Banking Financial Awareness · General Awareness

Banking Services and Operations

1,373 Questions

Banking Services and Operations cover the fundamental principles of financial institutions, including credit markets, money supply, and risk management. It also addresses various transaction methods and account types used by businesses. This topic is crucial for candidates preparing for banking and insurance recruitment examinations.

Banking AbbreviationsCredit Market OperationsMoney Supply MetricsRisk Management MeasuresForeign Exchange RulesDigital Banking Technology

Banking Services and Operations Questions

Multiple choice

Which of the following is generally referred to as a “broader measure of money supply“?

  1. M1

  2. M2

  3. M3

  4. M4
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In monetary economics, M3 is considered the broader measure of money supply as it includes M1 (currency + demand deposits) plus M2 (savings deposits) and time deposits. M1 is the narrowest measure representing only the most liquid forms of money. M4 would be even broader if it exists in the system, but M3 is typically cited as the key broad aggregate.

Multiple choice

What is the meaning of financial inclusion?

  1. Opening accounts of finance companies

  2. Financial analysis of balance sheet figures

  3. Opening accounts of High Net worth Individual(HNIs)

  4. Opening accounts of underprivileged persons at affordable cost

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

Financial inclusion focusses on opening accounts of low income groups or disadvantaged of the society.

Multiple choice

What is not true about core banking solutions(CBS)?

  1. It is a networking of branches.

  2. It is the process which is completed in a centralized environment.

  3. It is a step of a bank towards enhancing the convenience of its customers.

  4. Anywhere and anytime banking is the concept associated with CBS.

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

All the above options are true about core banking solutions. Hence, option 5 is correct.

Multiple choice

Which of the following is a measure selective credit control?

  1. Bank rate policy

  2. Moral suasion

  3. Statutory cash reserve ratio

  4. Open market operations
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Selective credit controls target specific sectors or uses of credit. Moral suasion (persuading banks to comply with central bank guidelines) is a selective tool. Bank rate, CRR, and open market operations are quantitative (general) credit controls affecting overall money supply.

Multiple choice

Which of the following is not a function of a Rural Bank?

  1. To accept deposits

  2. To waive loans

  3. To grant advances

  4. To supply inputs to farmers
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Rural Banks perform core banking functions like accepting deposits and granting advances/loans. However, supplying agricultural inputs to farmers is not a banking function - it's an activity typically done by agricultural supply stores or cooperative societies, not financial institutions.

Multiple choice

‘Payment in due course’ requires the payment to be made

  1. in accordance with the apparent tenor of the instrument

  2. in good faith

  3. without negligence

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

‘Payment in due course’ requires the payment to be made in good faith without negligence in accordance with the apparent tenor of the instrument.

Multiple choice

Where an instrument may be construed either as a promissory note or a bill of exchange,

  1. it will be treated as a promissory note

  2. it will be treated as a bill of exchange

  3. the holder may, at his election, treat it as either a bill of exchange or a promissory note

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

Where an instrument owing to its faulty drafting may be construed either as a promissory not or a bill of exchange is known as an ambiguous instrument. The holder of such instrument may, at his election, treat it as either a bill of exchange or a promissory note.

Multiple choice

Where in a promissory note or a bill of exchange, the expressions “at sight” and “on presentment” are mentioned. It means that it is payable

  1. on demand

  2. after acceptance

  3. on non-acceptance

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In a promissory note or a bill of exchange, the expressions “at sight” and “on presentment” mean "on demand". The expression “after sight” in a promissory note means after presentment for sight, and in a bill of exchange after acceptance or noting for non-acceptance or protest for non-acceptance.

Multiple choice

A negotiable instrument made, drawn, accepted, indorsed or transferred without consideration creates ________ of payment between the parties to the transaction.

  1. no obligation

  2. an obligation

  3. a responsibility

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A negotiable instrument made, drawn, accepted, indorsed or transferred without consideration or for a consideration which fails, creates no obligation of payment between the parties to the transaction. But if any such party has transferred the instrument with or without indorsement to a holder for consideration, such holder, and every subsequent holder deriving title from him, may recover the amount due on such instrument from the transferor for consideration or any prior party thereto.