money supply, banking & financial institutions section 2 MCQ Questions & Answers Detailed Explanation

Answer: (c)

Answer: (b)

Electronic Clearing Service is a mode of electronic funds transfers from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa.

This can be used both for making payments like distribution of dividend, interest, salary, pension, etc. by institutions or for collection of amounts for purposes such as payments to utility companies like telephone, electricity, or charges such as house tax, water tax, etc or for loan instalments of financial institutions/banks or regular investments of persons.

Answer: (c)

As commercial banks are required to keep SLR (cash, gold, government securities) of 18.25%, they keep the maximum per cent of government securities. Out of cash, gold and government securities, the government securities give the best returns (interest), so they prefer this instrument.

Cooperative banks also keep government securities under SLR but since cooperative banks overall share in deposit and lending is around 10 per cent of the Scheduled commercial banks, so commercial banks have the highest share of government securities.

Answer: (d)

Answer: (b)

Answer: (b)

The rate of rupee-dollar is determined in the forex market based on market forces of demand and supply. When the rupee becomes highly volatile, then RBI intervenes in the forex market, to contain the volatility.

But RBI does not regulate or fix the rupee-dollar rate. This is called ‘Managed Float’ or ‘Dirt Float’.

RBI regulates the Forex Market, Money Market and Govt. securities Market.