IBPS PROBATIONARY OFFICERS BANKING KNOWLEDGE

Transcription

1 IBPS PROBATIONARY OFFICERS BANKING KNOWLEDGE RBI Rates as on 30 th September 2014 RBI's fourth bi-monthly monetary policy statement of Bank Rate: 9% CRR (Cash Reserve Ratio): 4% Repo Rate: 8% Reverse Repo Rate: 7% SLR (Statutory Liquidity Ratio): 22% Bank Rate: Bank rate is a rate of interest. It is an official rate of interest of RBI. It is also a minimum rate of interest at which RBI advances loans to Banks and financial institutions. RBI lends to banks and financial institutions by rediscounting the approved first class bills of exchange of banks as security. So this Bank rate is also called as Discount rate. It is also an instrument used for credit control. RBI uses Bank rate to control inflation or deflation. If inflation in the country is high and it is keeping on mounting RBI increases the Bank rate in order to bring down the inflation. In case of deflation, RBI decrease the Bank rate which allows more money supply in the economy and deflation will be in control. Cash Reserve Ratio (CRR): Cash reserve ratio is a quantitative method of monetary control. This is an instrument used by RBI to control credit in the economy. Cash reserve ratio means the percentage of cash that scheduled banks need to be deposited with RBI. The percentage is calculated on the Net Demand and Time Liabilities (NDTL) of the bank deposits at any given point of time. This is a mandatory reserve to be kept by the banks to meet the unexpected withdrawals from customers. Statutory Liquidity Ratio (SLR): This is also a quantitative measure takes by RBI in order to control the credit supply in the economy. This is the minimum statutory reserve that scheduled banks must maintain with RBI at any given point of time. The statutory reserves are of liquid assets of banks like gold, cash in hand, Government securities, current account balances with other banks etc. R

2 Repo Rate: Repo rate or Repurchase Rate is at which RBI lends to banks for short periods. This is a debt instrument used by RBI to control money supply in the economy. In order to lend loan to banks, RBI ask Treasury bills and dated government securities as guarantee from banks. RBI repurchases those Government securities at a predetermined rate (which is known as Repo Rate) and date. Reverse Repo Rate: Reverse Repo rate is at which RBI barrow from banks. This is also a debt instrument used by RBI to control money supply in the economy. If RBI wants money then it will like to borrow from banks at a reverse repo rate by selling treasury bills at predetermined rate (which is known as Reverse Repo Rate) and dated government securities. 1. Reserve Bank of India's reserve ratios are... a) SLR b) CRR c) REPO d) Only a and b e) Reverse REPO 2. If the bank rate is increased by RBI then... a) The lending rates of commercial banks also increases. b) Cost of credit increases in the money market. c) Demand for bank loans decreases. d) Due to demand for goods will also decreases, inflation can be controlled. e) All the above 3. If RBI wants to raise credit supply in the money market... a) RBI provide special schemes and gifts to promote more loans in market. b) RBI decreases the bank rate. c) RBI lend more money to banks. d) RBI increases the bank rate. 4. Who acts as a custodian of cash reserves of scheduled banks... a) Reserve Bank of India b) State Bank of India c) Central Bank of India d) Central Government of India

3 5. When does banks need to maintain mandatory reserve ratio? a) Quarterly b) Yearly (Financial) c) Half yearly d) At any given point of time 6. What is the rate charged by banks for discounting of approved bill of exchange? a) Repo Rate b) Reverse Repo Rate c) Bank Rate d) All the above 7. If RBI manipulate the Bank Rate then... a) Increase in supply of credit in economy. b) Decrease in supply of credit in economy c) Advance loans are stopped. d) Either increase or decrease in the credit supply in economy. e) Neither increase nor decrease in supply of credit in economy. 8. To arrest the rise in the price levels during inflation... a) RBI reduces the Bank Rate b) RBI raises the Bank Rate c) RBI manipulate the Bank Rate d) All the above 9. Why does RBI need to change CRR or SLR? a) To show that it is the supreme power for monetary system in India b) To have grip over banking system c) Depends upon the monetary requirements and conditions of the economy d) Because corporate and big companies need more money to expand their business e) All the above 10. Liquidity Adjustment Facility (LAF) mean... a) Advancing loans to banks in adjusting day to day mismatches in the liquidity. b) Facilitates banks credit expansion. c) Unsecured money market facility. d) Maintaining the liquidity in the form of gold, cash and government securities.

4 11. Repo and Reverse Repo operations are... a) Reduction of excess of expenditure b) Variable reserve ratio operations c) Issuing and paying agent operations d) Liquidity adjustment facility operations 12. When do banks get money at cheaper rate? a) When CRR is increased b) When Repo is lowered c) When Reverse Repo is lowered d) When SLR is lowered 13. Pulling out excess money from banks means... a) Raising CRR b) Raising LAF c) Reducing CRR d) Reducing SLR e) Keeping Variable Reserve Ratios unchanged 14. The rate of interest that RBI charge on banks for long term lending is... a) Repo Rate b) Bank Rate c) Reverse Repo Rate d) Base Rate 15. Money available cheaper from RBI means... a) Bank rate is low when compared to previous bi monthly monetary policy b) Repo Rate is low when compared to previous bi monthly monetary policy c) Reverse repo rate is unchanged when compared to previous bi monthly monetary policy d) Both a and b 16. When can RBI sell more government securities to banks? a) When RBI increases the SLR b) When RBI decreases the SLR c) When RBI increases the CRR d) When RBI decreases the CRR

5 17. Regional Rural Banks (RRBs) need to maintain their complete SLR in... a) Gold and cash b) Loans and advances to rural poor c) Government and other approved Securities d) They need not maintain as sponsor bank maintains the SLR 18. Reverse Repo Rate is an instrument used by RBI in order to... a) Pull out excess liquidity in the economy. b) Maintain liquidity at a certain level. c) Increase the liquidity levels in the economy. d) Decrease the liquidity in the banking system. 19. Identify the false statement from the following. a) When RBI sells government securities to banks the main purpose of selling may be to raise more funds for banks. b) When RBI buys the government securities from banks the main purpose of buying may be to pull out excess money from banks. c) When RBI sells government securities to banks it is raising funds to governments in the form of borrowing. d) When RBI repurchasing government securities for a short period from banks it is pumping more funds in the banking system. 20. Repurchasing the government securities means... a) RBI is lending to banks b) Banks are lending to RBI c) Government is lending to banks d) RBI is lending to government 21. In RBI s monetary policy, Liberal Money Policy means... a) Banks no need to deposit more excess cash as reserves. b) Banks are asked for more and more deposits to be held with RBI. c) CRR is Decreased d) Both a and c

6 22. RBI s fifth bi-monthly monetary policy statement of is/ was scheduled on... a) 30 th Sep, 2014 b) 2 nd Jan, 2014 c) 2 nd Dec, 2014 d) 5 th Aug, 2014 KEY 1-d; 2-e; 3-b; 4-a; 5-d; 6-c; 7-d; 8-b; 9-c; 10-a; 11-d; 12-b; 13-a; 14-b; 15-d; 16-a; 17-c; 18-b; 19-e; 20-a; 21-d; 22-c. Writer: S. Rudranand