Banking Financial Awareness · Economics

Banking Regulation and Monetary Policy

1,180 Questions

Banking regulation and monetary policy questions test your understanding of the Reserve Bank of India functions, regulatory frameworks, and monetary tools. Topics include KYC guidelines, repo rates, and foreign exchange reserves management. This section is crucial for candidates preparing for banking and financial awareness exams.

RBI monetary toolsKYC guidelinesInterest rate regulationsCurrency issuanceBanking business acts

Banking Regulation and Monetary Policy Questions

Multiple choice

In March 2015, the Reserve Bank of India reduced the repo rate to

  1. 7.75 percent

  2. 7.5 percent

  3. 7 percent

  4. 8 percent

  5. 8.25 percent
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In March 2015, the RBI cut the repo rate by 25 basis points from 7.75% to 7.5%. This was the first rate reduction under Governor Raghuram Rajan, aimed at boosting economic growth while managing inflation.

Multiple choice

The K.S.Shastry Committee recommendations deals with

  1. health insurance for senior citizens

  2. administered price mechanism for petroleum products

  3. FDI in sensitive sectors

  4. implementation of Basel norms
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The K.S. Shastry Committee (2002) specifically dealt with health insurance for senior citizens, leading to the establishment of Senior Citizen Health Insurance Scheme. It did not cover petroleum pricing (administered by different committees), FDI, or Basel norms.

Multiple choice

The Reserve Bank of India has extended currency swap arrangement to South Asian Association for Regional Cooperation nations till mid-November 2017. All 7 SAARC members can avail the facility. Under the arrangement, RBI will offer swap arrangement up to an overall amount of ________ both in foreign currency and Indian rupee.

  1. US 1 billion dollars

  2. US 1.5 billion dollars

  3. US 2 billion dollars

  4. US 2.5 billion dollars

  5. US 3 billion dollars
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct answer is (3). 

Multiple choice

Reserve Bank of India gives

  1. all currencies except hundred rupee notes

  2. all notes except one rupee notes

  3. all currencies

  4. All currencies more than the ten Rupee note
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Reserve Bank of India issues all currency notes except the one rupee note. One rupee notes are issued by the Ministry of Finance, Government of India, and bear the signature of the Finance Secretary rather than the RBI Governor. This distinction is because only the RBI can issue notes of higher denominations.

Multiple choice

Base rate in banks is _________.

  1. rate of interest payable on demand deposit

  2. rate of interest payable on fixed deposits

  3. rate of interest charged by RBI on long term borrowings of public sector units

  4. the rate below which no bank allows their lending to anyone

  5. all of the above

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Yes, its the correct choice. Base rate is the rate below which no bank allows their lending to anyone. It is fixed by RBI.

Multiple choice

A bank is called a scheduled bank when ____________.

  1. its business has crossed the 1000 Crore mark

  2. its branch network is over 100

  3. it is included in the second schedule of the RBI act

  4. when it complies with all of the 3 above options

  5. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Yes, it’s the correct choice. If a bank is included in the second schedule of the RBI act then it is called a scheduled bank.

Multiple choice

CRR is changed by RBI __________.

  1. at its discretion

  2. on a day to day basis

  3. on a monthly basis

  4. on a yearly basis

  5. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

CRR will be changed by RBI at its discretion only, not on a monthly or daily basis.

Multiple choice

The slogan of the Central Bank of India is ____________.

  1. Central to you since 1911

  2. Central to your finance

  3. We around you, you at center

  4. Central in serious since 2011

  5. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Yes, it’s the correct choice. The Central bank slogan is Central to you since 1911.

Multiple choice

The Securities and Exchange Board of India (SEBI) had imposed a restriction on money flow in equity through ‘P-Notes’. What is the full form of ‘P-Notes’?

  1. Permanent Notes

  2. Purchase Notes

  3. Participatory Notes

  4. Private Notes
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

P-Notes stands for Participatory Notes, which are financial instruments used by foreign investors to invest in Indian securities without registering with SEBI. They are issued by FIIs to overseas investors who wish to invest in India but want to avoid regulatory procedures.