellers‘ cheques

45. Employer‘s contribution to contributory provident fund to employees

is a transfer payment

46. Indian Depository Receipt is known as IDR 47. IDR is an instrument in the form of depository receipt created by an

Indian depository against underlying equity shares of the issuing

company

48. Mid day meal scheme has been launched by the Ministry of Food and

Civil Supplies of Government of India

49. NABARD is the apex institution which handles refinance for agriculture

and rural development in the country

50. ULIP stands for Universal Loan and Investment Plan

POINTS

01. The most effective channel other than traditional branch channel

to achieve the aim of providing banking services to the people in rural

and remote areas – putting biometric ATMs 02. Land Development Banks form part of the cooperative credit

structure

03. KYC guideline is basically an anti money laundering exercise

04. Bharat Nirman Yojana is not welfare scheme launched by the

Government of India

05. The following cannot be considered as a value added service

offered by any bank – free cheque books

06. The minimum number of women required for formation of women

groups under Development of Women and Children (DWCRA) program

is 10 07. Dirham is the currency of UAE

08. The land development bank secure short term accommodation

from – state governments, commercial banks and state cooperative

banks

09. GNP stands for gross national product

10. FINO means Financial Investment Network and Operations



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11. Nationalisation of banks in the country took place under two

phases – the first phase on 19.7.1969 for fourteen banks and on

15.4.1980 in the second phase for six banks

12. Industrial Exit policy means allowing the business units to close

down 13. The following is not the feature of Real Time Gross Settlement –

RTGS – settlement of funds in revocables

14. The 2011 census is the 15th census

15. Sub Prime refers to lending done by financing institutions

including the banks to customers not meeting with normally required

credit appraisal standards

16. National Rural Employment Guarantee Scheme is associated with

Mahatma Gandhi

17. Currency is one among several terms used in banking

18. Standard and Poor is a credit rating agency 19. RBI is the banker of the banks and it is also called as the central

bank of the country

20. The first bank in the country to implement reverse mortgage in

the country is Punjab National Bank

21. Reverse mortgage scheme is beneficial for senior citizens for

availing loan against immovable properties

22. State Bank of India has been appointed for refunding income tax

to tax payers

23. Inflation has become a major area of concern in the country these days and Government of India and Reserve Bank of India

normally take to control the same the following measures namely –

system of dual prices; increase in supply of food grains and control on

credit and liquidity in market

24. Government of India these days is very keen about the credit to

the rural people and the product launched by the banks to provide

loan/credit to the farmers quickly – Kisan Credit Cards

25. SEBI was established during the year 1988

26. SEBI was made a fully autonomous body in 1992

27. SEBI regulates the securities market and protect the interests of the investors in securities

28. The short and medium term cooperative credit structure in the

country federal in character consists of three tiers viz: the State

Cooperative banks at the state level; the central cooperative banks at



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the district level and primary cooperative credit societies at the village

level.

29. Mutual funds are regulated by – SEBI – Securities and Exchange

Board of India

30. Raghuram Rajan Committee had submitted recommendations on financial inclusion

31. The main function of the International Monetary Fund is to help

solve balance of payments problem of member countries

32. NABARD is limited to the needs of agriculture and rural finance

33. SEBI is the regulator of the credit rating agencies in the country

34. The terms which are associated with banking operations are –

repo rate, prime lending rate and corporate finance

35. Joint Liability Groups replicate the self help groups

36. UTI bank has officially changed its name to Axis Bank Limited

37. A hot money or the refugee capital is one which is transferred from one centre to another for greater safety

38. RBI has asked all the banks in the country to form customer

service panels at branch levels

39. Indra Awas Yojana is one of the most successful programs under

Bharat Nirman

40. SARFAESI act was framed specially to deal more effectively with

the problem of non performing assets in the banking system

41. Operation market operations of Reserve Bank of India refer to

trading in securities 42. SEBI has introduced a new tool named Data Warehousing and

Business Intelligence System (DWBIS) for speedy analysis of data and

identification of violations

43. EXIM bank is a term lending institution

44. Central Cooperative Banks occupy a crucial importance in the

cooperative credit structure

45. Central Cooperative Banks form an important link between the

State cooperative bank at the apex and the primary agricultural credit

societies at the base

46. Central cooperative Banks are closer to the primary societies than an apex bank could be

47. In context with the business and banking, CRAR means Capital to

Risk Asset Ratio

48. Rangarajan committee is the first committee that gave its

recommendations relating to mechanization of banking system



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49. The definition of banking has been given in Negotiable

Instruments Act 1881

50. Employer‘s contribution to contributory provident fund of

employees is a transfer payment

QUESTIONS AND ANSWERS MODEL

51. What are the functions of any bank? – The bank accepts deposits

from the public and lends loans to the public. Acceptance of deposits and lending loans are called as the primary functions. The secondary

functions are – selling gold coins, selling insurance products and selling

mutual fund products. Apart from the above, the banks open demat

accounts also.

52. What do you know by demand deposits? – Current account and

savings accounts are called as demand deposits. Current account is

opened for business purpose carrying no interest and savings deposit is

opened for the purpose of saving the money and it carries interest. The

interest is at present decided by respective banks. 53. What do you know by KYC guidelines? – KYC means Know your

customer guidelines. According to KYC, the bank demands address proof

and identity proof from the public when they open accounts with the

bank. For address proof, copes of ration card, voter ID card, AATHAAR

card, telephone bill etc. are obtained. For identity proof, copies of identity

card issued by the employers, voter ID card, driving licence, AATHAAR

card etc. are obtained by the bankers.

54. What do you know by term deposits? – Fixed deposits, recurring

deposits and reinvestment deposits are called as term deposits since

these deposits are opened for specific period. The minimum period for which the term deposit is opened – 7 days and the maximum period: 10

years. Interest is paid according to the period of deposit. Interest is

decided by the respective banks only.

55. What do you know by fixed deposit? – Fixed deposits are opened

for a minimum period of seven days and maximum period of ten years.

Interest is paid according to the period of deposit. In this scheme, a lump

sum amount is deposited for a fixed period and interest earned is



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obtained from the bank on quarterly basis. In case the customer

demands, interest is paid by the bank on monthly or fortnightly basis.

56. What do you mean by recurring deposit? – According to this

scheme, the customer can remit monthly or quarterly a fixed amount for

a fixed period. For example, an amount of Rs. 1000/- can be deposited for 60 months and interest is paid to the depositor according to the

period of deposit along with the principal amount on maturity of deposit.

57. What do you know by reinvestment deposit? – Reinvestment

scheme is nothing but fixed deposit. Instead of getting the interest on

fixed amount on monthly or quarterly basis, the customer can get the

interest on maturity along with principal amount. Since interest is

reinvested, the customer is eligible to get interest for interest also.

58. What do you know by PAN number? – PAN number is required for

IT purposes and when more than Rs. 50000/- is invested in time deposit

accounts or remitted in current or savings deposit accounts, the customer has to mention the PAN number in the remittance slips.

59. Whether deposits can be opened in the name of minor? – Yes,

deposits can be opened in the name of minors. The accounts are opened

in the name of minor duly represented by father and mother and they

are called as natural guardians. When the minor is a student and aged

more than ten years, he can operate the account himself. For this

purpose, he should produce a certificate from the headmaster or principal

of the school where he is studying.

60. Whether minor is eligible for loans – Loans should not be granted to minors as per law and as per law the loans granted to the minors

cannot be demanded by legally.

61. What do you know by PIN number? – PIN number is a four digit

number used when the customer operates automated teller machines.

The PIN number consists of four digits and instead of PIN number, thumb

impressions are recorded in biometric ATMs

62. What do you know by bank nationalization? – As much as

fourteen banks owned by private entrepreneurs were nationalized on

19.7.1969 so that they can meet social obligations. During the second

phase, six banks were nationalized on 15.4.1980. New Bank of India got merged with Punjab National Bank and as at present there are twenty

public sector banks including IDBI bank.

63. What do you know by foreign bank? – Foreign banks have their

headquarters in a foreign country; however, they have branches in India

as permitted by Reserve Bank of India.



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64. What do you know private sector banks? – At present there are

fourteen old private sector banks in our country and seven new private

sector banks namely; Axis bank Limited, Development Credit Bank

Limited, HDFC Bank Limited, ICICI Bank Limited, Indus Ind bank Limited,

Kotak Mahindra Bank Limited and Yes bank Limited. According to the revised norms fixed by Reserve Bank of India, the new private sector

banks should have a minimum capital base of Rs. 200 crore.

65. What do you know by central bank? Central bank is the bank which

governs other banks in the country. In our country RBI is the central

bank. It has its headquarters at Mumbai and the following are the

functions of RBI namely – currency note issue, banker to the banks,

financial adviser to the government, custodian of cash reserves of banks,

lender of the last resort and controller of credits etc.

66. What do you know by issue of currency notes in the country? In

our country, up to one rupee note and coins, Government of India undertakes to issue and currency notes coins valuing more than one

rupee are issued by Reserve Bank of India.

67. What do you know by scheduled commercial banks? – The public

sector banks, SBI and its subsidiaries, all private sector banks, foreign

banks and Regional Rural Banks are called as scheduled commercial

banks. They should have been included in the second schedule of RBI act

1934; got licence for conducting banking business as per Banking

Regulation act, 1949 and should have been incorporated either as per

companies act or cooperative act. 68. What do you know by commercial banks? – Commercial banks are

banks which function for profit and the following banks are included

under the category of commercial banks by RBI – State Bank and its

subsidiaries, all nationalized banks including IDBI bank, all private sector

banks and foreign banks. The cooperative banks and regional rural banks

are not treated as commercial banks.

69. What do you know by cheque book? Cheque books are issued when

the customer is having current account, savings deposit account or

overdraft account. Cheque books are issued for the purpose of

withdrawal of money from the account. Cheques are not issued in the case of term deposits namely; fixed deposit, reinvestment deposit and

recurring deposit. In the case of term deposits, the customers are issued

with deposit receipts mentioning therein the details of deposits.

70. What do you know by minimum balance? – When a customer is

maintaining current account and savings account, he should maintain



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minimum balance in the account. The minimum balance is prescribed by

the respective banks. When the amount falls below the minimum balance

during any day, penal charges are levied in the account.

71. What do you know by automated teller machines? – Automated

Teller Machines are used for the purpose of allowing the customer to withdraw money twenty four hours a day using ATMs. The following

services are available through automated teller machines namely – cash

withdrawal, balance enquiry, mini statement up to last ten entries, pin

number change, mobile recharge, e-ticketing, transfer of funds etc.

72. What do you know by TDS? TDS is called as tax deducted at source.

When a customer having a fixed deposit account or reinvestment deposit

account earns interest amount more than Rs. 10000/- tax is deducted at

source from the account according to income tax laws prevalent in the

country.

73. What do you know by core banking solution? According to core banking solutions, all branches of the bank are interconnected through a

common server and a customer can transact the business in his account

from anywhere in the country.

74. What do you know by real time gross settlement? _ According to

RTGS, a customer can send money more than Rs. 200000/- from his

account to any other account of another person having his account with

the branch of the same bank or any other bank. For example, a customer

having an account with Canara Bank, Kellys branch at Chennai can

transfer the amount to the account of his father with State Bank of India, Canning Street, Kolkatta. Banks charge normal service charges for the

remittance facility.

75. What do you know by either or survivor? – When more than one

individual opens an account it is called as a joint account. Since the

account is opened jointly by more than one person, the account holders

should specify the conditions for operation of the account to the banker.

In the case of E or S account, anyone of the customers can operate the

account individually. In the case of joint accounts, all accountholders

should operate the accounts jointly.

76. What do you know safe deposit locker? – It is a facility provided by the bank for safekeeping the valuable articles. Lockers are available in

different sizes and according to the size of the locker, charges are

collected for the lockers. The lockers are operated by the locker holder

and the banker and for this purpose, the customer is given one key



85

pertaining to the locker and the banker is having the master key for the

entire unit.

77. What do you know by nomination facility in the account?

Nomination facility is available for deposit accounts namely; current

account, savings account, fixed deposit, reinvestment deposit account and recurring deposit account. The customer nominates a person for the

account to receive money on the death of the depositor.

78. What do you know by safe custody service? – According to the

scheme for safe custody service, customers can safe keep their valuables

with the banker for nominal service charges. The valuables are kept in

sealed packets or bundles and handed over to the banker and the banker

on receipt of the packet or bundle, furnishes a receipt and when the

customer is in need of the packet or bundle, he has to produce the

receipt to the banker.

79. What do you know by proprietorship account? When a customer maintains an account in his personal name, it is called as individual

account and when he opens an account in the name of a firm owned by

him, it is called as proprietorship account. For example, Balaji conducting

a printing press can open an account in the name of Balaji Printing

services and this is a proprietorship account opened for business

purposes and Balaji is called as proprietor.

80. What do you know by partnership account? When more than one

person joins together to conduct a business, it is called as a partnership

firm and the partners invest the capital either equally or according to the terms as agreed between the partners. The rules and regulations of the

business are recorded in partnership deed. The partnership deed can be

registered or non registered.

81. What do you mean by crossing of the cheque? – When two parallel

transverse lines are drawn on the face of the cheque, it is called as

crossing. When two simple transverse lines are drawn, it is called as

general crossing and when the name of a banker is mentioned between

the two parallel lines, it is called as special crossing.

82. What is the purpose of crossing of the cheque? – Cheques are

crossed so that they should be encashed through accounts only. This is to avoid fraudulent encashment of the cheques by miscreants.

83. What do you know by order cheque? Normally the cheques are

payable to the person mentioned in the cheque or to the bearer. In the

case of uncrossed bearer cheque, the person named in the cheque or any

bearer can get payment of the cheque from the bank counter. When the



86

words, ―bearer‖ are cancelled, the cheque is treated as order cheque

and for encashing an order cheque, the customer has to prove his

identity to the banker.

84. What do you know by shares? – For the purpose of building fixed

capital, joint stock companies are authorized to issue shares to the public. Shares can be issued in the form of ordinary shares or preference

shares. Ordinary shareholders are entitled to vote during the annual

general body meeting and they do not have any predetermined dividend

amounts and in the case of preference shareholders, they are paid

dividend according to predetermined rates.

85. What do you know by Debentures ?: It is a sort of loan document.

Those who advance loans to the company are called as debenture

holders. Normally debentures are issued through initial public offer as in

the case of shares. Predetermined rate of interest is paid to the

debenture holder, whether the corporation earns profit or suffers loss. 86. What do you know by SEBI? It is the principal regulator in the

capital market in the country – both the primary and secondary

segments. It has also been conferred with the powers to regulate the

mutual funds and venture capital funds in the country.

87. What do you know by call money? It is an important segment of

the Indian Money Market. Under call money market, funds are transacted

on overnight basis and under notice money market, funds are transacted

for the period between 2 days and 14 days. Banks borrow in this market,

in order to fill the gaps or temporary mismatches in funds; to meet the cash reserve ratio and statutory liquidity ratio and to meet sudden the

demand for funds arising out of large outflows. Banks, primary dealers,

development finance institutions, insurance companies and select mutual

funds are participants in this market.

88. What do you mean by Treasury bill?: They are money market

instruments to finance the short term requirements of the Government of

India. There are different types of treasury bills based on the maturity

period and utility of the issuance like, adhoc treasury bills, three months,

six months and 12 months treasury bills etc.

89. What do you know by call money? – Call or notice money is an amount borrowed or lent on demand for a very short period. If the period

is greater than one day and up to 14 days, it is called as notice money;

otherwise the amount is known as call money. Cooperative banks,

commercial banks and primary dealers are allowed to borrow and lend in

this market for adjusting their cash reserve requirements.



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90. What do you know by certificate of deposits? – It is a negotiable

short term promissory note in nature. It is issued at a discount to the

face value, the discount rate being negotiated between the issuer and the

investor.

91. What do you know by commercial paper? – Commercial papers are negotiable short term unsecured promissory notes with fixed maturities,

issued by well rated organizations. These are generally sold on discount

basis. Organisations can issue commercial papers either directly or

through banks or merchant banks called as dealers.

92. What do you know by primary market? – Primary market deals

with new securities – it can be otherwise called as new shares issued to

the public. The new offerings by the companies are made through an

initial public offer or rights issue of shares to the existing shareholders

93. What do you know by secondary market/stock market? – It is

the market for buying and selling securities of the existing companies. Under this scheme, securities are traded and being initially offered to the

public in the primary market and/or listed on the stock exchange. The

secondary market dealings are done through the share brokers in the

stock markets situated in various cities in the country.

94. What do you know by the term called as savings bank ? – It is a

financial institution whose primary purpose is to accept savings deposits.

It may also perform some other functions. These banks are much helpful

for salaried people and low income groups. The deposits collected from

customers are invested in bonds, securities etc. 95. What do you know by commercial banks? – It is an institution

which accepts deposits, makes business loans and offers related services.

The commercial banks also allow for a variety of deposit accounts, such

as checking, savings and time deposits. Their main purpose is to make a

profit. Commercial banks apart from acceptance of deposits and lending

loans provide services like collection of cheques and bills of exchanges,

remittance of money from one place to another place etc.

96. What do you know by industrial banks and development banks?

– They are development banks engaged in promotion and development

of industry. SIDBI is a development bank engaged in helping industries in getting loans from public sector and other banks. NABARD caters to the

needs of agriculture and National Housing Bank is meant for helping

housing development. EXIM bank helps for import and export

development in the country.



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97. What do you know by indigenous banks? – Indigenous banks

mean money lenders and sahukars. They collect deposits from the

general public and grant loans to the needy persons out of their own

funds as well from deposits. They are much popular in villages and small

towns. 98. What are the different types of loans provided by banks? – Cash

credits, overdrafts, loans and advances, discounting of the bill of

exchange and investment in government securities are various loan

facilities provided by any bank. Cash credits are loans granted against

stock of goods. Overdrafts are clean loans granted in current accounts.

The other loans are housing loans, educational loans, consumer loans,

gold loans, other agricultural loans, industrial loans etc. .

99. What do you know by debit card?- They are cards issued by the

banks on current and savings accounts. Using debit cards the customers

can withdraw funds using automated teller machines or they can purchase goods through point of sale terminals situated at textile shops,

petrol pumps, hotels and other outlets. The card can be also used for

purchasing e-tickets, air tickets and many more.

100. What do you know by credit card? – Credit cards are post paid

cards whereas the debit cards on the other hand is a prepaid card with

some stored value. Every time, a person uses this card, the internet

banking house gets money transferred to its account from the bank of

the buyer.

POINTS

BANKING AWARENESS – ABBREVIATIONS

01. AADHAAR card denotes – Unique Identity Number

02. PSL – Priority sector lending

03. NBFC – Non Banking Financial Company 04. WPI – Wholesale price Index

05. CPI – Consumer Price Index

06. LAF – Liquidity adjustment facility



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07. NDTL – Net Demand and Time Liabilities

08. UCB – Urban Cooperative Bank

09. ECS – Electronic clearing service

10. FSLRC – Financial Sector Legislative Reforms Commission

11. UCIC – Unique Customer Identification Code 12. AML – Anti Money Laundering

13. CFT – Combatting of financial terrorism

14. SME – Small and Medium Enterprises

15. CDR – Corporate Debt Restructuring

16. CDS –Credit Default Swaps

17. IRS – Interest Rate Swaps

18. QE3 –Quantitative Easing

19. FII – Foreign Institutional Investors

20. RRB – Regional Rural Banks

21. PDC – Post Dated Cheques 22. MSE – Micro and Small Enterprises

23. DCCO – Date of commencement of commercial operations

24. CRAR – Capital to Risk weighted assets ratio

25. IBL – Inter bank liability

26. GDS – Gold deposit scheme

27. CAD – Current account deficit

28. ECB – European Central Bank

29. MFIN – Micro Finance Institutions Network

30. IRDA – Insurance Regulatory Development Authority 31. CRMPG – Counterparty Risk Management Policy Group

32. HTM – Held to maturity

33. SLR – Statutory Liquidity Ratio

34. BC – Business correspondents

35. BF – Business facilitators

36. DSA – Direct selling agents

37. DMA – Direct marketing agents

38. DRA – Debt Recovery agents

39. ELA – Emergency Liquidity assistance

40. BOP – Balance of payments 41. APBS – AADHAAR payment bridge system

42. FDI – Foreign direct investment

43. M3 – Money supply

44. MSF – Marginal standing facility

45. FFA – Forward freight agreements



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46. AD – Authorised dealer

47. BIS – Bank for international settlements

48. BR act – Banking Regulation act

49. MCX – Multi commodity exchange

50. PSB – Public sector banks

POINTS

01. The Unit Trust of India came into existence in 1964

02. Infrastructure bonds are termed as financial assets

03. National savings certificates, Indra Vikas Patras, Kisan Vikas

Patras are issued by Post office

04. Capital market is a market which deals with gilt edge securities

05. Regional Rural Banks fall within the supervisory purview of


06. IRDA is called as Insurance Regulatory Development Authority 07. IRDA with its headquarters at Hyderabad is the regulatory

authority for all insurance companies in India including the Life

Insurance Corporation of India

08. Mutual Funds fall within the supervisory purview of SEBI

09. SEBI means – Securities and Exchange Board of India

10. Export-Import Bank do not fall within the category of

development banks

11. Industrial Development Bank of India, Small Industries

Development Bank of India and Industrial Investment Bank of India,

State Finance Corporation are called as developments 12. The major financial instruments of corporate sector are shares,

debentures, public deposits and loan from institutions

13. Financial institutions promote savings, mobilize savings and

allocate savings among different users

14. The following are called primary securities – bills, bonds, shares

and book debts

15. New currency is not an example of primary security

16. Indian Financial System comprises of scheduled commercial

banks, non banking financial institutions, urban cooperative banks 17. The Bombay Stock Exchange was made functional as early as

1870

18. The Unit Trust of India came into existence in 1964



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19. In July 1969, 14 commercial banks were nationalized

20. The government‘s share in any nationalized bank is 51% or more

21. New Private banks are being given licences since 1993

22. The gilt edged market refers to the market for government

securities and semi government securities 23. First share market in India was established in Mumbai

24. Securities that have an original maturity that is greater than one

year are traded in capital markets

25. The best known capital market securities are stocks and bonds

26. Securities that have an original maturity that is greater than one

year are not traded in money markets

27. Stocks and bonds are not money market securities

28. The primary issuers of capital market securities include – the

central and local governments and corporations

29. The characteristic of a capital market instrument are – liquidity, marketability, long maturity and liquidity premium

30. Treasury bill, negotiable certificate of deposit and commercial

paper are capital market instruments

31. Treasury bills are financial instruments initially sold by the

government to raise funds

32. Commercial Paper is a short term security issued by large and

well known companies to raise funds

33. A corporate convertible bond gives the holder the right to

exchange the bond for a specified number of the company‘s common shares

34. Treasury bond is not a money market instrument

35. Money lent for 15 days or more in inter bank market is called as

term money

36. Money lent for one day is called as call money

37. Special interest rate on a fixed maturity security fixed at the time

of issue is called as coupon rate

38. Lending of scheduled commercial banks, on a fortnightly average

basis, should not exceed 25 percent of their capital fund

39. A short term credit investment created by a non financial firm and guaranteed by a bank to make payment is called as bankers

acceptance market

40. Money market securities are short term in nature having low risk

and very liquid



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41. Money market instruments are characterized by the following

namely – they are usually sold in large denominations, have low default

risk and mature in one year or less

42. In the term repo, the term of the loan is greater than 30 days

43. All commercial banks do not deal for their customers in the secondary market

44. Money markets are used extensively by businesses both to

warehouse surplus funds and to raise short term funds

45. The single most influential participant in the US money market is

the US treasury department

46. The money market in India consists of two sectors namely the

organized and the unorganized sectors.

47. Indigenous banks do not fall under unorganized sector

48. Money lent for one day in the money market is known as call

money 49. Money lent for more than one day but less than 15 days in the

money market is known as notice money

50. Money lent for 15 days or more in inter-bank market is called as

term money

POINTS

01. Government security that is a claim on the government and is a

secure financial instrument which guarantees of both capital and

interest is called as gilt edged security

02. Insurance companies operate in the call money market as lenders 03. As per prudential norms of RBI, lending of scheduled commercial

banks on a fortnight average basis should not exceed 25 percent of

their capital fund

04. The market for bankers acceptance which are out of trade

transactions, both domestic and foreign is called as bankers acceptance

market

05. An unsecured loan extended by one corporate to another is called

as inter corporate deposits

06. Interest is calculated on actual/365 days basis in respect of the following products namely; call money, notice money and term money

07. Interest is not calculated on actual/365 days basis in respect of

the following products namely; Government of India dated securities



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08. An Institution which accepts deposits, makes business loans, and

offers related services is called as commercial bank

09. A bank which acts as a banker of other banks is called as central

bank

10. The following are the functions of exchange banks – remitting money from one country to another country, discounting of foreign

bills, buying and selling gold and silver and helping import and export

trade

11. Consumer banks are usually found in United States of America

and Germany

12. A bank account in which a depositor can deposit his funds any

number of times he likes and can also withdraw the same any number

of times he wishes is called as current account

13. In Recurring deposit account, a specified amount is deposited

every month for a specific period, say 12, 24, 36 or 60 months 14. An Inter bank funds transfer system, where funds are transferred

as and when the transactions are triggered is called as real time gross

settlement

15. Accepting deposits is the primary function of any bank

16. Collection and payment of cheques, rent, interest etc on behalf of

their customers is the secondary function of any bank

17. Buying, Selling and keeping in safe custody, the securities on

behalf of their customers are called as the secondary functions

18. Acting as trustees and executors of the property of their customers on their advice – the secondary functions of the bank

19. Remitting money from one place to the other through bank drafts

or mail – the secondary functions of the bank

20. The operative guidelines for banks on mobile banking

transactions in India were issued in 2008

21. To use smart cards/debit cards/credit cards for the purchase of

an item or for payment of a service at a merchant‘s store, the card has

to be swiped in a terminal known as point of sale terminal

22. The branding line of Bank of Baroda is - India‘s International

Bank 23. The logo of Bank of Baroda is known as Baroda sun

24. Lot of banks in India these days are offering M-banking facility to

their customers. The full form of M in M-banking is Mobile

25. State cooperative banks do not form part of the scheduled

banking structure in India



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26. Section 14 of Banking Regulations act, 1949 prohibits a banking

company from creating a charge upon any unpaid capital of the

company

27. A bank is under a statutory obligation to honour the customer‘s

cheques vide section 31 of the Negotiable Instruments act 1881 28. Nationalised banks have been permitted to offer their equity

shares to the public to the extent of 49 percent of their capital as per

amendments made in 1994 in – Banking companies (acquisition and

transfer of undertakings) act, 1970

29. Five banks are at present associates of State Bank of India

30. At present there are twenty nationalized banks in the country

31. The number of foreign banks operating in India are – 32

32. BCSBI stands for Banking Codes and Standards Boards of India

33. The main function of a commercial bank can be segregated into –

payment system, financial intermediation and financial services 34. Reserve Bank of India prescribed that all scheduled commercial

banks should maintain their SLRs in dated securities noted by RBI; T-

bills of Government of India and State Development loans

35. In case a depositor wishes to withdraw his deposits prematurely,

banks charge a penalty and allow the same

36. The percentage of India‘s population lives in rural areas – 65% to

less than 70%

37. In case a depositor is a sole proprietor and holds deposits in the

name of the proprietory concern as well as in the individual capacity, the maximum insurance cover is available upto Rs. 100000.00

38. Banks give contracts to third parties in order to manage support

services like help desk support, credit card processing and call support

service

39. In case of FCNR – B scheme, the period for fixed deposits is – for

terms not less than one year and not more than five years

40. The past due debt collection policy of banks generally emphasizes

on – respect to customers, appropriate letter authorizing agents to

collect recovery, due notice to customers.

41. According to the risk diversification principle of bank lending, diversification should be in terms of customer base, geographic

location, nature of location etc

42. The aspects which are outlined by the loan policy of a bank are –

rating standards, lending procedures, financial covenants etc.,

43. The paid up capital of non scheduled bank is less than Rs. 5 lakhs



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44. Scheduled bank means a bank – which is included in the second

schedule to the RBI act, 1934

45. A foreign bank is one which is incorporated outside India

46. The Unit banking system is prevalent in United States of America

47. In terms of section 5(1) (e) of the Banking Regulations act, 1949, a banking company means any company which transacts the business

of banking in India

48. Universal Banking is one which undertakes the functions of a

Development financial institution as well as a commercial bank

49. The commercial banking system in India consists of scheduled

and non scheduled banks

50. EBT – stands for Electronic Benefit Transfer

POINTS

01. RBI generally reviews the monetary policy every three months on

a quarterly basis

02. The rate at which Reserve Bank of India lends short term money

to the banks is called as repo rate

03. The Reserve Bank of India was nationalized on 1.1.1949

04. RBI functions are governed by RBI act 1934

05. RBI is not expected to perform the function of accepting deposits

from the general public

06. RBI functions as a banker to the government; accepts deposits

from commercial banks and issues currencies 07. RBI has its headquarters at Mumbai

08. The first Governor of the Reserve Bank of India from 01.04.1935

to 30.06.1937 was Sir Osborne Smith

09. The 22nd current Governor of Reserve Bank of India is Y V Reddy

10. Prime lending rate is not decided by RBI

11. Prime lending rate is decided by the individual banks

12. RBI decides the following rates namely; Bank rate, repo rate,

reverse repo rate and cash reserve ratio

13. RBI was set up on the recommendations of Hilton Young commission

14. RBI formulates implements and monitors the monetary policy

15. The central banking institution in India is Reserve Bank of India



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16. RBI had divested its stake in State Bank of India to IDBI bank

17. At present the RBI holds one percent of shareholding in National

Bank for Agriculture and Rural Development Bank – NABARD

18. The number of regional offices of RBI is 23

19. In India RBI prescribes the minimum SLR level for scheduled commercial banks in India in specified assets as a percentage of bank‘s

net demand and time liabilities

20. CRR refers to the share of liquid cash that rural banks have to

maintain with RBI of their net demand and time liabilities

21. The functions of RBI are – acts as the currency authority; controls

money supply and credit; manages foreign exchange and serves as a

banker to the government

22. The quantitative instruments of RBI are – bank rate policy, cash

reserve ratio and statutory liquidity ratio

23. The objective of monetary policy of RBI is to control inflation; discourage hoarding of commodities and encourage flow of credit into

neglected sector

24. When RBI is lender of the last resort, it means that RBI advances

credit against eligible securities

25. When RBI acts as a banker to the government, its functions are –

keeping bank accounts of the government; carrying out government

transactions and advising the government on all financial and monetary

matters

26. Government of India decides the quantity of coins to be minted 27. The method which is used currently in India to issue currency

note – minimum reserve system

28. An anna was equal to four paise

29. The first decimal issues of coins in 1950 in India consisted of

1,2,5 paise

30. RBI began production of notes in 1938, issuing Rs.2,5,10, 1000

notes. Rs. 500 note was reintroduced again in 1987

31. Rs. 1000 note was reintroduced again in 2000

32. Coins which were struck in with the hand picture are available

since 2010 33. Under Britton Woods system, as a member of International

Monetary Fund, India declared its par value of rupee in terms of gold

34. On September, 25, 1975, rupee was delinked from pound sterling

and was linked to basket of currencies



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35. On March 1, 1992, RBI announced a new system of exchange

rates known as partial convertibility and liberalized exchange rate

system

36. In India, the fixed fiduciary system of note issue was in force

from 1816 to 1920 37. During 1992, India adopted partial convertibility of rupee

38. All banks are authorized to accept soiled notes across their

counters and pay the exchange value

39. Banks are expected to offer this service even to non customers

40. All public sector bank branches and currency chest branches of

private sector banks are authorized to adjudicate and pay value in

respect of mutilated notes

41. RBI has also authorized all commercial bank branches to treat

certain notes in two pieces as soiled notes and pay exchange value

42. At present there are over 4000 currency chests in the country 43. Indo_Greeks were the first rulers in India to issue coins which can

be definitely attributed to the kings

44. Section 22 of RBI act 1934 gives sole power to RBI to issue

currency notes

45. For issuing notes, RBI is required to hold the minimum reserves

of Rs. 200 crore of which note less than Rs. 115 crore is to be held in

gold

46. The decimal system of note and coin issue was started in the

country in 1957 47. The objectives of financial sector reforms in the country are –

creating an efficient, productive and profitable financial sector industry;

preparing the financial system for increasing international competition;

opening the external sector in a calibrated fashion; promoting the

maintenance of financial stability even in the face of domestic and

external environments

48. The Narasimhan Committee-I was set in 1991

49. The Narasimhan Committee-I was set up to suggest some

recommendations for improvement in the efficiency and productivity of

the financial institution 50. The Narasimhan Committee-II was set up to suggest some

recommendations for improvement in the banking reform process



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POINTS

01. Narasimhan Committee 1991 has given the following

recommendations namely – reduction in SLR and CRR; phasing out

directed credit program; the determination of the interest rate should be on the grounds of market forces such as the demand for and the

supply of fund; the actual numbers of public sector banks need to be

reduced

02. According to narrow banking concept, weak banks will be allowed

to place their funds only in short term and risk free assets

03. The following are the recommendations of Narasimhan

Committee report 1998 – reduction in CRR and SLR; deregulation of

interest rate, fixing prudential norms and capital adequacy norms

04. Basel I which was issued during 1988 focuses on the capital

adequacy of financial institutions 05. Capital to risk assets ratio CRAR of all the scheduled commercial

banks under Basel I framework improved to 13.6 percent by the end of

March, 2010

06. In 1991, the statutory liquidity ratio was as high as 38.5%

07. Narasimhan committee recommended to reduce SLR and CRR to

25 % and 3.5% respectively

08. The following guidelines were issued by RBI in January 1993 for

the entry of private sector banks in the wake of Narasimhan Committee

recommendations – The new bank upon being granted licence under the banking regulation act by RBI shall be registered as a public limited

company under the companies act, 1956; Its inclusion in the second

schedule to the RBI act, 1934 shall be subject to RBI‘s decision;

Preference would be given to those banks the headquarters of which

are proposed to be located in the center which does not have the

headquarters of any other bank

09. The RBI has prescribed that new private sector bank – shall be

subject to prudential norms in regard to income recognition, asset

classification and provisioning, capital adequacy ratio etc; shall have to

observe priority sector lending targets as applicable to other domestic banks and will be required to open rural and semi urban branches also

as may be laid down by RBI

10. To create a strong and competitive banking system, reform

measures were initiated in early 1990s and the thrust of these reforms

was on – increasing the operation efficiency; developing technological



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supervision over banks and developing technological and institutional

infrastructure

11. Financial inclusion makes people to access financial markets

12. The following steps are taken for financial inclusion in the country

– the expansion of network of cooperative banks to provide credit to agriculture and saving facilities in rural areas; nationalization of banks

in 1969 and expansion of branches; creation of an elaborate framework

of priority sector lending with mandated targets as part of a strategy to

meet the savings and credit needs of large sections of the Indian

population who had no access to institutional finance

13. The following sections of people are covered under financial

inclusion – marginal farmers, landless labourers, self employed and

unorganized sector enterprises and urban dwellers

14. Mangalam village situated in the Union territory of Puducherry

became the first village in India where all households were provided with banking facilities

15. The objectives of forming self help group is – to build mutual

trust and confidence between the bankers and the rural people; to

encourage banking activities, both on the thrift as well as credit sides,

in a segment of the population that the formal financial institutions

usually find difficult to cover and to meet the needs of the poor by

combining the flexibility, sensitivity and responsiveness of the informal

credit system with the strength of technical and administrative

capabilities and financial resources of the formal credit institutions 16. The best alternative banking service to branch banking to be the

part of financial inclusion – establishment of small branches; setting up

of automated teller machines; issuing of ATM cards, giving credit cards

and mobile banking

17. National credit fund for women is the most prominent national

level micro finance apex organization providing micro credit services for

women in the country

18. Banks provide the lowest lending in the North-eastern part of

India

19. No frills accounts are certainly an effort in the direction of financial inclusion

20. The financial assistance or loans of Rs. 10000 by a bank to a

small borrower will be called as micro finance

21. The Rashtriya Mahila Kosh is working exclusively for poor women

22. SHG bank linkage programme was initially launched by NABARD



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23. The recent initiatives for financial inclusion in India include – no

frill account for retail purpose; simplified KYC (Know your customer);

credit counseling centre facilities and extension of smart cards

24. Strong competition between numerous microcredit programs to

reduce interest rates is not innovation likely to explain the high repayment rates of microcredit programs

25. Group lending using social sanctions instead of collateral

foreclosure is not a potential limit of group lending

26. Collaterals is not a mechanism that contributes to the success of

micro credits

27. The index of financial inclusion has been launched for the first

time in 2008 by ICRIER

28. Regional Rural banks were established in the country on the

recommendations of Narasimhan committee

29. Regional Rural banks were set up during 1975 30. The total authorized capital of Regional Rural Banks was originally

fixed at Rs. 1 crore which has since been raised to Rs. 5 crore

31. At present, the formula for subscription to Regional Rural Banks

capital has been fixed at – central government 60%; state government

20% and sponsor bank 20%

32. Central Government‘s contribution towards the capital of Regional

Rural Bank is made through NABARD

33. The sponsor bank helps and aids the Regional Rural Bank

sponsored by it by – subscribing to its share capital; training its personnel; providing managerial and financial assistance during the

first five years or extended period

34. The sponsor banks are empowered to – monitor the progress of

Regional Rural Banks; to conduct inspection and internal audit; to

suggest corrective measures

35. As on March, 2011, the total number of Regional Rural Banks in

the country are – 82

36. Each of the Regional Rural Banks covers districts ranging from 3

to 25

37. The main resources of Regional Rural Banks are – share capital, deposits from the public, borrowing from sponsor banks, refinance from

NABARD

38. Regional Rural Banks are refinanced at 2 percent below the bank

rate



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39. Regional Rural Banks are owned by central government, state

government, sponsor bank and jointly by all of the above

40. With a view to improve the performance of the Regional Rural

Banks and giving more powers and flexibility to their boards in decision

making RBI had constituted task force on empowering the RRB boards for operational efficiency. The task force was headed by – K.G.

Karmakar.

41. The number of directors on the boards of Regional Rural Banks

has been raised to 15

42. Regional rural banks are classified under scheduled commercial

banks

43. The paid up share capital of Regional Rural Bank is contributed by

state government only

44. Regional Rural Banks are empowered to transact the business of

banking as defined under Banking Regulation act, 1949 45. Regional Rural Banks are managed by the board of directors

46. The deposits with Regional Rural Banks are insured by DICGC

47. DICGC – Deposit Insurance and Credit Guarantee Corporation

48. For the purpose of Income tax act, 1961, the Regional Rural

Banks are treated as – cooperative banks

49. On the current account balances maintained by the Regional

Rural Banks with them, the commercial banks may pay interest as

applicable to savings accounts

50. By virtue of the amendment carried out by the Regional Rural Bank (Amendment) act, 1987, the chairman of a Regional Rural Bank is

to be appointed by sponsor bank in consultation with NABARD

POINTS

101. What do you know by stale cheque?- When the cheque becomes

out of date and cannot be encashed, it is termed as stale cheque. For

example, the validity period of any cheque is three months and when a

cheque dated: 10.01.2012 is presented for payment on 10.01.2013, it is

considered as a stale cheque, since the cheque is more than three

months old. 102. What do you mean by post dated cheque?- When the date of the

cheque is beyond the date on which the cheque is presented for

payment, the cheque is considered to be post dated. For example, when



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a cheque dated: 10.02.2013 is presented for payment on 10.01.2013, it

is considered to be a post dated cheque.

103. What do you know by current chest? – Currency chests are

operated by RBI so that they can provide good quality currency notes to

the public. However, RBI has appointed commercial banks to open and monitor currency chests on behalf of RBI. The cash kept in currency

chests is considered to be kept in RBI and

104. What is meant by minimum balance to be maintained in the

accounts? In the case of savings bank and current account deposits, the

banks stipulates a minimum balance to be maintained. The minimum

balance varies from bank to bank and when the balance in the account

falls below the minimum balance then banks debit the account with some

penal charges. Some banks insist quarterly average minimum balance to

be maintained instead of regular minimum balance to be maintained.

105. What do you mean by tax deduction at source? TDS means tax deducted at source. Banks must deduct tax from the interest paid on the

fixed deposit when the interest paid on fixed deposits to a customer

exceeds Rs. 10000/- during the accounting year. TDS is applicable to

fixed deposits only and is applicable to savings bank deposits.

106. What do you mean hindu undivided family? – HUF means Hindu

Univided family and it is the legal entity duly recognized by the laws in

India. The account of hindu undivided family is operated by Karta and

karta is the senior most male member in the family. The remaining

members in the family are called as coparceners. Banks can open deposit accounts and also extend loan facilities to hindu undivided family.

107. What do you know by MICR? – MICR means magnetic ink character

recognition. Nowadays, the cheques are issued in MICR formats in

metropolitan centres namely; Mumbai, Chennai, Kokatta, Bangalore etc.

The micr code is readable by a reader sorter computer which helps in

quick sorting of the cheques towards immediate adjustment of the

amount to be received and paid by the banks in the clearing house. MICR

code consists of the following namely; the cheque number, name of the

city, name of the bank, name of the branch, account category etc. and

banks simply type the amount of the cheque in the MICR portion using scanners so that the sorter reader is able to read the entire information

in regard to the cheque instantaneously.

108. What do you mean by cheque truncation? – Under cheque

truncation, the physical cheque is replaced by the digital image of the

cheque after scanning. Once the cheque is truncated the physical cheque



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is cancelled and from the moment of truncation only the digital image

has life. The digital image of the cheque which contains the digital

signature of a bank officer as to its authenticity is processed by all banks

and payment is effected. Cheque truncation helps in quick processing of

the cheques drawn even on far away places since there is no necessity to physically move the cheque from one place to another place.

109. What do you mean by ECS?- ECS means electronic clearing service

and this facility is used where a large number of small value payments or

receipts are to be made or received. ECS can be used for either debit

transactions or credit transactions. When a company wants to pay

dividends to large number of shareholders, they use ECS credit facility

and by debiting the company‘s account, the shareholders accounts are

credited with the dividend amount instantaneously. Similarly when an

accountholder can use ECS debit facility towards effecting payment to

telephone charges each month. 110. What do you mean by bankassurance? Hitherto banks were

dealing with acceptance of deposits and lending loans to the customers

apart from undertaking certain ancillary services. Nowadays banks

started selling insurance policies of prominent insurance companies by

having tie up arrangements with such companies and banks earn

commission for such transactions.

111. What do you mean by Universal banking? – Universal banking is

the concept under which banks can provide various types of services

namely; deposits, loans, safe deposit lockers, safe custody services, dealing with mutual fund schemes, selling insurance policies, selling gold

coins, dealing with issue of shares and debentures etc. Thus at present

banks are becoming like a supermarket for all kinds of financial products

and such concept is called as universal banking.

112. What do you mean by Regional Rural Banks? – The Regional Rural

Banks are relatively new banking institutions which were added to the

Indian banking scene since October, 1975. The distinctive feature of a

rural bank is that though it is a separate body corporate with perpetual

succession and common seal, it is very closely linked with the

commercial bank which has sponsored the proposal to establish it. 113. What do you mean by National Housing Bank?- National Housing

Bank was established under the National Housing Bank act, 1987 as an

apex body and the key function of National Housing Bank is the

development of the housing sector and it is a wholly owned subsidiary of

Reserve Bank of India. National Housing Bank undertakes the following



104

activities namely; promotion and development of housing finance

companies; regulation and supervision of housing finance companies and

providing both direct finance and indirect finance to housing sector.

114. What do you mean by NABARD? – National Bank for agriculture and

rural development was set up in 1982 as an apex development bank in the field of agricultural finance and rural development. NABARD is set up

by the Government for the purpose of facilitating credit flow for

promotion and development agriculture and integrated rural

development. It covers supporting all other allied economic activities in

rural areas, promoting sustainable rural development and ushering in

prosperity in the rural areas

115. What do you mean by EXIM Bank? – Export and Import Bank of

India was set up during the year, 1982 for the purpose of financing,

promoting and facilitating foreign trade in the country. It is wholly owned

by the Government of India. The bank apart from enhancing exports from the country, integrates the country‘s foreign trade and investment

with the overall economic growth.

116. What do you mean by SIDBI? – SIDBI was established for the

purpose of assisting and promoting small scale industry. It was

established on 2.4.1990. It is the principal financial institution

established for the promotion, financing and development of industry in

the small scale sector and to coordinate the functions of the institutions

engaged in the promotion and financing or developing industry in the

small scale sector. 117. What do you mean by NBFCs? – Non Banking Finance Companies

provide finance for small ventures but at the same time they are more

customer oriented and operate at low volumes compared to the banks.

They also collect deposits from customers and offer slightly higher

interest rates on deposits compared to the banks.

118. What do you mean NEFT and RTGS – The two options namely –

national electronic funds transfer and RTGS – real time gross settlement

offered by Reserve Bank of India allow electronic transfer of funds from

the remitter who has an account in one bank to the beneficiary who has

account in any other bank/branch. The transfer can be carried out using the internet banking facility. The minimum amount that can be

transferred by RTGS is Rs. 2.00 lakh and there is no such limit for

transfer through NEFT. It is settled in batches at times defined by the

Reserve Bank of India. RTGS transactions are settled continuously as and

when they are put through. The transfer of funds through NEFT and RTGS



105

can also be carried out by submitting the remittance form at the

remitter‘s bank branch.

119. What do you mean IFSC code? – IFSC means Indian financial

system code. It is a eleven digit code to identify the bank branch. IFSC

code is used while transferring the funds using RTGS and NEFT payments. 120. What do you mean by financial inclusion? In spite of vast growth

in the banking system, a large number of poor people are still not served

by any bank. They are living outside the purview of any bank. Financial

inclusion is delivery of financial services at an affordable cost to the vast

population of disadvantaged/low incomes sections of the society

121. What do you mean No frill accounts? No frill accounts are accounts

with very low or nil minimum balance as well as charges to be opened by

the banks as targeted by Reserve Bank of India. KYC norms are relaxed

for opening no frill accounts so that people living in rural and semi urban

areas can open the accounts conveniently. Overdrafts upto Rs. 25000.00 are allowed in the no frill accounts

122. What do you mean by narrow banking? – It is the system of

banking under which the bank accepts deposits from the public and places

the funds accepted in 100 percent risk free assets with maturity matching

for its liabilities. The bank takes no risk of lending at all.

123. Who are business facilitators and business correspondents? –

RBI has permitted the banks to use the services of business facilitators

and correspondents with effect from 2006. The services of non

governmental officers, microfinance institutions and civil society organizations can be utilized by the banks. They help the banks in

identifying the borrowers processing their applications etc. without

involving in business transactions. No approval of RBI is necessary.

Correspondents will do all the above and will also participate in business

transactions in a small way.

124. What do you mean by non performing assets? – Non performing

assets means bad loans. When the principal and interest in the account

becomes overdue for more than 90 days, it is treated as non performing

assets. Non performance assets are classified into sub standard assets,

doubtful assets and loss assets. Banks are willing to keep the level of non performance accounts at the lowest.

125. What are the major risks faced by banks according to Basel II

norms? – Banks are facing credit risk, market risk and operational risk.

When the bank lends an advance, it faces credit risk and sometimes the

banks may not be able to recover the loan amount from the borrowers. In



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the case of failure of any bank product, the banks face market risk and

operational risk occurs on account of failure of systems available in the

bank branches namely; staff unrest; striking employees; computer

failure; automated teller machines out of order etc.

126. What do you mean by merchant banking? – Merchant banking stands for provision of various services to corporate clients by helping

them to access capital market. Merchant banks help the corporate

customers to approach the capital market with initial public offers for the

purpose of collection of capital by way of shares.

127. What do you mean by demat accounts? Demat means

dematerialization. During the early days, shares and debentures

certificates were issued in physical form in the form of certificates. At

present, they are issued in electronic form. It is the process by which

paper securities are converted to electronic form so that they can be

stored, sold and transferred easily. 128. What is a depository? – A depository holds the securities of the

investors in electronic form. In our country there are two depositories

namely; NSDL – National Securities Depositories Limited promoted by

National Stock Exchange and CDSL – Central Depository Services Limited

promoted by Bombay Stock Exchange.

129. What do you know by consortium financing? When a corporate is

in need of huge finance – say Rs. 200 crores and above, banks join

together and extend the loan facilities by sharing the loan amount

between themselves. This reduces the risk for each bank. The banks jointly process the application of the borrower and sanction the advance

and this is called consortium lending.

130. What do you mean by repo rate? – It is the rate at which RBI lends

short term funds to the commercial banks against securities. In order to

temporarily expand the money supply, the central bank decreases repo

rates enabling the banks to swap the government securities for cash.

Repo is the abbreviation of Repurchase and to contract the money supply

RBI increases the repo rates.

131. What do you mean reverse repo ? – The reverse repo rate is the

interest rate that banks receive if they deposit money with the central bank. This reverse repo rate is always lower than the repo rate. Increases

or decreases in the repo and reverse repo rate have an effect on the

interest rate on banking products such as loans, mortgages and savings.

132. What do you mean by CRR? – CRR means Cash Reserve Ratio and as

per the stipulations by Reserve Bank of India, all banks are in a position



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to maintain a certain percentage of their deposits (technically called as

net demand and time liabilities) in their account with the RBI. CRR ranges

from 5 percent to 15 percent. By increasing CRR by merely 0.25 percent,

an amount of Rs. 15000 crores of liquid funds can be transferred from the

commercial banks to the coffers of RBI. When CRR is reduced, the liquid funds are transferred from RBI to commercial banks.

133. What do you mean by SLR? – Statutory Liquidity Ratio refers to the

stipulation by RBI that approximately 25 percent of the banks deposits is

to be kept in the form of government securities, gold and cash. Primarily

SLR refers to the amount invested by the banks in Government of India

securities. RBI has the right to change the statutory liquidity ratio from

time to time. On reduction of SLR, the availability of funds for the banks

moves up and banks tend to more loans to the common public. In the

case of increase in SLR, banks reduce bank lending.

134. What do you mean by PLR? – Prime lending rate is the rate at which commercial banks are willing to lend to their triple A rated No 1

borrowers. The lending rates by the bank for other borrowers whose

credit worthiness is low will be more than prime lending rate. RBI has

deregulated the lending rates that are to be charged by the banks for

advance above Rs. 2 lakhs.

135. What do you mean by BPLR? – It is the rate at which commercial

banks must charge to all their advances less than Rs. 2 lakhs.

136. Who is a non resident Indian? – Non resident Indian is the person

who is the Indian citizen who is residing in abroad for more than 182 days and has gone for abroad for the purposes namely; business, studies and

employment.

137. What are the different types of accounts that can be opened by

Non Resident Indians? – Non resident ordinary account, Non resident

External account, FCNR account and RFC account.

138. What are the different currencies in which FCNR accounts can

be opened? – FCNR accounts can be opened in the following currencies

namely; US dollar, pound sterling, Euro, Australian dollar, Japanese Yen

and Canadian dollar. FCNR accounts can be opened for a minimum period

of one year and maximum period of three years 139. What are the traditional functions of RBI? – The traditional

functions of RBI are – issue of currency, forex management, export

assistance, clearing house functions, change of currency, transfer of

currency, publication of statistics and other information and training in

banking.



108

140. What are the developmental functions of RBI? – The

developmental functions of RBI are – agriculture development, promotion

of industrial finance, promotion of export through refinance, development

of bill market, development and regulation of banking system.

141. What are the regulatory functions of RBI? – The regulatory functions of RBI are – qualitative credit control, bank rate, differential

rate of interest, open market operations, Maintenance of CRR and SLR,

direct action, credit authorization scheme and moral persuasion

142. What are the different types of financial institutions in our

country? – The various financial institutions in our country are – RBI –

Reserve Bank of India; SEBI – Securities and Exchange Board of India

and IRDA – Insurance Regulatory and Development Authority of India.

RBI monitors the various banks in the country; SEBI monitors and

regulates capital markets and IRDA monitors the functions of insurance

companies. 143. What are the different types of banks in our country? – In our

country the following banks are available – savings banks; commercial

banks; industrial banks; development banks; land development banks;

indigenous banks; central bank; cooperative banks; exchange banks and

consumer banks

144. What are the different types of secondary functions of any

bank? – They are agency or representative functions; general utility

services and social development functions.

145. What do you mean by agency or representative functions of any bank? – They are collection and payment of various items; purchase and

sale of securities; trustee and executor; remitting money; purchase and

sale of financial exchange; letter of references and other agency

functions.

146. What are the general utility services offered by the banks? –

They are locker facilities; business information; help in transportation of

goods; acting as a referee; issuing of letters of credit; acting as

underwriters; issue of traveler cheques; issue of gift cheques and dealing

in merchant banking activities

147. What are the social development functions of a bank ? – They are capital formation; inducement to innovations; impact on the rate of

interest; role on the development of rural sector; helping in pushing up

the demand

148. Can you name some items which are covered under negotiable

instruments act? – They are promissory notes, bills of exchanges;



109

cheques, exchequer bills; circular notes; dividend warrants; share

warrants; bearer debentures; bank notes and bank drafts

149. What do you mean by priority sector advance? – In order to boost

development of agriculture and industries, Government of India has

stipulated certain norms under which banks are in a position to allocate 40 percent of their advances exclusively to certain categories of

borrowers called as priority sector advances. The following are classified

into priority sector advances namely – retail traders, small business,

professional and self employed; agriculture; small scale industries, self

help groups, differential rate of interest and SC/ST beneficiaries

150. What do you mean by weaker sections? – The following categories

are termed as weaker sections namely – small business enterprises;

marginal farmers; artisans/village and cottage industries for whom loans

are granted upto Rs. 50000.00; SGSY beneficiaries; SC/ST beneficiaries;

DIR beneficiaries; SJSRY beneficiaries; SLRS; self help groups and people

belonging to minority community.

COMMITTEES/PROGRAMMES/PLANNING COMMISSION

01. COMMITTEES ON VARIOUS SECTORS OF INDIAN ECONOMY

01 A C SHAH NON BANKING FINANCIAL COMPANY

02 BIMAN JALAN MARKET INFRASTRUCTURE INSTRNMENTS

03 MALEGAM FUNCTIONING OF MICRO FINANCE

04 BIRLA CORPORATE GOVERNANCE

05 KIRITH PARIKH RATIONALISATION OF PETROLEUM

PRODUCTS

06 CHATURVEDI IMRPOVING NATIONAL HIGHWAYS

07 SR HASHIM URBAN POVERTY

08 ABHIJIT SEN WHOLESALE PRICE INDEX

09 C RANGARAJAN SERVICES PRICES INDEX AND FINANCIAL

INSTITUTION

10 ABID HUSSAIN DEVELOPMENT OF CAPITAL MARKETS

11 DAMADORAN CUSTOMER SERVICE IN BANKS

12 KHANDELWAL HUMAN RESOURCE IN COMMERCIAL BANKS

13 PATIL CORPORATE DEBT

14 V K SHARMA CREDIT TO MARGINAL FARMERS



110

15 SARANGI NON PERFORMING ASSETS

16 KHANNA REGIONAL RURAL BANKS

17 DANTAWALA LEAD BANK SCHEME

18 GADGIL FINANCIAL INCLUSION

19 THORAT DEREGULATION OF SMALL SAVING DEPOSIT

RATES

20 DEEPAK

MOHANTY

MONETARY SYSTEM IN INDIA

21 RAGHURAM

RAJAN

FINANCIAL SECTOR REFORMS

22 NARESH

CHANDRA

CIVIL AVIATION

23 RAKESH MOHAN RAILWAYS

24 KAKODKAR RAIL SAFETY

25 PITRODA RAIL MODERNISATION

02. PLANNING COMMISSION MEMBERS

01 DR MANMOHAN

SINGH

CHAIRMAN

02 MONTEK SINGH

AHUWALIA

DEPUTY CHAIRMAN

03 SOUMITRA

CHOUDHARY

MEMBER

04 MIHIR SHAH MEMBER

05 K KASTURI RENGAN

MEMBER

06 AMAN MAIRA MEMBER

07 ABHIJIT SEN MEMBER

08 SYEDA HAMEED MEMBER

09 NARENDRA

JADHAV

MEMBER

10 B K CHATURVEDI MEMBER

03. FLAGSHIP PROGRAMMES OF GOVERNMENT OF INDIA



111

01 SSA SARVA SHIKSHA ABHIYAN 2001

02 NRHM NATIONAL RURAL HEALTH MISSION 2005

03 ICDS INTEGRATED CHILD DEVELOPMENT

SCHEME

1975

04 MDM MID DAY MEAL 1995

05 NRDWP NATIONAL RURAL DRINKING WATER

PROGRAMME

2009

06 TSP TOTAL SANITATION PROGRAMME

07 NSAP NATIONAL SOCIAL ASSISTANCE

PROGRAMME

08 MGNREGA MAHATMA GANDHI RURAL

EMPLOYMENT GUARANTEE ACT

2006

09 IAY INDIRA AWAS YOJANA 1999

10 RGGVY RAJIV GANDHI VIDYUTIKARAN

YOJANA

2005

11 JNNURM JAWAHARLAL NEHRU NATIONAL

URBAN RENEWAL MISSION

2005

12 BNY BHARAT NIRMAN YOJANA

04. EMPLOYMENT, POVERTY, RURAL AND URBAN DEVELOPMENT

PROGRAMMES

01 EGSM EMPLOYMENT GUARANTEE SCHEME OF

MAHARASHTRA

1972

02 TRYSEM TRAINING RURAL YOUTH FOR SELF

EMPLOYMENT

1979

03 IRDP INTEGRATED RURAL DEVELOPMENT

PROGRAMME

1980

04 NREP NATIONAL RURAL EMPLOYMENT

PROGRAMME

1980

05 RLEGP RURAL LANDLESS EMPLOYMENT

GUARANTEE PROGRAMME

1983

06 JRY JAWAHAR ROZGAR YOJANA 1989

07 NRY NEHRU ROZGAR YOJANA 1989

08 SUWE SCHEME OF URBAN WAGE EMPLOYMENT 1990

09 EAS EMPLOYMENT ASSURANCE SCHEME 1990

10 SJSRY SWARNA JAYANTHI SHAHARI ROZGAR

YOJANA

1997



112

11 SJGSY SWARNA JAYANTHI GRAM SWAROZGAR

YOJANA

1999

12 JPNRGY JAI PRAKASH NARAYAN ROZGAR

GUARANTEE YOJANA

2002-2003

13 PMGY PRADHAN MANTRI GRAMODAYA YOJANA 2000

14 SGRY SAMPOORNA GRAMEEN ROZGAR YOJANA 2001

15 FWP FOOD FOR WORK PROGRAMME 2001

16 PMEGP PRIME MINISTER‘S EMPLOYMENT

GENERATION PROGRAMME

2008

05. RURAL EMPLOYMENT PROGRAMMES

01 CDP COMMUNITY DEVELOPMENT PROGRAMME 1952

02 NPRD NATIONAL FUND FOR RURAL

DEVELOPMENT

1984

03 CAPART COUNCIL FOR ADVANCEMENT OF

PEOPLE‘S ACTIONS AND RURAL

TECHNOLOGY

1986

04 DRDA DISTRICT RURAL DEVELOPMENT AGENCY 1993

05 PMGSY PRADHAN MANTRI GRAM SADAK YOJANA 2000

06 TWENTY POINT PROGRAMME 1975

07 DPAP DROUGHT PRONE AREAS PROGRAMME 1973-1974

08 ANNAPURNA SCHEME 2000

09 TSC TOTAL SANITATION CAMPAIGN 1999

10 NGP NIRMAL GRAM PURASKAR 2003

11 DDP DESERT DEVELOPMENT PROGRAMME 1977-1978

12 IWDP INTEGRATED WASTELAND DEVELOPMENT

PROGRAMME

1989-1990

13 VAAY VALMIKI AMBEDKAR AWAS YOJANA 2001

14 MPLADP MEMBER OF PARLIAMENT LOCAL AREA DEVELOPMENT PROGRAMME

1993

15 AHIP AFFORDABLE HOUSING IN

PARTNERSHIP(PART OF JNNURM)

2009

16 RAY RAJIV AWAS YOJANA 2010

06. WOMEN EMPOWERMENT PROGRAMMES



113

01 STEPW SUPPORT TO TRAINING AND

EMPLOYMENT PROGRAMME FOR WOMEN

2003-2004

02 RGSEAG RAJIV GANDHI SCHEME FOR

EMPOWERMENT OF ADOLESCENT GIRLS

2010

03 RASHITRIYA MAHILA KOSH – NATIONAL

CREDIT FUND FOR WOMEN

1993

04 IGMSY INDIRA GANDHI MATRITVA SAHYOG

YOJANA

05 SWAYAM SIDDHA 2001

06 SWADHAR 1995

07 STEP SUPP0RT TO TRAINING AND EMPLOYMENT PROGRAMME FOR WOMEN

1986

08 DWCRA DEVELOPMENT OF WOMEN AND

CHILDREN IN RURAL AREAS

1982

09 DHAN LAXMI 2008

10 UJJWALA 2007

11 GBS GENDER BUDGETING SCHEME 2004

12 NMEW NATIONAL MISSION FOR EMPOWERMENT

OF WOMEN

2010

07. EDUCATION ORIENTED PROGRAMMES

01 NPEGEL NATIONAL PROGRAMME FOR EDUCATION

OF GIRLS AT ELEMENTARY LEVEL

2003

02 KGBVS KASTURBA GANDHI BALIKA VIDYALAYAS 2004

03 IEDSS INCLUSIVE EDUCATION FOR THE

DISABLED AT SECONDARY STAGE

2009-2010

04 RMSA SUCCESS

RASHTRIYA MADHYAMIK SHIKSHA ABHIYAAN OR

SCHEME FOR UNIVERSALISATION OF

ACCESS FOR SECONDARY EDUCATION

2009

05 SAAKSHAR BHARAT 2009

08. HEALTH ORIENTED PROGRAMMES

01 NRHM NATIONAL RURAL HEALTH MISSION 2005

02 JSY JANANI SURAKSHA YOJANA 2005

03 PMSSY PRADHAN MANTRY SWASTHYA

SURAKSHA YOJANA

2010



114

09. MAJOR AGRICULTURAL REVOLUTIONS

01 BLACK

REVOLUTION

PETROLEUM PRODUCTION

02 BLUE

REVOLUTION

FISH PRODUCTION

03 BROWN REVOLUTION

LEATHER/NON CONVENTIONAL(INDIA)/COCOA

PRODUCTION

04 GOLDEN FIBRE

REVOLUTION

JUTE PRODUCTION

05 GREEN

REVOLUTION

FOODGRAIN/CEREALS, WHEAT ETC

06 GREY

REVOLUTION

FERTILISER REVOLUTION

07 PINK

REVOLUTION

ONION

PRODUCTION/PHARMACEUTICAL/PRAWN

PRODUCTION

08 RAINBOW

REVOLUTION

HOLISTIC DEVELOPMENT OF

AGRICULTURE SECTOR

09 RED REVOLUTION

MEAT AND TOMATO PRODUCTION

10 ROUND

REVOLUTION

POTATO REVOLUTION

11 SILVER FIBER

REVOLITION

COTTON REVOLUTION

12 SILVER

REVOLUTION

EGG/POULTRY PRODUCTION

13 WHITE

REVOLUTION

MILK/DAIRY PRODUCTION

14 YELLOW

REVOLUTION

OIL SEEDS PRODUCTION

15 EVERGREEN

REVOLUTION

INCREASE IN PRODUCTIVITY AND

PROSPERITY WITHOUT ECOLOGICAL

HARM

10. NAVRATNAS



115

01 BHARAT ELECTRONICS LIMITED

02 BHARAT HEAVY ELECTRICALS LIMITED

03 BHARAT PETROLEUM CORPORATION LIMITED

04 GAS AUTHORITY OF INDIA LIMITED

05 HINDUSTAN AERONAUTICS LIMITED

06 HINDUSTAN PETROLEUM CORPORATION LIMITED

07 MAHANAGAR TELEPHONE NIGAM LIMITED

08 NATIONAL ALUMINUM COMPANY LIMITED

09 NATIONAL MINERAL DEVELOPMENT CORPORATION

10 NEYVELI LIGNITE CORPORATION LIMITED

11 OIL INDIA LIMITED

12 POWER FINANCE CORPORATION LIMITED

13 POWER GRID CORPORATION OF INDIA LIMITED

14 RASHTRIYA ISPAT NIGAM LIMITED

15 RURAL ELECTRIFICATION CORPORATION LIMITED

16 SHIPPING CORPORATION OF INDIA LIMITED

11. FINANCE COMMISSION

FINANCE

COMMISSION

ESTD

ON

CHAIRMAN OPERATIONAL

DURATION

I 1951 K C NYOGI 1952-1957

II 1956 K SANTHANAM 1957-1962

III 1960 A K CHANDA 1962-1966

IV 1964 P V RAJAMANNAR 1966-1969

V 1968 MAHAVEER TYAGI 1969-1974

VI 1972 BRAHMANAND REDDY 1974-1979

VII 1977 J M SHELIET 1979-1984

VIII 1983 Y B CHAVAN 1984-1989

IX 1987 N K P SALVE 1989-1995

X 1992 K C PANT 1995-2000

XI 1998 A M KHUSRO 2000-2005

XII 2003 C RANGARAJAN 2005-2010

XIII 2007 VIJAY L KELKAR 2010-2015

12 . POPULATION TREND IN INDIA



116

01 1891 TO 1921 PERIOD OF STAGNANT POPULATION

02 1921 TO 1951 PERIOD OF STEADY GROWTH

03 1951 TO 1981 PERIOD OF HIGH GROWTH

04 1981 TO 2011 PERIOD OF DECLINING RATE

05 YEAR

1921

THE YEAR OF GREAT DIVIDE

There are two structures of taxes namely – direct tax and indirect

tax

Direct tax are – personal income tax, corporation tax, wealth tax,

gift tax, land revenue, profession tax, stamp duty and registration

charges, securities transaction tax, banking cash transaction tax

Excise tax are – excise duty, custom duty, sales tax, service tax,

value added tax, passenger tax, entertainment tax, electricity

duty, motor vehicles tax Types of planning are – planning by direction, planning by

inducement, financial planning, physical planning, perspective

planning, indicative planning, imperative planning, rolling plan,

core plan.

BUDGET TERMS

01. Appropriation bill is a bill that enables withdrawal of money

from the consolidated fund to pay off expenses. These are instruments

that Parliament clears after the demand for grants has been voted by the Lok Sabha

02. Bank credit includes loans, cash credit and overdrafts and inland

bills and foreign bills purchased and discounted

03. Bill is a draft legislative proposal which becomes an act when

passed by both houses of Parliament and assented to by the President

04. Budget deficit is a part of the fiscal deficit and it represents the

borrowing requirement of the centre



117

05. Budget estimates – The estimates of government spending on

various sectors during the year plus income in the form of tax revenues

06. Capital revenues – Expenses incurred on acquisition of assets

by the government

07. Capital receipts – Include loans raised by center from the market, government borrowings from Reserve Bank of India and

proceeds from disinvestment

08. Consolidated fund – includes all revenues received by

Government, loans raised and receipts from recoveries of loans granted

by it.

09. Consumer Price Index – is a price index covering the prices of

consumer goods

10. Contingency fund – is used by the government in emergencies

to meet unforeseen expenditures, that cannot wait for Parliament

authorization 11. Corporate tax – is levied on the profits of firms, as distinct from

taxation of the incomes of their owners

12. Current account deficit – excess of expenditure over receip0ts

on current account in a country‘s balance of payments

13. Current account surplus – excess or receipts over expenditure

on current account in a country‘s balance of payments

14. Direct taxes – are levied on the consumers directly. These

include income tax, corporate tax and capital gains tax

15. Disposable income – Income minus income tax. This is income available in your hands for expenditure

16. Disinvestment – The dilution or selling of the government stake

(ownership) in public sector undertakings

17. Excise duties – are levied on items manufactured within the

country and are paid by the manufacturers.

18. Finance bill- Government‘s plans for imposing new taxes,

modifying of the existing tax structure or continuing the existing tax

structure beyond the period approved by the Parliament

19. Fiscal deficit – difference between the revenue receipts and

total expenditure 20. Foreign direct investment – is made in India by a company

incorporated abroad, through a branch or a subsidiary company set up

in India

21. Foreign Institutional Investor – an institution established

outside India which proposes to invest in India



118

22. GDP – Total market value of finished goods and services

produced in the country in a given year

23. Gross National Product – GDP plus income of residents from

investments made abroad minus income earned by foreigners in

domestic market 24. Indirect taxes – are charged on goods produced, imported or

exported in the country. These taxes include excise and customs duties

25. Inflation – Inflation rate is the percentage rate of change in the

price level

26. National debt – Total outstanding borrowings of the central

government exchequer

27. Peak rate – the higher rate of customs duty applicable on an

item

28. Per capita income – the national income of a country, or

region, divided by its population 29. Progressive tax structure – a tax structure in which the

marginal tax rate increases as the level of income increases

30. Revenue expenditure – expenses incurred for functioning of

government departments, interest on debt, subsidies etc

31. Revenue receipts – include tax and duties collected by

government and interest and dividend on investments made by

government

32. Revised estimates – difference between budget estimates and

the actual figures pertaining to the economy 33. Sales tax – a tax levied at a percentage of retail sales

34. Vote on account – it is a sort of interim budget where the

government presents accounts required to keep the machinery running

until the next government takes over

35. Wholesale price index – Prices of goods that are dealt with

wholesale (mostly inputs to production, rather than finished

commodities)

UNION BUDGET HIGHLIGHTS

Compliance of Public sector banks with Basel III regulations to be

ensured; Rs. 14000 crore provided in BE 2013-2014 for infusing

capital



119

All branches of Public sector banks to have automated teller machines

by 31.03.2014

Proposal to set up India‘s first women‘s bank as a public sector bank.

Provision of Rs. 1000 crore as initial capital

Foreign investment is imperative in view of the high current account deficit, FII, FDI and ECB are three main sources of CAD financing.

Foreign investment that is consistent with our economic objectives to

be encouraged

Interest subvention scheme for short term crop loans to be continued;

scheme extended for crop loans borrowed from private sector

scheduled commercial banks

Benefits or preferences enjoyed by MSME to continue upto three years

after they grow out of this category

Rs. 6000 crore to Rural Housing Fund in 2013-2014

National Housing Bank to set up Urban Housing Fund A multi pronged approach to increase the penetration of insurance,

both life and general, in the country.

Number of proposals finalized in consultation with Insurance Regulatory

Development Authority such as empowering insurance companies to

open branches in Tier II cities and below without prior approval of

IRDA; KYC of banks to be sufficient to acquire insurance policies,

banks to be permitted to act as insurance brokers, banking

correspondent allowed to sell micro insurance products.

Rashtriya Swasthya Bima Yojana to be extended to other categories such as rikshaw, auto rikshaw and taxi drivers, sanitation workers, rag

pickers and mine workers

A comprehensive social security package to be evolved for unorganized

sector by facilitating convergence among different schemes; Rs. 2000

crore to be provided in the fund in 2013-2014

FIIs will be permitted to participate in the exchange traded currency

derivate segment to the extent of their Indian rupee exposure in India

FIIs will also be permitted to use their investment in corporate bonds

and Government securities as collateral to meet their margin

requirements Small and medium enterprises to be permitted to list on the SME

exchange without being required to make an initial public offer

An ambitious IT driven project to modernize the postal network at a

cost of Rs. 4909 crore. Post offices to become part of the core banking

solution and offer real time banking services.



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Reserve Bank of India issues final guidelines for new bank

licences and the norms are as furnished below

Eligible promoters: Companies, Non Banking Finance Companies and public sector entities

Broking and real estate firms

Promoters need to be financially sound with a track record of 10 years

Positive feedback from other regulators and investigative agencies

crucial

Risk fenced structure:

Promoters must set up banks through wholly owned non operative

financial holding companies

Holding company and bank not permitted to lend or invest in any entity

belonging to the promoter group Shares of holding companies cannot be transferred to entities outside

the promoter group

Shareholding in the bank:

Holding company to hold 40% stake in the bank for five years

Holding company to reduce stake in the bank to 20 % in ten years,

15% in 12 years

Foreign shareholding capped at 49% for five years

Other conditions:

At least 25 percent of new branches must be in unbanked rural centres At least 50 percent of the directors of holding company must be

independent directors

The bank‘s board must have a majority of independent directors

Application process:

Applications for banking licences need to be sent by July 1

RBI to issue in principle approval after considering the

recommendations from a high level advisory committee

The in principle approval will be valid for a year

News in brief

Syndicate Bank had tied up with Maruti Suzuki for financing cars under

Syndvahan scheme

IDBI Bank Limited had tied up with EXIM Bank to co finance, co

arrange syndicate rupee and foreign currency loans; jointly finance



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export oriented projects in India; and provide and avail refinance

facility in Indian rupees and foreign currency for extending short term

export credit and long term Capex loans to eligible export oriented

companies, particulars in the SME sector

HDFC bank in association with Times Internet had a launched a credit card that will enable customers to enjoy discounts as high as 25% in

restaurants and movie halls

ICICI bank has tied up with Aircel and VISA to offer mobile banking

service for its customers across the country.

Mr T S Vijayan took over as the Chairman of the Insurance Regulatory

and Development Authority

What do you mean by Federal Discount Rate ?:

The interest rate set by the Federal Reserve that is offered to eligible

commercial banks or other depository institutions in an attempt to reduce liquidity problems and the pressures of reserve requirements

The discount rate allows the federal reserve to control the supply of

money and is used to assure stability in the financial markets.

A decrease in the discount rate makes it cheaper for commercial banks

to borrow money, which results in an increase in the supply of money

in the economy

Conversely, a raised discount rate will make it more expensive for the

banks to borrow and would thereby decrease the money supply

Funds borrowed from the fed are processed through the discount window and the rate is reviewed every 14 days

What do you mean by Priority sector lending ?:

Some areas or fields in a country depending on its economic condition

or government interest are prioritized and are called priority sectors –

i.e. industry, agriculture.

Banks are directed by RBI that loans must be given on reduced interest

rates with discounts to promote these fields

It means lending to priority sector in such a way to ensure maximum

credit flow to remotest and farthest person of the country by setting

up a strong network and series of financial channels. The main objective of Priority sector lending is providing finance to all those

sectors which are deprived of easy access to finance and credit.

It also includes facilitation of growth via development of healthy

financial system as well as high living standards of poor living below

poverty line



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A Account Agreement:

The contract governing your open-end credit account, it provides information on changes that may occur to the account. Account History: The payment history of an account over a specific period of time, including the number of times the account was past due or over limit. Account Holder: Any and all persons designated and authorized to transact business on behalf of an account. Each account holder's signature needs to be on file with the bank. The

signature authorizes that person to conduct business on behalf of the account. Accrued Interest: Interest that has been earned but not yet paid. Acquiring Bank: In a merger, the bank that absorbs the bank acquired. Adjustable-Rate Mortgages (ARMS):

Also known as variable-rate mortgages. The initial interest rate is usually below that of conventional fixed-rate loans. The interest rate may change over the life of the loan as market conditions change.



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There is typically a maximum (or ceiling) and a minimum (or floor) defined in the loan agreement. If interest rates rise, so does the loan payment. If interest rates fall, the loan payment may as well. Adverse Action: Under the Equal Credit Opportunity Act, a creditor's refusal to grant credit on the terms requested, termination of an existing account, or an unfavorable change in an existing account. Adverse Action Notice: The notice required by the Equal Credit Opportunity Act advising a credit applicant or existing debtor of the denial of their request for credit or advising of a change in terms considered unfavorable to the account holder. Affidavit: A sworn statement in writing before a proper official, such as a notary public. Alteration: Any change involving an erasure or rewriting in the date, amount, or payee of a check or other negotiable instrument. Amortization:

The process of reducing debt through regular installment payments of principal and interest that will result in the payoff of a loan at its maturity. Annual Percentage Rate (APR): The cost of credit on a yearly basis, expressed as a percentage. Annual Percentage Yield (APY): A percentage rate reflecting the total amount of interest paid on a deposit account based on the interest rate and the frequency of compounding for a 365-day year. Annuity:

A life insurance contract sold by insurance companies, brokers, and other financial institutions. It is usually sold as a retirement investment. An annuity is a long-term investment and can have steep surrender charges and penalties for withdrawal before the annuity's maturity date. (Annuities are not FDIC insured.) Application: Under the Equal Credit Opportunity Act (ECOA), an oral or written request for an extension of credit that is made in accordance with the procedures established by a creditor for the type of credit requested.



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Appraisal: The act of evaluating and setting the value of a specific piece of personal or real property. Authorization: The issuance of approval, by a credit card issuer, merchant, or other affiliate, to complete a credit card transaction. Automated Clearing House (ACH): A computerized facility used by member depository institutions to electronically combine, sort, and distribute inter-bank credits and debits. ACHs process electronic transfers of government securities and provided customer services, such as direct deposit of customers' salaries and government benefit payments (i.e., social security, welfare, and veterans' entitlements), and preauthorized transfers. Automated Teller Machine (ATM):

A machine, activated by a magnetically encoded card or other medium, that can process a variety of banking transactions. These include accepting deposits and loan payments, providing withdrawals, and transferring funds between accounts. Automatically Protected:

As of May 1, 2011, up to two months of Federal benefits such as Social Security benefits, Supplemental Security Income benefits, Veteran‘s benefits, Railroad Retirement benefits, and benefits from the Office of Personnel Management that are direct deposited to an account may be protected from garnishment. The amount automatically protected will depend upon the balance of the account on the day of review. Automatic Bill Payment: A checkless system for paying recurring bills with one authorization statement to a financial institution. For example, the customer would only have to provide one authorization form/letter/document to pay the cable bill each month. The necessary debits and credits are made through an Automated Clearing House (ACH). Availability Date:

Bank's policy as to when funds deposited into an account will be available for withdrawal. Availability Policy: Bank's policy as to when funds deposited into an account will be available for withdrawal.



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Available Balance: The balance of an account less any hold, uncollected funds, and restrictions against the account. Available Credit: The difference between the credit limit assigned to a cardholder account and the present balance of the account. B Balance Transfer: The process of moving an outstanding balance from one credit card to another. This is usually done to obtain a lower interest rate on the outstanding balance. Transfers are sometimes subjected to a Balance Transfer Fee. Bank Custodian: A bank custodian is responsible for maintaining the safety of clients' assets held at one

of the custodian's premises, a sub-custodian facility or an outside depository. Bank Examination: Examination of a bank's assets, income, and expenses-as well as operations by representatives of Federal and State bank supervisory authority-to ensure that the bank is solvent and is operating in conformity with banking laws and sound banking principles. Bank Statement:

Periodically the bank provides a statement of a customer's deposit account. It shows all deposits made, all checks paid, and other debits posted during the period (usually one month), as well as the current balance. Banking Day: A business day during which an office of a bank is open to the public for substantially all of its banking functions. Bankrupt: A bankrupt person, firm, or corporation has insufficient assets to cover their debts. The

debtor seeks relief through a court proceeding to work out a payment schedule or erase debts. In some cases, the debtor must surrender control of all assets to a court-appointed trustee. Bankruptcy:



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The legal proceedings by which the affairs of a bankrupt person are turned over to a trustee or receiver for administration under the bankruptcy laws. There are two types of bankruptcy:

Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having the debtor declared bankrupt.

Voluntary bankruptcy-the debtor files a petition claiming inability to meet financial obligations and willingness to be declared bankrupt.

Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Billing Cycle:

The time interval between the dates on which regular periodic statements are issued. Billing Date: The month, date, and year when a periodic or monthly statement is generated. Calculations have been performed for appropriate finance charges, minimum payment due, and new balance. Billing Error: A charge that appears on a periodic statement associated with an extension of credit (e.g., credit card) that

was not authorized by the cardholder or the cardholders' designee, is not properly identified, and was not accepted by the cardholder or the cardholder's designee.

A billing error can also be caused by a creditor's failure to credit a payment or other credit to an account as well as accounting and clerical errors. Bond, U.S. Savings: Savings bonds are issued in face value denominations by the U.S. Government in denominations ranging from $50 to $10,000. They are typically long-term, low-risk investment tools. Business Day: Any day on which offices of a bank are open to the public for carrying on substantially all of the bank's business. C Canceled Check : A check that a bank has paid, charged to the account holder's account, and then endorsed. Once canceled, a check is no longer negotiable.



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Cashier's Check: A check drawn on the funds of the bank, not against the funds in a depositor's account. However, the depositor paid for the cashier's check with funds from their account. The primary benefit of a cashier's check is that the recipient of the check is assured that the funds are available. Cease and Desist Letter:

A letter requesting that a company stops the activity mentioned in the letter. Certificate of Deposit: A negotiable instrument issued by a bank in exchange for funds, usually bearing interest, deposited with the bank. Certificate of Release: A certificate signed by a lender indicating that a mortgage has been fully paid and all debts satisfied. Certified Check: A personal check drawn by an individual that is certified (guaranteed) to be good. The face of the check bears the words "certified" or "accepted," and is signed by an official of the bank or thrift institution issuing the check. The signature signifies that

the signature of the drawer is genuine, and sufficient funds are on deposit and earmarked for payment of the check.

Charge-off: The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt. Check: A written order instructing a financial institution to pay immediately on demand a specified amount of money from the check writer's account to the person named on the check or, if a specific person is not named, to whoever bears the check to the institution for payment. Check 21 Act:

Check 21 is a Federal law that is designed to enable banks to handle more checks electronically, which is intended to make check processing faster and more efficient. Check 21 is the short name for the Check Clearing for the 21st Century Act, which went into effect on October 28, 2004. Check Truncation:



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The conversion of data on a check into an electronic image after a check enters the processing system. Check truncation eliminates the need to return canceled checks to customers. Checking Account: A demand deposit account subject to withdrawal of funds by check. ChexSystems:

The ChexSystems, Inc. network is comprised of member financial institutions that regularly contribute information on mishandled checking and savings accounts to a central location. ChexSystems shares this information among member institutions to help them assess the risk of opening new accounts. ChexSystems only shares information with the member institutions; it does not decide on new account openings. Generally, information remains on ChexSystems for five years. Closed-End Credit :

Generally, any credit sale agreement in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date. Most real estate and automobile loans are closed-end agreements. Closed-End Loan:

Generally, any loan in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date. Most real estate and automobile loans are closed-end agreements. Closing a Mortgage Loan:

The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are then disbursed by the lender. Closing Costs:

The expenses incurred by sellers and buyers in transferring ownership in real property. The costs of closing may include the origination fee, discount points, attorneys' fees, loan fees, title search and insurance, survey charge, recordation fees, and the credit report charge. Collateral: Assets that are offered to secure a loan or other credit. For example, if you get a real estate mortgage, the bank's collateral is typically your house. Collateral becomes subject to seizure on default.



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Collected Funds: Cash deposits or checks that have been presented for payment and for which payment has been received. Collection Agency: A company hired by a creditor to collect a debt that is owed. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, usually through letters and telephone calls. Collection Items: Items-such as drafts, notes, and acceptances-received for collection and credited to a depositor's account after payment has been received. Collection items are usually subject to special instructions and may involve additional fees. Most banks impose a special fee, called a collection charge, for handling collection items. Collective Investment Funds (CIFs): A Collective Investment Fund (CIF) is a trust created and administered by a bank or trust company that commingles assets from multiple clients. The Federal securities laws generally require entities that pool securities to register those pooled vehicles (such as mutual funds) with the SEC. However, Congress created exemptions from these registration requirements for CIFs so long as the entity offering these funds is a bank or other authorized entity and so long as participation in the fund is restricted to only those customers covered by the exemption. If these limitations are met, CIFs are exempt from SEC registration and reporting requirements. Co-Maker: A person who signs a note to guarantee a loan made to another person and is jointly liable with the maker for repayment of the loan. (Also known as a Co-signer.) Community Reinvestment Act: The Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. It was enacted by the Congress in 1977. Consumer Credit Counseling Service: A service which specializes in working with consumers who are overextended with debts and need to make arrangements with creditors. Consumer Reporting Agency: An agency that regularly collects or evaluates individual consumer credit information or other information about consumers and sells consumer reports for a fee to creditors or



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others. Typical clients include banks, mortgage lenders, credit card companies, and other financing companies. Conventional Fixed Rate Mortgage: A fixed-rate mortgage offers you a set interest rate and payments that do not change throughout the life, or "term," of the loan. A conventional fixed-rate loan is fully paid off over a given number of years-usually 15, 20, or 30. A portion of each monthly payment goes towards paying back the money borrowed, the "principal"; the rest is "interest." Co-Signer: An individual who signs the note of another person as support for the credit of the primary signer and who becomes responsible for the obligation. (Also known as a Co-maker.) Credit Application: A form to be completed by an applicant for a credit account, giving sufficient details (residence, employment, income, and existing debt) to allow the seller to establish the applicant's creditworthiness. Sometimes, an application fee is charged to cover the cost of loan processing. Credit Bureau:

An agency that collects individual credit information and sells it for a fee to creditors so they can make a decision on granting loans. Typical clients include banks, mortgage lenders, credit card companies, and other financing companies. Also commonly referred to as a consumer reporting agency or a credit reporting agency. Credit Card Account Agreement: A written agreement that explains the

terms and conditions of the account, credit usage and payment by the cardholder, and duties and responsibilities of the card issuer.

Credit Card Issuer: Any financial institution that issues bank cards to those who apply for them. Credit Disability Insurance: A type of insurance, also known as accident and health insurance, that makes payments on the loan if you become ill or injured and cannot work. Credit Life Insurance:



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A type of life insurance that helps repay a loan if you should die before the loan is fully repaid. This is optional coverage. Credit Limit: The maximum amount of credit that is available on a credit card or other line of credit account. Credit Repair Organization:

A person or organization that sells, provides, performs, or assists in improving a consumer's credit record, credit history or credit rating (or says that that they will do so) in exchange for a fee or other payment. It also includes a person or organization that provides advice or assistance about how to improve a consumer's credit record, credit history or credit rating. There are some important exceptions to this definition, including many non-profit organizations and the creditor that is owed the debt. Credit Report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. Credit Score:

A number, roughly between 300 and 800, that measures an individual's credit worthiness. The most well-known type of credit score is the FICO® score. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in your credit report. Banks use a credit score to help determine whether you qualify for a particular credit card, loan, or service. Cut-Off Time: A time of day established by a bank for receipt of deposits. After the cut-off time, deposits are considered received on the next banking day. D Debit:

A debit may be an account entry representing money you owe a lender or money that has been taken from your deposit account. Debit Card: A debit card allows the account owner to access their funds electronically. Debit cards may be used to obtain cash from automated teller machines or purchase goods or services using point-of-sale systems. The use of a debit card involves immediate debiting and crediting of consumers' accounts.



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Debt Collector: Any person who regularly collects debts owed to others. Debt Elimination Scheme: A debt elimination scheme is a plan that is advertised as a way for an individual to eliminate various types of debt simply by paying someone a small fee compared to the amount of debt to be eliminated. These schemes are fraudulent. As a result of using a fraudulent scheme, individuals will lose money, could lose property, will damage their credit rating, and possibly incur additional debt. In addition, a creditor may take legal action against an individual to resolve a fraudulent attempt to eliminate debt. It is also possible for the victim to have identify theft occur by participating in such a fraudulent scheme. Debtor: Someone who owes monies to another party. Debt-to-Income Ratio (DTI):

The percentage of a consumer's monthly gross income that goes toward paying debts. Generally, the higher the ratio, the higher the perceived risk. Loans with higher risk are generally priced at a higher interest rate. Decedent:

A deceased person, ordinarily used with respect to one who has died recently. Deferred Payment: A payment postponed until a future date. Delinquency: A debt that was not paid when due. Demand Deposit: A deposit of funds that can be withdrawn without any advance notice. Deposit Slip: An itemized memorandum of the cash and other funds that a customer presents to the bank for credit to his or her account. Derogatory Information: Data received by a creditor indicating that a credit applicant has not paid his or her accounts with other creditors according to the required terms. Direct Deposit:



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A payment that is electronically deposited into an individual's account at a depository institution. Direct Dispute: A dispute submitted directly to the furnisher about the accuracy of information in your consumer report that relates to an account or other relationship you have with the furnisher. Disclosures: Certain information that Federal and State laws require creditors to give to borrowers relative to the terms of the credit extended. Draft:

A signed, written order by which one party (the drawer) instructs another party (the drawee) to pay a specified sum to a third party (the payee), at sight or at a specific date. Typical bank drafts are negotiable instruments and are similar in many ways to checks. Drawee: The person (or bank) who is expected to pay a check or draft when it is presented for payment. Drawee bank: The bank upon which a check is drawn. Drawer: The person who writes a check or draft instructing the drawee to pay someone else. E Electronic Banking: A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution's Web site on the Internet. (This is also known as Internet or online banking.) Electronic Check Conversion: Electronic check conversion is a process in which your check is used as a source of information-for the check number, your account number, and the number that identifies your financial institution. The information is then used to make a one-time electronic payment from your account-an electronic fund transfer. The check itself is not the method of payment. Electronic Funds Transfer (EFT):



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The transfer of money between accounts by consumer electronic systems-such as automated teller machines (ATMs) and electronic payment of bills-rather than by check or cash. (Wire transfers, checks, drafts, and paper instruments do not fall into this category.) Embezzlement: In most States, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. Encoding: The process used to imprint or inscribe MICR characters on checks, deposits, and other financial instruments. [Magnetic Ink Character Recognition (MICR) is a character-recognition technology adopted mainly by the banking industry to facilitate the processing of checks. Each check in encoded at the bottom with the dollar amount of the check. If that information is entered incorrectly, there is an encoding error.] Enforcement Action: A regulatory tool that the OCC may use to correct problems or effect change in a national bank. Equal Credit Opportunity Act (ECOA):

Prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, or because an applicant receives income from a public assistance program. Error Resolution:

The required process for resolving errors involving electronic transfers to and from deposit accounts. Escheat: Reversion of real or personal property to the State when 1) a person dies without leaving a will and has no heirs, or 2) when the property (such as a bank account) has been inactive for a certain period of time. Escrow:

A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions-or until obligations have been fulfilled. Securities, funds, and other assets can be held in escrow. Escrow Analysis:



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The periodic examination of escrow accounts by a mortgage company to verify that monthly deposits are sufficient to pay taxes, insurance, and other escrow-related items on when due. Escrow Funds: Funds held in reserve by a mortgage company to pay taxes, insurance, and other mortgage-related items when due. Estate Account: An account held in the name of a decedent that is administered by an executor or administrator of the estate. Exception Hold:

A period of time that allows the banks to exceed the maximum hold periods defined in the Expedited Funds Availability Act. F Fair and Accurate Credit Transactions Act of 2003 (FACT Act or FACTA): The purpose of this Act is to help consumers protect their credit identities and recover from identity theft. One of the key provisions of this Act is that consumers can request and obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies (Equifax, Experian, and TransUnion). AnnualCreditReport.com provides consumers with the secure means to request their free credit report. Fair Credit Reporting Act (FCRA):

A Federal law, established in 1971 and revised in 1997, that gives consumers the right to see their credit records and correct any mistakes. The FCRA regulates consumer credit reporting and related industries to ensure that consumer information is reported in an accurate, timely, and complete manner. The Act was amended to address the sharing of consumer information with affiliates. Fair Debt Collection Practices Act (FDCPA): The Fair Debt Collection Practices Act is a set of United States statutes added as Title VIII of the Consumer Credit Protection Act. Its purpose is to ensure ethical practices in the collection of consumer debts and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy. It is often used in conjunction with the Fair Credit Reporting Act. Federal Deposit Insurance Corporation (FDIC):


http://www.annualcreditreport.com/


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A government corporation that insures the deposits of all national and State banks that are members of the Federal Reserve System. Federal Emergency Management Agency (FEMA): Federal agency responsible for the emergency evaluation and response to all disasters, natural and man-made. FEMA oversees the administration of flood insurance programs and the designation of certain areas as flood prone. Federal Reserve System: The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. You can divide the Federal Reserve's duties into four general areas:

Conducting monetary policy Regulating banking institutions and protecting the credit rights of consumers Maintaining the stability of the financial system Providing financial services to the U.S. government

Fiduciary:

Undertaking to act as executor, administrator, guardian, conservator, or trustee for a family trust, authorized trust, or testamentary trust, or receiver or trustee in bankruptcy. Finance Charge: The total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge. Financial Regulatory Agency: An organization authorized by statute for ensuring the safe and sound operation of financial institutions chartered to conduct business under that agency's jurisdiction. The primary regulators are the following:

OCC (Office of the Comptroller of the Currency) FDIC (Federal Deposit Insurance Corporation) FRB (Federal Reserve Board) NCUA (National Credit Union Administration) State regulatory agencies

First Mortgage: A real estate loan which is in a first lien position, taking priority over all other liens. In case of a foreclosure, the first mortgage will be repaid before any other mortgages. Fixed Rate Loan:



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The interest rate and the payment remain the same over the life of the loan. The consumer makes equal monthly payments of principal and interest until the debt is paid in full. Fixed Rate Mortgage: A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change. Float: 1) The amount of uncollected funds represented by checks in the possession of one bank but drawn on other banks. 2) The time that elapses between the day a check is deposited and the day it is presented for payment to the financial institution on which it is drawn. Flood Insurance: Flood insurance protects against water from an overflowing river or a hurricane's tidal surge and also covers damage from water that builds up during storms. Flood Plain: A strip of relatively flat and normally dry land alongside a stream, river, or lake that is covered by water during a flood. Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Foreign Transaction Fees:

A fee assessed by your bank for making a transaction at another bank's ATM. Forged Check: A check on which the drawer's signature has been forged. Forgery:

The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Fraud Alert: A key provision of the Fair and Accurate Credit Transactions Act of 2003 is the consumer's ability to place a fraud alert on their credit record. A consumer would use this option if they believe they were a victim of identity theft. The alert requires any creditor that is asked to extend credit to contact the consumer by phone and verify that the credit application was not made by an identity thief.



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Freedom of Information Act (FOIA): A Federal law that mandates that all the records created and kept by Federal agencies in the executive branch of government must be open for public inspection and copying. The only exceptions are those records that fall into one of nine exempted categories listed in the statute. Frozen Account:

An account on which funds may not be withdrawn until a lien is satisfied and a court order or other legal process makes the account available for withdrawal (e.g., the account of a deceased person is frozen pending a court order distributing the funds to the new lawful owners). An account may also be frozen when there is a dispute regarding the true ownership of an account. The bank will freeze the account to preserve the existing funds until legal action can determine the lawful owner. Furnisher:

An entity that provides information about a consumer to a consumer reporting agency for inclusion in a consumer report. G Garnishment/Garnish:

A legal process that allows a creditor to remove funds from your bank account to satisfy a debt that you have not paid. If you owe money to a person or company, they can obtain a court order directing your bank to take money out of your account to pay off your debt. Guaranteed Student Loan: An extension of credit from a financial institution that is guaranteed by a Federal or State government entity to assist with tuition and other educational expenses. The government entity is responsible for paying the interest on the loan and paying the lender to manage it. The government entity also is responsible for the loan if the student defaults. Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. H Hold: Used to indicate that a certain amount of a customer's balance may not be withdrawn until an item has been collected, or until a specific check or debit is posted.



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Home Equity Line of Credit (HELOC): A line of credit secured by the equity in a consumer's home. It can be used for home improvements, debt consolidation, and other major purchases. Interest paid on the loan is generally tax deductible (consult a tax advisor to be sure). The funds may be accessed by writing checks against the line of credit or by getting a cash advance. Home Equity Loan:

A home equity loan allows you to tap into your home's built-up equity, which is the difference between the amount that your home could be sold for and the amount that you still owe. Homeowners often use a home-equity loan for home improvements, to pay for a new car, or to finance their child's college education. The interest paid is usually tax-deductible. Because the loan is secured by your home's equity, if you default, the bank may foreclose on your house and take ownership of it. This type of loan is sometimes referred to as a second mortgage or borrowing against your home. I Inactive Account: An account that has little or no activity; neither deposits nor withdrawals having been posted to the account for a significant period of time. Index-linked Certificate of Deposit: An index-linked CD is a deposit obligation of the issuing bank and is often sold through bank branches and affiliated and unaffiliated brokers. Index-linked CDs provide the investor the ability to participate in the appreciation, if any, of a particular index, during the term of the CD. Index-linked CDs may have complicated payout structures and may not be suitable or appropriate for all investors. Investors should carefully review the investment risk considerations detailed in the relevant offering documents and disclosure statements. Index-linked CDs are not securities and are not registered under securities laws. Individual Account: An account in the name of one individual. Individual Retirement Account (IRA): A retirement savings program for individuals to which yearly tax-deductible contributions up to a specified limit can be made. The amount contributed is not taxed until withdrawn. Withdrawal is not permitted without penalty until the individual reaches age 59 1/2.



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Insufficient Funds: When a depositor's checking account balance is inadequate to pay a check presented for payment. Insurance (Hazard): Insurance to protect the homeowner and the lender against physical damage to a property from sources such as but not limited to fire, wind, or vandalism. Insured Deposits: Deposits held in financial institutions that are guaranteed by the Federal Deposit Insurance Corporation (FDIC) against loss due to bank failure. Interest: The term interest is used to describe the cost of using money, a right, share, or title in property. Interest Rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Interest Rate Index: IA table of yields or interest rates being paid on debt that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans. J Joint Account: An account owned by two or more persons. Either party can conduct transactions separately or together as set forth in the deposit account contract. K Kiting: Writing a check in an amount that will overdraw the account but making up the deficiency by depositing another check on another bank. For example, mailing a check for the mortgage when your checking account has insufficient funds to cover the check, but counting on receiving and depositing your paycheck before the mortgage company presents the check for payment. L Late Charge:



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The fee charged for delinquent payment on an installment loan, usually expressed as a percentage of the loan balance or payment. Also, a penalty imposed by a card issuer against a cardholder's account for failing to make minimum payments. Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Lender: An individual or financial institution that lends money with the expectation that the money will be returned with interest. Lien:

Legal claim against a property. Once the property is sold, the lien holder is then paid the amount that is owed. Line of Credit:

A pre-approved loan authorization with a specific borrowing limit based on creditworthiness. A line of credit allows borrowers to obtain a number of loans without re-applying each time as long as the total of borrowed funds does not exceed the credit limit. Loan-to-Value Ratio (LTV): The ratio of the loan principal (amount borrowed) to the appraised value (selling price). For example, on a $100,000 home, with a mortgage loan principal of $80,000, the loan-to-value ratio is 80 percent. The LTV will affect programs available to the borrower; generally, the lower the LTV, the more favorable the program terms offered by lenders. Loan Contract: The written agreement between a borrower and a lender in which the terms and conditions of the loan are set. Loan Fee: A fee charged by a lender to make a loan (in addition to the interest charged to the borrower).

Loan Modification Provision: A contractual agreement in a loan that allows the borrower or lender to permanently change one or more of the terms of the original contract. Loan Proceeds:



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The net amount of funds that a lending institution disburses under the terms of a loan, and which the borrower then owes. Local Check:

A check payable by, at, or through a bank in the same check processing region as the location of the branch of the depository bank. The depository bank is the bank into which the check was deposited. As of February 27, 2010, the Federal Reserve consolidated its checking processing centers into one processing center. Therefore, all checks are now considered local. M Manufactured (mobile) home: A structure, built on a permanent chassis, transported to a site in one or more sections, and affixed to a permanent foundation. The term does not include recreational vehicles. Maturity:

The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable. Media: Any organization in the business of informing the public with news or commentary. The various forms of media include print, television, internet, and radio. Minimum Balance: The amount of money required to be on deposit in an account to qualify the depositor for special services or to waive a service charge. Minimum Payment:

The minimum dollar amount that must be paid each month on a loan, line of credit, or other debt. Missing Payment: A payment that has been made but not credited to the appropriate account. Mobile home:To be eligible for coverage under the National Flood Insurance Program,

a mobile home must be on a permanent foundation and meet specific anchoring requirements for it location. See manufactured (mobile) home. Money Market Deposit Account: A savings account that offers a higher rate of interest in exchange for larger than normal deposits. Insured by the FDIC, these accounts have limits on the number of



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transactions allowed and may require higher balances to receive the higher rate of interest. Money Market Fund: An open-ended mutual fund that invests in short-term debts and monetary instruments such as Treasury bills and pays money market rates of interest. Money market funds usually offer checkwriting privileges. They are not insured by the FDIC. Mortgage: A debt instrument used in a real estate transaction where the property is the collateral for the loan. A mortgage gives the lender a right to take possession of the property if the borrower fails to pay off the loan. Mortgage Loan: A loan made by a lender to a borrower for the financing of real property. Mortgagee:

The lender in a mortgage loan relationship. Mortgagor: The borrower in a mortgage loan relationship. (Property is used as collateral to make payment.) Mutual Fund: A fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities, or money market securities. These funds offer investors the advantages of diversification and professional management. To participate, the investor may pay fees and expenses. (Mutual funds are not covered by FDIC insurance.) N National Bank:

A bank that is subject to the supervision of the Comptroller of the Currency. The Office of the Comptroller of the Currency is a bureau of the U.S. Treasury Department. A national bank can be recognized because it must have "national" or "national association" in its name. National Bank Examiner: An employee of the Comptroller of the Currency whose function is to examine national banks periodically to determine the financial position of a bank and the security of its deposits. The examiner also verifies that the bank maintains procedures consistent with Federal banking laws and regulations.



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National Credit Union Administration (NCUA): The Federal regulatory agency that charters and supervises Federal credit unions. (NCUA also administers the National Credit Union Share Insurance Fund, which insures the deposits of Federal credit unions.) National Flood Insurance Program (NFIP):

The program of flood insurance coverage and floodplain management administered under the Flood Disaster Protection Act (FDPA or Act) and applicable Federal regulations found in Title 44 of the Code of Federal Regulations, Subchapter B. Negotiable Order of Withdrawal Account (NOW): A savings account from which withdrawals can be made by negotiable orders of withdrawal (functional equivalent of checks). This is an interest-bearing account for which the bank must reserve the right to require the depositor to provide at least seven days notice of his/her intent to withdraw funds. Not Automatically Protected: There are several types of Federal benefits that are not automatically protected under 31CFR 212: Federal benefits received by check rather than direct deposit; Federal benefits received more than two months before the bank received the garnishment order or Federal benefits that were transferred to another bank account. The benefits may be exempt from garnishment but you will have to alert the court or creditor. O Official Check: A check drawn on a bank and signed by an authorized bank official. (Also known as a cashier's check.) Offset, Right of: Banks' legal right to seize funds that a guarantor or debtor may have on deposit to cover a loan in default. It is also known as right of setoff Online Banking: A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution's web site on the Internet. (This is also known as Internet or electronic banking.) Open-End Credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only



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billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or revolving credit.) Operating Subsidiary: National banks conduct some of their banking activities through companies called operating subsidiaries. These subsidiaries are companies that are owned or controlled by a national bank and that, among other things, offer banking products and services such as loans, mortgages, and leases. The Office of the Comptroller of the Currency supervises and regulates the activities of many of these operating subsidiaries. Outstanding Check: A check written by a depositor that has not yet been presented for payment to or paid by the depositor's bank. Overdraft: When the amount of money withdrawn from a bank account is greater than the amount actually available in the account, the excess is known as an overdraft, and the account is said to be overdrawn. Overdraw: To write a check for an amount that exceeds the amount on deposit in the account. Overlimit: An open-end credit account in which the assigned dollar limit has been exceeded. P Participating Community: A community for which the Federal Emergency Management Agency (FEMA) has authorized the sale of flood insurance under the National Flood Insurance Program (NFIP). Passbook:

A book in ledger form in which are recorded all deposits, withdrawals, and earnings of a customer's savings account. Past Due Item : Any note or other time instrument of indebtedness that has not been paid on the due date. Payday Loans:



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A small-dollar, short-term loan that a borrower promises to repay out of their next paycheck or deposit of funds. Payee: The person or organization to whom a check, draft, or note is made payable. Paying (Payor) Bank :

A bank upon which a check is drawn and that pays a check or other draft. Payment Due Date: The date on which a loan or installment payment is due. It is set by a financial institution. Any payment received after this date is considered late; fees and penalties can be assessed. Payoff: The complete repayment of a loan, including principal, interest, and any other amounts due. Payoff occurs either over the full term of the loan or through prepayments. Payoff Statement: A formal statement prepared when a loan payoff is contemplated. It shows the current status of the loan account, all sums due, and the daily rate of interest. Payor: The person or organization who pays. Periodic Rate: The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day. Periodic Statement: The billing summary produced and mailed at specified intervals, usually monthly. Personal Identification Number (PIN): Generally a four-character number or word, the PIN is the secret code given to credit or debit cardholders enabling them to access their accounts. The code is either randomly assigned by the bank or selected by the customer. It is intended to prevent unauthorized use of the card while accessing a financial service terminal. PITI: Common acronym for principal, interest, taxes, and insurance—used when describing the monthly charges on a mortgage.



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Point of Sale (POS): 1) The location at which a transaction takes place. 2) Systems that allow bank customers to effect transfers of funds from their deposit accounts and other financial transactions at retail establishments. Power of Attorney:

A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Some institutions require that you use the bank's power of attorney forms. (The bank may refer to this as a Durable Power of Attorney: The principal grants specific rights to the agent.) Preauthorized Electronic Fund Transfers: An EFT authorized in advance to recur at substantially regular intervals. Preauthorized Payment: A system established by a written agreement under which a financial institution is authorized by the customer to debit the customer's account in order to pay bills or make loan payments. Preferred Risk Policy (PRP): A policy that offers fixed combinations of building/contents coverage or contents-only coverage at modest, fixed premiums. The PRP generally is available for property located in B, C, and X Zones in Regular Program Communities that meets eligibility requirements based on the property‘s flood loss history. Prepayment: The payment of a debt before it actually becomes due. Prepayment Clause:

A clause in a mortgage allowing the mortgagor to pay off part or all of the unpaid debt before it becomes due. Prepayment Penalty: A penalty imposed on a borrower for repaying the loan before its due date. (In the case of a mortgage, this applies when there is not a prepayment clause in the mortgage note to offset the penalty.) Previous Balance:



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The cardholder's account balance as of the previous billing statement. Principal Balance:

The outstanding balance on a loan, excluding interest and fees. Private Mortgage Insurance (PMI): Insurance offered by a private insurance company that protects the bank against loss on a defaulted mortgage up to the limit of the policy (usually 20 to 25 percent of the loan amount). PMI is usually limited to loans with a high loan-to-value (LTV) ratio. The borrower pays the premium. Q R Real Estate Settlement Procedures Act (RESPA): Federal law that, among other things, requires lenders to provide "good faith" estimates of settlement costs and make other disclosures regarding the mortgage loan. RESPA also limits the amount of funds held in escrow for real estate taxes and insurance. Reconciliation: The process of analyzing two related records and, if differences exist between them, finding the cause and bringing the two records into agreement. Example: Comparing an up-to-date check book with a monthly statement from the financial institution holding the account. Redlining: The alleged practice of certain lending institutions of not making mortgage, home improvement, and small business loans in certain neighborhoods-usually areas that are deteriorating or considered by the lender to be poor investments. Refinancing: A way of obtaining a better interest rate, lower monthly payments, or borrow cash on the equity in a property that has built up on a loan. A second loan is taken out to pay off the first, higher-rate loan. Refund: An amount paid back because of an overpayment or because of the return of an item previously sold. Regular Program Community: A community wherein a Flood Insurance Rate Map is in effect and full limits of coverage are available under the Flood Disaster Protection Act (FDPA or Act).



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Release of Lien: To free a piece of real estate from a mortgage. Renewal: A form of extending an unpaid loan in which the borrower's remaining unpaid loan balance is carried over (renewed) into a new loan at the beginning of the next financing period. Residual Interest: Interest that continues to accrue on your credit card balance from the statement cycle date until the bank receives your payment. For example, if your statement cycle date was January 10 and the bank received your payment on January 20, there were ten days for which interest accrued. This amount will be posted on your next statement. Return Item: A negotiable instrument—principally a check—that has been sent to one bank for collection and payment and is returned unpaid by the sending bank. Reverse Mortgage:

A reverse mortgage is a special home loan product that allows a homeowner aged 62 or older the ability to access the equity that has accumulated in their home. The home itself will be the source of repayment. The loan is underwritten based on the value of the collateral (home) and the life expectancy of the borrower. The loan must be repaid when you die, sell your home, or no longer live there as your principal residence. Revolving Credit:

A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or open-end credit.) Right of Offset:

Banks' legal right to seize funds that a guarantor or debtor may have on deposit to cover a loan in default. It is also known as the right of set-off. Right of Rescission: Right to cancel, within three business days, a contract that uses the home of a person as collateral, except in the case of a first mortgage loan. There is no fee to the borrower, who receives a full refund of all fees paid. The right of rescission is guaranteed by the Truth in Lending Act (TILA).



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S Safe (or Safety) Deposit Box: A type of safe usually located in groups inside a bank vault and rented to customers for their use in storing valuable items. Safekeeping: A service provided by banks where securities and valuables are protected in the vaults of the bank for customers. Satisfaction of Mortgage: A document issued by a mortgagee (the lender) when a mortgage is paid in full. Service Charge:

A charge assessed by a depository institution for processing transactions and maintaining accounts. Signature Card:

A card signed by each depositor and customer of a bank which may be used as a means of identification. The signature card represents a contract between the bank and the depositor. Special Flood Hazard Area (SFHA):

An area defined on a Flood Insurance Rate Map with an associated risk of flooding. Stale-Dated Check: Presented to the paying bank 180 days (6 months) or more after the original issue date. Banks are not required by the Uniform Commercial Code to honor stale-dated checks and can return them to the issuing bank unpaid. The maker of a check can discourage late presentment by writing the words "not good after X days" on the back of the check. State Bank:

A bank that is organized under the laws of a State and chartered by that State to conduct the business of banking. State Banking Department:

The organization in each State that supervises the operations and affairs of State banks. Statement: A summary of all transactions that occurred over the preceding month and could be associated with a deposit account or a credit card account.



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Stop Payment: An order not to pay a check that has been issued but not yet cashed. If requested soon enough, the check will not be debited from the payer's account. Most banks charge a fee for this service. Student Loan:

Loans made, insured, or guaranteed under any program authorized by the Higher Education Act. Loan funds are used by the borrower for education purposes. Substitute Check: A substitute check is a paper copy of the front and back of the original check. A substitute check is slightly larger than a standard personal check so that it can contain a picture of your original check. A substitute check is legally the same as the original check if it accurately represents the information on the original check and includes the following statement: "This is a legal copy of your check. You can use it the same way you would use the original check." The substitute check must also have been handled by a bank. Substitute checks were created under Check 21, the Check Clearing for the 21st Century Act, which became effective on October 28, 2004. T Terms: The period of time and the interest rate arranged between creditor and debtor to repay a loan. Time Certificate of Deposit:

A time deposit evidenced by a negotiable or nonnegotiable instrument specifying an amount and maturity. Time Deposit: A time deposit (also known as a term deposit) is a money deposit at a bank that cannot be withdrawn for a certain "term" or period of time. When the term is over it can be withdrawn, or it can be held for another term. The longer the term, the better the yield on the money. Generally, there are significant penalties for early withdrawal. Trust Account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Trust Administrator:

A person or institution that manages trust accounts.



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Truth in Lending Act (TILA): The Truth in Lending Act is a Federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. In general, lenders must provide information on

what credit will cost the borrowers, when charges will be imposed, and what the borrower's rights are as a consumer.

U Uncollected Funds: A portion of a deposit balance that has not yet been collected by the depository bank. Uniform Commercial Code (UCC): A set of statutes enacted by the various States to provide consistency among the States' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Uniform Gift to Minors Account: A UGMA provides a child under the age of 18 (a minor) with a way to own investments. The money is in the minor's name, but the custodian (usually the parent) has the responsibility to handle the money in a prudent manner for the minor's benefit. The parent cannot withdraw the money to use for his or her own needs. Usury: Charging an illegally high interest rate on a loan. Usury Rates: The maximum rate of interest lenders may charge borrowers. The usury rate is generally set by State law. V Variable Rate:

Any interest rate or dividend that changes on a periodic basis. W Wire Transfer: A transfer of funds from one point to another by wire or network such the Federal Reserve Wire Network (also known as FedWire).



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BANK INTERVIEW QUESTIONs 1. What is Balance of Trade?

The value of a country‘s exports minus the value of its imports. Unless

specified as the balance of merchandise trade, it normally incorporates trade

in services, including earnings (interest, dividends, etc.) on financial assets.

2. What is Balanced Trade?

When A balance of trade equal to zero. (exports-imports=0)

3. What is Balance of merchandise trade?

The value of a country‘s merchandise exports minus the value of its

merchandise imports.

4. What is a favorable balance of trade?

It is the difference between exports and imports. Debit items include imports,

foreign aid, domestic spending abroad and domestic investments abroad.

Credit items include exports, foreign spending in the domestic economy and

foreign investments in the domestic economy. A country has a trade deficit if

it imports more than it exports; the opposite scenario is a trade surplus.

5. What is Balance of Payments?

A list, or accounting, of all of a country‘s international transactions for a given

time period, usually one year. Payments into the country (receipts) are

entered as positive numbers, called credits; payments out of the country

(payments) are entered as negative numbers called debits. A single number

summarizing all of a country‘s international transactions: the balance of

payments surplus.

6. What is Balance of payments adjustment mechanism?

Any process, especially any automatic one, by which a country with a

payments imbalance moves toward balance of payments equilibrium

7. What is Monopolistic Competition?

A market structure in which there are many sellers each producing a

differentiated product. Each can set its own price and quantity, but is too

small for that to matter for prices and quantities of other producers in the

industry.

8. What is MFN?

MFN stands for Most Favoured Nation. The principle, fundamental to the

GATT, of treating imports from a country on the same basis as that given to

the most favored other nation. That is, and with some exceptions, every



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country gets the lowest tariff that any country gets, and reductions in tariffs

to one country are provided also to others.

9. What is Gold Standard?

A monetary system in which both the value of a unit of the currency and the

quantity of it in circulation are specified in terms of gold. If two currencies are

both on the gold standard, then the exchange rate between them is

approximately determined by their two prices in terms of gold.

10. What is Balance on capital account?

A country‘s receipts minus payments for capital account transactions.

11. What is Balance on current account ?

A country‘s receipts minus payments for current account transactions. Equals

the balance of trade plus net inflows of transfer payments.

12. What is a Balanced budget ?

A government budget surplus that is zero, thus with net tax revenue equaling

expenditure. A balanced budget change in policy or behavior is one in which a

component of the government budget, usually taxes, is adjusted as necessary

to maintain a balanced budget.

13. What is balanced growth of an Economy?

Growth of an economy in which all aspects of it, especially factors of

production, grow at the same rate.

14. What is a Bank rate

The interest rate charged by a central bank to commercial banks for very

short term loans.

15. What is a Repo?

Repo is ―Repurchase Agreement. An agreement to sell a security for a

specified price and to buy it back later at another specified price. A repo is

essentially a secured loan.

16. What is Repo Rate?

Whenever the banks have any shortage of funds they can borrow it from RBI.

Repo rate is the rate at which our banks borrow rupees from RBI. A reduction

in the repo rate will help banks to get money at a cheaper rate. When the repo

rate increases borrowing from RBI becomes more expensive. On March 4,

2009 it was 5% in India (please check the latest figure by RBI)

17. What is CRR Rate in India?

Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep

with RBI. If RBI decides to increase the percent of this, the available amount



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with the banks comes down. RBI is using this method (increase of CRR rate),

to drain out the excessive money from the banks.

18. What is a Reverse Repo Rate?

Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows

money from banks. Banks are always happy to lend money to RBI since their

money are in safe hands with a good interest. An increase in Reverse repo

rate can cause the banks to transfer more funds to RBI due to this attractive

interest rates. It can cause the money to be drawn out of the banking system.

Due to this fine tuning of RBI using its tools of CRR, Bank Rate, Repo Rate

and Reverse Repo rate our banks adjust their lending or investment rates for

common man. On March 4, 2009 Reverse Repo Rate is 3.5% (please check

latest rate by RBI)

19. What is SLR Rate?

SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to

maintain in the form of cash, or gold or govt. approved securities (Bonds)

before providing credit to its customers. SLR rate is determined and

maintained by the RBI (Reserve Bank of India) in order to control the

expansion of bank credit.

20. How is SLR determined?

SLR is determined as the percentage of total demand and percentage of time

liabilities. Time Liabilities are the liabilities a commercial bank liable to pay to

the customers on their anytime demand. .

21. What is the Need of SLR?

With the SLR (Statutory Liquidity Ratio), the RBI can ensure the solvency a

commercial bank. It is also helpful to control the expansion of Bank Credits.

By changing the SLR rates, RBI can increase or decrease bank credit

expansion. Also through SLR, RBI compels the commercial banks to invest in

government securities like government bonds..

22. What is the main use of SLR?

SLR is used to control inflation and propel growth. Through SLR rate tuning

the money supply in the system can be controlled efficiently.

23. What is Inflation in India?

Increase in the overall price level of an economy, usually as measured by the

CPI /WPI or by the implicit price deflator. Inflation is as an increase in the

price of bunch of Goods and services that projects the Indian economy. An

increase in inflation figures occurs when there is an increase in the average



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level of prices in Goods and services. Inflation happens when there are less

Goods and more buyers, this will result in increase in the price of Goods, since

there is more demand and less supply of the goods..

24. What is Deflation?

A fall in the general level of prices. Unlikely unless the rate of inflation is

already low, it may then be due either to a surge in productivity or, less

favorably, to a recession. Deflation is the continuous decrease in prices of

goods and services. Deflation occurs when the inflation rate becomes

negative (below zero) and stays there for a longer period.

25. What is a Barter economy?

An economic model of international trade in which goods are exchanged for

goods without the existence of money. Most theoretical trade models take

this form in order to abstract from macroeconomic and monetary

considerations.

26.What is Basel I?

Also known at Basel Capital Accord, this was an agreement in 1988 by the

Basel Committee of central bankers to measure the credit risk of commercial

banks and set minimum standards for bank capital in order to reduce the

likelihood of international repercussions due to bank failures.

27.What is Basel II?

The Basel II Framework describes a more comprehensive measure and

minimum standard for capital adequacy that national supervisory authorities

are now working to implement through domestic rule-making and adoption

procedures. It seeks to improve on the existing rules by aligning regulatory

capital requirements more closely to the underlying risks that banks face. In

addition, the Basel II Framework is intended to promote a more forwardlooking

approach to capital supervision, one that encourages banks to identify

the risks they may face, today and in the future, and to develop or improve

their ability to manage those risks. As a result, it is intended to be more

flexible and better able to evolve with advances in markets and risk

management practices.

The efforts of the Basel Committee on Banking Supervision to revise the

standards governing the capital adequacy of internationally active banks

achieved a critical milestone in the publication of an agreed text in June 2004.

28.What is a Beggar thy neighbor policy?

For a country to use a policy for its own benefit that harms other countries.



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Examples are optimal tariffs and, in a recession, tariffs and/or devaluation to

create employment.

29. What is a Bill of Lading?

This term is normally used in shipping industry. The receipt given by a

transportation company to an exporter when the former accepts goods for

transport. It includes the contract specifying what transport service will be

provided and the limits of liability.

30. What is the use of color boxes in WTO category of subsidies?

Used with a color, a category of subsidies based on status in WTO:

red=forbidden, amber or orange=go slow, green=permitted, blue=subsidies tied

to production limits. Terminology seems only to be used in agriculture, where

in fact there is no red box.

31. What is a fiscal deficit?

A deficit in the government budget of a country and represents the excess of

expenditure over income. So this is the amount of borrowed funds required by

the government to meet its expenditures completely.

India‘s fiscal deficit widened to Rs. 541.58 billion in April, 2009 as compared to

Rs. 329.39 billion rupees in April 2008.

32. What is Black Money ?

Black Money is the unaccounted money concealed from the tax authorities.

The black money runs a parallel economy adversely affecting the distribution

of wealth & income in the economy.

The total amount of black money globally is estimated between $2.1 and 2.5

trillion. This is roughly about seven percent of the world‘s GDP.

33.What is a Black Market?

A black market is an illegal market, in which something is bought and sold

outside of official government-sanctioned channels. Black markets tend to

arise when a government tries to fix a price without itself providing all of the

necessary supply or demand. Black markets in foreign exchange almost

always exist when there are exchange controls.

34.What is a blue chip company? Why it is blue color only used in such

companies?

A blue chip is concerned with stocks & shares of company, which are well

established and whose purchase is considered extremely safe. Due to stable

earnings and no extensive liabilities these companies are called blue chip

companies.



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The term blue chip comes from casinos, where blue chips stand for counters

of the highest value. Most blue chip stocks pay regular dividends, even when

business is faring worse than usual.

35.What is a direct Tax?

A direct tax is that which is paid directly by someone to taxing authority.

Income tax and property tax are examples of direct tax. They are not shifted

to somebody else.

36.What is an Indirect Tax?

This type of tax is not paid by someone directly to the authorities and it is

actually passed on to the other in the form of increased cost. They are levied

on goods and services produced or purchased. Excise tax, Sales tax, VAT are

indirect taxes.

37.What are LDCs or Least Developed Countries?

Least Developed Countries (LDCs) are countries which as per United Nations

show the lowest indicators of socioeconomic development.

They have lowest Human Development Index ratings of all countries in the

world.

A country which has three-year average Gross national Income per capita of

less than US $750 is tagged as LDC. a LDC must have an income of $ 900 to

escape this tag. Besides if thse countries show human resource weakness

based on indicators of nutrition, health, education and adult literacy and also

or economic vulnerability based on instability of economy . Currently UN has

tagged 49 countries in LDC. India is not an LDC.

38.What are Middle Income Countries ?

Middle-income countries (MICs) are the 86 countries that fall into the middleincome

range set by the Bank‘s World Development Indicators. They account

for just under half of the world‘s population; are home to one-third of people

across the globe living on less than $2 per day; and are found in all six of the

Bank‘s geographical regions. They cover a wide income range, with the

highest income MIC having a per capita income 10 times that of the lowest.

39.What is Policy of Laissez Faire?

Laissez Faire is a French term and means no interference. It is a doctrine that

states that government generally should not intervene in the marketplace.

40.What is the difference between Monopoly and Monopsony ?

In monopsony only one buyer faces many sellers. So this is called Buyer‘s

Monopoly. It is a rare situation in today‘s economy.



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In monopoly one seller faces many buyers. As the only purchaser of a good or

service, the ―monopsonist‖ may dictate terms to its suppliers in the same

manner that a monopolist controls the market for its buyers.

41.What is the main function of Competition Commission of India?

CCI is an independent body which become operational w.e.f. May 20, 2009

and is responsible for investigating the mergers, market shares & conditions

besides regulating firms. CCI will ultimately replace the Monopolies and

Restrictive Trade Practices Commission (MRTPC) ofIndia.

42.What is Lead Bank Scheme?

Lead bank scheme was introduced around 40 years ago and recently it was in

the news as a high level committee chaired by RBI Deputy Governor Usha

Thorat was constituted to review and revitalize this scheme. The scheme aims

at facilitating credit delivery to the farfetched areas ofIndia. There are

members of the committee from NABARD and SIDBI. Thus the scheme

focuses upon financial inclusion.

The Opinion of this committee is that full financial inclusion is possible only if it

makes a facility of opening of no frill accounts backed by other specialized

services.

43.What are Nostro & Vostro Accounts ?

A nostro account is maintained by an Indian Bank in the foreign countries for

a facility of easy clearing of their transactions. For instance, if the bank pays a

demand drawn on it by its correspondent bank, there is no delay because the

foreign corresponded bank would already have credited the nostro account of

the paying bank while issuing the demand draft.

A vostro account is maintained by a foreign bank in India with their

corresponding bank.

44.From which country India imports maximum?

From China. Import from China was $ 24.16 billion in 2008-09, which got

doubled in 3 years. This is 10.3 % of all the imports of India.

45.What is Gold Standard?

A system of setting currency values whereby the participating countries

commit to fix the prices of their domestic currencies in terms of a specified

amount of gold.

46.What is a Free Float Exchange Rate system?

An exchange rate system characterized by the absence of government

intervention. Also known as a clean float.



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47.What are Special Drawing rights SDR?

SDR are new form of international reserve assets, created by the

International Monetary Funds in 1967. The value of SDR is based on a

portfolio of widely used currencies and they are maintained as accounting

entries and not as hard currency or physical assets like Gold.

48.What are the requirements to open a New Branch in Rural Area?

Since 2006, RBI has approved the opening of new branches only on the

condition that at least half of such branches are opened in under-banked

areas as notified by the regulator.

The opening of branches by banks is governed by the provisions of Section 23

of the Banking Regulation Act, 1949. In terms of these provisions, banks

cannot open a new place of business inIndia or abroad or change otherwise

than within the same city, town or village, the location of the existing place of

business without the prior approval of the ReserveBank of India (RBI). Thus, it

is mandatory for RRBs to seek prior approval/ license from Rural Planning and

Credit Department (RPCD) of RBI before opening of new branches/offices.

RRB should fulfill the following conditions to become eligible for opening of

new branch/es.

1. It should not have defaulted in maintenance of SLR and CRR during the last

two years.

2. The RRB should be making operational profits, its net worth should show

improvement 3. Its net NPA ratio should not exceed 8 per cent.

49.What is concept sustainable Development?

Meeting the needs of the present without compromising the ability of future

generations to meet their needs is called sustainable development. This

concept is popular in present context of development.

50.What is the meaning of Financial Inclusion?

Today is is well recognized that large population of India is out of reach of the

formal banking services. Financial inclusion is the concept which has been

floated to bring the most of the rural population / area under the net of the

financial and banking services.

51. What is SATMO?

SATMO is Satellite Money Order Service introduced by Postal Department

Govt. of India on December 16, 1994. However this scheme could not make

its headway due to functional complicacies.

52. What is “Vande Mataram Scheme” ?



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Vande mataram schem is a nationwide programme aimed at improving ante

and post-natal care–which was launched on February 9, 2004. The scheme

envisages free ante and post-natal check-ups, tips to avoid nutritional

problems and anemia and counseling on small family norm and is a major

initiative in Public Private partnerships during emergency.

53. What is Golden Handshake Scheme?

Golden handshake scheme is a Govt. of India scheme introduced as a

Voluntary retirement Scheme (VRS) in Industrial Policy Resolution 1991 for

reducing the pressure of extra employees on public sector enterprises.

54. What is India Brand Equity Fund?

This is a scheme to promote Indian Brands in Overseas Markets with the

primary objective of brand promotion and not export promotion. To make the

―Made in India‖ label a symbol of quality, competitive price, reliability and

service to the customer & to project India as a reliable supplier of quality

goods and services. It was established on July 11, 1996.

55. What is Jago Grahak Jago”?

The Consumer Awareness Scheme for the XI Plan amounting to a total of Rs.

409 crores has been approved by the Cabinet Committee on Economic Affairs

on 24.01.08. This scheme has been formulated to give an increased thrust to

a multi media publicity campaign to make consumers aware of their rights. The

slogan ‗Jago Grahak Jago‘ is part of the publicity campaign undertaken in the

last few years.

‗Jago Grahak Jago‘ has become the focal theme through which issues

concerning the functioning of almost all Government Departments having a

consumer interface can been addressed. To achieve this objective joint

campaigns have been undertaken/are being undertaken with a number of

Government Departments.

56. What is a revolving credit?

Revolving credit is a type of credit that does not have a fixed number of

payments. Corporate revolving credit facilities are typically used to provide

liquidity for a company‘s day-to-day operations.The credit cards are examples

of revolving credit. They are renewed automatically until the notice of

cancellation is receieved. The time of repayment is specified.

57. What is Gender Budgeting?

Gender budgeting is the process of conceiving, planning, approving, executing,

monitoring, analyzing and auditing budgets in a gender-sensitive way. Gender



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Budgeting is actually an attempt to women upliftment without any sex

discrimination while formulating the policies and making allocation for them.

Gender Budgeting is a process that entails incorporating a gender perspective

at various stages- planning/ policy/ programme formulation, assessment of

needs of target groups, allocation of resources, implementation, impact

assessment, reprioritization of resources.

Gender Responsive Budget and Gender Mainstreaming are outcomes of

Gender Budgeting.

58. What is Soft Currency?

Soft currency is opposite of hard currency and it indicates a type of currency

whose value may depreciate rapidly or that is difficult to convert into other

currencies. Soft currency can be in the form of paper, electronic or debtbased

―IOUs‖ which have in the past been used in place of hard currency. This

currency has limited convertibility into gold and other currencies.

59. What are factors of production?

The resources and the inputs which are required to produce a good or service

is called factor of production. The basic categories are land labor and capital.

60. What is the principle of Diminishing returns?

This principle says that if one factor of production is fixed and constant

additions of other factors are combined with this, the marginal productivity of

variable factors will eventually decline. According to this relationship, in a

production system with fixed and variable inputs (say factory size and labor),

beyond some point, each additional unit of the variable input yields smaller and

smaller increases in output. Conversely, producing one more unit of output

costs more and more in variable inputs.

QUESTION AND ANSWERS 1. Which of the following statements is true?

(1) Banks cannot accept demand and time deposits from public

(2) Banks can accept only demand deposits from public

(3) Banks can accept both demand and time deposits from public (4) Banks can accept both demand and time deposits from public

(5) Banks can accept demand and time deposits only from government (4) Banks can accept both demand and time deposits from public

2. Which of the following is the correct statement?

(1) State Bank of India is the sole authority to issue and manage currency in

India



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(2) A nationalized bank is the sole authority to issue and manage currency in

India

(3) A cooperative bank is the sole authority to issue and manage currency in India

(4) RBl is the sole authority to issue and manage currency in India

(5) None of the above (4) RBl is the sole authority to issue and manage currency in India

3. Interest payable on savings bank accounts is

(1) not regulated by RBI

(2) regulated by Sate Governments

(3) regulated by Central Government

(4) regulated by RBI (5) regulated by Finance Minister (4) regulated by RBI

4. The usual deposit accounts of banks are

(1) current accounts, electricity accounts and insurance premium accounts (2) current accounts post office savings bank accounts and term deposit accounts

(3) loan accounts, savings bank accounts and term deposit accounts

(4) current accounts, savings bank accounts and term deposit accounts

(5) current bill accounts and term deposit accounts (4) current accounts, savings bank accounts and term deposit accounts

5. Fixed deposits and recurring deposits are

(1) repayable after an agreed period

(2) repayable on demand (3) not repayable

(4) repayable after death of depositors

(5) repayable on demand or after an agreed period as per bank‘s choice (1) repayable after an agreed period


(1) both savings bank accounts and fixed deposit accounts

(2) savings bank accounts and current accounts

(3) both savings bank accounts and loan accounts

(4) both savings bank accounts and cash accounts only (5) both Current accounts and fixed deposit accounts (2) savings bank accounts and current accounts

7. Which of the following is correct statement? (1) Normally no interest is paid on current deposit accounts

(2) Interest is paid on current accounts at the same rate as term deposit

accounts

(3) The rate of interest on current account and savings account are the same

(4) No interest is paid on any deposit by the bank (5) Savings deposits are the same as current deposits (1) Normally no interest is paid on current deposit accounts

8. Mortgage is a



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(1) security on movable property for a loan given by a bank

(2) security on immovable property for a loan given by a bank

(3) concession on immovable property for a loan given by a bank (4) facility on immovable property for a loan given by a bank

(5) security on immovable property for a deposit received by a bank (2) security on immovable property for a loan given by a bank

9. Which of the following is known as cross selling by banks?

(A) Sale of a debit card to a credit card holder.

(B) Sale of Insurance policy to a depositor.

(C) Insurance of cash against cheque presented by a third party.

(1) Only (A) (2) Only (B) (3) Only (C)

(4) Both (A) and (C) (5) All (A), (B) and (C) (5) All (A), (B) and (C)

10. Financial inclusion means provision of

(1) financial services namely, payments, remittances, savings, loans and insurance

at affordable

cost to persons not yet given the same

(2) ration at affordable cost to persons not yet given the same

(3) house at affordable cost to persons not yet given the same

(4) food at affordable cost to persons not yet given the same (5) education at affordable cost to persons not yet given the same (1) financial services namely, payments, remittances, 11. When a bank returns a cheque

unpaid, it is called

(1) payment of the cheque

(2) drawing of the cheque

(3) canceling of the cheque (4) dishonour of the cheque

(5) taking of the cheque (4) dishonour of the cheque

12. NEFT means

(1) National Electronic Funds Transfer system

(2) Negotiated Efficient Fund Transfer system

(3) National Efficient Fund Transfer solution

(4) Non Effective Fund Transfer system

(5) Negotiated Electronic Foreign Transfer system (1) National Electronic Funds Transfer system

13. Upper limit prescribed for RTGS transaction is (1) Rs. 1 lac (2) Rs. 2 lacs

(3) Rs. 5 lacs (4) Rs. 50 lacs

(5) No upper limit is prescribed (5) No upper limit is prescribed



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14. Distribution of insurance products and insurance policies by banks as

corporate

agents is known as (1) General Insurance (2) Non-life Insurance

(3) Bancassurance (4) Insurance Banking

(5) Deposit Insurance (3) Bancassurance

15. In order to attract more foreign exchange the Government of India decided to

allow foreign

investment in LLP firms. What is full form of ‗LLP‘ as used in this reference?

(1) Local Labour Promotion

(2) Low Labour Projects (3) Limited Loan Partnership

(4) Longer Liability Partnership

(5) Limited Liability Partnership (5) Limited Liability Partnership

16. Interest on Saving bank account is now calculated by banks on

(1) minimum balance during the month

(2) minimum balance from 7th to last day of the month

(3) minimum balance from 10th to last day of the month

(4) maximum balance during the month (5) daily product basis (5) daily product basis

17. Largest shareholder (in percentage shareholding) of a nationalized bank is

(1) RBI (2) NABARD (3) LICI

(4) Government of India

(5) IBA (4) Government of India

18. When the rate of inflation increases

(1) purchasing power of money increases

(2) purchasing power of money decreases

(3) value of money increases (4) purchasing power of money remains unaffected

(5) amount of money in circulation decreases (2) purchasing power of money decreases

19. A centralized databases with online connectivity to branches, internet as well

as

ATM-network which has been adopted by almost all major banks of

our country is own as

(1) Investment Banking (2) core Banking (3) Mobile Banking (4) National Banking

(5) Specialized Banking (2) core Banking



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20. The Unit Trust of India came into existence in

(1) 1960 (2) 1962 (3) 1964 (4) 1966 (5) 1968 (3) 1964 21. Which of the following is example of financial assets?

(1) National Saving Certificates (2) Infrastructure Bonds (3) Indira Vikas Patra

(4) Krishi Vikas Patra (5) All of the above (5) All of the above

22. Capital market is a market which deals in

(1) short-term funds (2) long-term funds

(3) gilt-edge securities (4) All of the above

(5) None of the above (2) long-term funds

23. Regional Rural Banks fall within supervisory purview of

(1) SBI (2) RBI (3) SEBI

(4) IRDA (5) None of these (2) RBI

24. IRDA with its headquarters at ……… is the regulatory authority for all

insurance companies in

India including the Life Insurance Corporation of India.

(1) Hyderabad (2) Bengaluru (3) Mumbai

(4) Delhi (5) Chandigarh (1) Hyderabad

25. Mutual Funds fall within 7 supervisory purview of

(1) SBI (2) RBI (3) SEBI

(4) IRDA (5) None of these (3) SEBI

26. Which of the following does not come under the category of Development

Banks? (1) Industrial Development Bank of India

(2) Small Industries Development Bank of India

(3) Industrial Investment Bank of India

(4) State Finance Corporation

(5) Export-import Bank (5) Export-import Bank

27. Main financial instruments of corporate sector are

(1) Shares (ii) Debentures (iii) Public Deposits

(iv) Loan from Institutions Select the correct answer by using of the following codes

(1) i and ii (2) ii and iii (3) iii and iv

(4)1, ii and iv (5) All I, ii, iii and iv (5) All I, ii, iii and iv

28. Financial institutions



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(1) promote savings (2) mobilise savings (3) allocate savings among different

users

(4) All of the above (5) None of the above (4) All of the above

29. Which of the following is not an / example of primary securities?

(1) Bills (2) Bonds (3) Shares (4) Book debts (5) New currency (5) New currency

30. Indian Financial System / comprises of (1) Scheduled Commercial Banks

(2) Non-banking Financial Institutions

(3) Urban Cooperative Banks

(4) All of the above (5) None of the above (5) None of the above

31. The Bombay Stock Exchange was 7 made functional as early as

(1) 1870 (2) 1901 (3) 1935

(4) 1951 (5) 1949 (1) 1870

32. The Unit Trust of India come into existence in

(1) 1964 (2) 1970 (3) 1975 (4) 1980 (5) 1982 (1) 1964

33. 19 July 1969, how commercial Banks were nationalised? (1) 13 (2) 14 (3) 15 (4) 16 (5) 20 (2) 14

34. New Private Banks are being given licenses since

(1) 1991 (2) 1992 (3) 1993

(4) 1995 (5) 2001 ((3) 1993

35. The gilt-edged market refers to the market for

(i) Government securities

(ii) Semi-government securities

(iii) Corporate securities

Select the correct answer (1) only i (2) i and ii (3) ii and iii

(4) i, ii and iii (5) only iii (2) i and ii

36. First share market in India established in

(1) Delhi (2) Mumbai (3) Kolkata

(4) Chennai (5) None of these (2) Mumbai

37. Consider the following statements:

(i) Securities that have an original maturity that is greater than one year are



168

traded in capital markets.

(ii) The best known capital market securities are stocks and bonds.

Select the correct answer (1) (i) is true and (ii) is false (2) (i) is false and (ii) is true

(3) Both are true (4) Both are false

(5) None of the above (3) Both are true

38. Consider the following statements:

(i) Securities that have an original maturity that is greater than one year are

traded in money markets.

(ii) The best known money market securities are stocks and bonds.

(1) (i) is true and (ii) is false (2) (i) is false and (ii) is true (3) Both are true (4) Both are false

(5) None of the above (4) Both are false

39. The primary issuers of capital market securities include

(1) the Central Government (2) the local Government

(3) corporations

(4) the Central and Local Governments and corporations

(5) Local Government and corporations (4) the Central and Local Governments and corporations

40. Which of the following is a / characteristic of a capital market instrument?

(a) Liquidity (b) Marketability (3) Long maturity (4) Liquidity premium

(5) All of the above (5) All of the above

41. Which one of the following is a capital market instrument?

(1) A Treasury bill

(2) A negotiable certificate of deposit was

(3) Commercial paper


42. T-bills are financial instruments initially sold by ________ to raise funds.

(1) Commercial Banks (2) the government

(3) corporations (4) agencies of the State Government

(5) None of the above (2) the government

43. Commercial paper is a short-term security issued by ________ to raise funds.

(1) the Reserve Bank of India

(2) Commercial Banks

(3) large and well-known companies

(4) National Stock Exchange



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(5) State and Local Governments (3) large and well-known companies

44. Which of the following statements is true regarding a corporate bond?

(1) A corporate callable bond gives the holder the right to exchange it for a

specified number of the company‘s common shares

(2) A corporate debenture is a secured /‗ bond (3) A corporate indenture is a secured bond

(4) A corporate convertible bond gives the holder the right to exchange the bond

for a specified number of the company‘s common shares

(5) Holders of corporate bonds have voting rights in the company (4) A corporate convertible bond

45. Which one of the following is not a money market instrument?

(1) A Treasury bill (2) A negotiable certificate of deposit

(3) Commercial paper (4) Treasury bond (5) Repo (4) Treasury bond

46. Money lend for 15 days or more in Inter-bank market is called

(1) call money (2) notice money (3) term money (4) All of these

(5) None of these (3) term money

47. Money lent for one day is called

(1) call money (2) notice money

(3) term money (4) All of these

(5) None of these (1) call money

48. Specified interest rate on a fixed maturity security fixed at the time of issue is

called

(1) market rate of interest (2) call rate

(3) repo rate (4) coupon rate (5) discount rate (4) coupon rate

49. Lending of scheduled Commercial Banks, on a fortnightly average basis,

should not

exceed — of their capital fund.

(1) 25 per cent (2) 35 per cent

(3) 15 per cent (4) 50 per cent

(5) None of these (1) 25 per cent

50. A short-term credit investment created by a non- financial firm and

guaranteed by a bank to make payment is called (1) bankers acceptance market

(2) collateral loan market (3) treasury bill market

(4) call money market (5) repo market



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(1) bankers acceptance market

51. Money market securities are

(1) short-term (2) low risk

(3) very liquid (4) All of the above

(5) 1 and 2 (4) All of the above

52. Money market instruments

(1) are usually sold in large denominations

(2) have low default risk (3) mature in one year or less

(4) are characterized by all of the above

(5) are characterized by 1 and 2 (4) are characterized by all of the above

53. Which of the following statements about the money market are true?

(1) Not all Commercial Banks deal for their customers in the secondary market

(2) Money markets are used extensively by businesses both to warehouse surplus

funds and to raise short-term funds

(3) The single most influential participant in the US money market is the US

Treasury Department

(4) All of the above are true

(5) 1 and 2 of the above are true (5) 1 and 2 of the above are true

54. In the term repo, the term of the loan is greater than

(1) 30 days (2) 20 days (3) 60 days

(4) 90 days (5) None of these (1) 30 days

55. The money market in India consists of two sectors

namely, the organised and the unorganised sector. Which of the following do not fall under unorganised sector?

(1) RBI, Commercial Banks and SBI

(2) LIC and GIC (3) Unit Trust of India

(4) Indigenous Banks (5) None of the above (4) Indigenous Banks

56. Money lent for one day in the money market is known as

(1) Notice Money (2) Call Money

(3) Term Money (4) All of the above (5) None of the above (2) Call Money

57. Money lent for more than one day but less than 15 days in the money market is known as


(3) Term Money (4) All of the above



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(5) None of the above (1) Notice Money

58. Money lent for 15 days or more in inter-bank market is called


(3) Term Money (4) All of the above

(5) None of the above (3) Term Money

59. Government security that is a claim on the government and is a secure

financial instrument which guarantees of both capital and interest is called (1) Coupon security (2) Gilt-edged security

(3) Corporate security (4) All of the above

(5) None of the above (2) Gilt-edged security

60. Which of the following types of institutions are operate in the call money

market only as lender?

(1) Commercial Banks (2) Primary Dealers

(3) Insurance companies (4) SBI (5) None of the above (3) Insurance companies

61. As per prudential norms of RBI, lending of Scheduled Commercial Banks, on a fortnight average basis, should not exceed…….. per of their capital fund.

(1) 25 (2) 30 (3) 35 (4) 15 (5) 20 (1) 25

62. The market for bankers acceptance which or out of trade transactions, both

domestic and foreign, is called

(1) Mohey market (2) Capital market

(3) Bankers acceptance market (4) Repo market

(5) Government security market (3) Bankers acceptance market

63. An unsecured loan extended by one corporate to another is called

(1) Commercial papers (2) Treasury bill (3) Inter-corporate deposits (4) Certificates of deposits

(5) All of the above (3) Inter-corporate deposits 64. Interest is calculated on actual/365 days basis

respect of the following products, except one

(1) Call money (2) Notice money

(3) Term money (4) GOI dated securities

(5) None of the above (4) GOI dated securities

65. An institution which accepts deposits, makes business loans, and offers

related services is called (1) Saving Bank (2) Commercial Bank

(3) Investment Bank (4) Development Bank



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(5) Central Bank (2) Commercial Bank

66. A bank which acts as a banker of other banks is called

(1) Saving Bank (2) Commercial Bank

(3) Investment Bank (4) Development Bank

(5) Central Bank (5) Central Bank

67. Which of the following is/are the function(s) of Exchange Banks?

(i) Remitting money from one country to another country. (ii) Discounting of foreign bills.

(iii) Buying and selling gold and silver

(iv) Helping Import and Export Trade.

Select the correct answer

(1) i and ii (2) ii and iii (3) iii and iv

(4) i, ii and iii (5) All i, ii, iii and iv - (5) All i, ii, iii and iv

68. Consumer banks are usually found in (1) India and Pakistan (2) India and UK

(3) USA and Germany (4) China and Russia

(5) India and China (3) USA and Germany

69 A bank account in which a depositor can deposit his funds any number of

times

he likes and can also withdraw the same any number of times he wishes is called

(1) Fixed Deposit Account (2) Saving Account

(3) Current Account (4) Recurring Account (5) Demat Account (3) Current Account 70. Under which type of account a specified amount is

deposited every month for a specific period, say, 12, 24, 36 or 60 months?

(1) Fixed Deposit Account (2) Saving Account

(3) Current Account (4) Recurring Account

(5) Demat Account (4) Recurring Account

71. An inter-bank funds transfer system, where funds are transferred as and

when the transactions are triggered, is called (1) Internet Banking (2) Mobile Banking

(3) Bill Payment Service

(4) Real time Gross Settlement (5) None of the above (4) Real time Gross Settlement 72. Which of the following is a primary function of

banks?

(1) Collection and payment of cheques, rent, interest, etc on behalf of their

customers (2) Buying, selling and keeping in safe custody, the securities on behalf of



173

their customers

(3) Acting as trustees and executors of the property of their customers on

their advice (4) Remitting money from one place to the other through bank drafts or mail or

telegraphic transfers

(5) Accepting deposits (5) Accepting deposits

73. The operative guidelines for banks on Mobile Banking Transactions in India

were issued in

(1) 2008 (2) 2009 (3) 2010

(4) 2011 (5) 2007 (1) 2008

74. To use smart cards/debit cards/credit cards for the purchase of an item or for

payment of a service at a merchant‘s store, the card has to be swiped in a

terminal known as (1) Point of Sale terminal (2) Real time terminal

(3) Shopping terminal (4) All of the above

(5) None of the above (1) Point of Sale terminal

75. The Branding Line of Bank of Baroda is

(1) International Bank of India (2) India‘s International bank

(3) India‘s Multinational Bank (4) World‘s Local Bank

(5) None of the above (2) India‘s International bank

76. The logo of Bank of Baroda is known as

(1) Sun of Bank of Baroda (2) Baroda Sun (3) Bank of Baroda‘s Rays (4) Sunlight of Bank of Baroda

(5) None of the above (2) Baroda Sun

77. Lot of Banks in India these days are offering M- Banking Facility to their

customers. What is the full form of M‘ in ‗M-Banking‘?

(1) Money (2) Marginal (3) Message

(4) Mutual Fund (5) Mobile (5) Mobile

78. Which of the following is not the part of the Scheduled Banking structure in

India?

(1) Money Lenders (2) Public Sector Banks (3) Private Sector Banks (4) Regional Rural Banks

(5) State Cooperative Banks (1) Money Lenders

79. Section 14 of Banking Regulation Act, 1949

(1) prohibits a banking company from creating a charge upon any unpaid capital

of



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the company

(2) contains a system of licensing of banks by the RBI

(3) provides that the subscribed capital of a banking company should not be less than one-half of its

authorised capital

(4) All of the above (5) None of the above (1) prohibits a banking company from creating a charge upon any unpaid capital of the company

80. A Bank is under a statutory obligations to honour its customer‘s cheques vide

(1) Section 10 of the Banking Regulation Act, 1949

(2) Section 3 of the RBI Act, 1934

(3) Section 31 of the Negotiable Instruments Act, 1881

(4) All of the above (5) None of the above (3) Section 31 of the Negotiable

81. Nationalised Banks have been permitted to offer their equity shares to the

public to the extent of 49% of their capital as per amendments made in 1994 in (1) Banking Regulation Act, 1949

(2) Banking Companies (Acquisition & Transfer of Undertakings) Acts 1970/1980

(3) RBI Act, 1935

(4) Nationalisation of Banks Act, 1980

(5) None of the above (2) Banking Companies (Acquisition Transfer of Undertakings) Acts 1970/1980

82. How many banks are presently associates of State Bank of India?

(1) Eight (2) Seven (3) Six

(4) Five (5) Four (4) Five

83. How many nationalized

(1) 14 (2) 15 (3) 19 (4) 20 (5) 6 (3) 19

84. The number of Foreign Banks operating in India is (1) 20 (2) 25 (3) 28 (4) 32 (5) 35 (4) 32

85. BCSBI stands for (1) Banking Codes and Standards Board of India

(2) Banking Credit and Standards Board of India

(3) Banking Codes and Service Board d India.

(4) Banking Credit and Service Board India

(5) None of the above (1) Banking Codes and Standards Board of India

86. The main Commercial segregated into

(i) Payment System (ii) Financial Intermediation

(iii) Financial Services



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(1) (i), (ii), (III) (2) (i) and (iii)

(3) (i) and (ii) (4) (ii) and (iii)

(5) None of the above (1) (i), (ii), (III)

87. The RBI has prescribed that all SCBs should maintain their SLRs in

(1) Dated securities notified by RBI (2) T-Bills of Government of India

(3) State Development Loans


88. In case a depositor wishes to withdraw his deposits prematurely, banks

(1) do not allow the same till maturity of the deposits

(2) charge a penalty for the same do not charge any penalty and allow the same

(4) do not allow premature withdrawal

(5) None of the above (2) charge a penalty for the same do not charge any penalty

89. What percentage of India‘s population lives in rural areas? (1) 50% to less than 55% (2) 65% to less than 70% (3) 70% to less than 75%

(4) 60% to less than 65% (5) None of the above (2) 65% to less than 70%

90. For filing and resolving complaints, the Ombudsman

(1) charges a fee of Rs. 500/- (2) does not charge any fee (3) charges a fee of

Rs. 1500/- (4) charges a fee of Rs. 1000/

(5) None of the above (2) does not charge any fee

91. In case a depositor is a sole proprietor and holds deposits in the name of the

proprietory concern as well as in the individual capacity the maximum insurance

cover is available up to

(1) Rs.100000 (2) Rs. 200000 (3) Rs. 500000 (4) All of the above (5) None of the above (1) Rs.100000

92. Banks give contracts to third parties in order to manage support services like

(1) help desk support (2) credit card processing

(3) call support service (4) All of the above

(5) None of the above (4) All of the above

93. In case of FCNR(2) Scheme, the period for fixed deposits is

(1) as applicable to resident accounts

(2) for terms not less than 1 year and not more than 5 years

(3) for terms not less than 2 years and not more than 6 years (4) at the discretion of the Bank (5) None of the above (2) for terms not less than 1 year and not more than 5 years

94. The past due debt collection policy of banks generally emphasizes



176

on ______ at the time of recovery

(1) respect to customers

(2) appropriate letter authorising agents to collect recovery (3) due notice to customers


95. According to the risk diversification principle of bank lending, diversification

should

be in terms of

(1) customer base (2) geographic location

(3) nature of business (4) All of the above


96. Which of the following aspects are outlined by the loan policy of a bank?

(1) rating standards (2) lending procedures (3) financial covenants (4) All of the above


97. The paid-up capital of Non-Scheduled Bank is less than

(1) Rs. 5 lakh (2) Rs.10 Iakh (3) Rs. 12 lakh

(4) Rs. 15 lakh (5) None of the above (1) Rs. 5 lakh

98. Scheduled bank ―means a bank

(1) incorporated under the Companies Act, 1956

(2) authorized to transact Government business

(3) governed by the Banking Regulation Act, l949 (4) included in the Second Schedule to the Reserve Bank of India Act, 1934

(5) All of the above (4) included in the Second Schedule to the Reserve Bank

99. Which of the following conditions must be fulfilled before a bank is included in

the

Second Schedule to the Reserve Bank of India Act?

(1) It must have a paid-up capital and reserves of an aggregate value of not less

than Rs. 5 lakh

(2) It must satisfy the Reserve Bank of India that its affairs are not being conducted in a

manner detrimental to the interests of the depositors

(3) It must be a State co-operative bank or a company as defined in the

Companies

Act, 1956 or an institution notified by the Central Government in this behalf or a

corporation or a company incorporated by or under any law in force in any place

outside India.



177

(4) Only (3) (5) All of the above (5) All of the above

100. Which of the following are the scheduled banks ?

(1) State Bank of Mauritius Ltd ,

(2) HDFC Bank Ltd (3) ICICI Bank

(4) None of the above (5) All of the above (5) All of the above

101. A foreign bank is one

(1) whose most of the branches are situated outside India (2) in which at least 40% equity shares are held by non-resident Indians

(3) which is incorporated outside India

(4) All of the above (5) None of the above (3) which is incorporated outside India

102. ‗Branch Banking‘ system is one under which

(1) a large bank carries on banking business through a large network

of branches spread all over the country

(2) the bank‘s huge financial resources enable it to carry on its activities on a large scale throughout the country

(3) Only (2) and (3) (4) Both of the above

(5) None of the above (4) Both of the above

103. ‗Unit Banking System‘ is that system where an individual bank

undertakes the banking business

(1) through a single office

(2) through a few branches operating within a limited area

(3) Only (2) and (3) (4) Both of the above (5) None of the above (4) Both of the above

104. The Unit Banking System is prevalent in (1) Canada (2) Great Britain

(3) United States of America (4) India

(5) Pakistan (3) United States of America

105. In terms of section 5 (1)(e) of the Banking Regulation Act, 1949,

‗banking company‘ means an company which

(1) accepts deposits from the public

(2) undertakes lending of money (3) transacts the business of banking India

(4) accepts deposits from public a invests the same in trade and India.

(5) All of the above (3) transacts the business of banking India

106. Which of the following are Scheduled Banks?

(1) The fuji Bank Ltd. (2) IDBI Bank Ltd.



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(3) Centurion Bank of Punjab Ltd. (4) All of the above


107. Which of the following bank has been included in the second Schedule to

the RBI Act, 1934 with effect from 21st August, 2004 and thus is the latest

entrant in Indian Banking as a new generation private sector bank? (1) ICICI Bank Ltd (2) HDFC Bank Ltd

(3) Kotak Mahindra Bank Ltd (4) Yes Bank Ltd

(5) None of the above (4) Yes Bank Ltd

108. Which of the following statements are correct in regard to foreign banks

operating in India ?

(1) Foreign banks would be allowed to open more than the existing WTO

commitment of 12 branches in a year

(2) Foreign banks would be permitted to acquire a controlling stake in a phased manner,

but only in those private sector banks which are identified by the Reserve Bank

for restructuring

(3) The parent foreign bank of a wholly owned subsidiary would continue to hold

100 percent

equity in the Indian subsidiary for a minimum prescribed period of operation (4) Only (1) and (2) (5) All of the above (5) All of the above

109. Universal Bank is one which

(1) is present universally ie, in all the countries of the world

(2) undertakes the work of note-issuing authority, monetary and regulatory

authority, banker of the Government and equipment leasing

(3) undertakes the functions of a Development Financial Institution as well as a

commercial bank (4) All of the above (5) None of the above (3) undertakes the functions of a Development Financial Institution as well as a commercial bank

110. A universal bank may undertake multifarious financial services under one

roof,

eg, (1) receiving money on current or deposit accounts, and, lending of money for

trade,

industries, exports, agriculture, etc

(2) mortgage financing, project financing, infrastructure lending, asset

securitization, leasing, factoring, etc

(3) remittance of funds, custodial services, credit/debit cards, collection of

cheques/bills, etc



179


111. The commercial banking system in India consists of

(1) nationalized banks and private sector banks

(2) scheduled and non-scheduled banks

(3) regional rural banks, co-operative banks and land development banks (4) All of the above (5) None of the above (2) scheduled and non-scheduled banks

112. Which of the following are the scheduled banks? (1) The Fuji Bank Ltd (2) lDBl Bank Ltd

(3) Centurion Bank of Purijab Ltd (4) None of the above


113. Lord Krishna Bank Ltd. is a

(1) New Private Sector Bank (2) Old Private Sector Bank

(3) Public Sector Bank (4) Regional Rural Bank

(5) None of the above (2) Old Private Sector Bank

114. What does EBT stands for?

(1) Electronic Belated Transfer (2) Electronic Beginners‘ Transaction

(3) Electronic Benefit Transfer

(4) Electronic Beginning Transaction (5) None of the above (3) Electronic Benefit Transfer

115. Consider the following statements

(i) If the beneficiary of a cheque has lost the cheque, he can instruct the paying

bank

to stop payment of the cheque without waiting for the account holder‘s

instructions. (ii) While outsourcing, the only consideration should be cost savings. which

among

the

statements given above is/are correct?

(1) Only (i) (2) Only (ii) (3) (i) and (ii)

(4) Neither (i) nor (ii) (5) None of the above (4) Neither (i) nor (ii)

116. Telebanking service is based on (1) Virtual banking (2) Online banking

(3) Voice banking (4) Core banking

(5) None of the above (3) Voice banking

117. Which of the following is not a Public Sector Bank?

(1) State of Hyderabad (2) Central Bank of India



180

(3) Regional Rural Bank (4) HDFC Bank

(5) None of the above (4) HDFC Bank

118. RBI generally reviews the Monetary policy for every

(1) three months (2) six months

(3) nine months (4) ten months (5) None of the above (1) three months

119.The rate at which the RBI lends shot-term money to the banks (1) PLR (2) CRR (3) Repo Rate

(4) Reverse Repo Rate (5) None of the above (3) Repo Rate

120.The Reserve Bank of India (RBI) was nationalized on

(1) 1 January, 1949 (2) 1 July, 1955

(3) 19 July, 1969 (4) 15 April, 1980

(5) None of the above (1) 1 January, 1949

121.Which of the following acts govern the RBI functions?

(1) RBI Act,1934 (2) Banking Regulation Act, 1949

(3) Companies Act, 1956 (4) Foreign Exchange Regulation Act, 1973

(5) Foreign Exchange Management Act, (1) RBI Act,1934

122. The RBI is not expected to perform the function of

(1) the banker to the government

(2) accepting deposit from Commercial Banks

(3) accepting deposits from general public

(4) issuer of currency

(5) None of the above (3) accepting deposits from general public

123. Headquarters of Reserve Bank of India is in (1) New Delhi (2) Mumbai (3) Kolkata

(4) Chennai (5) Hyderabad (2) Mumbai

124. The first Governor of the Reserve Bank of India

from 1 April1935 to 30 June, 1937 was

(1) Sir Osborne Smth (2) Sir James Taylor

(3) C.D. Deshmukh

(4) Sir Benegal Rama Rao (5) KG. Ambegaonkar (1) Sir Osborne Smth

125.22nd and Current Governor of Reserve Bank of

India is

(1) Manmohan Singh (2) C. Rangarajan



181

(3) Bimal Jalan (4) Y.V. Reddy

(5) D. Subbarao (5) D. Subbarao

126.Which of the following rates is not decided by RBI?

(1) Bank Rate (2) Repo Rate (3) Reverse Repo Rate

(4) Prime Lending Rate (5) Cash Reserve Ratio (4) Prime Lending Rate

127 .The Reserve Bank of India was set up on the recommendations of the

(1) Narasimham Committee (2) Hilton-Young Commission

(3) Mahalanobis Committee

(4) Fazal Ali Commission (5) None of the above (2) Hilton-Young Commission

128. Which of the following formulates. implements

and monitors the monetary policy?

(1) Ministry of Finance (2) RBI

(3) SBI (4) ICICI Bank (5) None of the above (2) RBI

129.Which of the following is th central banking institution India?

(1) State Bank of India (2) Ministry of Finance (3) Reserve Bank of India

(4) Finance Commission of India

(5) None of the above (3) Reserve Bank of India

130. The Reserve Bank of India had divested its stake

in State Bank of India to

(1) IDBI Bank (2) LIC (3) ICICI Bank

(4) Government of India (5) None of the above (4) Government of India

131. At Present the RBI holds one per cent of shareholding in?

(1) State Bank of India (2) National Housing Bank (3) State Bank of Hyderabad

(4) National Bank for Agriculture and Rural Development (NABARD)

(5) None of the above (4) National Bank for Agriculture and Rural Development

132. The number of regional offices of RBI is

(1) 20 (2) 21 (3) 22 (4) 23 (5) None of these (3) 22

133. In India, the RBI prescribes the minimum SLR level for Scheduled

Commercial Banks in India in specified assets as a percentage of Bank‘s

(1) Net Demand and Time Liabilities

(2) Demand Liabilities (3) Time Liability




182

(1) Net Demand and Time Liabilities

134 . CRR refers to the share of that banks Rural have

to maintain with RBI of their net demand and time liabilities.

1) Liquid cash (2) forex reserves

(3) gold (4) liquid cash (5) None of the above Show Answer

135.The RBI has adopted _____ Model in which mobile banking and is

promoted through business correspondents of banks.

1) Bank Led (2) Band Mobile (3) Mobile (4) All of these S) None of these (4) All of these

136. Services offered to government departments include all the above except (1) payments of salaries and pensions

(2) distributing RBI bonds to government departments

(3) direct and indirect tax collections

(4) remittance facilities (5) None of the above (2) distributing RBI bonds to government departments

137. Which of the following is/are known as Banker‘s Bank?

(1) SBI (2) NABARD (3) RBI

(4) All of these (5) None of these (3) RBI

138. Which of the following is the central bank of the country?

(1) RBI (2) SBI (3) RRB (4) NABARD (5) None of these (1) RBI

139 . RBI was established on

(1) April 1, 1935 (2) March 1, 1935

(3) April 1, 1934 (4) March 1, 1934

(5) None of these (1) April 1, 1935

140. Which of the following is/are functions of the RBI?

(I) Acts as the currency authority

(ii) Controls money supply and credit

(iii) Manages foreign exchange (iv) Serves as a banker to the government

(1) (i) and (Ill) (2) (ii) and (iii)

(3) (i), (ii) and (iii) (4) (i), (ii), (iii) and (iv)

(5) None of these (4) (i), (ii), (iii) and (iv)

141. Central Bank

(1) creates (2) controls (3) restricts

(4) all of these (5) None of these (2) controls



183

142 credit investment.

(1) Dear (2) Cheap (3) Restricted

(4) Green (5) None of these (2) Cheap

143. Quantitative instrument of RBI can be

(1) bank rate policy (2) cash reserve ratio (3) statutory liquidity ratio (4) All of the above


144. Objective of monetary policy of RBI is to

(1) control inflation

(2) discourage loarding of commodities

(3) encourage flow of credit into neglected sector


145. When RBI is lender of last resort, what does it mean?

(1) RBI advances necessary credit against eligible securities (2) Commercial Banks give fund to the RBI

(3) RBI advances money to public whenever there is any emergency

(4) All of the above (5) None of the above (1) RBI advances necessary credit against eligible

146. When RBI acts as a banker to the government, what does it do?

(1) RBl keeps bank accounts of the government

(2) RBI carries out government transactions

(3) RBI advises the government on all financial and monetary matters


147. The merit of issuing notes with RBI can be seen is

(1) uniformity (2) stability in currency (3) control of credit (4) All of the above


148. Which of the following is not an objective of financial sector reform in India?

(1) Creating an efficient, productive and profitable financial sector industry

(2) Preparing the financial system for increasing international competition

(3) Opening the external sector in a calibrated fashion

(4) Reducing the fiscal deficit (5) Promote the maintenance of financial stability even in the face of domestic

and

external environment (4) Reducing the fiscal deficit

149. The Narsimham Committee-I was set up in

(1) 1990 (2) 1991 (3) 1992



184

(4) 1998 (5) 2000 (2) 1991

150. The Narsimham Committee-I was set up to suggest some recommendations

for

improvement in the

(1) efficiency and productivity of the financial institution (2) banking reform process (3) export of IT sector

(4) fiscal reform process (5) None of the above Show Answer

151. The Narsimham Committee-Il was set up to suggest some recommendations

for

improvement in the

(1) efficiency and productivity of the financial institution

(2) banking reform process (3) export of IT sector

(4) fiscal reform process (5) None of the above (2) banking reform process

152. The Narsimham Committee, 1991 has given which of the following major recommendations

(i) Reduction in the SLR and CRR.

(ii) Phasing out Directed Credit Programme.

(iii) The determination of the interest rate should be on the grounds of market

forces

such as the demand for and the supply of fund. (iv) The actual numbers of public sector banks need to be reduced.

(v) ‗Narrow Banking Concept‘ where weak banks will be allowed to place their

funds

only in short-term and risk free assets.

Select the correct answer using the following codes

(1) i,ii and v (2) i, iii, iv and v (3) i,ii,iii and v (4) ii, iii, iv and v (5) i, ii, iii and iv (5) i, ii, iii and iv

153. Which of the following is not correct about the recommendations of Narsimham Committee Report, 1998?

(1) Reduced CRR and SLR

(2) Deregulation of Interest Rate

(3) Establishment of the ARE Tribunal

(4) Fixing Prudential Norms (5) Capital Adequacy Norms (3) Establishment of the ARE Tribunal

154. Basel I, which was issued in 1988, focuses on the

(1) capital adequacy of financial institutions (2) improvement of the banking sectors ability to deal with financial and

economic

stress



185

(3) technology up gradation

(4) training of banking staff

(5) professionalism in banking (1) capital adequacy of financial institutions

155. In 1991, SLR was as high as

(1) 25% (2) 30% (3) 38.5% (4) 39.5% (5) 40% (3) 38.5%

156. Narsimham Committee recommended to reduce SLR and CRR to

(1) 25% and 3.5% respectively

(2) 24% and 3.5% respectively

(3) 25% and 3% respectively

(4) 20% and 5% respectively

(5) 25% and 5% respectively (1) 25% and 3.5%

157. Which of the following is not a recommendation of the Narsimham Committee,

1991?

(1) Reduction of CRR and SLR

(2) Phasing out directed credit programme

(3) Reduction of Capital Adequacy Ratio

(4) Establishment of ARE Fund (5) Autonomy to Public Sector Bank (3) Reduction of Capital Adequacy Ratio

158. Which of the following guidelines were issued by Reserve Bank of India in January 1993 for the entry of Private Sector Banks in the wake of Narasimham

Committee recommendation

(1) The new bank, upon being granted license under the Banking Regulation Act

by

RBI,

Shall be registered as a public limited company under the Companies Act, 1956 (2) Its inclusion in the Second Schedule to the Reserve Bank of India Act, 1934

shall be

sunject to Reserve Bank‘s decision

(3) Preference would be given to those banks the headquarters of which are

proposed to be located in the centre which does not have the headquarters of

any other bank (4) (1) and (3) (5) All of these (5) All of these

159. The RBI has prescribed that a new Private Sector Bank

(1) shall be subject to prudential norms in regard to income recognition, asset

classification and provisioning, capital adequacy, etc.



186

(2) shall have to observe priority sector lending targets as applicable to other

domestic banks

(3) will be required to open rural and semi-urban branches also as may be laid down by RBI

(4) None of the above (5) All of above (5) All of above

160. A new Private Sector Bank

(1) would be governed by existing branch licensing policy where by banks could

open branches including at urban/ metro centres without prior approval of RBI

once capital adequacy and prudential accounting norms were satisfied

(2) will be governed by the provisions of the RBI Act, 1934 the Banking

Regulation Act, 1949 and other relevant statutes (3) would be subject to the directives, guidelines and advices given by the



161. To create a strong and competitive banking system, reform measures were

initiated in early 1990s. The thrust of these reforms was on

(1) increasing operation efficiency

(2) strengthening supervision over banks

(3) developing technological and institutional infrastructure (4) All of the above (5) None of the above (4) All of the above

162. What does EBT stands for?

(1) Electronic Belated Transfer

(2) Electric Beginners Transaction

(3) Electronic Benefit Transfer

(4) Electronic Beginning Transaction

(5) None of the above (3) Electronic Benefit Transfer

163. On the recommendations of which of the following committee Regional Rural

Banks were established? (1) Tarpore Committee (2) Narasimham Committee

(3) Karmakar Committee (4) Kelker Committee

(5) Jha Committee (2) Narasimham Committee

164. RRBs were set up on

(1) 1975 (2) 1985 (2) 1991

(4) 2001 (5) 1965 (1) 1975

165. The total authorized capital of RRBs was originally fixed at 1 crore which has

since been raised to

(1) Rs. 2crore (2) Rs. 3 crore (3) Rs. 5 crore



187

(4) Rs. 7 crore (5) Rs. 10 crore (3) Rs. 5 crore

166. At present, the formula for subscription to RRBs

capital has been fixed at

(1) Central Government 50%, State Government 35% and Sponsor Bank 15%



(4) Central Government 35%, State Government 35% and Sponsor Bank:

30%

(5) Central Government 50%, State Government 25% and Sponsor Bank:

25% (2) Central Government 60%, State Government 20% and

167. Central Government‘s contribution towards the

capital of RRBs is made through (1) NABARD (2) RBI (3) SBI

(4) Central Cooperative Bank (5) State Cooperative Bank (1) NABARD

168. The Sponsor Bank helps and aids the RRB sponsored by it by

(i) Subscribing to its share capital.

(ii) Training its personnel.

(iii) Providing managerial and financial assistance during the first five years or

extended period. Select the correct answer by using the following codes

(1 ) i and ii (2) ii and iii (3) i and ii

(4) i, ii, and iii (5) None of these (4) i, ii, and iii

169. The Sponsor Banks are empowered

(1) to monitor the progress of RRBs

(2) to conduct inspection and internal audit

(3) to suggest corrective measures


170. Each of the RRBs covers districts ranging from

(1) 1 to 15 (2) 2 to25 (3) 3 to 25 (4) 2 to 15 (5) 1 to 5 (2) 2 to25

171. The main resources of RRBs are

(1) share capital

(2) deposits from the public

(3) borrowing from Sponsor Banks

(4) refinance from NABARD (5) All of the above (5) All of the above



188

172. RRBS are refinanced at

(1) 2% below the bank rate (2) 1% below the bank rate (3) 2% below the repo

rate (4) 1% below the repo rate (5) repo rate (1) 2% below the bank rate

173. RRBs are owned by (1) Central Government (2) State Government

(3) Sponsor Bank (4) jointly by all of the above

(5) None of the above (4) jointly by all of the above

174. The main resources of RRBs are

(i) share capital. (ii) deposits from the public.

(iii) borrowing from Sponsor Banks.

(iv) refinance from NABARD.

Select the correct answer (1) i and ii (2) i, ii and iii (3) iii and iv

(4) ii, iii and iv (5) i, ii, iii and iv (5) i, ii, iii and iv

175. The number of directors on the boards of RRBs has been raised to

(1) 14 (2) 15 (3) 16 (4) 17 (5) 18 (2) 15

176. The issued/paid-up capital of a Regional Rural Bank should be

(1) Rs. 60 lac

(2) minimum Rs. 25 lac and maximum Rs. 100 lac

(3) Rs. 80 lac (4) Rs. 90 lac (5) None of the above (5) None of the above

177. Under which category will Ofl classify Regional

Rural Banks?

(1) Scheduled Commercial Banks (2) Co-operative banks (3) Private sector banks

(4) Development banks (5) None of the above (1) Scheduled Commercial Banks

178. Paid-up share capital of Region Rural Bank is contributed by

(1) Central Government only

(2) State Government only

(3) Central Government, State Government and the sponsor commercial bank

in the ratio of 50: 15: 35 respectively (4) NABARD, the concerned Government and the sponsor commercial bank in

the ratio of 60:20 :20 respectively

(5) All of the above (2) State Government only

179. Regional Rural Banks are empowered to transact

the business of banking as defined under



189

(1) Banking Regulation Act, 1949

(2) Negotiable Instruments Act, 1881

(3) Regional Rural Banks Act, 1976 (4) The Banking Companies (Acquisition and Transfer of Undertakings) Act,

1970

(5) None of the above (1) Banking Regulation Act, 1949

180. RRBs are permitted to undertake corporate agency business, without risk

participation, for distribution of all types of insurance products, including health

and animal insurance subject to the condition that

(1) The bank should comply with the Insurance Regulatory and Development

Authority (IRDA) regulations for acting as ‗composite corporate agent‘ (2) The bank should not adopt any restrictive practice of forcing its customers

to go in only for a particular insurance company in respect of assets financed

by the bank

(3) The risks, if any, involved in insurance agency should not get transferred to

the business of the bank

(4) Only (2) and (3) (5) All of the above (5) All of the above

181. Regional Rural Banks are managed by

(1) Reserve Bank of India (2) a board of directors (3) the sponsor bank (4) the State Government

(5) All of the above (2) a board of directors

182. Deposits with Regional Rural Banks are insured by

(1) Life Insurance Corporation of India

(2) General Insurance Corporation

(3) Deposit Insurance and Credit Guarantee Corporation

(4) None of the above (5) All of the above (3) Deposit Insurance and Credit Guarantee Corporation

183. For opening a new branch, a Regional Rural Bank requires

(1) permission of NABARD (2) permission of Director, Institutional Finance

(3) RBI license (4) All of the above

(5) approval of DRDA (3) RBI license

184. Regional Rural Banks are classified as

(1) scheduled commercial banks

(2) subsidiaries of the sponsor banks

(3) subsidiaries of NABARD (4) All of the above (5) None of the above (1) scheduled commercial banks 185. For the purpose of Income Tax Act, 1961, the

regional rural banks are treated as



190

(1) scheduled commercial banks

(2) non-scheduled banks (3) nationalised banks

(4) co-operative banks (5) None of the above (4) co-operative banks

186. On the current account balances maintained by the Regional Rural Banks

with them, the commercial banks may

(1) pay interest up to 9 per cent

(2) waive incidental charges

(3) pay interest as applicable to savings accounts

(4) pay interest at such rates as may be mutually agreed to

(5) All of the above (4) pay interest at such rates as may be mutually agreed to

187. All regional rural banks (RRBs) are required to

maintain their entire statutory liquidity ratio (SLR) in (1) government and other approved securities

(2) current accounts with sponsor banks

(3) time deposits with sponsor banks

(4) gold holdings only (5) All of the above (1) government and other approved securities

188. Which of the following statements about Regional Rural Banks are correct?

(1) Sponsor banks‘ travellers cheques can be issued by RRBs

(2) RRBs can enter into arrangements with the sponsor banks for providing remittance facilities to its customers

(3) Where RRBs can afford the investment, they can install lockers also


189.Reserve Bank has permitted RRBs for opening/

maintaining Non-Residents (Ordinary /External)

accounts in rupees and for acceptance of FCNR (B)

deposits subject to the condition that

(1) The bank should have a positive net-worth and earned net profit during the preceding year

(2) The bank should not have defaulted in maintenance of CRR/SLR

requirements on more than three occasions during the preceding two years

(3) Net NPA level of the bank should not exceed five per cent of the outstanding

advances as on March 31 of the preceding year


190. The Regulatory Authority Regional Rural Banks is (1) Sponsor bank (2) Central Government

(3) State Government (4) RB land NABARD

(5) All of the above



191

(4) RB land NABARD

191. Which of the following are the recommendations of the Internal Group

(Chairman : Shri A V Sardesai) set up by RBI in regard to strengthening and

viability of RRBs?

(1) merger/amalgamation of RRBs to improve operational viability

(2) change of sponsor banks to enhance competitiveness. (3) governance and management and scope for improving profitability


192. Which of the-following measure have been taken to enlarge resources

available to RRI3s?

(1) Lines of credit at a reasonable rate of interest from sponsor banks

(2) Access to inter-RRB term money/ borrowings

(3) Access to repo / CBLO markets


193. With a view to increase their resource base, RRBs have been permitted to

(1) issue of credit/debit cards and setting-up of ATMs

(2) open Currency Chests

(3) handle pension and other government business as sub- agents of those

banks which are authorised to conduct government business


194. Which of the following conditions are required to be fulfilled by a Regional

Rural Bank to be eligible for opening of new branches? (1) It should not have defaulted in maintenance of SLR and CRR during the last

two years

(2) It should be making operational profits

(3) Its net worth should show improvement and its net NPA ratio should not

exceed 8 per cent


195. Co-operative Banks in India are registered under

(i) Banking Laws (Cooperative Societies) Act, 1965. (ii) Banking Regulations Act, 1949.

(iii) Companies Act, 1956.

Select the correct answer using the following codes

(1) only i (2) i and ii (3) ii and iii

(4) i, ii and iii (5) i, and iii (1) only i

196. Co-operative Development Bank was set up by

(1) NABARD (2) RB! (3) SB!



192

(4) Central Government (5) None of the above (1) NABARD

197. Co-operative banks in India do not finance rural

areas under

(1) Farming (2) Cattle (3) Milk

(4)Small scale units (5) Personal finance (4)Small scale units

198. Which of the following is not a negotiable

instrument? (2) semi-negotiable instrument? (1) Promissory note (2) Bill of exchange

(3) Cheque (4) Bank Draft (5) Share certificate (4) Bank Draft

199. Those instruments which can be transferred by endorsement and delivery,

but the transferee does not get a better title than that of the transferor is called

(1) negotiable instruments

(2) semi-negotiable instruments

(3) non-negotiable instruments (4) All of the above (5) None of the above (2) semi-negotiable instruments

200. Transfer of any instrument to another person by signing on its back or face or on a slip of paper attached to it is known as :

(1) promissory note (2) bill of lading

(3) bill of exchange (4) endorsement

(5) None of the above (4) endorsement

201. Which of the following is not a prerequisite for a promissory note?

(1) drawn on a specified banker

(2) It should be unconditional

(3) It should be in writing (4) It should be made and signed by the debtor

(5) It should be payable in the currency of the country (1) drawn on a specified banker

202. A bill of exchange in which a bank orders its branch or another bank, as the

case may be, to pay a specified amount to a specified person or to the order of

the specified person is called

(1) cheque (2) bank draft (3) promissory note

(4) bill of exchange (5) None of the above (2) bank draft

203. Which of the following is not a party of bill of exchange?

(1) The Drawer (2) The Drawee (3) The Payee (4) The Endorser (5) None of the above (4) The Endorser

204. Which of the following is/are the right(s) of customer towards his banker?



193

(1) To receive a statement of his account from a banker

(2) To sue the bank for any loss and damages

(3) To sue the banker for not maintaining the secrecy of his account (4) All of the above (5) None of the above (4) All of the above

205. When an endorser waives presentment and notice of dishonour he increases his liability. His endorsement is:

(1) facultative endorsement (2) qualified endorsement

(3) alternative endorsement (4) restrictive endorsement

(5) None of the above (1) facultative endorsement

206. All of the following are examples of Quasi Negotiable Instruments, under the

Negotiable Instrument Act, 1881, except

(1) Dividend Warrants (2) Share Warrants

(3) Bearer Debentures (4) Promissory Note (5) None of the above (4) Promissory Note

207. Section 131 of Negotiable Instrument Act, 1881

extends protection to the

(1) Paying Banker (2) Collecting Banker

(3) Advising Banker (4) Issuing Banker

(5) All of the above (2) Collecting Banker

208. Which of the following is not considered as

negotiable instrument under the Negotiable

Instruments Act, 1881? (1) Bill of exchange (2) Promissory note

(3) Share certificate

(4) Cheque payable to bearer

(5) Cheque with ‗not negotiable‘ crossing (3) Share certificate

209. Which of the following is not considered as an instrument negotiable by

custom or usage?

(1) Delivery orders for goods

(2) Railway receipts for goods (3) Hundi

(4) Government promissory notes (5) Cheques (5) Cheques

210. Under the Negotiable Instrument Act, 1881, an instrument which is

incomplete in some respects, is called a/an

(1) Foreign instrument (2) Inland instrument

(3) Inchoate instrument (4) Ambiguous instrument

(5) Fictitious instrument



194

(3) Inchoate instrument

211. Which of the following is an example of ‗restrictive crossing‘?

(1) Not Negotiable (2) State Bank of India

(3) A/c Payee (4) Company

(5) Two transverse parallel lines simply drawn across the face of the cheque (3) A/c Payee

212. Which of the following is not a payment in due

course?

(1) Payment made in accordance with the apparent tenor of the instrument (2) A payment is made on an instrument before the date of maturity

(3) Payment is made to a person who is in possession of the instrument either

as a holder or a person authorised to receive payment on behalf of holder

(4) Payment made in good faith and without negligence

(5) Payment made to a person in possession of an instrument payable to bearer

or one that is, endorsed in blank (2) A payment is made on an instrument before the date of maturity

213. When a bill is drawn, accepted or indorsed for consideration, it is called a/an (1) Accommodation bill (2) Genuine trade bill

(3) Escrow (4) Ambiguous instrument

(5) Inchoate instrument (2) Genuine trade bill

214. Which of the following is a prerequisites for transfer of a negotiable

instrument?

(1) Crossing (2) Acceptance

(3) Noting with a Notary (4) Blank indorsement

(5) Mere delivery or indorsement and delivery (5) Mere delivery or indorsement and delivery

215. Which of the following statements is correct about promissory note?

(1) It need not be in writing (2) An implied promise is enough to constitute a valid promissory note

(3) The promise to pay must be definite and unconditional

(4) The name of the pyee need not be mentioned

(5) The payment can be in kind (3) The promise to pay must be definite and unconditional

216. The legal relationship between a bank and its

customer is a kind of

(i) Debtor and Creditor (ii) Principal and Agent (iii) Pledgor and Pledgee (iv) Mortgagor and Mortgagee

Select the correct answer by using the following codes

(1) i and ii (2) i, iii and iv (3) i, ii, iii and iv

(4) i and ii (5) i, ii and iii (3) i, ii, iii and iv

217. Since, acceptance of deposits and granting of loans are the two general



195

functions of a bank, the relationship arising out of these two main activities is

known as

(1) principal and agent relationship (2) financer and finance relationship

(3) bailor and bailee relationship

(4) general relationship (5) specific relationship (4) general relationship

218. Which of the following is not an obligation of bank towards its customer?

(1) Pay bills as per the instructions of the customer

(2) Act as per the directions given by the customer

(3) Submit periodical statements, i.e., informing customers of the state of the

account (4) Not to set off a debt owed to him by a creditor from the credit balances held

in other accounts of the borrower

(5) Maintain secrecy of accounts (4) Not to set off a debt owed to him by a creditor from the

219. Which of the following statement is not correct regarding a minor?

(1) A minor is a person who has not attained the age of 18

(2) Minor does not have legal capacity to enter into a contract

(3) A current account in the name of minor can be opened when guardian of the

minor operates this account (4) A minor‘s account should never be allowed to

be overdrawn

(5) In the event of death of a minor, the money will be payable to the guardian (3) A current account in the name of minor can be opened

220. Money deposited with the bank becomes a debt due

(1) from the banker (2) from the customer

(3) to the customer (4) Either 1 or 2

(5) None of the above (2) from the customer

221. KYC means

(1) Know your customer very well (2) Know your existing customer very well

(3) Know your prospective customer very well

(4) Satisfy yourselves about the customer‘s identity and activities

(5) All of the above (4) Satisfy yourselves about the customer‘s identity and

222. Mahesh and Suresh are friends aged 14 and 15 respectively. They want to

open a joint account in your bank. You will

(1) allow them to open a joint account to be operated jointly (2) allow them to open a joint account with operating instructions either or

survivor

(3) allow them to open a joint account with operating instructions former or



196

survivor

(4) allow them to open a joint account with operating instructions any one or

survivor (5) None of the above (1) allow them to open a joint account to be operated jointly

223. NABARD was set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of

(1) agriculture

(2) small-scale industries

(3) cottage and village industries

(4) handicrafts and other rural crafts


224. On the recommendation of which committee

NABARD was established? (1) The Committee to Review Arrangements for Institutional Credit for

Agriculture and Rural Development

(2) Narshimham Committee (3) Chelliaha Committee

(4) Kelkar Committee (5) None of the above (2) Narshimham Committee

225. NABARD was set up with an initial capital of ‗Rs.

100 crore, which was enhanced to

(1) Rs. 1,000 crore (2) Rs. 2000 crore (3) Rs. 3000 crore (4) Rs. 4000 crore (5) Rs. 5000 crore (1) Rs. 1,000 crore

226. On the recommendations of which committee, the NABARD was established? (1) Shivaraman Committee (2) Basel Norms

(3) Narasimham Committee (4) All of the above

(5) None of the above (1) Shivaraman Committee

227. Which of the following statements is not correct

about NBFCs?

(1) An NBFC cannot accept demand deposits

(2) These institutions trade in the capital market in a variety of assets and

liabilities (3) An NBFC can issue cheques drawn on itself

(4) Deposit insurance facility of Deposit Insurance and Credit Guarantee

Corporation is not available for NBFC depositors

(5) NBFIs act as brokers of loanable funds and in this capacity they

intermediate between the ultimate saver and the ultimate investor. (3) An NBFC can issue cheques drawn on itself

228. The working and operations of NBFCs are regulated by

(1) SEBI (2) RBI (3) Finance Ministry, Gol



197

(4) IRDA (5) None of the above (2) RBI

229. Which of the following is a kind of non-banking financial institutions?

(1) Equipment leasing company

(2) Hire purchase company (3) Loan company

(4) Investment company (5) All of the above (5) All of the above

230. Which of the following is not correct about the acceptance of deposits by

the NBFCs? (1) They are allowed to accept/renew public deposits for a minimum period of 12

months and maximum period of 60 months

(2) They cannot accept deposits repayable on demand

(3) They should have minimum investment grade credit rating

(4) Their deposits are not insured

(5) The repayment of deposits by NBFCs is guaranteed by RBI (5) The repayment of deposits by NBFCs is guaranteed by RBI

231. Any financial intermediary whose principal business is that of buying and selling of securities is called

(1) equipment leasing company

(2) hire purchase company (3) loan company

(4) investment company (5) None of the above (4) investment company

232. Life Insurance in its modern form came to India from England in the year

(1) 1818 (2) 1896 (3) 1905

(4) 1907 (5) 1919 (1) 1818

233. Which of the following statements about insurance business in India is not

correct?

(1) Oriental Life Insurance Company was the first life insurance company on Indian Soil

(2) Bombay Mutual Life Assurance Society was the first Indian life insurance

company

(3) The Life Insurance Companies Act and the Provident Fund Act were passed

1949

(4) The Insurance Regulatory and Development Authority was established in the year 1999

(5) From March 21, 2003 GIC ceased to be a holding company of its

subsidiaries (3) The Life Insurance Companies Act and the Provident

234. In which year had the Insurance Regulatory and Development Authority

come into force?

(1) 1999 (2) 2000 (3) 2001

(4) 1991 (5) 1993



198

(2) 2000

235. By taking out insurance cover an individual

(1) reduces the cost of an accident

(2) reduces the risk of an accident

(3) transfers the risk to someone else

(4) converts the possibility of large loss to certainty of a small one (5) reduces the certainty of major loss (3) transfers the risk to someone else

236. Which of the following is an example of NBFCs? (1) Unit Trust of India

(2) Life Insurance Corporation

(3) General Insurance Corporation


237. A company which pools money from investors and

invests in stocks, bonds, shares is called

(1) A bank (2) An insurance company (3) Bank assurance (4) Mutual fund

(5) None of the above (4) Mutual fund

238. Bank assurance is

(1) an insurance scheme to insure bank deposits

(2) an insurance scheme to insure bank advances

(3) a composite financial service offering both bank and insurance products

(4) a bank deposit scheme exclusively for employees of insurance companies

(5) None of the above (3) a composite financial service offering both bank

239. Which was the first mutual fund started in India?

(1) SBI Mutual Fund (2) Indian Bank Mutual Fund (3) Kotak Pioneer Mutual Fund

(4) Unit Trust of India (5) None of the above (4) Unit Trust of India

240. The regulator of mutual fund in India is

(1) FIMMDA (2) AMFI (3) RBI (4) SEBI (5) None of these (4) SEBI

241. FIMMDA‘s general principles and procedures are applicable to

(1) Fixed income markets (2) Money markets

(3) Derivative markets (4) All of the above


242. Which is the principal institution for promotion, financing and development

of

small scale industries in the country?



199

(1) RBI (2) SBI (3) IDBI (4) SIDBI (5) None of these (4) SIDBI

243. The UTI was established in

(1) 1956 (2) 1964 (3) 1972

(4) 1976 (5) None of these (2) 1964

244. Which of the following mobiise/s the savings of the public to specifically

invest

in the industrial securities? (1) UTI (2) LIC (3) GIC

(4) All of these (5) None of these (4) All of these

245. Whcih of the following is/are ‗Term Deposits‘?

(1) Fixed deposits (2) Re-investment deposits

(3) Recurring deposits (4) None of the above

(5) All of the above (1) Fixed deposits

246. Which of the following is not correct about Non- Banking Financial

Companies

(NBFCs)? (1) NBFC can not accept demand deposits

(2) NBFC is not a part of the payment and settlement system

(3) NBFC can issue cheques drawn on itself

(4) NBFCs are fast emerging segment of Indian financial system

(5) None of these (3) NBFC can issue cheques drawn on itself

247. The working and operations of NBFCs are regulated by

(1) SBl (2) RBI (3) Finance Ministry

(4) All of these (5) None of these (2) RBI

248. Which of the following is not correct about Development Banks in India?

(1) The Development Banks do not seek or accept deposits from the public

(2) They provide short term finance

(3) The Development Banks promote economic development by promoting

investment and enterprise

(4) Development Banks are those banks engaged in the promotion and development of industry, agriculture, exports and other key sectors.

(5) All of the above (2) They provide short term finance

249. Which of the following is the first Development

Bankof India?

(1) Industrial Finance Corporation of India



200

(2) State Finance Corporation

(3) Industrial Credit and Investment Corporation of India

(4) State Industrial Development Corporations (5) National Bank for Agriculture and Rural Development (1) Industrial Finance Corporation of India

250. The Small Industries Development Bank of India was established in

(1) 1975 (2) 1980 (3) 1982

(4) 1989 (5) 1990 (4) 1989

251. The erstwhile Industrial Reconstruction Bank of

India (IRBI) is now known as

(1) Industrial Finance Corporation of India

(2) Industrial Credit and Investment

(3) Corporation of India Industrial Development Bank of India (4) State Industrial Development Corporations

(5) Industrial Investment Bank of India LTD (5) Industrial Investment Bank of India LTD

252. National Housing Bank was established in

(1) 1975 (2) 1980 (3) 1985

(4) 1988 (5) 1990 (4) 1988

253. Industrial Development Bank of India was established as a subsidiary

of

(1) Reserve Bank of India

(2) State Bank of India (3) Industrial Credit and Investment Corporation of India

(4) State Industrial Development Corporations

(5) Small Industries Development Corporation Bank of India (SIDBI) was

established in 1989 (1) Reserve Bank of India

254. Which of the following is not an objectives of SIDBI?

(1) To initiate the process of modernisation and technical upgradation of the

present units

(2) To facilitate the marketing of the products of the small scale sector in India and abroad

(3) to give loans both to the private as well as public sector undertakings in the

field of commodity production, mining and services such as hotels and transport

(4) to provide special aid to labour intensive industries to enable them to

provide more employment (5) To provide refinancing factoring, leasing services to the small sector (3) to give loans both to the private as well as public sector

255. ‗Development Banks‘ are



201

(1) branches of Commercial Banks, whether in private or public sector, situated

in rural areas for upliftment of weaker sections of the society

(2) financial institutions which provide long term finance to industries (3) land development banks which provide developmental financing to agriculture

(4) (2) and (3) (5) None of the above (2) financial institutions which provide long term financ

256. SEBI was established in

(1) 1993 (2) 1992 (3) 1988

(4) 1990 (5) 1994 (2) 1992

QUESTION & ANSWER-2 BANKING AWARENESS 1.Maximum punishment for

melting or destruction of coins

would be increased from

5 years to ……………..years of

imprisonment?

1. 4 2.9

3.7

4.10

5.16

2.The central government

reduced its stake in State Bank of India from 55 percent to

………..percent ?

1. 49

2.40

3.15

4.25 5.51

3. ………….authorizes the credit limit to the National Co-operative Marketing

Federation?

1. NABARD 2. RBI 3. SEBI 4. SBI 5. None

4.. Increase in deposit rate results …………?

1. lower savings 2. lower investments

3. increase bank branches



202

4. increase savings

5. None

5. Increase in deposit rate results ……….? 1. decrease the credit growth

2. increase the Agriculture default payments

3 decrease the customer base

4. increase the credit growth

5. all of above

6.Raise in inflation rate leads to decline in ……………? 1. interest rate

2. raise in the deposits in the banks

3. decrease the real interest rate

4. raise the credit growth by banks

5. None

7.Difference between interest earned and interest paid is called……..? 1. Gross Interest Income

2. Paid Interest Income

3. Free Interest Income

4. Net Interest Income

5. All of above

8.Express Remit is the brand name remittance facility of …………..? 1. SBH

2. Allahabad Bank

3. Repco Bank

4. UBI

5. SBI

9.Rs. 1000 can be withdrawn from the Point of Sales Terminals ( POS) as per the order of RBI.

Which is the first bank to introduce this facility?

1. SBI

2. SBH

3. UBI

4. ICICI 5. HDFC

10.Free Collateral loan up to Rs. …lakh provided to SME?

1. 5

2.10

3.9

4.5 6.15

11.………………………is the largest stake holder in the National securities

depository Limited?



203

1. SBI

2. Coporation Bank

3. Syndicate Bank 4.IDBI

5. ICICI

12. Recently RBI advised the banks to reduce the Net Interest Margin

comedown to see the

double digit growth. What is meant by it……….

1. Banks accept the deposits at high rate of interest and lend at higher rate of interest

2. Banks accept the deposits at high rate of interest and lend at no rate of

interest

3. Banks accept the deposits at high rate of interest and lend at lower rate

than the

present rates 4. Banks accept the deposits at lower rate of interest and lend at higher rate

5. None

13.C Rangarajan said which one as the ‗flawed business model‘ ?

1. Banks

2. Companies

3. Micro Finance Companies 4. Schools

5. Private Banks

14.Interest Corridor includes ……..?

1. Base rate and savings rate

2. Bank rate and Reverse Repo rate

3. Base rate and Repo rate 4. Repo rate and Reverse Repo rate

5. None

15.Asset-Liability mismatch usually happened in…………?

1. Home Loan and Infrastructure Project Financing

2. Education loan and personal loan

3. Personal loan and marriage loan 4. Travel loan and marriage loan

5.None

16.When Reserve bank of India Act was passed?

1. 1935

2.1954

3.1934 4.1971

5.1919

17. When Reserve bank of India was founded?



204

1. 1 Apr 1934

2. 1 Jan 1935

3. 1 Apr 1935 4. 1 June 1935

5. None

18.On which date of January 1949, the Reserve Bank of India was

Nationalized?

1. 21

2.31 3.5

4.15

5.1

19. How many regional offices are there for RBI?

1. 5

2.6 3.4

4. 7

5.9

20.On 26 March 2011, RBI said it wants to set up its first Sub-office

in……….. to increase the

outreach of the banks in that region? 1. Meghalaya

2. Manipur

3. Assam

4. Arunachal Pradesh

5. Tripura

21.The chief function of Reserve Bank of India includes…………? 1. Minting Currency

2. framing the monetary and credit policy

3. With the help of Circulation of money, maintaining price stability

4. Foreign Exchange matters

5. All of above

22.The different names of Reserve Bank of India are………….? 1. Central bank

2. Banker‘s bank

3. Lender of the last resort

4. Apex bank

5. All of the above

23.The government of India has the mint at………. 1. Noida

2. Kolkata

3. Mumbai



205

4. Hyderebad

5. All of the above places

24.………… puts signature on one rupee paper currency? 1. Finance Secretary

2. RBI governor

3. President of India

4. prime minister

5. Finance minister

25. RBI has six training colleges. Pick up correctly matched one? a) College of Agricultural Bank-Pune

b) National Institute of Bank Management-Pune

c) Bankers Training College-Mumbai

d) Indira Gandhi Institute for Development Research-Mumbai

e) Reserve Bank of India Staff College- Chennai

f) institute for Development and Research in Banking Technology-Hyderabad g) Note Counting and Quality Research Center-New Delhi

1. a b c d f g 2. a c d e f g 3. a b c d e f 4. a b c d e g 5. a b d f g

26.How many banks were allowed to import gold and silver as per the order

of RBI recently?

1. 8 2.6 3.7 4.11 5.10

27.In India how many banks were allowed to import the gold and silver? 1. 11 2.60 3.45 4.30 5.20

28.In India the lowest denomination of currency is Rs. ?

1. two 2. five 3. ten 4. one 5. 50 paise

29.In India the highest denomination of currency is………..?

1. 100 2.500 3.50 4.1000 5.10000

30.The highest circulation of paper currency is…………? 1. 2 2.100 3.1 4.1000 5.10

31.The highest number of fake currency in India is …………?

1. 5 2.100 3.1000 4.10 5.500

32.All paper currency in India must have the symbol of …………….as per the

order of Central

government from the year 2000? 1. Gandhi 2. Nehru 3. Bharath Matha 4. Lion 5. Tiger

33.Indian paper currency minted in Mysore and also in ……….?

1. Kolkatta 2. Chennai 3. Bengaluru 4.Nasik 5. Delhi

34.Paper currecncy minted with Ink OVI. OVI means Optical Variable Ink. It

is imported from

1. Switzerland 2. France 3. America 4. Russia 5. Belgium 35. Which industry manufactures white paper to supply to Indian Security

Press?

1. Gurgoan ( Haryana) 2. Golkonda (Andhra Pradesh) 3. Houshangabad (



206

Madhya Pradesh)

4. Ladakh ( Jammu) 5. None

36.In 2010-2011,which country exported the huge quantity of white paper to India?

1. USA 2. Japan 3. Russia 4. Dubai 5. Australia

37.Who mints the Indian coins?

1. RBI 2. CBI 3. Government of India 4. State Bank of India 5. IDBI

38.Recently Rs. 150 coin minted in the memory of Rabindranath Tagore. The

same denomination also minted in the memory of the completion of department of

……….?

1. Excise tax 2. Sales Tax 3. Income Tax 4. Finance 5. None

39.New series of Rs. 10 Gandhi Series will have…………..letter and other

features are the

same, as per the order of the RBI on 19 Jan 2010? 1. Y 2. L 3. P 4. N 5. K

40.By 31 March 2010, how many villages were covered with banking

serives?

1. 81000 2.31000 3.91000 4.15000 5.20000

41.Usha Thorat Committee suggested how many villages will have banking

services by the end of 2012?

1.75000 2.100000 3.60000 4.50000 5.90000

42.On 28 Feb 2011, as per the union budget, how many villages will be

provided with banking

services by 2012?

1. 84000 2.10000 3.68000 4.41000 5.73000 43.As per the statement of RBI‘s Deputy Governor K. C. Chakrabarty, at

least all villages will

have mobile banks by……………?

1. 2015 2.2020 3.2014 4.2016 5.2025

44.Which among the following is not the part of banking service?

1. Branch 2. On line banking

3. bank hoarding

4. Appointment of business correspondent

5. ATM service

45.‗Bank Saathi‘ means…………?

1. nearest bank 2. Business correspondent scheme

3. Nearest ATM

4. Account for friend



207

5. Scheme for wife and husband

46.Business Correspondent appointed to represent the bank in rural area.

Who is not eligible to act as business correspondent?

1. House Wife

2. Bank employee

3.private employee

4. the resident of village

5. None 47.Financial inclusion means……….?

1. providing banking services in rural areas with affordable cost

2. providing corporate accounts in industrial area

3. giving many joint accounts to save the money of banks

4. not to allow the banks to villages having already branch of another bank

there 5. all of above

48.On 11 February 2011,Hamara Khaata Hamara Swabhimaan(Our Account

Our Pride) scheme

announced. Who declared this one?

1. Indian Banks Association and SBI

2. RBI and IBA 3. SBI and IDBI

4. Ministry of Finace and World Bank

5. Indian Banks Association and Ministry of Finace

49.The lowest lending in the area of ……………….?

1. Central Part of India

2. Northern Part of India 3. Southern Part of India

4. Western Part of India

5. North Eastern Part of India

50.To raise the funds in European Union GDR used. GDR means…..?

1. Global Digital Receipts

2. Global Dual Receipts 3. Global Digital Rom

4. Global Done Receipts

5. Global Depositary Receipts

51. Which bank in India usually acts as a coordinator in the operations of

rural credit

institutions? 1. RBI

2. SIDBI

3. NABARD



208

4. RRB

5. SCB

52. Who is called leader in refinance to lending institutions in rural areas? 1. ICICI

2. REPCO

3. NABARD

4. SKS

5. SFC

53.With whom NABARD got MOU to prepare a road map for it‘s financial boost up its

business?

1. System Group

2. Perefect Solutions

3. Boston Consulting Group

4. DATA CRAFT 5. None

54.Non-Performing Assets do not include…………..?

a) Interest and /or installment of principal remain overdue for a period of

more than 90

days in respect of a term loan

b) the account remaining ‗out of order‘ for a period of more than 90 days in respect of an

overdraft/cash credit

c) the bill remains overdue for a period of more than 90 days in the case of

bills purchased

and discounted

d) the customer does not do any transaction in the last 90 days in savings bank account

e) the cheque does not honor within 180 days

1. a b 2. a d 3. c d 4. d e 5. c e

55.RBI increases the cash limit for foreign travel to……from $ 2000 without

its approval?

1. $4000 2. $7500

3. $3000

4. $10000

5. $600

56.RBI asked all banks not to honour cheques with overwriting from…?

1. 1 September 2010 2. 1 February 2011

3. 1 December 2010

4. 1 March 2011



209

5. 1 April 2011

57.RBI sold out its …………………..% share in national housing index for RS.

450 crore to Union Government

1. 75 2.62 3.100 4.25 5.90

58. How much worth of bank notes is in the circulation in India as per the

data released by RBI?

1. 5,22,814 cr 2. 18,22.366 cr 3. 7,88,299 crore 4. 2,25,145 cr 5. none

59. The business men and corporate sector eager to know India‘s Reference Rate for the US

dollar as released by RBI. RBI releases this data on…………..basis

1. Bi-monthly 2. Weekly 3. monthly 4. Half-yearly 5.Daily

60. Deposit Insurance and Credit Guarantee Corporation (DICGC) insures

the deposits of the

bank customers up to 1 lakh. DICGC is the wholly owned subsidiary of …? 1. SBI 2. NABARD 3. Union Government 4. RBI 5. IDBI

61.Monetary Policy of RBI does not include……………?

1.Control the supply of Money

2. Fixation of rate of interest ( least in some categories)

3. Reduction of taxes

4.Fixation of Repo rate and Reverse Repo rate 5.Fixation of Cash

62.RBI has constituted an Expert Committee under the chairman ship of

……………….studying

the advisability of granting new urban co-operative banking licenses?

1. C.Ranga Rajan

2. 2. Deepak Mohanty 3. Y. H Malegam

4. Usha Thorat

5. Subhir Gokarn

63. On the eve of 125th birth anniversary of the country's first president

Rajendra Prasad and

150th birth anniversary of Nobel laureate Rabindrnath Tagore, RBI issues Rs…………..coin

as per the statement given on 14 Oct 2010?

1. one 2. two 3. ten 4. twenty 5. five

64.The Reserve Bank of India has constituted a Working Group to review

the current operating

procedure of monetary policy of the RBI, including the liquidity adjustment facility under the

headship of…………………………….on 13 Sep 2010

1. Syamala Gopinath



210

2. Kaushik Basu

3. Pranab Mukarjee

4. Vijay C.Kelkar 5. Deepak Mohanty

65.RBI in one statement said that the Rupee is over-hauled, it means?

1. Rupee weakened where as the other currencies are becoming stronger

2. Dollar weakened against Rupee in the morning but in evening it lost to

Rupee

3. Rupee appreciates against other currencies; where as other currencies are weakening

4. All currencies are stronger than Rupee, except the Dollar as it is universal

currency

5. Rupee becoming stronger in that week against the all currencies

66.RBI does some Open Market Operations. Open Market Operations

mean……….? 1.RBI enters in the Banking sector and offers the direct service to

customers. It can give

current account to customers and participate in the mutual fund markets

2. RBI participates in the selling and buying of shares in stock exchange.

3. It buys and sells the government securities in the open market . By buying

it swells the liquidity by selling it sucks the load of liquidity.

4. RBI and banks buy and sell shares in the open market for profit during

the first session of

stock exchange business.

5. All of above

67.To study the issues and concerns of the Microfinance sector, RBI appointed a committee

headed by………………………………..?

1. C.Ranga Rajan

2. Usha Thorat

3. K.C.Chakravarthy

4. Shyamala Gopinath 5. Y. H. Malegam

68. Who heads the sub-committee of Financial Stability and Development

Council (FSDC), the

chief regulator to regulate the regulators?

1. Finance minister

2. SEBI Chairman 3. RBI Governor

4. IRDA Chairman

5. PFRDA Chairman



211

69.Which famous French Bank applied to get Reserve Bank of India's

permission to start a

non-banking finance company (NBFC) in India? 1. ING

2. IAG

3. BNP Paribas

4. Lombard

5. Prudential

70.An Indian company, which is otherwise eligible for ECB (External Commercial Borrowing )

can borrow up to which of the following amounts a year without prior RBI

approval?

1. $ 500 Million 2. $ 300 million 3. $ 400 Million 4.$ 450 Million 5.$ 600

Million

71.In which bank Bank of Rajasthan was merged? 1. SBI 2. Syndicate Bank 3. HDFC 4. ICICI 5. Bank of Punjab

72. BOR and ICICI agreed to amalgamate with ……………a swap ratio

1. 15:100 2. 25:118 3. 118:25 4. 25:75 5. 15:85

73.RBI said all………..should open no frills accounts for Minority communities

for availing

various scholarships? 1. Co-Operative Banks 2. Regional rural banks

3. Scheduled Commercial Banks 4. Local Area banks 5. NABARD

74.RBI issue Rs…………….and Rs……………..coins to commemorate the

Common Wealth

Games 2010 held at New Delhi?

1.One and Two 2.Five and Hundred 3.Two and Five 4.Five and Twenty 5.Hundred and Five

Hundred

75.Since 2003, Which of the following key rate had not been altered by RBI?

1. Reverse Repo Rate 2. Repo Rate 3. Cash Reserve

Ratio

4. Bank Rate 5. Statutory liquidity Ratio 76. As per RBI data currently, credit to the MSME sector accounts for about

…. per cent of the

total banking credit in the country?

1. 14-15 2. 20-21 3.30-35 4. 25-26 5.50-5

77.SBI christened SBI PSU FUND and raised ……….?

1. 500 cr 2. 1500 cr 3. 2000 cr 4. 1000 cr 5. 3000 cr 78.More than 1,000 kg Gold to be deposited with ………by Tirumal Tirupathi

Devastanams at

1.6 % P.A?



212

1. State Bank of Hyderabad

2. Tirumala Bank

3. State Bank of India 4. Indian Bank

5. ICICI

79. State Bank of India became first bank to setup wind mills for captive use

to adhere Green

banking. These wind mills are established first in………….?

1. Andhra Pradesh 2. Haryana

3.Karnataka

4.Tamilnadu

5. Goa

80.SBI funds is the joint venture between SBI and………………?

1. Prudential ( U.S.A ) 2. BNP Paribas ( France )

3. Allianz ( )

4. Societe Generale Asset Management ( France )

5. IAG ( Australia )

81.Which bank and Oriental Insurance Corporation Limited agreed to launch

a joint medicliam policy ?

1. Andhra Bank

2. Oriental Bank of Commerce

3. PNB

4. ICICI

5. Syndicate Bank 82.The Reserve Bank of India has raised the threshold limit for real time

gross settlement

(RTGS) transactions from Rs 1 lakh to RS. ……………lakh?

1. 1.5 2.3 3.5 4.2.5 5. 2

83.India‘s First Dedicated Education Loan Company CREDILA is the

associate body of……………?

1. SBI 2. Andhra Bank 3. United Bank of India 4. Hdfc 5. SBH

84. SBI life insurance details are given. Pickup incorrect statement?

1. SBI Life Insurance Company Limited is a joint venture between the State

Bank of India

and BNP Paribas Assurance 2. SBI owns 74% of the total capital and BNP Paribas Assurance the

remaining 26%.

3. BNP Paribas Assurance is the fourth largest life insurance company in



213

France

4. On 14 Apr 2010, SBI proposed to merge BNP Paribas Indian module

5. SBI Life Insurance is registered with an authorized capital of Rs 2000 crores and a Paidup

capital of Rs 1000 Crores

85. Which bank was merged with Centurion bank?

1. Bank of India

2. bank of maharastra

3. Bank of Punja 4. Indian bank

5. Corporation Bank

86. Centurion bank was merged with…………………….?

1. HSBC

2. Corporation bank

3. HDFC 4. IDBI bank

5. City bank

87. Global Trust bank was merged with ………………………?

1. HDFC

2. OBC

3. IDBI 4. Indian bank

5. Corporation bank

88.State Bank of India opened a savings bank account with RS. 1 by

targeting Urban Poor. In this

connection, recently it opened 20 kiosks called customer Service point (

CSP) to do this assignment. The first Kiosk opened in ……………….?

1. Lucknow

2. Mumbai

3. Vijayawada

4.Hyderabad

5. Tirupathi 89.25 % FDI allowed as per the approval of the Foreign Investment

Promotion Board in to

banks. How much percent of FDI allowed by direct route in banks?

1. 74 2.49 3.50 4.51 5.15

90.Regional Rural banks are not in the state of Sikkim and ……………..?

1. Tamil nadu 2. Rajasthan 3. Goa4. West Bengal 5. Jammu & Kashmir 91.Common Wealth Bank of Australia open its first branch in India at …?

1. Delhi 2. Jaipur 3. Mumbai 4. Chennai 5. Hyderabad

92. Which two banks have executed a memorandum of understanding



214

(MOU) to form a trust

exclusively to establish and run financial literacy and credit counseling

centers across various lead districts in Karnataka?

1. Andhra Bank and Union Bank of India

2. Syndicate Bank and State Bank of India

3.Syndicate Bank and Vijaya Bank

4. Andhra Bank and Oriental Bank of Commerce

5. United Bank of India and Andhra Bank 93.Which banks have comfortably retained the top rank in terms of profits/

employee, as per the data

released by the Reserve Bank of India?

1. Public Sector Banks

2. Private Sector Banks

3. Foreign Banks 4. Co-operative Banks

5. Rural Banks

94.The software, styled ‗Score', invented for small banking institutions such

as cooperative

banks at a minimal cost. This software developed by……………?

1. Satyam Mahendra ( Pune) 2. Infosys ( Karnataka)

3. Simcom ( Haryana)

4. Microsoft ( Andhra Pradesh)

5. Perfect Software Solutions Pvt Ltd ( Kerala)

95. Which Co-operative Bank has moved the Central Government and the

Reserve Bank of India for permission to issue shares at a premium to new members. it has base at

Mumbai?

1. Baranagar

2. Vizayanagaram

3.saraswat

4. Belguam 5. Annoya

96.European Central Bank (ECB) has the head quarters at…………?

1. Pairs

2. London

3. Madrid

4. Rome 5.Frankfurt

97.In context with Banking, which among the following is a correct with

regard to Merchandise



215

Credit and Merchandise Debit?

1. Merchandise credit relate to export of Durable goods while merchandise

debit represent import of Durable goods

2. Merchandise credit relate to buying of goods while merchandise debit

represent selling of

goods

3.Merchandise credit relate to export of petrol while merchandise debit

represent import of Crude

4. Merchandise credit relate to export of goods while merchandise debit

represent import of goods

5. Merchandise credit relate to Balance of Payments while merchandise debit

represent

Balance of Trade 98.GAB ( General Agreements to Borrow ) recently signed by………….?

1. G-8 2. G-10 3. G-7 4. G-8 5. G-77

99. ………………….. has sold its 13.84 per cent stake in SBI Capital Markets

Ltd (SBICAPS) to SBI?

1. World Bank 2. IMF 3.Asian Development Bank (ADB) 4. IFC 5. IIFC

100.Which bank is the first to issue computer chip based Debit card on pilot basis?

1. HDFC 2. ICIC 3.Axis bank 4. Syndicate bank 5. HSBC

101.State Bank of India has tied up with technology company …….. to offer

kiosk banking

in Mumbai and Maharashtra.?

1. Satyam 2. Micro Soft

3. Infosys

4. Oxigen

5. None

102.portal-linked service, which enables a dissatisfied customer to SMS

―unhappy‖ to 8008202020, if he is a customer of………………………..this is the first of its

kind in India?

1. SBI

2. IDBI

3. HSFC

4. ICIC 5. Indian bank

103.INFINET is a communication channel for transmission of electronic

communication by



216

banks. INFINET stands for…………?

1. Indian Financial Internal Network Electronic Transaction

2. Indian Financial Internal Network 3. Indian National Financial Internal Net Extra Track

4. Indian Financial Network 5. None

104.IDBI will tie up with…………….to boost micro-financing in India?

1. SBI 2. RBI 3. NABARD 4. SIDBI 5. ADB

105.SBI SMILE provides interest-free seed capital of up to Rs.10 lakh to

………………..? 1. Auto drivers 2. students 3. children 4. small and medium enterprises 5.

NRI‘s

106.If a bank account that automatically transfers amounts that exceed (or

fall short of) a

certain level into a higher interest earning investment option at the close of

each business day that account usually called as

1. Freeze Account

2. CASA Account

3. Illegal Account

4. Sweep Account

5. In operative Account 107.In a news paper it is read that ‗Higher Provisioning erodes public sector

banks‘ profit‘

Here Provisioning means?

1. Daily Expenses

2. Cost to erect ATMs

3. Conducting Exams to recruit new Personal 4. bad loans

5. Establish new branches

108.Details of the loan given to appear for Competitive exams is a new type

of loan. Pick up

correct statements?

1. Central Bank of India is the first bank to offer this type of loan. The name of the schme

is CENT COMP-EXAM

2. the volume of the loan is Rs. 2 Lakhs

3. It must be paid with in 36 months

4. Even NRI students are eligible

5. For boy students the rate of interest is 12 percent and for girl students the rate of interest

is 11.5 percent

109.. Micro Credit in India belongs to………………………..?



217

1. Semi-Commercial Banking 2. Commercial Banking 3. Non-Banking Finance

4. Cooperative Banking 5. Private Banking

110.Which is the first rural bank in the country introduced a co-branded ATM card. This is the

Indian bank sponsored rural bank.

1. Puduvai Bharathiar Grama Bank (Puducherry)

2. Saptagiri Grameena Bank(Andhra Pradesh)

3. Pallavan Grama Bank( Tamilnadu)

4. Manjira Gramina Bank( Andhra Pradesh) 5. None of above

111.First time in India, Which bank initiates to open ―Youth branch‖, in

Andhra Pradesh having

a cafeteria for chatting, video games, trendy music speakers etc?

1. State Bank of India 2. Corporation Bank 3. Fedral Bank

4. HDFC 5. ICICI Bank 112.Housing finance company HDFC and private sector ICICI Bank have

decided to

discontinue teaser home loan schemes. Teaser home loans mean……?

1. the loans given at higher rate of interest for the first few years

2. the loans given at cheaper rates to Senior Citizens

3. the loans given at lower rates for the first few years. 4. the loans given at no interest rate

5. the loans given to employees of the same bank

113. Which of the following private sector bank is re branding itself as RBS?

1.Sumitomo Bank 2.Bank of Scotland . 3.ABN Amro 4. ICICI 5. Bank of

Rajasthan

114.. …………………………….Committee played a vital role in the genesis of the Self-Help

Group and Bank linkage programme?

1. Usha throat 2. C.Ranga Rajan 3. S.K.Kalia 4. Deepak Mohanty 5.None

115. The banking business use the word Hot Card. Hot card means…………..?

1. Card used to buy Petrol 2. Card used to buy hot deals in website

3. Card issued, but not used by customer 4. Card issued by bank but not honoured by another bank. 5. Lost Credit

Cards

116.Recently Reserve Bank of India, along with the Securities and Exchange

Board of India

(SEBI) has allowed recognized stock exchanges to launch futures currency

trading in……. Futures trading in dollars-rupee were already allowed.

a) euro-rupee

b) pound sterling-rupee



218

c) yen-rupee

d) Ruble-rupee

e) Lira-rupee 1. b c d 2. a b e 3. a b c 4. a b c d 5. All of above

117.What is NABARD‘s primary role?

1. To raise the capital of state government to give loans

2. To provide term loans to State Bank of India

3. To give term loans to stateCooperative Banks

4. To assist central government for share capital share with co-operative banks

5. None

118.To open a new branch the Banks are required to take permission from

…………….?

1.SBI

2.SEBI 3.Indian Banks Association

4.Finance Commission of India

5. RBI

119. Banks do not provide……………………………….

1.Issuing Negotiable instruments

2.Sale of Stamp papers at lower rates 3.Deposits

4.Lockers

5.Loans

120. Repatriation means

1. Capital flow from a home country to the foreign country.

2. Deposits move from the low interest area to high interest area 3. Capital flow from a foreign country to the country of origin

4. Capital flow from share market to safe deposits

5. Capital move from the risk area to non- risk area

121. "Loan Servicing" means?

1. Lending the money

2. A mortgage bank or sub-servicing firm collects the timely payment of interest and principal from

borrowers

3. Helping the customer to get loan in other banks by providing the details of

the running account

4. Giving a loan if the customer has any deposit

5. Giving second loan after payment of first loan regularly 122.. The obstacle for financial inclusion in India?

1. Lack of legal identity like voter id , driving license , birth certificates

,employment identity



219

card etc,

2. Lack of basic education prevent people to have access from financial

services, 3. Low income people,

4. Lack of awareness about the importance of Finance, Bank Accounts,

cheque facility by the

people who has basic education

5. All of the above

123.Least ten banks want to pickup stake in the proposed Central Electronic Registry (CER), to

keep track of mortgages in the home loan market. CER established by ……..

1. Reserve Bank of India

2. National Housing Bank

3. HDFC

4. State Bank of Hyderabad 5. IMF

124.Luxemberg based KBC group bank purchased by………………group?

1. Tata

2. Hinduja

3. Reliance

4. Vedanta 5. Piramal

125. Lead Bank scheme was launched on the recommendation of?

1. C.Ranga rajan

2.F. K. F. Nariman

3. Lakdawala

4. Dutt and Sundaram 5. Man mohan singh

126.Of the following one, which one is called as non-cash transactions?

1.Credit card

2.Debit card

3.ATM card

4.Pre-Paid card 5. All of above

127.―SBI Ka Apna Goan‖, a Village Development Scheme which was

introduced and gradually

faded away in 1960s, is being revived by State bank of India under its CSR

(Corporate

Social Responsibility) . Now it‘s wanted to revive first in ….? 1. Bihar 2. Rajasthan 3. Uttarakhand4. Assom 5. Uttar Pradesh

128.R.B.I has both qualitative and quantitative control instruments to

control the monetary



220

policy.Among the following measures which one is qualitative one?

1.RBI decreases the CRR rate

2. RBI increases Reverse Repo rate 3. RBI announces selective credit control

4.RBI decreases the Bank rate

5.RBI alters the statutory Liquidity Ratio

129. India will improve its rank by three notches to the 8th position in the

International Monetary

Fund (IMF). The share improve to about 2.75 percent from the present level of 2.44 percent.

China improves it rank from sixth to …………………?

1. First 2. Fifth 3. Fourth 4. Third 5. Second

130.Federation of Indian Chambers of Commerce and Industry conducted a

survey. That survey

reveals a fact that Indian banking is stronger on vital banking parameters than other BRIC

nations. Which among the following has not been highlighted in this survey

as strength of

Indian Banking System?

1. Quality Human Resources

2.Regulatory system 3. Banking Technology

4. Risk Management System

5. All of above

131.RBI constituted ……………………………committee on Bench Mark Prime

Lending Rate?

1. C.Ranga rajan 2. subba rao

3. Deepak mohanty

4. K.C.chakravarthy

5. None

132.Solar ATMs hit soon Indian banking system. Pick up the correct

statements? 1. Vortex Engineering announced the launching of large scale of Solar ATMs

in India

2. These ATMs are developed in the collaboration of IIT Madras.

3. State bank of India ordered Vortex for the installation of 300 Solar ATMs

4. These ATMs are also equipped with Bio-metric option.

5. Under MGNREGS, these ATMs are erected in Cuddalore district of Tamilnadu as pilot

project.

133.Of the following banks which one are wrongly matched one ?



221

1. HDFC Bank---The smallest credit card in the world

2. ABN-AMRO—The first transparent credit card in the world

3. Kotak Bank- The first vertical Credit Card in the world 4. SBI bank—multi purpose card in the same group

5. HSBC Bank—first public sector bank to introduce credit card in India

134.Sub prime lending is a loan made to……?

1. The corporate business company which pay back its loan before the date

2. The individual who takes loan by keeping security

3. the bank was authorized by RBI to give loans at reduced rates to some people

4. Such person do not have a good credit history 5. The load of loans

135. On 11 February 2011, TTD deposited 1175 kg of gold with SBI to fetch

1.6 % rate of

interest per annum. Which is the only one bank in India offers Gold Deposit

Scheme? 1. Syndicate Bank

2. Andhra Bank

3. Kalinga Bank

4. OBC

5. SBI

136.11,000 Business Correspondents will be appointed by the various banks in rural areas with

the help of the network FINO. FINO means……………?

1.Financial Inclusion Network and Operations

2. Financial Inclusion Networth and Operations

3. Fundamental Inclusion Network and Operations

4. Financial Inclusion Network and Obligations 5. None

137. Skotch Financial Inclusion Award 2011 for ―SGH Inititatives-Urban

Financial Inclusion‖

given to………..?

1. Union Bank of India

2. Syndicate Bank 3. Andhra Bank

4. Indian Bank

5. State Bank of India

138.7th Annual Banking Techonolgy Conference& Expo was held in

………………..on 2 Mar

2011? 1. Goa

2. Hyderabad

3. Tiruvananthapuram



222

4. Delhi

5. Mumbai

5. All of the above 139.Banks usually share the information of CIBIL at the time of giving credit

to the borrowers.

CIBIL stands for…………..?

1. Credit inform Bureau ( India ) Limited

2. Credit Information Bureau (India) Limited

3. Consumer Information Bureau (India) Limited 4. Credit Information Board (India) Limited

5. Collective Information Bureau (India) Limited

140.10 percent of the voting rights removed by Banking Laws (amendment)

Bill 2011 in the

…………….?

1. Private Banks 2. Public Sector Banks

3. Foreign Banks

4. Regional Rural Banks

5. All of above

141.On 18 March 2011, Which bank opened its foreign subsidiary in UK?

1. SBI 2. IDBI

3. HDFC

4. ICICI

5. UBI

142. The Negotiable instrument is………..?

1. Cheque 2. Demand Draft

3.Cheque

4. Bill of Exchange

5. All of above

143.ICICI decided to come in the large way to open leaset 500 branches in

a year. It wants to foucus on the lending to…………..sectors

1. Transportation

2. Education

3. IT

4. Road and Power sector

5. Micro Finance 144.The second largest lender in India is………?

1. SBI

2. IDBI



223

3. ICICI

4. UBI

5. IOB 145.The only online account B2 run by……….?

1. Syndicate Bank

2. LIC

3. Corporation Bank

4. IDBI

5. ICICI 146.M.Chidambaram Chettyar is the founder of………..?

1. ICICI

2. Andhra Bank

3. Syndicate Bank

4. IOB

5. BOI 147.Project Merlin is the contract of 4 banks and…………..?

1. England

2. Japan

3. India

4. USA

5. UK 148.The banks are issuing the Kisan credit cards these days to give the free

credit period .

Generally what is the Validity period of the Kisan Credit Card?

1. 1 year

2. 10 years

3. 5 years 4. 8 years

5. 3 years

149.―Next Eleven Countries‖ (N-11) are ………………….. as identified by the

Goldman Sachs

investment bank?

1. Least Developed Countries 2. Developed countries

3. No developed countries

4. Developing Countries

5. None

150.RBI had set up the sub-committee, headed by Mr Y.H. Malegam to give

recommendations on the Microfinance institutions. His recommendations do not

include……………………..?

1. Create Separate category of Non-Banking Finance Companies (NBFC)



224

operating in the

microfinance sector

2. Even for Micro-finance loan sector, the set up of Credit Information Bureau is essential

3. Micro Finance companies must be audited by the lead banks of the

concerned districts on monthly basis

4. Limiting the lending to the same borrower to two Microfinance institutes

5. Micro Finance Companies must not charge more than 24 % from borrowers

151.In which state, the Reserve Bank of India initiated to start satellite banks in villages?

1. Andhra Pradesh

2. Bihar

3. Maharashtra

4. Jharkhand

5. Madhya Pradesh 152. On 14 January 2011, Which bank launched ‗Bank on bike‘, a banking

service to extend

banking services in rural areas, first time in India at Cheriyal village of Medak

district in Andhra

Pradesh

1. Andhra Bank 2. State Bank of Hyderabad

3. ICICI

4. Syndicate Bank

5. State Bank of India

153.The Banks Punch lines are given. Pick up correct one?

1. Allahabad Bank-A tradition of trust 2. Andhra Bank-For all your needs

3. Bank of Baroda-India‘s International Bank

4. Bank of India-Relationship beyond Banking

5. All of the above

154.The head offices of banks are given. Pick up incorrect one?

1. Allahabad Bank- Kolkatta 2. Andhra Bank-Hyderabad

3. Bank of Baroda-Baroda

4. Bank of India-Mumbai

5. None

155.What is meant by Medium term note?

1. A corporate note continuously offered by a bank to investors through a dealer.

Investors can choose from differing maturities, ranging from 1 month to 1

year



225

2. A corporate note continuously offered by a company to investors through

a dealer.

Investors can choose from differing maturities not exceeding 6 months 3.A corporate note continuously offered by a company to investors through

a dealer.

Investors can choose from differing maturities, ranging from nine months to

30 years

4. A corporate note continuously offered by a company to investors asking

them to take not higher or lower denomination of notes

5. None

156.Differential Rate of Scheme ( D.R.S ) means……….?

a. The difference between the small borrowers who will be charged with

more rate of interest and big

borrowers are charged with less rate of interest b. The banks can discriminate between public employment employees and

private employment

employees

c. Public and Private sector banks can discriminate the customers under this

DRS

d. Public sector banks are required to fulfill the target of lending of at least one percent of total

advances at the end of the preceding year to the weakest of weaker sections

at an interest of 4 % per

annum.

e. The Foreign and Indian banks differ in the evaluation of loans to be given

to customers 157.R.R.B‘S are entitled to enter in to the business of Mutual funds. Pick up

the wrong one?

1. They are entitled to enter in to business of Mutual Funds intimating to R.B.I

2. They should not acquire the MF units from secondary markets

3. They should get special permission from State Governments

4. They should not buy back the shares from the unit holders 5. They come under the monitoring role of SEBI and R.B.I in this case

158.Goporia committee recommendations were given below, relating to the

working of Banks. Find the incorrect one?

1. Extension of banking hours for all banks

2. suspend the saving accounts as there are withdrawals

3. The readujustment of banking time for staff 4. increase the tax benefit for bank deposit schemes

5. optimize the powers of banking officials

159.Some times banks believe that the sudden decrease of loan rate of



226

interest benefits both bank and for corporate houses. Pick up the correct one?

a. This type of scheme encourages the corporate houses to pay back their

high cost debts. b. This scheme helps the corporate sector to take fresh loans at lower rate

of interest

c.The bank is benefited by getting funds back from the risky customers.

d.Prepayment charges are also collected by bank

1. ab 2. b c d 3. a b c 4. a b c d 5. a c d

160.Private Equity investment means? 1. purchase of a majority of total owner ship in an operating company

2. Private company divides its capital and forming in to two companies

3. Public company turns in to Private company

4. Private stake sold to another company to do another business

5. Govt. approval to it‘s PSU to do the private business also

161.Balance of payments means a record of all economic transactions completed between its Residents of remaining world during a year . it includes?

a. export value b. import value c) shipping d) banking e) tourism

f) insurance g) loyalty

1. a b c d g 2. a b c d e f g 3. b c d e 4. d e f 5. a b d e f

162.Autarchy in Economy means?

1. independence of economy does not need imports 2. political dominance in parliament

3. independent powers of RBI

4. exclusive powers of Governor of State

5. company‘s power to buy back it‘s shares

163.With a view to strengthen and institutionalize the mechanism for

maintaining financial stability,Government has decided to set up an apex level body, not to disturb theautonomy of regulators. It is……………?

1.Financial and regulation council

2. Regulation and stability monitoring council

3. Financial stability and development council

4. Indian Regulatory authority of stability

5. Indian financial stability and development council 164.If the net worth of company is above RS. 1000 crore by 1 Apr 2010,

they should follow IFRS norms. If their net worth is RS. 500 crore –Rs.1000 crore

they should follow by 1 APR 2003, and below than RS. 500 crore they should

follow by 1 Apr 2014.All small and medium scale industries,Unlisted Firms are

exempted from IFRS. IFRS means………..?

1. International Financial Respect scheme 2. 2.International Financial Reign System

3 Inter-continental Financial Report system

4. International Financial Reporting Standards



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5 International Financial Responsive Syste

165.Of the following statements which one is wrong related RBI subsidiary

BRBNMPL? 1. Bharatiya Reserve Bank Note Mudran Private Limited was established by

RBI

2. its wholly owned subsidiary of RBI established on 3rd February 1995

3. It is established to bridge the gap between the supply and demand for

bank notes in the country.

4. The company manages 2 Presses one at Mysore in Karnataka and the other at Salboni in West Bengal

5. It is chaired by Pranab Mukharjee, the Finance Minister of India as a Full

time Director

166.As per the statement given by D.Subba Rao, the governor of R.B.I,

India preferrs.?

1. long term flows to short term flows and non-debt flows to debt flows. 2. Short term flows to long term flows and debt flows to non-debt flows

3. long term and short term flows

4. long term flows and debt flows

5. none

167.Which banks have comfortably retained the top rank in terms of profits/

employee, as per the data released by the Reserve Bank of India? 1. Public Sector Banks

2. Private Sector Banks

3. Foreign Banks

4. Co-operative Banks

5. Rural Banks

168.SBI SMILE provides interest-free seed capital of up to Rs.10 lakh to ………………..?

1. Auto drivers

2. students

3. children

4. small and medium enterprises

5. NRI‘s 169.Indian Banks are showing interest to do Factoring Business. Factoring

means..?

1. Construction of factories in the urban areas

2. Selling and buying of shares

3. Issue loans to heavy industries in SEZ areas

4. Collection of debts of another 5. None

170.Indian Banks are showing interest to do Factoring Business. Factoring

means..?



228

1. Construction of factories in the urban areas

2. Selling and buying of shares

3. Issue loans to heavy industries in SEZ areas 4. Collection of debts of another

5. None

171.Micro Credit in India belongs to………………………..?

1. Semi-Commercial Banking

2. Commercial Banking

3. Non-Banking Finance 4. Cooperative Banking

5. Private Banking

172.Any bank can start its branch with out permission of RBI in…………..part

of India?

1. North Eastern 2.North Western 3. South Western

4. South Eastern 5. Central Banking Awareness Key

1.3 2.5 3.1 4.4 5.4 6.3 7.4 8.5 9.3 10.1

11.4 12.3 13.3 14.4 15.1 16.3 17.3 18.5 19.3 20.5

21.5 22.5 23.5 24.1 25.3 26.3 27.4 28.4 29.4 30.5

31.5 32.1 33.4 34.1 35.3 36.4 37.3 38.3 39.4 40.2

41.1 42.5 43.1 44.3 45.2 46.2 47.1 48.5 49.5 50.5 51.3 52.3 53.3 54.4 55.3 56.3 57.3 58.3 59.5 60.4

61.3 62.3 63.5 64.5 65.3 66.3 67.5 68.3 69.3 70.1

71.4 72.2 73.3 74.3 75.4 76.1 77.4 78.3 79.4 80.4

81.3 82.5 83.4 84.4 85.3 86.3 87.2 88.4 89.2 90.3

91.3 92.3 93.3 94.5 95.3 96.5 97.4 98.2 99.3 100.3

101.4 102.1 103.4 104.4 105.4 106.4 107.4 108.4 109.3 110.3 111.1 112.3 113.3 114.3 115.5 116.3 117.3 118.5 119.2 120.3

121.2 122.5 123.2 124.2 125.2 126.5 127.4 128.3 129.4 130.1

131.3 132.4 133.5 134.4 135.5 136.1 137.4 138.2 139.2 140.1

141.5 142.5 143.4 144.5 145.5 146.3 147.1 148.5 149.4 150.3

151.4 152.5 153.5 154.5 155.3 156.4 157.3 158.2 159.4 160.1

161.2 162.1 163.3 164.4 165.5 166.1 167.3 168.4 169.4 170.4 171.3 172.1



229


Documents

Banking Awareness Book