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

Which of the following terms NOT used in Banking Sector?

  1. SLR

  2. NPA

  3. Credit Rating

  4. Fixed

  5. PURA
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

PURA (Provision of Urban Amenities in Rural Areas) is a rural development initiative, not a term specifically used in banking operations. The other options - SLR (Statutory Liquidity Ratio), NPA (Non-Performing Assets), Credit Rating, and Fixed (as in Fixed/Fixed Deposit) - are all standard banking terms. PURA is a government development policy, not banking terminology.

Multiple choice

Which of the following terms NOT used in Banking Sector?

  1. SLR

  2. NPA

  3. Credit Rating

  4. Fixed

  5. PURA
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

PURA (Providing Urban Amenities to Rural Areas) is a rural development initiative, not a banking term. It was proposed by Dr. A.P.J. Abdul Kalam to bridge the urban-rural divide. The other options - SLR (Statutory Liquidity Ratio), NPA (Non-Performing Assets), Credit Rating, and Fixed - are all commonly used terms in the banking and financial sector.

Multiple choice

Which of the following terms NOT used in Banking Sector?

  1. SLR

  2. NPA

  3. Credit Rating

  4. Fixed

  5. PURA
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

PURA (Provision of Urban Amenities in Rural Areas) is not a banking term. It's a rural development strategy. SLR (Statutory Liquidity Ratio), NPA (Non-Performing Assets), and Credit Rating are standard banking terms. Fixed is also commonly used in fixed deposits.

Multiple choice

Which of the following is not a function of the central bank of India?

  1. Regulation of currency and flow of credit system.

  2. Maintaining exchange value of rupee.

  3. Formulating monetary policy.

  4. Lending at low rates to the public.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The central bank (RBI in India) regulates currency and credit, maintains exchange value, and formulates monetary policy. Direct lending to the public at concessional rates is a commercial bank function, not a central bank function.

Multiple choice

The committee formed to suggest ways and means for Capital Account Convertibility Rupee is headed by

  1. N K Singh

  2. S S Tarapore

  3. Y K Alagh

  4. G V K Raghavan

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

The S.S. Tarapore Committee (1997) was formed to suggest measures for Capital Account Convertibility. The committee was headed by former RBI Deputy Governor S.S. Tarapore. N.K. Singh, Y.K. Alagh, and G.V.K. Raghavan served on other committees but not this one.

Multiple choice

Commercial banks finance rural credit directly and through

  1. NABARD

  2. Rural banks

  3. Cooperative societies

  4. State Govt

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

Commercial banks in India provide rural credit both directly and through Regional Rural Banks (RRBs). RRBs were established specifically to provide banking services to rural areas, combining the cooperative spirit with professional banking. They are sponsored by commercial banks but operate in rural sectors.

Multiple choice

Which among the following bodies recommends MSP (Minimum Support Price) for the crops in India?

  1. FCI (Food Corporation of India)

  2. RBI (Reserve Bank of India)

  3. Ministry of Agriculture

  4. CACP (Commission for Agricultural Costs and Prices)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Commission for Agricultural Costs and Prices (CACP) recommends Minimum Support Prices (MSP) for crops to the Government of India. It considers production costs, demand-supply, and market prices.

Multiple choice

According to the situation, who is responsible for the interest on the housing loans given by the bank?

Directions: Study the situation given below to answer the question.
Satish Vrati's New Year resolution for the past three years has been the same; to buy a new house in New Delhi at the earliest. With every hike in salary, he would scramble through newspapers to find out good properties and housing loans. Meanwhile, he received conflicting advice about the pros and cons of owning a flat. If one friend pointed out the risk involved in leasing out the property. Another would say his money was being locked up without good returns. Vrati became indecisive.

With the cut in Cash Reserve Ration (CRR) by the Reserve Bank of India (RBI), many banks decided to trim interest rates for housing loans. But Vrati still wondered whether real estate was a safe investment. With the entry of corporate sector, the real estate sector has become reliable�, says Rajendra Varshney, chartered accountant and real estate adviser. Today,� it can compete with any available investment option.�

  1. The customers

  2. The government

  3. Reserve Bank of India

  4. The banks themselves
Reveal answer Fill a bubble to check yourself
C Correct answer
Multiple choice

Who regulates the Commodity Exchange?

  1. Forward Market Commission

  2. Reserve Bank of India

  3. Commodity Exchange Board of India

  4. SEBI
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Forward Market Commission (FMC) was the regulatory body overseeing commodity exchanges in India. It regulated trading in commodity derivatives and ensured market integrity before being merged with SEBI.

Multiple choice

Currency notes in India are printed and supplied by

  1. Security Press, Nasik

  2. Security Press, Bombay

  3. Security Press, Noida

  4. Reserve Bank of India, New Delhi
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Currency notes in India are designed and printed at the Security Printing and Minting Corporation of India Limited (SPMCIL) facilities, including the Currency Note Press in Nashik (misspelled as Nasik). The RBI distributes currency but does not print it. 'Security Press, Bombay' and 'Noida' are not correct locations for note printing.

Multiple choice

RBI has raised cap on exports credit interest rates because

  1. it has been revised in sync with foreign currency deposits

  2. it has been revised in line with global rates

  3. it has been revised in consonance with WTO commitments

  4. it has been revised keeping in view the international export credit pricing

  5. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

RBI adjusts export credit interest rate caps in response to changes in global interest rates to maintain competitiveness of Indian exports. When global rates rise, the cap is raised to prevent exporters from being disadvantaged relative to foreign competitors, and vice versa. This aligns Indian export credit pricing with international market conditions.

Multiple choice

Cash Reserve Ratio (CRR) is maintained in the form of

  1. investment in money market

  2. government securities

  3. balance with RBI

  4. All of the above

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

CRR is the portion of bank deposits that banks must keep as cash reserves with the RBI. This ensures liquidity and monetary stability in the banking system. It is not invested in money market instruments or government securities - these are part of SLR (Statutory Liquidity Ratio).