banking, security market & insurance section 2 MCQ Questions & Answers Detailed Explanation

Answer: (d)

Answer: (a)

National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India.

It was established on 12 July 1982 in the sixth five-year plan and its main focus was to uplift rural India by increasing the credit flow for elevation of agriculture and rural non-farm sector and laying down policies and to oversee the operations of the RRBs.

Moreover, Regional Rural Banks grant direct loans and advances to marginal farmers and rural artisans. So both statements are correct.

Answer: (b)

In 1991, India faced a serious balance of payment crisis and was forced to sharply devalue its currency. The country was in the grip of high inflation, low growth and the foreign reserves were not even worth meeting three weeks of imports.

Under these situations, the currency was devalued to 17.90 against the dollar. In July of 1991, the Indian Government devalued the rupees by between 18 and 19%. The Government also changed its trade policy higher restrictive to a system of tradable EXIM SCRIPS.

Answer: (d)

Currency is most liquid, because you can use it as and when you want. Time deposit with bank (e.g. fixed deposit), are least liquid compared to savings/demand deposit with banks and currency.

Answer: (d)

CTS: Cheque Truncation System Cheque,

MICR: Magnetic Ink Character Recognition,

IFSC: Indian Financial System Code

FERA: Foreign Exchange Regulation Act.

Answer: (c)

The main functioning of the banking system is to accept deposits and provide credit. The bank collects deposits from the public.

These are savings, fixed, current and recurring deposits. The bank advances loans to the business community and other members of the public.

The types of bank loans and advances are overdraft, cash credits, loans and discounting of bills of exchange.