Banking Regulation MCQ – 1 | JAIIB PPB Quiz

March 10, 2021
Banking Regulation MCQ - 2

Here is the quiz series for Principles and Practices of Banking. This quiz covers the topics of Banking Regulation MCQ. Answers are given at the end of the quiz.

Q1. Which among the following activities are undertaken by investment banker?

  1. Underwriting Securities
  2. Providing Loans
  3. Acts as CRA
  4. All of the above

Answer: (1)
Investment banking is the division of a bank or financial institution that serves governments, corporations, and institutions by providing underwriting

Q2. Who regulates Mutual Fund business in India?

  1. RBI
  2. IRDAI
  3. SEBI
  4. AMFI

Answer: (3)
Mutual funds in India are regulated and monitored by the Securities and Exchange Board of India (SEBI), which strives to protect the interests of investors

Q3. Who is the regulator of insurance business in India? 

  1. RBI
  2. IRDAI
  3. SEBI
  4. NABARD

Answer: (2)
Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDAI Act 1999) for overall supervision and development of the Insurance sector in India.

Q4. Which among the following is India’s first listed Exchange? 

  1. BSE
  2. NSE
  3. KCX
  4. MCX

Answer: (4)
The Multi Commodity Exchange of India Limited (MCX), India’s first listed exchange, is a state-of-the-art, commodity derivatives exchange that facilitates online trading of commodity derivatives transactions, thereby providing a platform for price discovery and risk management.

Q5. Which among the following is not the asset in which banks can invest for maintaining SLR?

  1. Cash
  2. Gold
  3. Debentures
  4. SLR securities

Answer: (3)
Statutory Liquidity Ratio or SLR is a minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities. It is basically the reserve requirement that banks are expected to keep before offering credit to customers

Q6. What is the penal interest that scheduled commercial banks have to pay to RBI in case it fails to maintain the required amount of SLR?

  1. Bank Rate + 3%
  2. Bank Rate + 5%
  3. Base Rate + 3%
  4. Base Rate + 5%

Answer: (2)
If a banking company fails to maintain the required amount of SLR, it shall be liable to pay to RBI in respect of that default, the penal interest for that day at the rate of three per cent per annum above the Bank Rate on the shortfall and if the default continues on the next succeeding working day, the penal interest may be increased to a rate of five per cent per annum above the Bank Rate for the concerned days of default on the shortfall.

Q7. Which instrument is traded under Open Marker Operations (OMO) in India? 

  1. Bonds
  2. Stocks
  3. Currency
  4. Government securities

Answer: (4)
Open market operations refer to the selling and purchasing of the treasury bills and government securities by the central bank of any country, in order to regulate money supply in the economy.

Q8. RBI has temporarily increased the borrowing limit for scheduled banks under the marginal standing facility (MSF) scheme from 2 per cent to ____ of their Net Demand and Time Liabilities (NDTL) till March 2021. 

  1. 2.5%
  2. 3%
  3. 3.5%
  4. 4%

Answer: (2)
The RBI, as a temporary measure, had increased the borrowing limit for scheduled banks under the marginal standing facility (MSF) scheme from 2 per cent to 3 per cent of their Net Demand and Time Liabilities (NDTL) with effect from March 27, 2020

Q9. What is the minimum amount of money that banks can borrow under MSF?  

  1. Rs 1 crore
  2. Rs 2 crore
  3. Rs 5 crore
  4. Rs 10 crore

Answer: (1)
The minimum amount for which RBI receives application is Rs.1 Crore, and afterward in multiples of Rs.1 Crore.

Q10. Who is the issuer of currency in India? 

  1. Ministry of finance
  2. RBI
  3. Department of Financial Services
  4. SBI

Answer: (2)
The Reserve Bank of India is the nation’s sole note issuing authority. Along with the Government of India, RBI is responsible for the design, production and overall management of the nation’s currency, with the goal of ensuring an adequate supply of clean and genuine notes.

Q11. RBI has power to issue currency notes upto to value of ____Rs? 

  1. Rs 1000
  2. Rs 2000
  3. Rs 5000
  4. Rs 10000

Answer: (4)
RBI can issue any note of any denomination but NOT exceeding Rs. 10,000. The notes denomination is notified by Government and RBI acts accordingly. Under Section 22 of the Reserve Bank of India Act, RBI has sole right to issue currency notes of various denominations except one rupee notes

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