money supply, banking & financial institutions section 4 MCQ Questions & Answers Detailed Explanation
MOST IMPORTANT indian economy mcq - 12 EXERCISES
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The following question based on Money Supply, Banking and Financial Institutions topic of indian economy mcq
(a) State Bank of India
(b) Export-Import Bank of India
(c) Ministry of Finance, Government of India
(d) Reserve Bank of India
The correct answers to the above question in:
Answer: (d)
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
Which of the following kind of entities are covered under the Insolvency and Bankruptcy Code 2016?
- Individuals
- Partnership firms
- Limited Liability Partnerships
- Companies
a) (i) & (iv) only
b) (ii), (iii) & (iv) only
c) (iii) only
d) All of the above
Answer »Answer: (d)
The IBC Code 2016 covers solvency of Individuals/personal, Corporate Debtors, Proprietorship, Partnership firms and Limited Liability Partnership (LLPs) firms.
But the provisions of the IBC Code are being implemented/notified in a phased manner and till now only Corporate Debtors have been notified under IBC.
Personal insolvencies, Proprietorship (one-man company) and partnership firms (which are not "limited") and LLPs will be done soon.
Question : 2
Which of the following was described as the biggest ever cash purchase of the shares of a bank in India?
a) Purchase of Nedungadi Bank shares by Punjab National Bank
b) Merger of Centurion Bank of Punjab with HDFC Bank
c) Amalgamation of Global Trust Bank with Oriental Bank of Commerce
d) Purchase of State Bank of India shares from RBI by the Central Government
Answer »Answer: (d)
Question : 3
Which of the following activities will increase liquidity in the economy?
- Advance tax payment
- Tax refunds for GST
- Front loading of government expenditure
- Recapitalization of public sector banks
a) (ii), (iii) & (iv) only
b) (iii) & (iv) only
c) (i) & (iii) only
d) All of the above
Answer »Answer: (a)
Advance tax payment means paying a part of the yearly taxes in advance to the government. This reduces liquidity in the economy because the money moves from public to government. (the logic is money with the government is not part of the money supply in the economy)
In the case of GST, the government credits/gives back the taxes paid on inputs, to the suppliers which increase liquidity in the economy. Front loading of government expenditure means the government is spending its yearly targeted expenditure in the starting months rather than in the year-end. This increases liquidity in the economy.
Recapitalization of public sector banks means the government is putting money in public sector banks which increases the lending capacity of the banks resulting in an increase in money supply and liquidity.
Question : 4
Which of the following statements are true regarding Housing Finance Companies (HFC)?
- HFCs are under direct regulation of RBI
- HFCs are a category of NonBanking Financial Companies (NBFCs)
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
Recent changes: National Housing Bank was a wholly-owned (100%) subsidiary of RBI. But in 2019, Govt. of India took over the entire stake of NHB from RBI.
Housing finance companies (HFCs) are a category of NBFCs and till recently, HFCs were regulated by National Housing Bank (NHB). But this was changed in 2019 and now HFCs have come under the direct regulation of RBI.
This may have been done because of the bankruptcy issues going on in various housing finance companies like DHFL. Even if housing finance companies (HFCs) were a category of NBFCs, in the news the newspapers always mentioned NBFC and HFC separately.
The reason being NBFCs were regulated by RBI and HFC by National Housing Bank (which was regulated by RBI).
Question : 5
Consider the following statements:
- National Centre for Financial Education is an institution promoted by the Ministry of Finance, Govt. of India
- Indian Financial Technology and Allied Services is a subsidiary of RBI
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (a)
National Centre for Financial Education (NCFE) is a Section 8 (Not for Profit) Company promoted (owned) by the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA).
Indian Financial Technology & Allied Services (IFTAS) is a wholly-owned subsidiary of the Reserve Bank of India, mandated to design, deploy & support IT-related services to the Reserve Bank of India, and all Banks and Financial Institutions in the country.
Question : 6
Consider the following statements in context with Treasury Bills:
- They are issued by the Government of India on behalf of the Reserve Bank of India
- They are mostly for Short term borrowings
- Treasury Bills can not be purchased by any person resident of India
a) 2 & 3 are correct
b) All are correct
c) Only 2 is correct
d) Only 3 is correct
Answer »Answer: (c)
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