Question Answers with Explanation SEBI and other Institutions 1. Which is distributary agency of Kisan Credit Card Scheme? a) NABARD b) SBI c) Rural Development Bank d) Regional Rural Bank and Commercial Banks Explanation: The Kisan Credit Card provides affordable credit for farmers in India. It was started by government of India, and National Bank for Agricultural and Rural Development (NABARD) in 1989-90 to help farmers access timely and adequate credit. Regional rural bank and commercial banks are the distributary agencies of Kisan Credit Card Scheme. 2. To regulate scam in Indian capital market, which of the following body has regulatory power: a) SEBI b) RBI c) SBI d) None of these Explanation: The securities and exchange board of India, is the regulatory for the securities market in India. It was established in 1988 and work started from 1992. The SEBI is managed by its members which consist of following a) Chairman b) Two member officers from Indian finance ministry c) One member from the RBI. It has regulatory power to regulate scam in Indian capital market. 3. Which of the following is/are in public sector: 1. Fertilizer Corporation of India 2. Food Corporation of India 3. Cotton Corporation 4. Jute Corporation of India a) Only 1, 2 b) Only 2,3 c) Only 3,4 d) All of the above Explanation: Fertilizer Corporation of India is a public sector undertaking in Indian administrative control of the departmental fertilizer. FCI provides price supports to farmer and ensure adequate public distribution of grains. Cotton Corporation of India Ltd. is premier organization under the Ministry of Textiles Govt. of India. 4. Which of the following is incorrect: a) EXIM Bank Finance for export-import b) RBI Bankers of Bank c) IDBI Industrial finance d) FCI Finance for commercial institutes Explanation: Food Corporation of India is the full name of FCI. It provides price supports to farmers, and ensures adequate public distribution of grains. Food Corporation of India (FCI) net provides finance for commercial institutes. So in above option (d) is not correctly matched with their pair. 5. Select the false one/ones from statements given below: 1. Exchanging the loan particular interest rate for another at lowest interest rate is called interest swap. 2. One debt being exchanged by another for a fresh term of repayment scheduled at the same or lower interest rate called debt swap. 1
a) Only 2 is correct b) Both are correct c) Neither 1 nor 2 are correct d) Only 1 is correct Explanation: In the debt swap the interest rates may remain the same as the older loan since the intention here is to get term of loan payment increased not decreased. Statement 2 is also correct. 6. Consider the following statements and select correct: 1. The cash part of SLR of the bank is known as Till money. 2. Till money of commercial banks is the part of CRR. 3. Banks with no Till money are not allowed to operate by the RBI. a) 1, 2 and 3 are correct b) 2 and 3 are correct c) Only 3 is correct d) Only 2 is correct Explanation: Statement 2 is only correct. Till money is a name given to currency coins, which bank maintain and meet everyday cash requirement of their clients. It is counted as part of their cash reserve ratio. 7. Which of the following is/are treated as like artificial currency: a) SDR b) ADR c) GDR d) None of these Explanation: SDR is known as artificial currency of IMF. GDR and ADR are known as financial instruments. So in the above option (a) is correct about the artificial currency. GDR and ADR are financial instruments so they are not an artificial currency. 8. What do you mean by Scheduled Banks: a) The Bank which is already nationalised. b) The Bank which is not nationalised. c) The Banks whose headquarters is situated abroad. d) The Banks whose name is listed in 2nd schedule of RBI. Explanation: Scheduled bank in India are those banks which have been included in the second scheduled of Reserve Bank of India Act 1934. RBI in turn includes only those banks in this scheduled banks which satisfy the criteria laid down vide section 42(6) of the Act. 9. If the cash reserve ratio is lowered by the Reserve Bank of India, its impact on credit creation will be: a) Decrease b) It increase c) No effect d) None of these Explanation: CRR is the amount of funds that all scheduled commercial banks and excluding regional rural banks are required to maintain without any floor for ceiling rate with the RBI with reference to their total demand and time liabilities to ensure liquidity and solvency of banks. 10. Consider the following statements: 1. SEBI will be the authority to grant general permission to Qualified Foreign Investors for investment under Portfolio Investment Scheme (PIS) route that is similar to FIIs. 2. The prescribed limits for FIIs and NRIs are not applicable to the QFIs. 2
Select the correct above statement. a) Only 1 b) Only 2 c) 1 and 2 d) None of these Explanation: The securities and exchange board of India is a regular body for the securities market in India. It was established in 1988 and given statutory power on 12 April, 1992 through the SEBI Act, 1992. 11. Consider the following statements: 1. In insider trading the internal information is used for share trading by an employee of a company or a person related to it. 2. National stock exchange started the future trading of foreign currency for the first time. Choose correct options: a) Only 2 b) 1 and 2 c) Only 1 d) None of these Ans: Explanation: NSE is mutually owned by a set of leading financial institution banks, insurance companies and other financial intermediaries in India but ownership and management operates as separate entities. NSE located in Mumbai. It is the 11th largest stock exchange in World and largest in India. 12. The national housing bank was set up in India as a wholly owned subsidiary of which of the following: a) ICICI Bank b) RBI and LIC Banks c) RBI d) None of these Explanation: The national housing bank was set up in India as a wholly owned subsidiary by Reserve Bank of India (RBI). Reserve Bank is also known as bankers of bank. So in the given option (c) is correct about the given statement. The bank started its function from July, 1988. 13. Consider the committee as the step by the RBI to check the functioning of the Micro Finance Institutions (MFIs) operating in India. a) Raguram Rajan b) Bimal Jalan c) Y.H.Malegam Committee d) Y.V.Reddy Committee Explanation: Malegam is the chairman of the National Advisory Committee on accounting standards. It was appointed chairman of the famous Malegam Committee (subcommittee of the RBI Central Board of Directors) set up to study issues and concern in the Micro Finance Institution. The committee submitted its report to the RBI in jan., 2011. 14. As per the circular of the RBI, what is correct about the core investment companies? a) All those non-banking finance companies, which invest not less than 90% of their total assets in the form of shares and securities for non-trading purposes. b) All the corporate houses with net-owned funds not less than Rs. 2,000 crore invested in the core sector for at least 10 years. c) Both (a) and (b) correct. d) None of these Explanation: RBI Policy rates: Bank Rate -10.25% 3
Repo Rate -7.25% Reverse Repo Rate -6.25% Marginal Standing Facility Rate-10.25% 15. Consider the following statements about SEBI: 1. Protection of the interest of investors. 2. SEBI is the not constitutional institution. 3. The regulation and development of securities market. 4. Registering the collective investment plans of mutual funds and its regulation. Choose correct options. a) 1 and 2 b) 2 and 3 c) All of the above d) Only 3 Explanation: The preamble of the SEBI describes the basic functions of the securities and exchange board of India so as to protect the interests of investors in securities and to promote the development of and to regulate the securities market and for matters connected therewith or incidental thereto. 16. Consider the following statements regarding BASEL Standards: 1. Under BASEL-II, banks and financial institutions have to reserve money in a fixed amount to tackle international financial risks. 2. Under Basel-III tier 3 capital has to be maintained as earlier which is used for market risk. Which of the above statement is/are correct? a) Only 1 b) Only 2 c) Both d) None of these Explanation: Objective of Basel-2 is to ensure that capital allocation is more risk sensitive. Enhance discloser requirement which will allow market participants to assess the capital adequacy of an institution. Basel-2 is the second of the BASEL Accords which are recommendation on banking laws and regulation issued by Basel committee on banking supervision. 17. Which of the following institutions are concerned for long-term industrial finance: a) ICICI b) IDBI c) IFCI d) All of the above Explanation: ICICI - Jan.,1955 IDBI July,1964 IFCI - July,1948 Above three institutions provide long and, medium term economic aid. 18. Word bulls and bears is related to: a) Foreign trade b) Banking c) Share market d) Educational Explanation: A bull market is associated with increasing investor confidence and increase investment in anticipation of future price increases (capital gains). A bullist trend in stock market obtain begins before the general economy shows clear signs of recovery. A bear market is a general decline in the stock market over a period of time. It is a transition from high investors optimism to widespread investors fear and pessimism. 4
19. Consider the following statement and select correct code about regarding the Banking Ombudsman: 1. Banking Ombudsman is appointed by RBI. 2. All scheduled commercial bank, regional rural bank and scheduled primary cooperative banks are covered under banking ombudsman. 3. Appeal against banking ombudsman can be taken by Governor of RBI. a) Only 3 is correct b) 1 and 2 are correct c) 1 and 3 are correct d) None of these are correct Explanation: The appellate authority is Deputy Governor of RBI not Governor. The appellate authority is Deputy Governor of RBI not Governor. The bank has also option to file an appeal before the appellate authority under the scheme. 20. The accounting year of Central Bank (RBI) is: a) August-September b) April-March c) July-June d) September-October Explanation: The Reserve Bank of India (RBI) was established on 1 April, 1995 and Nationalised on 1 January, 1949. RBI is the central bank of India. The accounting year of Reserve Bank of India is March-April month. 21. The Narsimham Committee for financial sector reform has suggested reduction in: a) SLR and financing to capital goods sector. b) SLR and CRR c) SLR, CRR and priority sector financing d) None of these Explanation: The Narsimham Committee for financial sector reform was constituted under N.Narsimham, former governor of RBI in 1999. Committee has suggested reduction in statutory liquidity ration and cash reserve ratio. It has also suggested that statutory liquidity ratio should be reduced upto 25%. Lending priority sector should also be reduced. 22. Bank rates implies the rate of interest: a) At which the Reserve Bank of India accepts the deposit of commercial bank. b) At which the Reserve Bank of India discounts the bill of exchange c) Payable on bond d) None of these Explanation: Bank rate implies the rate of interest at which the central bank (RBI) discount the bill of exchange. In other word, it is the rat of interest at which RBI provides loan to commercial bank. It is instrument of monetary policy to effluence money supply in economy. 23. Economy survey in our country published officially every year by the: a) RBI b) Ministry of Finance, Govt. of India c) Planning Commission of India d) Ministry of Industries, Govt. of India Explanation: The economy survey in India is published every year by the Ministry of Finance, Government of India. In present P.Chidambaram is the Finance Minister of India. 24. NAB CONS refers to: 5
a) Consultancy service of World Bank b) Consultancy of NABARD c) Consultancy or RBI d) Consultancy of Asia Development Bank Explanation: NABARD consultancy services is a wholly owned subsidiary promoted by NABARD and is engaged in providing consultancy in all spheres of agriculture, rural development and allied areas. NAB CONS leverages on the crore competence of the NABARD in the areas of agricultural and rural development. 25. Consider the following statement regarding India millennium deposit: 1. It was started by SBI (State Bank of India). 2. This plan is only for non residents 3. It s maturity period is 6 years Choose correct options. a) Only 1 and 2 b) Only 1 and 3 c) All of the above d) None of these Explanation: The Indian millennium deposit scheme, operated by SBI got under way on Oct.21. Indian millennium deposit represent foreign currency deposit in India and are denominated in US dollar, Pound sterling and Euro. This plan is only for non resident plan. 6