Important Banking Awareness Questions with Detailed Explanation for BOB/SBI PO 2017

[DATED: 26th April] Important Banking Awareness Questions with Detailed Explanation for BOB/SBI PO 2017:

Dear Readers, the List of important Banking Awareness Quiz with detailed explanation for upcoming BOB/SBI PO 2017 exams was given here. Candidates those who are preparing for the exams can use this.

1). Which authority / organization is the major share holder in NABARD?

a) RBI

b) Government of India

c) SBI

d) SEBI

e) None of these

Answer: b)
Explanation: The initial corpus of NABARD was Rs.100 crores. Consequent to the revision in the composition of share capital between Government of India and RBI, the paid up capital as on 31 March 2015, stood at Rs.5000 crore with Government of India holding Rs.4,980 crore (99.60%) and Reserve Bank of India Rs.20.00 crore (0.40%). RBI sold its stake in NABARD to the Government of India, which now holds 99% stake.

2). Which international organization helps in prevention of money laundering?

a) World Bank

b) FATF

c) IMF

d) ADB

e) None of these

Answer: b)
Explanation: The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

3). SLR refers to

a) That portion of total deposit of a commercial bank which it has to keep with itself in the form of gold or securities

b) the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

c) the rate of interest which a central bank charges on the loans and advances to a commercial bank.

d) the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country.

e) None of these

Answer: a)
Explanation: Statutory liquidity ratio (SLR) is the Indian government term for reserve requirement that the commercial banks in India require to maintain in the form of gold, government approved securities before providing credit to the customers. Statutory Liquidity Ratio is determined by Reserve Bank of India maintained by banks in order to control the expansion of bank credit.

4). What is known as the Open Market Operations of RBI?

a) Buying and Selling of Stocks

b) Auctioning of foreign exchange

c) Trading in Securities

d) Transactions in Gold

e) None of these

Answer: c)
Explanation: Open Market Operations refer to the purchase and sale of the Government securities (G-Secs) by RBI from / to market. The objective of Open Market Operations is to adjust the rupee liquidity conditions in the economy on a durable basis.

5). Basel committee on banking supervision is associated with which of the following?

a) Banking Regulation Committee

b) Bretton Woods Institution

c) Bank for International Supervision

d) Federal Reserve

e) None of these

Answer: c)
Explanation: The Basel Committee on Banking Supervision (BCBS)is a committee of banking supervisory authorities that was established by the central bank governors of the Group of Ten countries in 1974. It provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. The Committee frames guidelines and standards in different areas - some of the better known among them are the international standards on capital adequacy, the Core Principles for Effective Banking Supervision and the Concordat on cross-border banking supervision.

6). Fiat money is best described by which of the following?

a) Money which is accepted internationally

b) Money accepted temporarily in lieu of gold

c) Inconvertible paper money made legal tender by a government decree

d) Money which is issued by keeping gold and silver as deposit

e) None of these

Answer: c)
Explanation: Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on the faith and credit of the economy.

7). Which among the following is NOT a credit rating agencies?

a) Experian

b) CRISIL

c) ICRA

d) FITCH

e) ONICRA

Answer: a)
Explanation: The Indian credit rating industry has evolved over a period of time. Indian credit rating industry mainly comprises of CRISIL, ICRA, CARE, ONICRA, FITCH & SMERA. CRISIL is the largest credit rating agency in India, with a market share of greater than 60%. It is a full service rating agency offering its services in manufacturing, service, financial and SME sectors. SMERA is the rating agency exclusively established for rating of SMEs.

8). What is the term used to explain the gap between total expenditure and total receipts including both the capital and revenue expenditure and receipts?

a) Revenue deficit

b) Budget deficit

c) Fiscal deficit

d) Primary deficit

e) None of these

Answer: b)
Explanation: Budget deficit is the difference between total receipts and total expenditure. If borrowings and other liabilities are added to budget deficit, we get Fiscal deficits.

9). When was the Banking Regulation Act enacted in India?

a) 1934

b) 1956

c) 1945

d) 1949

e) 1950

Answer: d)
Explanation: The Banking Regulation Act, 1949 is a legislation in India that regulates all banking firms in India. Initially, the law was applicable only to banking companies, and in 1965 it was amended to make it applicable to cooperative banks and to introduce other changes.

10). Which of the following is a fully owned subsidiary of RBI?

a) NABARD

b) SIDBI

c) IDBI

d) NHB

e) None of these

Answer: d)
Explanation: National Housing Bank (NHB), a wholly owned subsidiary of Reserve Bank of India (RBI), was set up on 9 July 1988 under the National Housing Bank Act, 1987. NHB is an apex financial institution for housing. NHB has been established with an objective to operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support incidental to such institutions.