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

IRDA is associated with

  1. banking sector

  2. mutual funds

  3. rural development

  4. FDI

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

It is a contract in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.

Multiple choice

All revenues received by the Union Government by way of taxes and other receipts for the conduct of Government business are credited to the

  1. Contingency Fund of India

  2. Public Account

  3. Consolidated Fund of India

  4. Deposit and Advances Fund
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Subject to the assignment of certain taxes to the States, all revenues received by the Government of India, all loan raised by Government and all money received by the Government in the repayment of loans shall form consolidated fund of India.

Multiple choice

The lowering of Bank Rate by the Reserve Bank of India leads to

  1. More liquidity in the market.

  2. Less liquidity in the market.

  3. No change in the liquidity in the market.

  4. Mobilization of more deposits by commercial banks.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the bank rate are often used by central banks to control the money supply or liquidity. Liquidity of economy is inversely proportional to bank rate.

Multiple choice

Monetary policy transmission involves the following: Read the following statements and answers the correct ones. i. When Reserve Bank India (RBI) changes the policy rates, the commercial banks also must follow the RBI. ii. When Government’s Fiscal deficit changes , RBI should change its policy rates iii. When the rate of inflation on Consumer Price index changes, RBI should change the policy rates. iv. When financial Savings in India increase or decrease, RBI should change its policy rates.

  1. i & ii only

  2. i only

  3. ii only

  4. iii & iv only
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 (b)

Multiple choice

Which act by FDR put the banks under control of the Treasury Dept

  1. Banking Act of 1933

  2. Emergency banking bill

  3. Emergency act of 1944

  4. Banking relief Act
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Emergency Banking Act of 1933 allowed the Treasury Department to inspect banks and reopen those that were solvent, effectively giving the government control over the banking system.

Multiple choice

Which of the following is not a part of the organised sector of Indian Money Market?

  1. Mutual Funds

  2. Non-Banking Financial Companies

  3. Unit Trust of India

  4. Reserve Bank of India

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

The organized sector of the Indian money market includes regulated entities like the RBI, commercial banks, mutual funds, and NBFCs. Chit funds are part of the unorganized sector as they are largely informal and less regulated.

Multiple choice

Which of the following is not a credit rating agency operating in India?

  1. ICRA

  2. CRISIL

  3. CARE

  4. FITCH

  5. None of these

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

Indian credit rating industry mainly comprises of CRISIL, ICRA, CARE, ONICRA, FITCH (India Ratings & Research) & SMERA. CRISIL - Credit Rating Information Services of India Limited - Headquarter – Mumbai ICRA - Investment information and credit rating agency - Headquarter - Gurgaon, India CARE - Credit Analysis and Research - Headquarters – Mumbai ONICRA - Headquarter - Gurgaon, India SMERA - Headquarters – Mumbai Fitch (India Ratings & Research) - Headquarters – Mumbai. India Ratings & Research is a 100% owned subsidary of Fitch group. Thus, option 5 is correct as all the given options are credit rating agencies operating in India.