Indian Financial System MCQ – 2 | JAIIB PPB Quiz

March 5, 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. Which act paved the way for establishment of Reserve Bank of India?  

  1. RBI Act,  1934
  2. RBI Act,  1930
  3. RBI Act,  1924
  4. RBI Act,  1920

Answer: (1)
The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.

Q2. RBI has started its functioning w.e.f ___? 
  1. 1st January 1935
  2. 1st March 1935
  3. 1st April 1935
  4. 1st June 1935

Answer: (3)
The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.

Q3. Select the correct pair of country and central bank out of the following:
  1. India – State Bank of India
  2. UK – Bank of England
  3. USA – Reserve Bank of USA
  4. China – Bank of China

Answer: (2)
The correct answer is:
India – Reserve Bank of India
UK – Bank of England
USA – Federal Reserve
China – People’s Bank of China

Q4. What is the maximum number of deputy governors can be there in RBI? 
  1. One
  2. Two
  3. Three
  4. Four

Answer: (4)
Reserve Bank of head by Governor of RBI. It consists of not more than four Deputy Governors

Q5. What % of interest is paid by RBI on CRR deposit maintained by Scheduled Commercial Banks with it? 
  1. No interest rate
  2. 1%
  3. 2%
  4. 3%

Answer: (1)
The Reserve Bank does not pay any interest on the CRR balances maintained by SCBs with effect from the fortnight beginning March 31, 2007.

Q6. Where does headquarters of RBI is situated at?  
  1. New Delhi
  2. Kolkata
  3. Chennai
  4. Mumbai

Answer: (4)
The Central Office of the Reserve Bank was initially established in Kolkata but was permanently moved to Mumbai in 1937.

Q7. How much percent of CRR requirement scheduled commercial banks have to maintain on daily basis during the fortnight?  
  1. 60%
  2. 70%
  3. 80%
  4. 95%

Answer: (4)
The banks will be required to maintain a minimum of 95 per cent of CRR requirement on daily basis during the fortnight

Q8. What is the penal interest bank have to pay to RBI if it cannot maintain mandatory CRR requirement on daily basis?
  1. Bank rate + 3%
  2. Bank rate + 4%
  3. Bank rate + 5%
  4. Bank rate + 6%

Answer: (1)
In case of default in maintenance of CRR requirement on a daily basis which is currently 95 per cent of the total CRR requirement, penal interest will be recovered for that day at the rate of three per cent per annum above the Bank Rate on the amount by which the amount actually maintained falls short of the prescribed minimum on that day and if the shortfall continues on the next succeeding day/s, penal interest will be recovered at the rate of five per cent per annum above the Bank Rate.

Q9. What is the penal interest that bank have to pay to RBI if it defaults in maintenance of required amount of SLR for more than one day? 
  1. Bank rate + 3%
  2. Bank rate + 4%
  3. Bank rate + 5%
  4. Bank rate + 6%

Answer: (3)
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 3 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 5 per cent per annum above the Bank Rate for the concerned days of default on the shortfall.

Q10.  Which out of the following is pledged to RBI for borrowing under LAF?
  1. Gold
  2. G-Sec
  3. Deposit
  4. Shares

Answer: (2)
LAF is a facility extended by RBI to the scheduled commercial banks and Primary Dealers to avail of liquidity in case of requirement or park excess funds with RBI in case of excess liquidity on an overnight basis against the collateral of G-Secs including SDLs.

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Tags: Financial System MCQ