money supply, banking & financial institutions section 11 MCQ Questions & Answers Detailed Explanation

MOST IMPORTANT indian economy mcq - 12 EXERCISES

Top 30,000+ Indian Economy Memory Based Exercises

The following question based on Money Supply, Banking and Financial Institutions topic of indian economy mcq

Questions : Which of the following statements are true regarding the "Prompt Corrective Action (PCA)" framework:
  1. It is applicable to banks and non-banking financial companies (NBFCs)
  2. The institutions under PCA may cease to lend
  3. It is a supervisory tool of RBI for banks
  4. It applies once financial institutions reach a certain threshold level regarding Capital and NPAs.
Select the correct answer using the code given below:

(a) (iii) & (iv) only

(b) (ii), (iii) & (iv) only

(c) (i), (ii) & (iii) only

(d) All of the above

The correct answers to the above question in:

Answer: (b)

RBI, under its supervisory framework, uses various measures/tools to maintain the sound financial health of banks. Prompt Correction Action (PCA) framework is one of such supervisory tools under which RBI has specified certain regulatory trigger points in terms of three parameters,

i.e. capital to risk-weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA), for initiation of certain structured and discretionary actions in respect of banks hitting such trigger points. It involves monitoring certain performance indicators of the banks as an early warning exercise and is initiated once such thresholds are breached.

Its objective is to facilitate the banks to take corrective measures including those prescribed by the Reserve Bank, in a timely manner, in order to restore their financial health.

The framework also provides an opportunity for the Reserve Bank to pay focused attention to such banks by engaging with the management more closely in those areas. The PCA framework is, thus, intended to encourage banks to eschew certain riskier activities and focus on conserving capital so that their balance sheets can become stronger.

The RBI has clarified that the PCA framework is not intended to constrain normal operations of the banks for the general public like lending and depositing. But in extreme cases, RBI can put restrictions on lending activity also.

The PCA framework is applicable only to commercial banks and not extended to co-operative banks and non-banking financial companies (NBFCs).

Read more questions on money and supply banking financial institutions of test pdf set 11 Click Here »

Practice Money Supply, Banking and Financial Institutions (money supply, banking & financial institutions section 11) Online Quiz

Discuss Form

Valid first name is required.
Please enter a valid email address.
Your genuine comment will be useful for all users! Each and every comment will be uploaded to the question after approval.

Read more money and supply banking financial institutions Based Indian Economy Questions and Answers

Question : 1

Among the supply side measures to contain inflation is:

a) postponing public expenditure

b) credit control measures of RBI

c) mopping up excess liquidity through taxation

d) maintaining price levels through an effective PDS

Answer: (d)

Question : 2

Consider the following statements:

  1. In Banks, the “Staff Security Deposits” come under Time Liabilities
  2. In Banks. “Cash certificates” come under the Demand Liabilities
Which among the above statements is/ are correct?

a) Only 2 is correct

b) Only 1 is correct

c) Both 1 and 2 are correct

d) Neither 1 nor 2 is correct

Answer: (b)

Question : 3

Consider the following statements regarding currency circulation in India:

  1. Govt. of India has the sole right to mint coins
  2. The coins are issued for circulation only through RBI in terms of the RBI Act 1934
  3. Coins can be issued up to the denomination of Rs. 1000 as per the Coinage Act 1906
Select the correct answer using the code given below:

a) (i) & (ii) only

b) (iii) only

c) (i) only

d) All of the above

Answer: (d)

[The Government of India has the sole right to mint coins. The responsibility for coinage vests with the Government of India in terms of the Coinage Act, 1906.

The designing and minting of coins in various denominations is also the responsibility of the Government of India. Coins are minted at the India Government Mints at Mumbai, Alipore (Kolkata), Saifabad (Hyderabad), Cherlapally (Hyderabad) and NOIDA (UP).

The coins are issued for circulation only through the Reserve Bank in terms of the RBI Act. Coins can be issued up to the denomination of Rs.1000 as per the Coinage Act, 1906.

The RBI shall issue rupee coins on demand and the Govt. of India shall supply/mint such coins to the RBI on demand.

Question : 4

RBI keeps its foreign exchange reserves with which of the following agency/ies?

  1. Bank for International Settlement (BIS)
  2. Foreign Commercial banks
  3. Other/foreign Central banks
  4. Other institutions approved by Central Board of RBI
Select the correct answer using the code given below:

a) (ii) & (iii) only

b) (iii) & (iv) only

c) (i) only

d) All of the above

Answer: (d)

Reserve Bank of India invests the reserves in the following types of instruments:

  1. Deposits with Bank for International Settlements
  2. Deposits with other central banks
  3. Deposits with foreign commercial banks
  4. Debt instruments representing sovereign or sovereign-guaranteed liability
  5. Other instruments/institutions as approved by the Central Board of RBI

Question : 5

In which year the export-import (EXIM) Bank in India was set up?

a) 1982

b) 1989

c) 1981

d) 1980

Answer: (a)

Question : 6

Consider the following statements regarding MUDRA Bank:

  1. It will provide direct lending to small entrepreneurs
  2. MUDRA loans will be available for agriculture, manufacturing, trading and service activities
Select the correct answer using the code given below:

a) (ii) only

b) Both (i) & (ii)

c) (i) only

d) Neither (i) nor (ii)

Answer: (d)

MUDRA would be responsible for refinancing all Last Mile Financiers such as

  1. NonBanking Finance Companies,
  2. Societies,
  3. Trusts,
  4. Companies,
  5. Co-operative Societies,
  6. Small Banks,
  7. Scheduled Commercial Banks and
  8. 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.

Need More Mcqs on Money Supply, Banking and Financial Institutions of money supply, banking & financial institutions section 11 Click Here »
GET Money Supply, Banking and Financial Institutions PRACTICE TEST EXERCISES

money supply, banking & financial institutions section 1

money supply, banking & financial institutions section 2

money supply, banking & financial institutions section 3

money supply, banking & financial institutions section 4

money supply, banking & financial institutions section 5

money supply, banking & financial institutions section 6

money supply, banking & financial institutions section 7

money supply, banking & financial institutions section 8

money supply, banking & financial institutions section 9

money supply, banking & financial institutions section 10

money supply, banking & financial institutions section 11

money supply, banking & financial institutions section 12
Money Supply, Banking and Financial Institutions Shortcuts and Techniques with Examples
Verbal Reasoning
Question & Answer Quiz
Non Verbal Reasoning
Question & Answer Quiz
Quantitative Aptitude
Question & Answer Quiz
Computer MCQ
Question & Answer Quiz
General English
Question & Answer Quiz
History GK
Question & Answer Quiz
Polity GK
Question & Answer Quiz
Geography GK
Question & Answer Quiz
Economy GK
Question & Answer Quiz
General Awareness GK
Question & Answer Quiz

Recently Added Subject & Categories For All Competitive Exams

Most Important Antonyms Vocabulary - IBPS Clerk Prelims 2024

Latest Antonyms multiple choice questions and answers with free PDFfor IBPS Clerk Prelims 2024. English Vocabulary practice exercise for all bank exam

17-May-2024 by Careericons

Continue Reading »

Syllogism Practice Questions Answers PDF - IBPS Clerk 2024

Practice Verbal Reasoning Syllogism multiple choice questions and answers with Fully solved explanation, PDF for the IBPS Clerk Prelims 2024 Bank Exam

16-May-2024 by Careericons

Continue Reading »

IBPS Clerk Prelims 2024 Synonyms Questions Solved Answers

Most important IBPS Clerk Prelims 2024 Synonyms and Antonyms multiple choice questions and answers with detailed solutions, English vocabulary PDF Download

14-May-2024 by Careericons

Continue Reading »

New Cloze Test Questions and Answers PDF - IBPS Clerk 2024

The most important Cloze Test questions with detailed answers for upcoming IBPS Clerk prelims 2024. Latest English verbal ability practice MCQs, PDF

13-May-2024 by Careericons

Continue Reading »