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 book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

The Main object of 'Rajiv Gandhi Equity Saving Scheme' (RGESS) is__________________.

  1. To encourage workers participation in management

  2. To encourage money market of India

  3. To encourage retail participation in capital market

  4. To encourage unlisted companies in Stock Exchanges
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Rajiv Gandhi Equity Saving Scheme (RGESS) was introduced by the Indian government to encourage retail investors, particularly first-time investors, to participate in the capital markets.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Which of the following is not a formal source of credit?

  1. Banks

  2. Cooperative

  3. Employer

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
  • Formal sources of credit are:
  • Banks and Co-operative societies.
  • Reserve bank of India will supervise the activities of the banks and co-operative societies in India.
  • Employers do not fall under formal sources of credit lenders in our country.
Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

In an SHG, most of the decisions regarding savings and loan activities are taken by ___________.

  1. Bank

  2. Members

  3. Non-government Organisation

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
  • In a SHG (Self Help Group) important decisions in regard to loan and savings are taken by group members.
  • Self Help Groups issue loans at reasonable rate of interest.
  • SHG is a mutual help group who provide support among themselves.
  • They come together to solve their economic issues and earn income.
Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Formal sources of credit do not include _____.

  1. banks

  2. cooperative societies

  3. employers

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

1. Formal sources of credit do not include employers as there is no role of these employers all these works are related to banks and the cooperatives.
2. Employers are there merely to serve the bank staff and do the work as it is asked to do by their owner.


Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Which of the following is a source of formal sector loan?

  1. Relatives

  2. Banks

  3. Moneylenders

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

The loan extended by banks and co-operative institutions constitutes formal sector of credit. The functioning of these financial institutions is supervised by the Reserve Bank of India.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Why is money called a 'medium of exchange' ?

  1. Because money can create loan

  2. Because money adds to the value of a commodity

  3. Because money is portable

  4. Because money acts as an intermediate in the process of exchange
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Money helps to facilitate trade because people in the economy generally recognize it as valuable. Money is called medium of exchange because money is a widely accepted token that can be used for exchange of any good or service. In old days, barter system was used as medium of exchange and later it was gold.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Which of the following is a source of informal sector of loan?

  1. Money lenders

  2. Cooperatives

  3. Banks

  4. Government
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
  • Money lenders are the indigenous bankers of India.
  • Usually, they lend money on short term basis. 
  • Collateral in form of gold is taken from borrowers.
  • Money lenders are not supervised or controlled by RBI in India.
Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Small farmers borrow money for cultivation from _____.

  1. traders

  2. family members

  3. banks

  4. money lenders.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Small farmers borrow money for cultivation from money lenders.
They borrow money from money lenders because they don't have any form of security (collateral) as requested by the formal sources of credit. 
Small farmers often get exploited with higher interest from money lenders.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

The poor are usually rejected bank loans in the absence of _____.

  1. ration card

  2. cash money

  3. collateral

  4. account with that bank
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Collateral is a type of a security taken by the banks from its customers.Collateral can be in the form of fixed deposit,  property documents, etc.Rural farmers/ Marginal farmers/ Landless labourers occupy the majority of rural poor population and savings of rural poor is negligible. 
Providing collateral to bank for borrowing loans is a big challenge for rural poor.
Thus banks usually reject loans to rural poor due to the non presence of collateral security by poor.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

85% of the loans taken by poor households in the rural areas are from ___.

  1. cooperatives

  2. local bank

  3. government bank

  4. informal sources
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Majority of the people in rural areas depend on informal sources for loans.

Informal sources include landlords and rich farmers.

 The main reasons behind this are:

1. The number of banks in rural remote areas is low.

2. Bank loans require proper documents and collateral (security). Absence of collateral is one of the major reasons which prevents the poor from getting bank loans.

3. Informal lenders like landlords, know the borrower personally and hence, are often willing to give a loan without a security.

 

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

People deposit their money in the banks as _____ .

  1. money deposited in the banks are safe

  2. it earns interest

  3. both (1) and (2)

  4. money can not be withdrawn as and when
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

People deposit their money in the banks as it earns interest and money deposited in the banks are secured.
Money can be withdrawn any time by the customer on demand.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Formal sources of credit do not include ___________.

  1. Banks

  2. Cooperative

  3. Employers

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


Formal sector credit in India includes loans from banks and cooperatives. RBI supervises their functions of giving loans. Rich urban households depend largely on formal sources of credit. Lower rate of interest on loans is charged as compared to informal sources of credit.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

One of the delivery channel for Micro Finance is SHG model. SHG means _______________.

  1. Soar Help Group

  2. Sake Help Group

  3. Self Help Group

  4. Store Help Group
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A self-help group is an economic intermediary group of 10 to 20 local women or men between 18 to 40 years. Most self-help groups are situated in India, though SHGs can be established in other countries, particularly in South Asia and Southeast Asia. 

SHG is not whatever thing but a group of people who are on daily wages, they form a group and from that group, one person collects the money and gives the wealth to the person who is in need. Members also make modest measure savings contributions over a few months until there is adequate money in the group to begin lending. 

Thus, the correct option is C.