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 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.

 

Multiple choice commerce sources of business finance - 2 gdrs, adrs and idrs depository receipts international sources

What is/are the eligibility criteria of foreign issuing company to issue Indian Depository Receipts (IDRs)?

  1. Preissue paidup capital and free reserves of at least US$ 50 million

  2. A continuous trading record or history on a stock exchange

  3. Listed in home country and not been prohibited to issue securities

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
IDR is a form of Depository receipt. It is created by a domestic depository. It is an instrument denominated in Indian Rupees. The eligibility criteria of foreign issuing company to issue Indian Depository Receipts are:
a) Pre issue paid up capital and free reserves of at least US$ 50 million b) A continuous trading record or history on a stock exchange
c) Listed in home country and not been prohibited to issue securities.
Multiple choice commerce sources of business finance - 2 gdrs, adrs and idrs depository receipts international sources

Which are the intermediaries involved in issuance of IDRs?

  1. Overseas Custodian Bank

  2. Domestic Depository

  3. Merchant Banker registered with SEBI

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
IDR is a form of Depository receipt. It is created by a domestic depository. It is an instrument denominated in Indian Rupees. The intermediaries involved in issuance of IDRs are:
a) Overseas Custodian Bankb) Domestic Depository
c) Merchant Banker registered with SEB.
Multiple choice commercial studies sources of business finance - 2 gdrs, adrs and idrs depository receipts international sources

Which is the next step of GDR mechanism, after the overseas depository bank enter into a custodian agreement with the domestic custodian of such company?

  1. On the instruction of domestic custodian, the overseas depository bank issues shares to foreign investors.

  2. The domestic custodian holds the equity shares of the company.

  3. The domestic company enters into an agreement with the overseas depository bank for the purpose of issue of GDR.

  4. The whole process is carried out under strict guidelines.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

After the overseas depository bank enter into a custodian agreement with the domestic custodian of such company, the next step of GDR mechanism is: the domestic custodian holds the equity shares of the company.  Hence the equity shares is held by the domestic custodian when the overseas depository bank signs the agreement.

Multiple choice business organisation and correspondence bank 2 - accounts maintained by a bank functions and services of banks role of banks in economic development and modes of money transfer accounts and other services

As per the RBI guidelines, validity of a bank draft is ___________.

  1. 3 months

  2. 4 months

  3. 5 months

  4. 6 months
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As per RBI regulations, the validity period for a bank draft (demand draft) is 3 months from the date of issue.

Multiple choice business organisation and correspondence bank 1 - definition, kinds, functions and importance other services and modern trends in banking sector types of banks diversified banking functions

_______ is a statutory corporation wholly owned by the Government of India for the purpose of financing, facilitating and promoting foreign trade of India.

  1. Small Industries Development Bank of India

  2. National Bank for Agricultural and Rural Development

  3. Export Import Bank of India (EXIM Bank)

  4. Industrial Development Bank of India
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Export Import Bank (EXIM Bank) is a statutory corporation wholly owned by the Government of India for the purpose of financing, facilitating and promoting foreign trade of India. Export Import Bank extends lines of credit to overseas governments, other financial institutions in order to finance India's exports to those countries.

Multiple choice commerce sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

The regulation of commercial paper comes under the preview of the ____________.

  1. Central Bank

  2. Reserve Bank of India

  3. State Government

  4. Central Government
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Commercial paper is an unsecured promissory note issued by a firm to raise funds for a short period, varying from 90 days to 364 days. It is issued by one firm to another business firm, insurance companies, pension funds, and banks. The amount issued by commercial papers is generally very large. The regulation of commercial paper comes under the purview of Reserve Bank of India.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

The Reserve Bank of India has decided to help banks, as a temporary measure, by providing additional liquidity support under LAF. What is the full form of LAF?

  1. Loan Adjustment Fund

  2. Liquidity Adjustment Facility

  3. Long Awaited Funds

  4. Loan Against Funds
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

LAF stands for Liquidity Adjustment Facility, which is a tool used by the Reserve Bank of India to manage liquidity in the banking system.