Banking Financial Awareness · Economics

Banking Regulation and Monetary Policy

1,219 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

What is the minimum stake that the Union government has to maintain in the State Bank of India according to the prevailing rules?

  1. 74%

  2. 55%

  3. 51%

  4. 49%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The government, which is currently required to hold at least 55 per cent stake of the bank, intended to introduce a legislation in both houses of parliament and secure approval when law makers reconvene this month, the official said, declining to be named before an announcement. The government holds 59.4 per cent of SBI, according to Bloomberg data.

Multiple choice

Which of the following is/are the measure(s) taken by the Reserve Bank of India (RBI) to ease the liquidity crunch in the country?

(a) Cut in Cash Reserve Ratio and Statutory Liquidity Ratio. (b) Increase the flow of foreign direct investment. (c) Supply of additional currency notes in the market.

  1. Only (a)

  2. Only (b)

  3. Only (c)

  4. All (a), (b) and (c)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The RBI manages liquidity primarily through monetary policy tools like the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). FDI flow is influenced by government policy, and printing more notes is not a standard liquidity management tool.

Multiple choice

The financial turmoil all over the world in recent past has put some effect on Indian economy. What measure(s) did RBI take to improve the situation ?

  1. SLR has been reduced by one percentage points and at present is 24%
  2. An advance of Rs. 25,000 crore provided to banks/financial institutions under the Agricultural debt waiver and Debt Relief Schemes.
  3. RBI allowed banks to raise their capital by issuing Investment Bonds. Almost all big banks have issued such bond in recent past.

  1. Only 1

  2. Only 3

  3. Only 1 and 2

  4. All 1, 2 and 3
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

During the 2008 financial crisis, the RBI reduced the SLR to 24% to inject liquidity into the banking system. The other options involve government fiscal measures rather than direct RBI liquidity actions.

Multiple choice

As per the reports published in the newspapers Indian Rupee is now fully accepted in Asian countries like, Singapore, Hong Kong, Malaysia etc. What does it really mean?

  1. Anybody from Asian country can purchase Indian Rupee and keep it in his/her bank account in his/her country without any restrictions.
  2. Now people in these nations are not required to go for a double conversion first in dollar and then in rupee.
  3. People travelling European/Asian countries can make their payments in rupee anywhere without any problem.

  1. Only 1 is correct

  2. Only 2 is correct

  3. Only 3 is correct

  4. All 1, 2 and 3 are correct

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

The acceptance of the Indian Rupee in certain Asian markets implies easier trade settlement and reduced transaction costs for travelers and businesses, as it eliminates the need for intermediate currency conversion into USD.

Multiple choice

As per the reports published in the newspapers the banks, particularly public sector banks are tying up with various rating agencies for providing a qualitative assessment of the credit needs of the borrowers. Which amongst the following is/are such credit rating agencies in India ?

  1. CARE
  2. CRISIL
  3. ULIP

  1. Only 1

  2. Only 2

  3. 1 and 2 only

  4. Only 3

  5. All 1, 2 and 3
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

CARE and CRISIL are prominent credit rating agencies operating in India, whereas ULIP stands for Unit Linked Insurance Plan, which is an insurance product and not a credit rating agency.

Multiple choice

A commemorative stamp marking the Platinum Jubilee of the Reserve Bank of India was released in 2010. Which of the following statements about the RBI is/are correct? I. The Reserve Bank of India was established on April 1, 1935 in Kolkata in accordance with the provisions of the Reserve Bank of India Act, 1934. II. The RBI was shifted from Kolkata to Mumbai before independence. III. The RBI was nationalised on 1 January 1949.

  1. I only

  2. I and II only

  3. II and III only

  4. III and I only

  5. I, II and III
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. Reserve Bank of India was nationalised on 1 Jan 1949. President of India, Pratibha Devisingh Patil released a commemorative postage stamp to mark the Platinum Jubilee of the Reserve Bank of India on January 16, 2010. The five-rupee stamp depicts the iconic New Delhi offices of the apex bank, which has the statues of the mythological Yaksha and Yakshini, designed by famous sculptor Ramkinkar Baij.

Multiple choice

Who issues one rupee notes in India?

  1. RBI

  2. SBI

  3. Planning Commission

  4. Govt. of India
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The one rupee notes are issued by Govt. of India. The other currency notes are issued by RBI.

Multiple choice

SLR refers to portion of deposit which   

  1. Commercial banks retain with RBI

  2. RBI retains with commercial banks

  3. RBI retains with itself

  4. Commercial banks retain with themselves
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Statutory liquid ratios are the liquid assets maintained by a commercial bank with itself. (A) is CRR.