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

The most important reason for an investor to prefer a Bank deposit is _________.

  1. The credit worthiness of the Bank.

  2. The Bank does not invest in the securities.

  3. The Bank offers a guarantee.

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

Creditworthiness is how a lender determines that you will default on your debt obligations, or how worthy you are to receive new credit. Your creditworthiness is what creditors look at before they approve any new credit to you.

Banks offer lower interest rates on saving account as compared to term deposits. It is because of this reason, investors opt for term deposit accounts.

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 considered an informal method of getting credit/finance?

  1. Internet banking

  2. Branch visits

  3. Going to moneylenders

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

Informal credit sources are those outside the regulated banking system. Moneylenders operate outside the formal regulatory framework of the central bank.

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 an institutional credit agency?

  1. Cooperative Society

  2. Moneylender

  3. Commercial Banks

  4. Regional Rural Banks
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Moneylenders are informal finance providers who are not registered under the government, as such, they fall under non-institutional credit agency. 

They may be rich farmers, friends or relatives from whom a person takes a loan on oral basis.

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

The power of the commercial banks to expand deposits through expanding their loans and advances is known as which of the following?

  1. Capital Expansion

  2. Credit Expansion

  3. Credit Control

  4. Credit Creation
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Credit creation is the process by which commercial banks expand the money supply by lending out a portion of their deposits, keeping only a fraction as reserves.

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 services/products of banks is specially designed and launched to help students?

  1. Personal loan

  2. Corporate loan

  3. Business loan

  4. Education loan
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Education loans are specifically designed to provide financial assistance to students for their tuition and related academic expenses.

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 part of the process of money laundering?

  1. Placement of funds

  2. Layering of funds

  3. Integration of funds

  4. All of a), b) and c)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Money laundering involves three stages: placement (introducing illicit cash into the financial system), layering (moving funds to disguise the source), and integration (returning the funds to the economy as legitimate).

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

Bank issues a letter to beneficiary on behalf of its constituents like guarantee for making payment on their behalf on fulfilment of its terms and conditions. What is this arrangement known in banking context?

  1. Line of Credit

  2. Loan to Client

  3. Letter of Credit

  4. Loan against Credit
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A Letter of Credit is a document issued by a bank that guarantees a buyer's payment to a seller will be received on time and for the correct amount.

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

_________ is also called credit market.

  1. Financial market

  2. Commodity market

  3. Stock market

  4. Money market
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Money market refers to the market where money is traded just as a commodity between two parties. It is a part of financial market where money is used as a financial assets for short term borrowing, lending, buying and selling which matures in less than a year. Since money is given and taken on credits in this market, therefore it is also known as credit market. 

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

Because money serves as a medium of exchange, it eliminates

  1. the need to write checks.

  2. The need for specialization.

  3. The use of commodities as money

  4. The need for a double coincidence of wants
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a barter system, you need a double coincidence of wants. Money acts as a medium of exchange, allowing people to trade without needing the other person to want exactly what they have.

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

Money's function as a medium of exchange means that

  1. money is a common denominators for expressing the value of goods and services.

  2. money can be sued to store wealth.

  3. money serves as an acceptable means of payment.

  4. money is a standard f deferred payment on exchange contracts extending into the future.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

As a medium of exchange, money is universally accepted as a means of payment for goods and services, facilitating trade.

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

Banks lend money mainly for ___________.

  1. industrial purposes

  2. commercial Purpose

  3. Both (a) and (b)

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

Banks act as financial intermediaries that mobilize savings from the public to lend to various sectors. They provide credit for both industrial and commercial activities to facilitate economic growth.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

Loans to poor people by banks have many limitations including lack of security and high operating cost. So to help them which type of finance system developed?

  1. Ponzi schemes

  2. Micro Finance System

  3. Money Laundering Schemes

  4. Money tampering finance
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Micro Finance Systems were developed to provide financial services, including small loans, to low-income individuals or those who lack access to traditional banking services, bypassing the need for traditional collateral.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Select the correct one/ones if all banks in an economy are nationalised and converted into a monopoly bank:
1. Deposits will decrease in the new bank
2. Deposits will increase in the new bank
3. There will be no effect on either saving rate or lending Code:

  1. Only 1

  2. 1 and 2

  3. Only 2

  4. 1 and 3
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Monopoly will discourage the depositors from putting money in the bank-this being the main reason. The saving rate of the economy together with the lending activities of the bank will also get hampered.