Banking Financial Awareness · General Awareness

Banking Services and Operations

1,239 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

The specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves as deposits with the central bank are called

  1. Corporate <font size="2">T</font>ax

  2. SLR

  3. CRR

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

Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank.

Multiple choice

ABC Limited, a company, has gone in liquidation and Mr. X is appointed as liquidator. He has opened a bank account. He sends a letter to the bank that he has to go abroad for 2 months and in his absence, the account will be operated by his Secretary.

  1. Bank will not accept such request.

  2. Bank will ask for specimen signature of Secretary and allow the operations.

  3. Being a special circumstance, the account will be allowed to be operated by taking usual safeguards.

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

Correct Answer: Bank will not accept such request.

Multiple choice

A packaged service in which both the banking service and insurance service are made available is called

  1. insurance

  2. bancassurance

  3. assured banking

  4. insurance-cum-banking
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The bank insurance model (BIM), also sometimes known as bancassurance or allfinanz, is the partnership or relationship between a bank and an insurance company, or a single integrated organisation, whereby the insurance company uses the bank sales channel in order to sell insurance products. 

Multiple choice

What is popular as ‘Advance-fee fraud’?

  1. Nigeria 419

  2. USA 352

  3. IPC 288

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

An advance-fee scam typically involves promising the victim a significant share of a large sum of money, in return for a small up-front payment, which the fraudster requires in order to obtain the large sum. If a victim makes the payment, the fraudster either invents a series of further fees for the victim, or simply disappears. There are many variations on this type of scam, including the 419 scam, the Spanish Prisoner scam, the black money scam and the Detroit-Buffalo scam. The scam has been used with fax and traditional mail, and is now prevalent in online communications like emails. The scam messages often claim to originate in Nigeria, but usually this is not true. The number "419" refers to the section of the Nigerian Criminal Code dealing with fraud, the charges and penalties for offenders.

Multiple choice

Under FEMA, the term authorized person means

  1. authorized dealers, money changers and all banks

  2. authorized dealers and all banks

  3. authorized dealers and money changers

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

Sec 2 (c) of FEMA 1999 define Authorised Persons means as Authorised Dealer, Money Changer, Offshore Banking Unit or any other person authorised u/s 10 (1) to deal in Foreign Exchange or Foreign Securities.

Multiple choice

Banks can undertake permitted business activities u/s 6 (1) of Banking Regulation Act such as

(a) buying or selling of bullion (b) undertaking and executing trusts (c) undertaking the administration of estates as executors and trustees (d) providing of safe deposit vaults

  1. (a), (b) and (c) only

  2. (b), (c) and (d) only

  3. (a), (c) and (d) only

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

Section 6(1) in BANKING REGULATION ACT,1949 permits: the buying, selling and dealing in bullion and specie, undertaking and executing trusts, undertaking the administration of estates as executor, trus­tee or otherwise and the providing of safe deposit vaults.

Multiple choice

Which of the following statements are correct regarding acceptance of deposits by banks?

(a) Banks can refuse to accept deposit from undesirable persons. (b) For opening an account, introductory reference is not mandatory. (c) For opening of an account, identification is essential. (d) Banks can accept deposit of money only.

  1. Only (a), (b) and (c)

  2. Only (b), (c) and (d)

  3. Only (a), (c) and (d)

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

Introduction is not necessary for opening of accounts under PML Act and Rules or Reserve Bank’s extant KYC instructions. Banks should not insist on introduction for opening bank accounts of customers. All of the above statements are correct.

Multiple choice

One or more bank is merged with another bank or two or more banks decide to merge to form a new company. It is called

  1. merger

  2. amalgamation

  3. liquidation

  4. winding-up
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Amalgamation is the combination of one or more companies into a new entity. An amalgamation is distinct from a merger because neither of the combining companies survives as a legal entity. A completely new entity is formed to house the combined assets and liabilities of both companies. Thus, option 2 is the correct answer.

Multiple choice

XYZ created equitable mortgage in favour of Bank A on January 14, 2007 (not registered), a simple mortgage with Bank B on January 28, 2007 (and registered on March 12, 2007) and a simple mortgage with Bank C on Februrary 10, 2007 (and registered on Februrary 28, 2007). The priority of mortgage in this case would be in which of the following orders?

  1. Bank C, Bank B and Bank A

  2. Bank B, Bank C and Bank A

  3. Bank B, Bank A and Bank C

  4. Bank A, Bank B and Bank C
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If a property's title has multiple mortgage liens and the loan secured by a first mortgage is paid off, the second mortgage lien will move up in priority and become the new first mortgage lien on the title. Documenting this new priority arrangement will require the release of the mortgage securing the paid-off loan. Thus, the priority will be according to the date. As mortgage in favour of Bank A was on January 14, 2007 and was the earliest, thus, will be dealt first and subsequently Bank B (January 28, 2007) and Bank C (February 10, 2007).

Multiple choice

Shell bank refers to the

  1. the Foreign bank that does not have a branch in any country.

  2. financial institution that does not have a physical presence in any country.

  3. the Indian bank that has very small area covered

  4. All of the above

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

Shell Bank refers to the financial institution that does not have a physical presence in any country.