Roots Institute of Financial Markets Rifm: Online Question Bank Commercial Banking in India: A Beginner's Module

Roots Institute of Financial Markets RIFM
Online Question Bank Commercial Banking in India: A Beginner's Module
Roots Institute of Financial Markets

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Our Team
Deep Shikha Malhotra CFP M.Com., B.Ed. AMFI Certified for Mutual Funds IRDA Certified for Life Insurance IRDA Certified for General Insurance PG Diploma in Human Resource Management CA. Ravi Malhotra B.Com. FCA DISA (ICA) CM CERTIFIED FINANCIAL PLANNER Vipin Sehgal CFP B.Com. NCFM Certification In Capital Market AMFI Certified for Mutual Funds IRDA Certified for Life Insurance
CM CM
(Dealers) Module
Neeraj Nagpal CFP B.Com. AMFI Certified for Mutual Funds IRDA Certified for Life Insurance NCFM Certification In: Capital Market (Dealers) Module Derivatives Market (Dealers) Module Commodities Market Module Kavita Malhotra M.Com. Previous (10th Rank in Kurukshetra University) AMFI Certified for Mutual Funds IRDA Certified for Life Insurance Certification in all Modules of CFPCM Curriculum (FPSB
CM
India)

Commercial Banking in India: A Beginner's Module Examination

Exam Pattern
Test Duration No. of Questions Maximum Marks Pass % Negative Marking % 120 Min. 60 100 50 No

Commercial Banking in India: A Beginner's Module
Index
Chapter No. 1 2 3 4 5 6 7 8 Title Introduction Banking structure in India Bank Deposit Accounts Basics of Bank Lending Bank Investments Other Activities of Commercial Banks Relationship between Bank and customer Evolving Trends in modern Banking Sample Paper 1 Sample Paper 2 Sample Paper 3 No. of Questions 37 62 140 94 51 70 63 37 60 60 60

Chapter 1 Introduction
Why bank play special role in economy? 1 S R
Because they take a leading role in developing other financial intermediaries and markets. Because, the corporate sector depends heavily on banks to meet its financing needs Because bank cater the needs of a vast number of savers from the household sector All of the above Yes
Which of the following risk is managed by banks?
1 Yes
S R
Financial risk Non-financial risk Both None
In India definition of the business of banking has been 1 given in the_________?
S R
Banking regulation act 1950 Banking regulation act 1949 Banking regulation act 1956 Banking regulation 1969 Yes
Functions of commercial banks are same as from the 1

other financial institution. True False Yes
Which of the following function of a commercial bank 1 different from the other financial institution?
S R
Bank maintain deposit accounts including current accounts Issue and pay cheques Collect cheques for the bank's customers All of the above Yes

Chapter 2 Banking structure in India

_______ Banks have taken lead role in branch 1 expansion, particularly in the rural areas? Yes S R
11
Public sector Private sector Rural sector Co-operative sector
12
__________ banks account for bulk of the branches of 1 in India?
S R
Regional rural banks Scheduled banks Public sector banks Nationalized banks Yes
13
_________ banks have limited presence in rural 1 areas?
S R
Foreign banks Private banks Both None Yes

14
Regional rural banks were established_________
S R
During 1975-1987 During 1976-1987 During 1978-1987 During 1974-1987 Yes
15
Which of the following authorities owns RBB?
S R
Central government State government Public sector All of the above Yes
16
RRB not provides credit to________.
S R
Small farmers Artisan Agricultural laborers None of the above Yes
54
What types of product offered by foreign banks?
S R
Automobiles finance Home loans Household consumer finance All of the above Yes
55 True False
RBI includes only those banks in this schedule which 1 satisfy the criteria as laid down section 42(6) (a) of the act. Yes
S R
56
RBI controls the commercial banks through
S R
Periodic inspection of banks Follow up action Calling for returns and other information All of the above Yes
57 FALSE TRUE
Under the new system, the RBI acts as the banker to 1 Central Government only, not banker to State Governments. Yes
S R
58 FALSE TRUE
Hindu Undivided Families (HUFs) are not allowed to 1 open current accounts. Yes
S R
59 TRUE
Public sector banks are not allowed to enter the mutual 1 fund business.
S R

FALSE
Yes

Chapter 4 Basics of Bank Lending

Bank act as __________of public deposits. 1 S R
Depository Custodian Lender Banker Yes
6 Safety Liquidity
Which of the following is the principle of lending
S R
Profitability All of the above Yes
Which type of security not used against loan?
S R
Adequate Free of encumbrances Marketable None of the above Yes
The DICGC can withdraw the deposit insurance cover 1 for a bank if it fails to pay the premium for __________periods. Yes
S R
Three consecutive half year

Four consecutive 1 year Two consecutive half year One consecutive half year
Which of the following entity prepare the basic credit 1 policy of the bank?
S R
Banks board of director Credit policy committee IBA(Indian bank of association) RBI Yes
10
In which areas loan policy typically lays down lending 1 guidelines?
S R
Level of credit-deposit ratio Hurdle ratings Targeted portfolio mix All of the above Yes
51
__________are repositories of information, which 1 contains the credit history of commercial and individual borrowers.
S R
Credit risk management department Credit Committee Credit information report Credit information bureau Yes
52
Credit information bureaus collect commercial and 1 consumer credit related data and collate such data to create credit reports, which they distribute to their Members. Yes
S R
True False
53
_________is a factual record of a borrower's credit 1 payment history compiled from information received from different credit grantors.
S R
Credit risk management report Credit Committee Credit information report Credit information bureau Yes
54
The purpose of _______ is to help credit grantor make 1 informed lending decision? Yes
S R
Credit information report Credit risk management report Credit Committee None of the above
55 True False
Banks do not need to constantly keep a check on the 1 overall quality of the loan portfolio.
S R
Yes

Chapter 6 Other Activities of Commercial Banks

The main para-banking activities of a bank can be 1 segreted into: (1)Investment banking service (2)Selling mutual funds (3)Selling insurance products Yes S R
1,2,3 1,2 2,3 1,3
2 True False
Forward foreign exchange transaction entered into with 1 corporate and non-corporate customer and counterparty banks for the purpose of hedging and trading. Yes
S R
3 Option Swaps Both None
Which of the following product derived from the foreign 1 exchange market or the interest rate market?
S R
Yes
Option and swaps are tailor made products designed to 1

meet specific risk hedging requirements of the customer. True False Yes
43
Which of the following is primary objective of the DP 1 system?
S R
Enhance liquidity and turnover Improve secondary market trading system Encourage voluntary holding of government securities All of the above Yes
44
Which of the following criteria fulfill by banks to do PD 1 business?
S R
Minimum net owned funds of Rs. 1000 crores Minimum CRAR of 9% Net NPAs of less than 3 % and a profit making record for the last three years All of the above Yes
45 True False
Merchant Banking and Investment Banking are same.
S R
Yes
46
Banks and Financial Institutions including Non Banking 1 Finance Companies (NBFCs) providing merchant banking services are governed by the RBI Rules and
S R

Regulations. True False Yes
47 True False
Indian only the player of investment banking.
S R
Yes

Chapter 7 Relationship between Bank and customer

Widespread distribution is not the key dimension of the 1 retail strategy of bank. S R
15 True False
Yes
16
Cross selling of the entire range of credit and 1 investment products and banking services to customers is a key aspect of the Product Life Cycle Strategy.
S R
True False Yes
17 Saving Retail Both None
________ Deposits are usually more stable than 1 corporate bulk deposits or wholesale deposits.
S R
Yes
18
Which of the following retail product not offer by bank?
S R
Automobile loans Loans against time deposits

Two wheeler loans None the above Yes
19 Secured
Personal loans are________.
S R
Unsecured Both None
Yes
52
Which of the following are the key elements should be 1 incorporated while banks frame their KYC?
S R
Customer Acceptance Policy Customer Identification Procedures Monitoring of Transactions All of the above Yes
53 True False
Driving license document use for opening deposit 1 accounts under KYC guidelines. Yes
S R
54
Normally what kind of customers may not be 1 categorized as low risk?
S R
Salaried employees Government owned companies

Regulators Politically exposed persons Yes
55
Which type of customer require higher due diligence?
S R
Non-resident customers High net worth individuals Firms with 'sleeping partners All of the above Yes

Chapter 8 Evolving Trends in modern Banking

Customer can pay various taxes online including 1 Excise and Service Tax, Direct Tax etc. Yes S R
4 True False
________is an inter bank-funds transfer system, where 1 funds are transferred as and when the transaction are triggered.
S R
Register and pay Online payment RTGS fund transfer Any of the above Yes
The RBI has adopted________ in which mobile phone 1 banking is promoted through business correspondents of banks. Yes
S R
Bank led model Point of sale Internet banking POS terminal
When banks did have been granted permission to 1 operate Mobile Banking in India?
S R

July 30,2008 July 30,2009 May 15,2008 May 30,2009 Yes
8 30 15 20 32
How many banks had been granted permission to 1 operate mobile banking in India?
S R
Yes

Sample Paper 1
1 In India definition of the business of banking has been 2 given in the_________? S R
Banking regulation act 1950 Banking regulation act 1949 Banking regulation act 1956 Banking regulation 1969 Yes
Which of the following entity is the central bank and 1 monetary authority of India?
S R
State bank of India SEBI RBI PNB Yes
3 2 3 4 5
How many components intermediation process has?
an
efficient
financial 1
S R
Yes
For whom bank credit is provided?
S R
Household
Retail traders Small and medium enterprises All of the above Yes
The imperial bank of India was established with 1 mainly_____?
S R
Indian shareholder Japan shareholder European shareholder All of the above Yes
57
_____ And ____ are two major companies in the 2 mortgage business and provide stiff competion to the commercial banks in the disbursal of housing loans.
S R
NEDFI, HDFC NEDFI, HUDCO HDFC, HUDCO LIC, HUDCO Yes
58
In India, the RBI prescribes the minimum SLR level for 3 Scheduled Commercial Banks in India in specified assets as a percentage of Bank's ______ Yes
S R
Net Demand and Time Liabilities Demand Liabilities Time Liability None of the above

59
How does a bank endeavor to provide services to the 2 satisfaction of customers?
S R
Banks put in place an expeditious mechanism to redress the Yes complaints of the customers By appointing Customer Relationship Managers (CRMs) Products are developed by banks to meet the specific requirements of the customer All of the above
60 TRUE FALSE
Public sector banks are not allowed to enter the mutual 1 fund business.
S R
Yes

Sample Paper 2
5 Which sector has been the most significant contributor 1 to savings? S R
Private corporate sector Household sector Public sector All of the above Yes
6 Safety Liquidity
Which of the following is the principle of lending
S R
Profitability All of the above Yes
7 SLR Non-SLR CRR
Commercial papers, shares, bonds and debenture 3 issued by the corporate sector categorized into______
S R
Yes
Any of the above
The RBI has adopted________ in which mobile phone 2 banking is promoted through business correspondents of banks.
S R

Bank led model Point of sale Internet banking POS terminal
Yes
Who formulate the policies relating to the rates of 1 interest payable on deposit?
S R
Board of director Top management Both Any of the above Yes
10 Assets Liabilities Both None
In terms of bank SLR is prescribed as_____.
S R
Yes
36
Which of the following is not the principal competitor in 2 the agriculture and priority segment?
S R
Large public sector banks Regional rural banks Cooperative banks Commercial banks Yes
37 FALSE TRUE
A commercial paper issue made by a corporate is a 2 non-SLR instrument
S R
Yes
38 75% 60% 65% 74%
Indian partners hold at least _____of Indian insurance 2 joint venture.
S R
Yes
39
The rural co-operative banks comprises_________.
S R
PCARDBs District central co-operative bank SCARDBs All of the above Yes

Sample Paper 3
11 True False Yes Product life cycle strategy is not the key components of 1 strategies to expand and retain the customer base. S R
12 RBI
Who determine the interest rate on NRE account?
2 Yes
S R
IBA(Indian bank of association) Both None
13
Banks decision to be outsourced some of their 2 activities should be on______.
S R
Cost consideration Lack of expertise in banks in delivering certain services Concentrate on their core activates All of the above Yes
14 FALSE TRUE
Hindu Undivided Families (HUFs) are not allowed to 1 open current accounts. Yes
S R

15
If any, payable for processing the loan, the amount of 2 such fees not refundable in the case of_________.
S R
Non-acceptance of application Prepayment options Both None Yes
52
___________terminal is the instrument in which the 2 credit card is swiped
S R
Point of buy Point of sale MICR All of the above Yes
53
Why is the RBI called as the bankers of bank?
S R
It lends the banks funds for short period It provides them with centralized clearing and cheap and quick remittance facilities It holds a part of the cash reserves of banks All of the above Yes
54
What is the purpose of measure taken in July 1993?
S R
To induce competition in banking sector Permit to private sector to enter into banking system Both Yes
None

Roots Institute of Financial Markets (RIFM)
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Helpful Books from RIFM

RIFM PROVIDES AN ON LINE ACCESS TO ITS STUDENTS , FOR A FAST AND QUICK REVISION OF MODULE . IT IS BASED ON THE CONCEPT ANYWHERE , ANYTIME !!
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Online Question Bank Commercial Banking in India: A Beginner's Module

Roots Institute of Financial Markets

Faculty and content team, RIFM

Roots Institute of Financial Markets

Roots Institute of Financial Markets

Commercial Banking in India: A Beginner's Module Examination

Roots Institute of Financial Markets

Commercial Banking in India: A Beginner's Module

Roots Institute of Financial Markets

Which of the following risk is managed by banks?

Financial risk Non-financial risk Both None

In India definition of the business of banking has been 1 given in the_________?

Functions of commercial banks are same as from the 1

Roots Institute of Financial Markets

other financial institution. True False Yes

Roots Institute of Financial Markets

Chapter 2 Banking structure in India

Public sector Private sector Rural sector Co-operative sector

__________ banks account for bulk of the branches of 1 in India?

_________ banks have limited presence in rural 1 areas?

Foreign banks Private banks Both None Yes

Roots Institute of Financial Markets

Regional rural banks were established_________

During 1975-1987 During 1976-1987 During 1978-1987 During 1974-1987 Yes

Which of the following authorities owns RBB?

RRB not provides credit to________.

Small farmers Artisan Agricultural laborers None of the above Yes

What types of product offered by foreign banks?

RBI controls the commercial banks through

Roots Institute of Financial Markets

Roots Institute of Financial Markets

Chapter 4 Basics of Bank Lending

Depository Custodian Lender Banker Yes

Which of the following is the principle of lending

Profitability All of the above Yes

Which type of security not used against loan?

Adequate Free of encumbrances Marketable None of the above Yes

Three consecutive half year

Roots Institute of Financial Markets

In which areas loan policy typically lays down lending 1 guidelines?

Roots Institute of Financial Markets

Chapter 6 Other Activities of Commercial Banks

1,2,3 1,2 2,3 1,3

3 Option Swaps Both None

Option and swaps are tailor made products designed to 1

Roots Institute of Financial Markets

Which of the following is primary objective of the DP 1 system?

Which of the following criteria fulfill by banks to do PD 1 business?

Merchant Banking and Investment Banking are same.

Roots Institute of Financial Markets

Regulations. True False Yes

Indian only the player of investment banking.

Roots Institute of Financial Markets

Chapter 7 Relationship between Bank and customer

True False Yes

17 Saving Retail Both None

Which of the following retail product not offer by bank?

Automobile loans Loans against time deposits

Roots Institute of Financial Markets

Two wheeler loans None the above Yes

Personal loans are________.