money supply, banking & financial institutions section 6 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) the rate at which banks lend to its prime borrowers
(b) the rate at which banks rediscount bills with RBI
(c) the maximum rate that banks can pay for deposit
(d) the rate of interest charged on inter-bank transactions
The correct answers to the above question in:
Answer: (b)
Practice Money Supply, Banking and Financial Institutions (money supply, banking & financial institutions section 6) Online Quiz
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
Rural Infrastructure Development Fund is being financed by
a) Reserve Bank of India
b) Selected group of Public Sector Banks
c) Ministry of Rural Development
d) NABARD
Answer »Answer: (d)
Question : 2
Which of the following are part of the money supply?
- Cash and deposits of public
- Bonds held by public
- Shares held by public
a) (i) & (ii) only
b) (ii) & (iii) only
c) (i) only
d) All of the above
Answer »Answer: (c)
Money supply is money with the public either in cash form or in deposit form (demand and time both) with the bank (and Post offices).
Securities like bonds and shares are tradable instruments and their prices fluctuate and hence are not part of the money supply.
Question : 3
Which of the following statements are true regarding the “Partial Credit Guarantee Scheme” launched in the 2019-20 budget?
- It is applicable to all govt. and private banks both
- NBFCs assets will be purchased by banks
- It will help in resolving the problem of asset-liability mismatch of NBFCs
- It will help in handling liquidity issues of NBFCs
a) (ii) & (iii) only
b) (ii), (iii) & (iv) only
c) (i) only
d) All of the above
Answer »Answer: (b)
As announced in July 2019 budget presentation, Govt. on 10.08.2019 launched a Partial Credit Guarantee offered by the Government of India (GoI) to Public Sector Banks (PSBs) for purchasing high-rated pooled assets from financially sound Non-Banking Financial Companies (NBFCs)/Housing Finance Companies (HFCs)".
Under the above scheme, Public Sector Banks can purchase the loan papers of NBFCs (only through the Direct Assignment route and not through securitisation) to provide liquidity to NBFCs and manage their asset-liability mismatch issue. Central govt. will provide partial credit guarantee on these assets
i.e. if in future these loan papers turn NPA, then Govt. of India will pay to Public Sector Banks. But there are restrictions on what kind of loan papers of NBFCs can be purchased by PSU banks and only high rated loans is allowed up to Rs. 1 lakh crore by February 2020.
Question : 4
Consider the following statements regarding NonBanking Finance Companies (NBFCs):
- NBFCs can also engage in Micro-Finance Activities.
- Housing-finance companies form a distinct subgroup of the NBFCs.
- The deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors.
a) 1 and 3
b) Only 1
c) All of there
d) None of these
Answer »Answer: (d)
Question : 5
Which among the following is not correct?
a) Floating exchange rate breeds uncertainties and speculation
b) The system of floating exchange rate requires comprehensive government intervention
c) Economic and political factors and value judgments influence the choice of the exchange rate system
d) Floating exchange rate system works on market mechanism
Answer »Answer: (b)
Question : 6
The Bank rate is the rate at which
a) the RBI lends to the public
b) the Government of India lends to other countries
c) the RBI gives credit to the commercial banks
d) a bank lends to the public
Answer »Answer: (c)
GET Money Supply, Banking and Financial Institutions PRACTICE TEST EXERCISES
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money supply, banking & financial institutions section 12
Money Supply, Banking and Financial Institutions Shortcuts and Techniques with Examples
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