Indian Financial System MCQ – 1 | JAIIB PPB Quiz

March 2, 2021
Indian Financial System MCQ

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

Q1. Who is the central banking authority in India? 

  1. RBI
  2. NABARD
  3. Ministry of Finance
  4. SEBI

Answer: (1)
The Reserve Bank of India (RBI) is India’s central bank, responsible for the issue and supply of the Indian rupee and the regulation of the Indian banking system

Q2. Which among the following is not one of the functions of RBI?
  1. Controlling inflation
  2. Banking Supervision
  3. Lender of last resort
  4. Controlling employment in the country

Answer: (4)
Functions of RBI includes Monetary Authority, Regulator and supervisor of the financial system, Manager of Foreign Exchange, Issuer of Currency, Regulator and Supervisor of Payment and Settlement Systems, Banker to Government:, Banker to Banks, Lendor of last resort, Controlling inflation

Q3. To operate as NBFC in India, one has to take license from _____.
  1. SEBI
  2. RBI
  3. MoF
  4. FICCI

Answer: (2)
NBFC (Non-Banking Financial Company) is a company registered under Companies Act, 2013 or earlier Companies Act, 1956. The Reserve Bank of India has defined financial activity as principal business to bring clarity to the entities that will be monitored and regulated as NBFC under the RBI Act. The criteria s is called as the 50-50 test and its as follows:
– The company’s financial assets must constitute 50 per cent of the total assets.
– The income from financial assets must constitute 50 per cent of the total income.
It is governed by the Ministry of Corporate Affairs as well as the Reserve Bank of India. The License for operation is obtained from the RBI and it is incorporated as a company under applicable laws of the land.

RBI Grade B Test Series

Q4. Which among the following financial instruments are dealt by Primary Dealers? 

  1. Bonds
  2. Mutual Funds
  3. Government securities
  4. Debentures

Answer: (3)
Primary dealers are registered entities with the RBI who have the license to purchase and sell government securities.

Q5. Name the section that mandate banks to maintain CRR with RBI? 

  1. Section 42(1) RBI Act
  2. Section 24(1) RBI Act
  3. Section 42(1) BR Act
  4. Section 24(1) BR Act

Answer: (1)
In terms of Section 42(1) of the RBI Act, 1934 the Reserve Bank, having regard to the needs of securing the monetary stability in the country, prescribes the CRR for SCBs without any floor or ceiling rate. The current CRR is 3%

Q6. Which out of the following liquid assets is not a part of SLR? 
  1. Cash
  2. Govt Securities
  3. Gold
  4. Bonds

Answer: (4)
Statutory Liquidity Ratio or SLR is the minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities.

Q7. Who is the regulator of insurance sector in India? 
  1. SEBI
  2. IRDAI
  3. NABARD
  4. PFRDA

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

Q8. Name India’s first listed exchange? 
  1. MCX
  2. NSE
  3. BSE
  4. OTC Exchange of India

Answer: (1)
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

Q9. MCX deals with trading of ___. 
  1. Stocks
  2. Gold
  3. Commodity futures
  4. None of the Above

Answer: (3)
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

Q10. Who provides clearing house facilities for netting of payments and securities delivery? 
  1. Stock exchange
  2. RBI
  3. SEBI
  4. SBI

Answer: (1)

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