money supply, banking & financial institutions section 9 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (b)

ATMs set up, owned and operated by non-banks are called WLAs. Non-bank ATM operators are authorised under the Payment & Settlement Systems Act, 2007 by the Reserve Bank of India (RBI).

The rationale to allow non-bank entities to set up WLAs has been to increase the geographical spread of ATMs for increased/enhanced customer service, especially in semi-urban / rural areas.

In case of Brown Label ATMs, the service providers own the hardware of the ATM machines. The responsibility of identifying ATM site, lease agreement with the landlord, power supply to ATM kiosk lies with the service provider.

Thus, the service provider takes the responsibility of maintenance of the ATM whereas the sponsor bank takes the responsibility of cash management and provide connectivity to ATM to the banking network.

Logo of sponsor bank is displayed on brown label ATM kiosk premises. Brown Label ATMs are the most cost-effective solution for banks. Unlike Brown Label ATMs, White Label ATMs will not display the logo of any bank like SBI, CANARA BANK, PNB ETC.

Logo of White Label ATM operator like Tata Indicash, Muthoot Finance etc.

Answer: (a)

Answer: (c)

RBI intervenes in the forex market to contain volatility in the exchange rate of the Rupee with respect to the dollar. There is no targeted band in which RBI tries to keep the Rupee-Dollar exchange rate.

For example, if the Rupee starts depreciating slowly over a period of time and it moves to $1 = Rs 85, then RBI may not intervene in the forex market.

Answer: (d)

Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal).

Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power.

Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.

In this way, one pays back less in real terms than one had borrowed. Those who may benefit from higher inflation are people with significant debt.

Answer: (b)

The ‘BSE SENSEX’ is a value-weighted index composed of 30 stocks and was started on 1 January 1986. The origin of the NYSE can be traced to 17 May 1792.

When the Buttonwood Agreement was signed by 24 stockbrokers outside 68 Wall Street in New York under a buttonwood tree.

Amsterdam Stock Exchange (1602) is considered the oldest in the world and was established by the Dutch East India company.