money supply, banking & financial institutions section 10 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

As per "The Deposit Insurance and Credit Guarantee Corporation (DICGC) Act 1961", DICGC must register all commercial banks (scheduled and non-scheduled both) and Urban Cooperative Banks (UCB) and State and District Central Cooperative Banks (StCB/DCCB) as an insured bank. (StCB/DCCB are rural cooperative banks)

And every insured bank is liable to pay a premium to DICGC as may be notified by DICGC after the approval of RBI. But the premium shall not exceed fifteen paise per annum for every hundred rupees of the total amount of the deposits in that bank.

This means the premium has been capped under the DICGC Act. As per the rules, the premium cost is required to be borne by the bank themselves and cannot be passed on to depositors.

Since the insurance cover has been increased from the present Rs. 1 lakh per depositor per bank to Rs. 5 lakh per depositor per bank, the insurance premium has also been increased from presently 10 paise per Rs. 100 of deposit to 12 paise per Rs. 100 of deposit.

Deposits of foreign governments, deposits of central and state governments, and interbank deposits are not covered/insured.

Answer: (b)

Answer: (a)

‘e-banking’ stands for electronic banking which involves the use of computers to carry out banking transactions such as withdrawals through cash dispensers or transfer of funds at point of sale. It is also known as online or interne banking.

Answer: (a)

Answer: (d)

With a view to improving the Governance of Public Sector Banks (PSBs), the GoI appointed an autonomous Banks Board Bureau (BBB) which started functioning from 1st April 2016. The Board has three ex-officio members and three expert members in addition to a Chairman. The following are the functions of the BBB

It will be responsible for the selection and appointment of Board of Directors in PSBs and Financial Institutions (FIs) It will advise the Government on matters relating to appointments, confirmation or extension of tenure and termination of services of the Board of Directors

It will help banks to develop a robust leadership succession plan for critical positions

It will build a data bank containing data relating to the performance of PSBs/FIs and their officers It will advise the Government on the formulation and enforcement of a code of conduct and ethics for managerial personal in PSBs/FIs

It will advise the Government on evolving suitable training and developmentØ programmes for management personnel in PSBs/FIs

It will help banks in terms of developing business strategies and capital raising planØ etc.