banking, security market & insurance section 1 MCQ Questions & Answers Detailed Explanation
MOST IMPORTANT indian economy mcq - 5 EXERCISES
The following question based on Banking, Security Market & Insurance topic of indian economy mcq
- Micro-credit extended by banks to individual is reckoned as a part of their priority sector lending.
- RBI has prescribed a particular model the banks to provide microfinance.
(a) Both 1 and 2
(b) 2 only
(c) 1 only
(d) Neither 1 nor 2
The correct answers to the above question in:
Answer: (c)
Micro-credit extended by banks to individuals is reckoned as a part of their priority sector lending and no particular model has been prescribed for micro-finance and banks have been extended freedom to formulate their own models.
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Question : 1
Which of the following grants/grant direct credit assistance to rural households ?
- Regional Rural Banks
- National Bank for Agriculture and Rural Development
- Land Development Banks
a) 1 and 3 only
b) 2 only
c) 1 and 2 only
d) 1, 2 and 3 only
Answer »Answer: (a)
NABARD doesn’t give “direct” credit assistance. It provides credit via intermediaries such as micro finance companies, cooperative society, RRB. Therefore, 2 is false.
Question : 2
Who among the following can join the National Pension System (NPS)?
a) All State Government employees joining the services after the date of notification by the respective State Governments
b) Persons of age from 21 to 55 only
c) Resident Indian citizens only
d) All Central Government employees including those of Armed Forces joining the services on or after 1st April, 2004
Answer »Answer: (a)
Any Indian between 18 to 55 can join NPS. So “B” is wrong.
NRIs are allowed to open NPS account as per PFRDA norms. So “C” is wrong.
NPS was compulsory for new central govt recruits (except armed forces) WEF 1/1/2004. so “D” is wrong.
Question : 3
Consider the following statements in regard to ‘Marginal Standing Facility (MSF)’ of RBI :
- It will help in reducing volatility in the overnight lending rates in the inter-bank market.
- The borrowing under the MSF should be over and above the statutory liquidity requirement.
a) Both 1 and 2
b) 2 only
c) 1 only
d) Neither 1 nor 2
Answer »Answer: (c)
Marginal Standing Facility (MSF) is the rate at which scheduled banks could borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities.
Banks can borrow funds through MSF during acute cash shortages (considerable shortfall of liquidity).
This measure has been introduced by RBI to regulate short-term asset-liability mismatch more effectively and the borrowing is within Statutory liquidity requirements.
The Marginal Standing Facility (MSF) is pegged 100bps or 1 % above the Repo Rate.
Question : 4
Which of the following is a most likely consequence of implementing the ‘Unified Payments Interface (UPI)’?
a) FDI inflows will drastically increase.
b) Digital currency will totally replace the physical currency in about two decades.
c) Mobile wallets will not be necessary for online payments.
d) Direct transfer of subsidies to poor people will become very effective.
Answer »Answer: (c)
“A” is the most appropriate choice. Mobile wallets will not be necessary, because your mobile number is directly linked with the bank account using bank’s ‘customized app’ which is built on the UPI platform.
Question : 5
What is the purpose of setting up Small Finance Banks (SFBs) in India?
- To supply credit to small business units
- To supply credit to small and marginal farmers
- To encourage young entrepreneurs to set up businesses particularly in rural areas.
a) 1 and 3 only
b) 2 and 3 only
c) 1 and 2 only
d) 1, 2 and 3
Answer »Answer: (c)
While directly or indirectly all three will be encouraged because of Small Finance banks. But when RBI invited applications, the specific purpose were 1 and 2 only.
Question : 6
In the context of Indian economy; which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
- To enable the Central Bank to control the amount of advances the banks can create
- To make the people’s deposits with banks safe and liquid
- To prevent the commercial banks from making excessive profits
- To force the banks to have sufficient vault cash to meet their day-to-day requirements
a) 2 and 3 only
b) 1 and 2 only
c) 1 only
d) 1, 2, 3 and 4
Answer »Answer: (b)
Because Reserve requirements are designed as “precautionary measures” and not to stop banks from “excessive” profit.
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