[DATED: 15th May] 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). Expand the term FRBM.
a) Financial Responsibility and Business Management
b) Fiscal Responsibility and Business Management
c) Financial Responsibility and Budget Management
d) Fiscal Responsibility and Budget Management
e) Formal Responsibility and Business Management
Answer: d)
Explanation: The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 is an Act of the Parliament of India to institutionalize financial discipline, reduce India's fiscal deficit, improve macroeconomic management and the overall management of the public funds by moving towards a balanced budget and strengthen fiscal prudence.
2). Reverse Repo is a tool used by RBI to
a) Inject liquidity
b) Absorb liquidity
c) Increase the liquidity with banking system
d) To keep the liquidity at one level
e) None of these
Answer: b)
Explanation: Reverse repo operation is when RBI borrows money from banks by lending securities. The interest rate paid by RBI in this case is called the reverse repo rate. Reverse repo operation therefore absorbs the liquidity in the system. Similarly Repo operations inject liquidity into the system. The collateral used for repo and reverse repo operations are Government of India securities.
3). Many times we read a term CBS used in banking operations. What is the full form of the letter ‘C’ in the term ‘CBS’?
a) Complete
b) Credit
c) Continuous
d) Core
e) None of these
Answer: d)
Explanation: Core Banking Solution (CBS) is networking of branches, which enables Customers to operate their accounts, and avail banking services from any branch of the Bank on CBS network, regardless of where he maintains his account. The customer is no more the customer of a Branch. He becomes the Bank’s Customer. Thus CBS is a step towards enhancing customer convenience through anywhere and anytime Banking.
4). The main function of the IMF is
a) to help solve balance-of-payments problems of member countries
b) to arrange international deposits from banks
c) to act as private sector lending arm of the World Bank
d) to finance investment loans to developing countries
e) None of these
Answer: a)
Explanation: The main function of the IMF is to provide temporary financial support to its members so that ‘fundamental’ BOP (balance-of-payments) disequilibrium can be corrected. However, such granting of credit is subject to strict conditionality. The conditionality is a direct consequence of the IMF’s surveillance function over the exchange rate policies or adjustment process of members.
5). Which of the following is the most active segment of the money market in India?
a) Call Money/Notice Money Market
b) Repo/Reverse Repo
c) Commercial Paper (CP)
d) Certificate of Deposit (CD)
e) None of these
Answer: a)
Explanation: The call/notice money market forms an important segment of the Indian Money Market. Under call money market, funds are transacted on an overnight basis and under notice money market, funds are transacted for a period between 2 days and 14 days.
6). Which of the following bodies promoted Securities Trading Corporation of India Limited (STCI) jointly with the Public Sector Banks?
a) Securities Exchange Board of India
b) ICICI Ltd
c) IDBI Ltd
d) Reserve Bank of India
e) IRDA
Answer: d)
Explanation: STCI Finance Limited was promoted by Reserve Bank of India in May 1994 with the objective of fostering an active secondary market in Government of India Securities and Public Sector bonds. The Company had a subscribed and paid up capital of Rs 500 crores with RBI owning the majority stake of 50.18%. In 1996, STCI was authorized by RBI as one of the first Primary Dealers in India.
7). The expansion for BIFR, in the context of the Indian industry, is
a) Board for Investment and Financial Redevelopment
b) Bureau for Industrial and Financial Revolution
c) Board for Investment and Formal Reconstruction
d) Board for Industrial and Financial Reconstruction
e) Bureau for Investment and Financial Reconstruction
Answer: d)
Explanation: The Board for Industrial and Financial Reconstruction (BIFR) was an agency of the government of India, part of the Department of Financial Services of the Ministry of Finance. Its objective is to determine sickness of industrial companies and to assist in reviving those that may be viable and shutting down the others.
8). GNP stands for
a) Gross National Product
b) Group Net Product
c) Grand Nuclear Process
d) Group Networking Process
e) None of these
Answer: a)
Explanation: Gross national product (GNP) is an estimate of total value of all the final products and services produced in a given period by the means of production owned by a country's residents. GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports, and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents. Net exports represent the difference between what a country exports minus any imports of goods and services.
9). As per notification issued by RBI, circulation of which of the following coins shall be ceased which effective from 29th June, 2011?
a) Rs.1
b) 50 paise
c) 25 paise
d) Both (b) and (c)
e) None of these
Answer: c)
Explanation: "Coins of denomination of 25 paise and below will cease to be legal tender from June 30, 2011. These will not be accepted for exchange at bank branches from July 1, 2011 onwards," the RBI said.
10). Which of the following would result in a fall in asset prices?
a) Low liquidity in the economy
b) High liquidity in the economy
c) RBI increasing the Reverse Repo Rates
d) RBI allowing more banks to play
e) None of these
Answer: a)
Explanation: Liquidity ratios measure a company's ability to pay short-term obligations of one year or less (i.e., how quickly assets can be turned into cash). A high liquidity ratio indicates that a business is holding too much cash that could be utilized in other areas. A low liquidity ratio means a firm may struggle to pay short-term obligations.
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