money supply, banking & financial institutions section 11 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
- Capital Adequacy Ratio (CAR) is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur if the account-holders fail to repay dues.
- CAR is decided by each individual bank.
(a) (ii) only
(b) Both (i) & (ii)
(c) (i) only
(d) Neither (i) nor (ii)
The correct answers to the above question in:
Answer: (c)
Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital to its risk-weighted asset ratio. A bank’s capital consists of Tier1 (share) and Tier2 (bonds) capital.
The bank has to maintain this capital so that, if there are defaults then the bank should be able to sustain. RBI mandates how much CAR has to be maintained by banks.
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Question : 1
Consider the following statements regarding MUDRA Bank:
- It will provide direct lending to small entrepreneurs
- MUDRA loans will be available for agriculture, manufacturing, trading and service activities
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (d)
MUDRA would be responsible for refinancing all Last Mile Financiers such as
- NonBanking Finance Companies,
- Societies,
- Trusts,
- Companies,
- Co-operative Societies,
- Small Banks,
- Scheduled Commercial Banks and
- Regional Rural Banks
Which are in the business of lending to micro/small business entities engaged in manufacturing, trading and services activities (not for agriculture).
Refinancing means MUDRA loans will be available through Banks/NBFCs/MFIs and not directly from MUDRA Bank.
MUDRA loans are available in three categories. For a small business, loans up to 50000/- is available under the ‘Shishu’ category, beyond 50,000 and up to 5 lakhs under the ‘Kishor’ category and between 5 lakhs to 10 lakhs under the 'Tarun' category.
These products have been designed to cater to customers operating at the lower end of the enterprise spectrum i.e. informal/unorganized sector.
Question : 2
In which year the export-import (EXIM) Bank in India was set up?
a) 1982
b) 1989
c) 1981
d) 1980
Answer »Answer: (a)
Question : 3
RBI keeps its foreign exchange reserves with which of the following agency/ies?
- Bank for International Settlement (BIS)
- Foreign Commercial banks
- Other/foreign Central banks
- Other institutions approved by Central Board of RBI
a) (ii) & (iii) only
b) (iii) & (iv) only
c) (i) only
d) All of the above
Answer »Answer: (d)
Reserve Bank of India invests the reserves in the following types of instruments:
- Deposits with Bank for International Settlements
- Deposits with other central banks
- Deposits with foreign commercial banks
- Debt instruments representing sovereign or sovereign-guaranteed liability
- Other instruments/institutions as approved by the Central Board of RBI
Question : 4
Which of the following grants / grant direct credit assistance to rural households?
- Regional Rural Banks
- National Bank for Agriculture and Rural Development
- Land Development Banks
a) 2 only
b) 1 and 2 only
c) 1 and 3 only
d) 1, 2 and 3
Answer »Answer: (c)
Land development banks started financing long term loans for more significant rural development activities like rural and cottage industries, rural artisans etc.
The main purpose of RRBs is to mobilize financial resources from rural / semi-urban areas and grant loans and advances mostly to small and marginal farmers, agricultural labourers and rural artisans.
Question : 5
Consider the following liquid assets.
- Demand deposits with the banks
- Time deposits with banks
- Savings deposits with banks
- Currency
a) 4, 3, 2, 1
b) 4, 1, 3, 2
c) 2, 3, 1, 4
d) 1, 4, 3, 2
Answer »Answer: (b)
Question : 6
Land Development Bank provides loan to farmers for
a) medium term
b) only for land improvement
c) long term
d) short term
Answer »Answer: (c)
GET Money Supply, Banking and Financial Institutions PRACTICE TEST EXERCISES
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money supply, banking & financial institutions section 11
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