money supply, banking & financial institutions section 3 MCQ Questions & Answers Detailed Explanation
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The following question based on Money Supply, Banking and Financial Institutions topic of indian economy mcq
(a) Cooperative Banks
(b) Reserve Bank of India
(c) Commercial banks
(d) Insurance companies
The correct answers to the above question in:
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.
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
Which among the following are the Nationalised Banks?
- Bank of India
- Punjab National Bank
- Canara Bank
- United Commercial Bank
a) 3 and 4
b) 1 and 2
c) 1 and 4
d) 1, 2, 3, 4
Answer »Answer: (d)
The nationalised banks are Central Bank of India, Bank of India, Punjab National Bank, Canara Bank, United Commercial Bank, Syndicate Bank, Bank of Baroda, United Bank of India, Union Bank of India, Dena Bank, Allahabad Bank, Indian Bank, Indian Overseas Bank Bank of Maharashtra.
Question : 2
What are the reforms of Narsimham Committee on Banking sector?
- Nationalisation of banks should not take place any more.
- Private and foreign banks should be set up to promote competition.
- There should be a phased reduction of CRR and SLR.
a) 2 only
b) 1 only
c) 3 only
d) All of the Above
Answer »Answer: (d)
Question : 3
Consider the following statements in a market-determined exchange rate system:
- Imposing tariffs may not help in improving the trade balance as the exchange rate moves to offset the tariff
- The exchange rate depends on the demand and supply of the two currencies
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
Suppose country A imposed a tariff against country B to reduce imports from B. Then it will lead to a reduction in demand of currency B for import purposes, which will lead to depreciation of currency B, resulting in negating the effect of tariffs imposed.
In a market-determined exchange rate, the rate of exchange between two currencies depends only on the demand and supply of the two currencies.
But the demand and supply of two currencies may depend on several factors like export and import and foreign people coming in or going out of the country and so on.
Question : 4
What does ECS in banking transactions stand for ?
a) Exchange Clearing Standard
b) lectronic Clearing Service
c) Excess Credit Supervisor
d) Extra Cash Status
Answer »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.
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