Banking Financial Awareness · Commerce Accountancy

Credit, Debt, and Finance

1,382 Questions

This topic covers essential concepts of credit, debt, and finance including bankruptcy, debt recovery, and financial acts. These questions are frequently asked in banking and IBPS exams. Test your knowledge of financial terminology and loan classifications.

Debt recovery actsBankruptcy filing proceduresFinancial classificationsMedium term financeCredit loss management

Credit, Debt, and Finance Questions

Multiple choice technology platforms and products

For Revolving products the customer is expected to payback the whole close balance by due date.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Revolving credit products allow customers to carry a balance forward by making only a minimum payment. Unlike charge cards, revolving products do not require full repayment of the closing balance by the due date. Customers can pay interest on the remaining balance and continue using the credit line.

Multiple choice technology platforms and products

For charge cards the minimium due amount is 14% of the total close balance due

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

For charge cards, the minimum due is typically calculated as either a fixed percentage (often 5-10%) of the outstanding balance OR a fixed minimum amount, whichever is higher. 14% is not the standard minimum due percentage for charge cards - this value varies by product and issuer but is rarely as high as 14%.

Multiple choice technology packaged enterprise solutions

Payment for a credit memo in AR is processed through ________

  1. A. Accounts Receivables

  2. B. Cash Management

  3. C. Accounts Payables

  4. D. Fixed Assets
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Credit memos in Oracle Accounts Receivable represent amounts owed to customers. When these are paid (refunded), the payment processing happens through Accounts Payable, which handles outgoing payments. Accounts Receivable manages incoming payments, Cash Management handles bank reconciliation and cash positioning, and Fixed Assets manages capital assets - none of these handle credit memo payments.

Multiple choice technology packaged enterprise solutions

When does the PO Status Shows as Pre-Approved

  1. Final Authority approves the PO, but then forwards it some one for additional approval

  2. With the encumbrance budgeting even though PO eligible for approval,but the funds have not yet been reserved for it

  3. Both Option 1 and Option 2

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

A PO shows Pre-Approved status when the final authority approves it but forwards it for additional approval, or when using encumbrance budgeting where the PO is approval-eligible but funds aren't yet reserved. This status indicates the PO has passed initial approval stages but requires additional steps before full approval.

Multiple choice

Term loans means Loans:

  1. Payable after one year to ten year

  2. Repayment are done in instalments

  3. Term loans are utilised for acquisition of fixed assets

  4. All of above

  5. only 1 and 2 are correct
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Term loans are payable after one year to ten years and repayments  are done in  instalments . Term deposits are utilised for acquisition of fixed assets.

Multiple choice

The base rate is required to be reviewed by banks at least

  1. once in a month

  2. once in a quarter

  3. once in half a year

  4. once in a year

  5. once in two years
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The base rate is the minimum lending rate below which banks are not permitted to lend. RBI regulations require banks to review this rate at least quarterly to ensure it reflects current market conditions.

Multiple choice

‘Sub-prime’ refers to

  1. lending done by banks at rates below PLR

  2. funds raised by banks at sub-libor rates

  3. group of banks which is not rated as prime bank as per Banker’s Almanac

  4. lending done by financing institutions including banks to customers not meeting with normally required credit appraisal standards

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

Correct answer is (4). 

Multiple choice

Reverse repo means

  1. injecting liquidity by the Central Bank of a country through purchase of government securities

  2. absorption of liquidity from the market by sale of government securities

  3. balancing liquidity with a view to enhance economic growth rate

  4. improving the position of availability of securities in the market

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

Option 2 is correct.

Multiple choice

Fixed deposits are offered with

  1. fixed interest rates

  2. floating interest rates

  3. fixed and floating interest rates

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

Fixed deposits offer fixed interest rates that remain constant throughout the deposit tenure. The rate is locked in at the time of deposit and doesn't fluctuate with market conditions, distinguishing FDs from floating rate instruments.

Multiple choice

Non-performing Advance means

  1. Non-functional assets

  2. Obsolete assets

  3. Assets transferred to company liquidator

  4. Loans becoming overdue beyond 90 days
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Non-performing Advances (NPAs) refer to loans or advances where principal or interest payments remain overdue for a period of 90 days or more. The 90-day threshold is the regulatory standard used by Indian banks to classify an asset as non-performing, triggering provisioning requirements and closer monitoring by regulators.

Multiple choice

The principal liability of a Joint Stock Bank relates to

  1. it's investment abroad

  2. it's investment at home

  3. repayment of it's customer's deposits

  4. it's requirements to make special deposits when requested
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A Joint Stock Bank's primary obligation is to repay deposits to its customers. Deposits form the main source of funds for banks, and the bank's core liability is to return these funds, either on demand or at agreed maturity. This is why deposit insurance and capital adequacy are critical regulatory requirements.