50+ Financial Awareness questions with answer detail

1. Which committee had observed that the regulator (RBI) should not be an owner of a Bank (SBI) and this required the RBI to divest its holding in banks and financial institutions?

A)   Rakesh Mohan committee 1
B)   Narasimham committee 2
C)   Wanchoo committee
D)   Gadgil committee
E)   YV Reddy committee
Correct answer: B

2. What is the expanded form of FIIA? It was originally conceptualised by the former NDA govt. and is set to get a new lease of life under PM Narendra modi’s watch.

A)   Foreign investment Initiation Agency
B)   Foreign investment Implementation Authority
C)   Foreign investment Improvement Agency
D)   Foreign investment Instrumentation Agency
E)   None of these
Correct answer: B

Solution :

Foreign Investment Implementation Authority (FIIA) has been set up by the government of India in order to encourage the implementation of the proposals for FDI in the country.

Objectives of FIIA:

1. To encourage fast translation of the approval of foreign direct investment and also its implementation.

2. To offer the foreign investors proactive services such as, getting them the approvals that are necessary.

3. To solve their problems by meeting the various agencies of the government, and also to solve the various operational problems.

Role of FIIA:

1. To understand and solve the problems of the investors

2. To understand and solve the problems of the approving authorities

3. To refer the cases that have not been resolved at the level of FIA to the agencies at the higher levels

4. To start consultations with multiple agencies.

3. Who among the following is the first women chairperson of the State Bank of India (SBI)?

A)   Vijayalakshmi R Iyer
B)   Shubhalakshmi panse
C)   Arundhati bhattacharya
D)   Usha sagwan
E)   Usha ananthasubramanian
Correct answer: C

4. What is the term used for the instruments used by foreign funds and investors who are not registered with the Sebi but are interested in taking exposure in Indian securities?

Solution :
Participatory Notes commonly known as P-Notes or PNs are instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator, the Securities and Exchange Board of India - SEBI.

5. As per RBI guideline banks are no longer allowed to penalise their customers for

A)   Non-maintenance of minimum balance in inoperative accounts
B)   Non-maintenance of minimum balance in current accounts
C)   Non-maintenance of minimum balance in saving bank accounts
D)   Bouncing of cheques issued for non-availability of funds
E)   Premature withdrawal of term deposits
Correct answer: A

6. Subject to compliance of security features, the CBS-compliant Urban Cooperative Banks can offer the following types of internet facility to their customers?

A)   Nun-fund-cased ‘view only’ facility
B)   Payment of direct/indirect taxes
C)   Online fund transfer facility from one account to another
D)   Online e-commerce facility
E)   Remittance of funds through NEFT/RTGS
Correct answer: A

7. Anoushka Shankar is a famous Indian?

A)   Film music director
B)   Guitarist
C)   Other than those given as options
D)   Classical singer
E)   Sitarist
Correct answer: E

8. Which of the following is the autobiography of renowned politician K Natwar singh?

A)   Not Just An Accountant
B)   One Life Is Not Enough
C)   My Years with Rajiv and Sonia
D)   The Substance and Shadow
E)   Other than those given as options
Correct answer: B

9. Basically the CTS-2010 standards issued by the Reserve Bank of India are:

A)   Cheque forms specifications
B)   Systems specifications
C)   Procedures specifications
D)   Technology specifications
E)   Equipment specification
Correct answer: A

Solution :

"CTS-2010 Standard" for Cheque Forms – Specifications

Mandatory features:

1. Paper (At Manufacturing Stage): Status quo shall be maintained in relation to paper specifications as it exists currently.

2. Watermark (At Manufacturing Stage): All cheques shall carry a standardised watermark, with the words “CTS-INDIA”.

3. VOID pantograph (At Printing Stage): Pantograph with hidden / embedded “COPY”or “VOID” feature shall be included in the cheques.

4. Bank’s logo printed with invisible ink (ultra-violet ink) (At Printing Stage) : Bank’s logo shall be printed in ultra-violet (UV) ink.

5. Field placements of a cheque: Placement of significant fields on the cheque forms shall be mandated.

6. Mandating colours and background : Light / Pastel colours shall be mandated for cheques

7. Clutter free background : Background of cheques shall be kept as clutter free as possible for improving quality and clarity of images.

8. Prohibiting alterations / corrections on cheques : No changes / corrections should be carried out on the cheques

9. Printing of account field : All cheques should, as far as possible, be issued with the account number field pre-printed.

10. Use of UV feature on cheque images

10. Which of the following instruments (s) in the hands of the RBI controls liquidity in the banking system by regulating the money supply in the hands of banks that they can pump in economy?

A)   Cash Reserve Ratio
B)   Credit Deposit Ratio
C)   Other than those given as options
D)   Capital Adequacy Ratio
E)   CASA Ratio
Correct answer: A

Solution :

Cash Reserve Ratio (CRR): The share of net demand and time liabilities that banks must maintain as cash balance with the Reserve Bank. The Reserve Bank requires banks to maintain a certain amount of cash in reserve as a percentage of their deposits to ensure that banks have sufficient cash to cover customer withdrawals. We adjust this ratio on occasion, as an instrument of monetary policy, depending on prevailing conditions. Our centralised and computerised system allows for efficient and accurate monitoring of the balances maintained by banks with the Reserve Bank.

11. Which of the following banks is a public sector bank?

12. The RBI has come out with a new concept of bank licensing termed as ‘Differentiated Bank Licence’. A differentiated bank licence will allow a bank to

A)   Open branches in only identified geographical areas.
B)   Deal with only an identified class of customers.
C)   Offer products only in selected verticals.
D)   Offer services to specified institutions/customers.
E)   Operate on principles of universal banking.
Correct answer: C

Solution :

Differentiated bank license policy refers to the new guidelines by the RBI inviting individuals/entities to start banks in the form of either small finance banks or payment banks.

Differentiated licensing refers to the system of different licenses in contrast to the existing universal bank (SBI, ICICI etc). The universal banks including the PSBs and private sector banks can provide all banking services and products. On the other hand, under differentiated banking license, the Small Finance Banks and Payments Banks can provide only selected products (and in prescribed geographies).

RBI has adopted differentiated banking license policy to promote financial inclusion and to enable quick payment services using the new technologies.

13. The mission of the insurance regulatory and development Authority is to protect the interest of the policy holders and to

A)   Ensure orderly growth of insurance industry
B)   Promote the development of financial infrastructure
C)   Specify listening and transfer of securities
D)   Regulate business of mutual funds
E)   Regulate the money and credit market
Correct answer: A

Solution :

Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous apex statutory body which regulates and develops the insurance industry in India. It was constituted by a Parliament of India act called Insurance Regulatory and Development Authority Act, 1999 and duly passed by the Government of India.

The agency operates from its headquarters at Hyderabad, Telangana where it shifted from Delhi in 2001.

14. Which of the following schemes aims at tackling malnutrition and health problems of children below the age of 6 years?

A)   Kasturba Gandhi ShishuSangopanYojana
B)   KishorVaigyanikprotsahanYojana
C)   JananiSurakshaYojana
D)   Other than those given as options
E)   Integrated Child Development services
Correct answer: E

15. SBI has recently launched a new facility called “mPassBook” for its retail banking users on its ‘State Bank Anywhere’ mobile application. The facility enables users to

A)   Perform e-commerce transactions through their smartphone
B)   Send requisition for cheque books through their smartphone
C)   Perform internet Banking transactions through their smartphone
D)   View their transaction history on their smartphone
E)   Remit funds under RTGS/NEFT through their smartphone
Correct answer: D

Solution :

M-Passbook or mobile Passbook is yet another innovative offering through State Bank of India.

This is an electronic passbook, which can be used for storing and recording your transaction account activities. Transactions can be synced/ updated manually into your m-Passbook at any time of the day after logging into State Bank Anywhere.

M-Passbook is absolutely free of charge is part of State Bank Anywhere. Every SBI retail internet banking user can download State Bank Anywhere from Google Play Store and start using m-Passbook

16. If the RBI increases reserve repo rate, consequently

A)   Banks will have less money to lend
B)   Banks will have more money to lend
C)   Banks will decrease interest rates
D)   Liquidity in the economy will increase
E)   None of these
Correct answer: A

Solution :
Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country.

17. Which of the following schemes of India has been ranked as the world’s largest public works programme by the world Bank?

A)   PAHAL
B)   MGNREGA
C)   Bharat Nirman
D)   Pardhan Mantri Gram Sadak Yojana
E)   Pradhan Mantri Gram sinchai Yojana
Correct answer: B

Solution :
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) aims at enhancing the livelihood security of people in rural areas by guaranteeing hundred days of wage-employment in a financial year to a rural household who volunteer to do unskilled manual work

18. The banks now allow minors above 10 years to independently open and operate savings bank accounts. These minors cannot avail which of the following services?

19. The rural banks came into existence on Gandhi Jayanti in 1975 with the formation of

A)   Kamraz rural bank
B)   Kakathiya Grameen bank
C)   Prathama Grameen bank
D)   Kanakdurga Grameen bank
E)   Chaitanya Grameen bank
Correct answer: C

20. The committee set up by the govt. on bankrupty law reform in India was chaired by

Solution :
The bankrupty law will likely to create a new class of insolvency (failure) professionals who will help sick companies and banks with a smooth takeover of the insolvent company and manage the liquidation process.

21. The conversion of a physical cheque into a substitute electronic form for transmission to the paying bank is termed as

A)   Cheques negotiation
B)   Cheque truncation
C)   Cheque endorsement
D)   Cheque alteration
E)   Cheque crossing
Correct answer: B

Solution :
Cheque truncation (check truncation in American english) is the conversion of a physical cheque into a substitute electronic form for transmission to the paying bank. Cheque truncation eliminates cumbersome (cumbersome) physical presentation of the cheque and saves time and processing costs.

22. The imitation currency produced without the legal sanction of the state or govt. is called

A)   Mutilated banknote
B)   Soiled banknote
C)   Star series banknote
D)   Counterfeit banknote
E)   Defective banknote
Correct answer: D

Solution :
Counterfeit money is imitation currency produced without the legal sanction of the state or government. Producing or using counterfeit money is a form of fraud or forgery.

23. We often read about the term PMLA in financial newspaper, what is the full form of PMLA?

A)   Prevention of monetary lending Act
B)   Prevention of money leasing Act
C)   Prevention of monetary liaising Act
D)   Prevention of money laundering Act
E)   None of these
Correct answer: D

Solution :
Prevention of Money Laundering Act, 2002 is an Act of the Parliament of India enacted (pass or approve) to prevent money-laundering and to provide for confiscation (the action of taking or seizing someone's property with authority) of property derived from money-laundering

24. Which of the following committee was set up to recommend banking reforms?

A)   Deepak parekh committee
B)   JS verma committee
C)   Rajinder sachar committee
D)   Narasimham committee
E)   Usha thorat committee
Correct answer: D

25. The regulator of the regional rural Banks (RRBs) in India is

Solution :
National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India, having headquarters in Mumbai. It is set up by the Reserve Bank of India (RBI). The mission of NABARD is to promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives.

26. The Re 1 notes are back in circulation as announced by the govt. in Dec. 2014. These notes carry the signature of the present?

A)   Finance minister
B)   A deputy governor, RBI
C)   Governor, RBI
D)   Prime minister
E)   Secretary, ministry of finance
Correct answer: E

27. The interest payable on savings bank account is

A)   Regulated by the RBI
B)   Not regulated by the RBI
C)   Regulated by the ministry of finance
D)   Regulated by the world bank
E)   Other than those given as options
Correct answer: B

Solution :

With effect from October 25, 2011, banks are free to determine their savings bank deposit interest rate, subject to the following two conditions:

1. Each bank will have to offer a uniform interest rate on savings bank deposits up to Rs.1 lakh, irrespective of the amount in the account within this limit.

2. For savings bank deposits over Rs.1 lakh, a bank may provide differential rates of interest, if it so chooses, subject to the condition that banks will not discriminate in the matter of interest paid on such deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices.

28. The lending by the scheduled commercial banks, on a fortnightly average basis, should not exceeded what per cent of their owned funds (paid–up capital and reserves)?

29. What is the maximum interest rate allowed by the RBI in call/notice money market?

Solution :
Call money is short-term finance repayable on demand, with a maturity period of one to fourteen days or overnight to fortnight. It is used for inter-bank transactions. The money that is lent for one day in this market is known as "call money" and, if it exceeds one day, is referred to as "notice money."

30 Which of the following statement is correct?

A)   Normally no interest is paid on current deposit accounts.
B)   The interest on current accounts and no savings deposit accounts are the same.
C)   The interest is paid at 4 per cent on all current accounts
D)   No interest is paid on savings as well as current deposit accounts
E)   Other than those given as options
Correct answer: A

31. The online payments and money transfer solution ‘PayZapp’ has recently been launched by

32. ‘Allahabad Bank’ is a nationalised bank with its headquarters in

33. Under the new gold monetisation scheme, the banks will be allowed to take a minimum deposit of how much of gold from individuals?

34. The “Balance Nail” is the name of a month-long joint military training held in Nepal, recently, between the security forces of Nepal and

35. Banks are offering payment solutions which do not require swiping credit/debit card and is completed by scanning a QR code. Here, the term QR stands for

36. What is the term used for the excise duty, included in the proposed GST, levied on products and services like alcohol, tobacco and gambling considered bad for health or society?

Solution :

A sin tax is an excise tax specifically levied on certain goods deemed harmful to society, for example alcohol and tobacco, candies, drugs, soft drinks, fast foods, coffee, and gambling. Two claimed purposes are usually used to argue for such taxes. In contrast to pigovian taxes, which are to pay for the damage to society caused by these goods, sin taxes are used to increase the price in an effort to reduce their use, or failing that, to increase and find new sources of revenue. Increasing a sin tax is often more popular than increasing other taxes. However, these taxes have been criticized for burdening the poor and being part of a nanny state.

37. The FIIs, NRIs and PIOs (Persons of Indian Origin) can invest in primary and secondary capital markets in India through PIS. What does the term PIS stand for?

A)   Preferential Investment Scheme
B)   Preferential Investment System
C)   Portfolio Investment System
D)   Portfolio Investment Scheme
E)   Particular Investment Scheme
Correct answer: D

Solution :

Portfolio investments are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures.

Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company. For international transactions, equity investments where the owner holds less than 10% of a company's shares are classified as portfolio investments. These transactions are also referred to as "portfolio flows" and are recorded in the financial account of a country's balance of payments.

They are categorized in two major parts: foreign institutional investment and investments by non-residents. According to the Institute of International Finance, portfolio flows arise through the transfer of ownership of securities from one country to another.

Portfolio investment covers a range of securities, such as stocks and bonds, as well as other types of investment vehicles. A diversified portfolio helps spread the risk of possible loss because of below-expectations performance of one or a few of them.

38. Moving towards creating a holding company structure for PSBs, the govt announced the setting up of the BBB which will recommend appointment of directors in PSBs. The term BBB stands for

A)   Banks Board Bureau
B)   Banks Base Bureau
C)   Banks Balancing Bureau
D)   Banks Basal Bureau
E)   Other than those given as options
Correct answer: A

39. What does the letter ‘I’ denote in the term DICGC as used in the banking sector?

40. The participatory notes are a part of ODIs, an investment vehicle used by the investors who are not registered with SEBI. What is the full form of ODI as used above?

A)   Ordinary Derivatives Instrument
B)   Original Derivatives Instrument
C)   Open Derivatives Instrument
D)   Obsolete Derivatives Instrument
E)   Offshore Derivatives Instrument
Correct answer: E

41. Who among the following Finance Ministers of India had also served as RBI governor?

42. What is the minimum paid-up capital requirement for floating a health insurance company in India as per the current norms?

43. Which of the following banks have launched first homegrown economic indicator called Composite Index?

Solution :
A composite index is a grouping of equities, indexes or other factors combined in a standardized way, providing a useful statistical measure of overall market or sector performance over time, and it is also known simply as a "composite." Usually, a composite index has a large number of factors that are averaged together to form a product representative of an overall market or sector.

44. The RBI issued final guidelines for payment banks recently. These banks will not be allowed to conduct which of the following?

A)   Take deposits
B)   Lend money
C)   Distribute financial products such as insurance and mutual funds
D)   Offer remittances up to a small limit (Rs 1 lakh currently)
E)   Issue debit cards
Correct answer: B

45. The payment banks, as per the guidelines of the RBI, cannot accept which of the following?

A)   Current account deposits from individuals
B)   Savings bank deposits from individuals, small businesses and other entities
C)   Non-resident Indian deposits
D)   All the above
E)   Only A) and B)
Correct answer: C

46. Which of the following requirements is/are NOT correct with respect to small banks as per the final guidelines issued by the RBI?

A)   Foreign shareholding – 74 per cent
B)   Priority sector lending – 40 per cent
C)   Cash Reserve Ratio – 4 per cent
D)   Statutory Liquidity Ration – 22 per cent
E)   None of these
Correct answer: B

47. The QIP is considered as one of the most-favoured fund-raising instruments for the industry. What does QIP stands for?

A)   Qualified Institutional Placement
B)   Qualitative Institutional Placement
C)   Quantitative Institutional Placement
D)   Qualified Industrial Placement
E)   None of these
Correct answer: A

48. A few states have achieved the target of complete financial inclusion under the scheme Pradhan Mantri Jan Dhan Yojana. Which of the following is NOT among them as of now?

Solution :

Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

Account can be opened in any bank branch or Business Correspondent (Bank Mitr) outlet. PMJDY accounts are being opened with Zero balance. However, if the account-holder wishes to get cheque book, he/she will have to fulfill minimum balance criteria.

Documents required to open an account under Pradhan Mantri Jan-Dhan Yojana

1. If Aadhaar Card/Aadhaar Number is available then no other documents is required. If address has changed, then a self-certification of current address is sufficient.

2. If Aadhaar Card is not available, then any one of the following Officially Valid Documents (OVD) is required: Voter ID Card, Driving License, PAN Card, Passport & NREGA Card. If these documents also contain your address, it can serve both as “Proof of Identity and Address”.

3. If a person does not have any of the “officially valid documents” mentioned above, but it is categorized as ‘low risk' by the banks, then he/she can open a bank account by submitting any one of the following documents:

a. Identity Card with applicant's photograph issued by Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks and Public Financial Institutions;

b. Letter issued by a gazette officer, with a duly attested photograph of the person.

49. The Finance Commission, usually set up every five year, gives its recommendations regarding the

A)   sharing of Union taxes
B)   transfer of resources of local bodies
C)   principles governing Grants-in-aid to States
D)   All of the above
E)   Only 1) and 2)
Correct answer: D

50. At present, paid-up capital requirement for a public company is not less than

51. Which of the following terms is NOT associated with banking/finance?

52. Which of the following financial institutions (FIs) does not come under the full-fledged regulation and supervision of the Reserve Bank of India (RBI)?

53. According to the Commerce and Industry Minister Nirmala Sitharaman, inflows of FDI into India rose by about 25 per cent to ________in the Apr-Oct period of the current fiscal.

54. Who among the following has been appointed Managing Director and CEO of the Indian Overseas Bank (IOB)?

55. What does the term ARC stand for as used in banking sector?

A)   Asset Recreation Company
B)   Asset Restructuring Company
C)   Asset Reconstruction Company
D)   Asset Recovery Company
E)   None of these
Correct answer: C

Solution :
An Asset Reconstruction Company (ARC) is a company that is set up to do exactly what the name suggests — reconstruct or re-package assets to make them more saleable. The assets in question here are loans from banks, card companies, financial institutions etc.

56. Who among the following will chair the institution which replaced the Planning Commission?

A)   Prime Minister
B)   Finance Minister
C)   Person Appointed by the PM
D)   RBI Governor
E)   None of these
Correct answer: A

57. What are the investment targets set by the govt for the central govt, states/ UTs and private sector respectively under Swachh Bharat Mission in urban areas?

A)   Rs 4,874 cr, Rs 14,623 cr, Rs 42,512 cr
B)   Rs 14,623 cr, Rs 4,874 cr, Rs 42,512 cr
C)   Rs 42,512 cr, Rs 4,874 cr, Rs 14,623 cr
D)   Rs 42,512 cr, Rs 14,623 cr, Rs 4,874 cr
E)   None of these
Correct answer: B

Solution :

The programme includes elimination of open defecation, conversion of unsanitary toilets to pour flush toilets, eradication of manual scavenging, municipal solid waste management and bringing about a behavioural change in people regarding healthy sanitation practices.

The mission aims to cover 1.04 crore households, provide 2.5 lakh community toilets, 2.6 lakh public toilets, and a solid waste management facility in each town. Under the programme, community toilets will be built in residential areas where it is difficult to construct individual household toilets. Public toilets will also be constructed in designated locations such as tourist places, markets, bus stations, railway stations, etc. The programme will be implemented over a five-year period in 4,401 towns.

The total assistance available for construction of an individual toilet is Rs 4000/- from the Central Government and an amount of Rs 1333/- at least from the State Government. However in the case of the North East States, the states are required to contribute only Rs 400/- per individual toilet. However, there is no bar on releasing any extra funds at any stage by the ULB/State Government through additional resources.

The expected assistance for construction of community toilets - Central Government will contribute upto 40% of the cost of construction of community toilet as a VGF/ outright grant. As per SBM guidelines, the States/UTs shall provide an additional 13.33% for the said component. The NE and special category states shall be required to contribute 4% only. The balance shall have to be arranged through innovative mechanisms by the urban local body. The approximate cost per seat for a community toilet is Rs 65,000/-.

Rs 62,009 crore is likely to be spent on the programme. Of this, the Centre will pitch in Rs 14,623 crore. Of the Centre’s share of Rs 14,623 crore, Rs 7,366 crore will be spent on solid waste management, Rs 4,165 crore on individual household toilets, Rs 1,828 crore on public awareness and Rs 655 crore on community toilets.

58. Which of the following has become the first city to achieve 100 per cent enrolment under Prime Minister Jan Dhan Yojana (PMJDY) recently?

59. What is the investment target set by the govt from the private sector under Swachh Bharat Mission in urban areas?

60. The direct benefit transfer scheme of which of the following countries became the largest direct benefit transfer scheme recently with more than 2.5 cr beneficiaries?

Source educitypedagogy direct link http://apsense.cc/aaa3d2

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