Banking General Awareness Banking Regulation System of India Question Bank

done Practice Questions - Credit Functions of Banks Total Questions - 42

• question_answer1)
  Which of the following correctly describes what sub-prime lending is?

  I. Lending to the people with less than ideal credit status.

  II. Lending to the people who are high value customers of the banks.

  III. Lending to those who are not a regular customer of a bank.

  Select the correct answer using the codes given below:
  A)
   Only I                          done clear
  B)
   Only II done clear
  C)
   Only III                        done clear
  D)
   All of these done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer2)
  Sub-prime refers to
  A)
   lending done by banks at rates below PLR done clear
  B)
   funds raised by the banks at sub libor rates done clear
  C)
   group of banks which are not rate as prime banks as per banker's almanac done clear
  D)
   lending done by financing institutions including banks to customers not meeting with normally required credit appraisal standards done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer3)
  Commercial banks create credit in the form of
  A)
   secondary deposits     done clear
  B)
   primary deposits done clear
  C)
   tertiary deposits          done clear
  D)
   both [a] and [b] done clear
  E)
   None of these done clear
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• question_answer4)
  A cheque presented for payment after three months from the date of the issue is called
  A)
   anti-Dated Cheque     done clear
  B)
   post-dated Cheque done clear
  C)
   stale Cheque done clear
  D)
   All of the above done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer5)
  Which of the following aspects are outlined by the loan policy of a bank?                
  A)
   Rating standards                        done clear
  B)
   Lending procedures done clear
  C)
   Financial covenants done clear
  D)
   All of the above done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer6)
  An unsecured loan extended by one corporate to another is called
  A)
   commercial papers done clear
  B)
   treasury bill done clear
  C)
   inter-corporate deposits done clear
  D)
   certificates of deposits done clear
  E)
   All of the above done clear
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• question_answer7)
  Since acceptance of deposits and granting of loans are the two general functions of a   bank, the relationship arising out of these   two main activities is known as
  A)
   principal and agent relationship done clear
  B)
   financer and financee relationship done clear
  C)
   bailor and bailee relationship done clear
  D)
   general relationship                    done clear
  E)
   specific relationship                     done clear
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• question_answer8)
  Which of the following lendings qualifies as a priority sector loan?
  A)
   Loan for purchase of gold for marriage of daughter done clear
  B)
   Loan for consumer durables done clear
  C)
   Housing loan done clear
  D)
   Loan for purchase of tractor done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer9)
  Which one of the following does not qualify as priority sector lending by commercial banks?
  A)
   Software exports done clear
  B)
   Small business loans done clear
  C)
   Education loans done clear
  D)
   Small industries loan done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer10)
  As reported in various newspapers, many banks have revised their interest rates on home loans, car loans and other such Credit Functions of Banks loans. Which of the following phenomenon prompted these banks to make such an upward revision in their interest rates?

  I. RBI has revised the CRR and other such rates upward, which has created a liquidity crunch in the market.

  II. Stock markets in the country are showing very high fluctuations as visible through their indexes. As a result, banks have lost a huge amount of money in-trading. Banks now want to recover that money by increasing their interest rates.

  III. Banks are in need of a huge amount of money, as they have to give revised pay to all its employees.

  Select the correct answer using the codes given below
  A)
   Only I                          done clear
  B)
   Only II done clear
  C)
   Only III                        done clear
  D)
   All of these done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer11)
  Bancassurance is
  A)
   an insurance scheme to insure bank deposits done clear
  B)
   an insurance scheme exclusively for the employees of banks done clear
  C)
   a composite financial service offering both banking and insurance products done clear
  D)
   a bank deposit scheme exclusively for employees for insurance companies done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer12)
  Which of the following schemes is launched specifically for helping senior citizens to avail loan by mortgage of their residential property?
  A)
   English Mortgage Scheme done clear
  B)
   Senior Capital Loan Scheme done clear
  C)
   Reverse Mortgage Loan Scheme done clear
  D)
   Senior Citizen Personal Loan Scheme done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer13)
  A merchant bank is a company that deals mostly in
  A)
   international finance done clear
  B)
   business loans for companies done clear
  C)
   underwriting done clear
  D)
   All of the above done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer14)
  Which of the following statements is/are correct?

  i. Merchant banks help corporations issue securities through private placements.

  ii. Investment banks underwrite and sell securities to the general public through IPOs.

  A)
   i only done clear
  B)
   ii only done clear
  C)
   Both i and ii done clear
  D)
   None of these done clear
  View Solution play_arrow

• question_answer15)
  In case of a debt taken by a married woman, her husband will be liable for debt only if the debt is taken
  A)
   with his consent or authority done clear
  B)
   for the supply of necessaries of life to the wife, in case the husband defaults in supplying the same to her done clear
  C)
   Both [a] and [b] done clear
  D)
   Either [a] or [b] done clear
  View Solution play_arrow

• question_answer16)
  General utility services of banks include
  A)
   issue of traveller's cheques done clear
  B)
   underwriting securities issued by government, public or private bodies done clear
  C)
   purchase and sale of foreign exchange done clear
  D)
   All of the above done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer17)
  Bank loan against property requires the asset to be free from encumbrances. What does it mean?
  A)
   The asset to be free from liability done clear
  B)
   The asset to be properly registered done clear
  C)
   The property to be fully constructed done clear
  D)
   The asset should not have multiple owners done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer18)
  In bank's parlance, credit risk in lending is
  A)
   default of the banker to maintain CRR done clear
  B)
   default of the banker to maintain SLR done clear
  C)
   default of the banker to release credit to the customer done clear
  D)
   default of the customer to repay the loan done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer19)
  Which of the following provides information about economic position of its customers to traders?
  A)
   Letters of references done clear
  B)
   KYC forms done clear
  C)
   Bank letters done clear
  D)
   both [a] and [c] done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer20)
  Which of the following statements is/are correct about an overdraft?                

  i. It is issued against security in current account.

  ii. The borrower is given the facility of borrowing only as much as he requires.

  A)
   (i) only done clear
  B)
   (ii) only done clear
  C)
   Both (i) and (ii) done clear
  D)
   None of these      done clear
  View Solution play_arrow

• question_answer21)
                    Which of the following is a payment and settlement system used by the banks in India?
  A)
   Liquidity adjustment facility done clear
  B)
   Real time gross settlement done clear
  C)
   Forward rate agreements done clear
  D)
   Central depository service done clear
  E)
   Negotiated dealing system done clear
  View Solution play_arrow

• question_answer22)
  Bridge loans refer to
  A)
   loans granted to construction companies for construction of bridges done clear
  B)
   loan granted to PWD for construction of bridges over rivers done clear
  C)
   interim finance allowed by banks to their customers, pending disbursement of term loans by financial institutions done clear
  D)
   loan granted to railway for construction of bridges done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer23)
  The right to retain possession only of those goods in respect of which the dues have arisen is called
  A)
   particular lien              done clear
  B)
   general lien done clear
  C)
   right of set off              done clear
  D)
   All of these done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer24)
  Land development banks provide long- term credit for schemes of basic importance to agriculture as
  A)
   minor irrigation purposes like wells, dug-cum-bore wells, tubewells, pump sets and irrigation tanks done clear
  B)
   mechanisation of agriculture i.e., loans for purposes of tractors, power tillers, threshers, etc done clear
  C)
   land reclamation, soil conservation, plantation of fruit orchards, dairy development schemes etc involving  heavy expenditure                      done clear
  D)
   Both [a] and [b] done clear
  E)
   All of these done clear
  View Solution play_arrow

• question_answer25)
  When more than one bank is allowing credit facilities to one party in co-ordination with each other under a formal arrangement the arrangement is generally known as         
  A)
   participation   done clear
  B)
   consortium            done clear
  C)
   syndication                 done clear
  D)
   multiple banking done clear
  E)
   None of these      done clear
  View Solution play_arrow

• question_answer26)
                    A Bill of Exchange in which a bank orders its branch or another bank, as the case may be, to pay a specified amount to a specified   person or to the order of the specified   person is called                            
  A)
   cheque            done clear
  B)
   bank draft done clear
  C)
   promissory note          done clear
  D)
   insurance done clear
  E)
   None of these      done clear
  View Solution play_arrow

• question_answer27)
                     Which of the following is not considered as negotiable instrument under the Negotiable Instruments Act, 1881?                    
  A)
   Bill of Exchange done clear
  B)
   Promissory Note done clear
  C)
   Share Certificate done clear
  D)
   Cheque Payable to Bearer done clear
  E)
   Cheque with 'Not Negotiable' crossing done clear
  View Solution play_arrow

• question_answer28)
  As per guidelines of Reserve Bank of India, a new private sector bank
  A)
   shall be subject to prudential norms in regard to income recognition, asset classification and provisioning, capital adequacy, etc. done clear
  B)
   shall have to observe priority sector lending targets as applicable to other domestic banks done clear
  C)
   will be required to open rural and semi- urban branches done clear
  D)
   All of the above done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer29)
  Initial repayment holiday given to a borrower for repayment of loan is called is
  A)
   subvention                  done clear
  B)
   moratorium done clear
  C)
   re-schedulement          done clear
  D)
   amortisation done clear
  E)
   EMI done clear
  View Solution play_arrow

• question_answer30)
  In case where the loan is sanctioned by the bank against the borrower submitting the fake/forged documents and thus, playing fraud on the bank, such a loan is to be treated in the bank's books as a........ asset, even when there is recovery in the account as per the repayment schedule approved by the bank at the time of sanctioning the loan.
  A)
   standard                     done clear
  B)
   sub-standard done clear
  C)
   doubtful                      done clear
  D)
   loss done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer31)
  A loan granted for short-term crops will be treated as NPA, if the instalment of principal or interest thereon or both remain overdue for..... crop season(s).
  A)
   one done clear
  B)
   two done clear
  C)
   three done clear
  D)
   four done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer32)
  Which of the following is not considered one among the loans under Retail Banking?
  A)
   Car loan                     done clear
  B)
   Housing loan done clear
  C)
   Personal loan  done clear
  D)
   Education loan done clear
  E)
   Infrastructure loan done clear
  View Solution play_arrow

• question_answer33)
  When banks make advances to limited companies against their assets, the required forms are to be presented to the Registrar companies within.............. from the date of  execution.
  A)
   21 days                       done clear
  B)
   30 days done clear
  C)
   1 month                      done clear
  D)
   2 months done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer34)
  Which of the following is the correct definition of the term commercial papers?

  I. It is nothing but the popular name of the judicial stamp papers used to register financial transactions.

  II. It is one of the instruments through which corporates raise debt from the market.

  III. It is the name of the 'Certificate of Deposits' (CD) provided by the bank to its retail customers.

  Select the correct answer using the codes given below:
  A)
   Only I                          done clear
  B)
   Only II done clear
  C)
   Only III                        done clear
  D)
   Both I and II done clear
  E)
   All of these done clear
  View Solution play_arrow

• question_answer35)
  Which of the following means of lending is considered as a priority sector loan?
  A)
   Loan for purchase of gold for marriage of daughter done clear
  B)
   Car loan done clear
  C)
   Housing loan done clear
  D)
   Loan for purchase of tractor done clear
  E)
   Education loan done clear
  View Solution play_arrow

• question_answer36)
  Term deposits, which are payable only after the expiry of the specified period, are also called
  A)
   time deposits done clear
  B)
   demand deposits done clear
  C)
   current deposits done clear
  D)
   short credit done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer37)
  Which of the following would be treated as an unsecured loan?
  A)
   Agricultural loan done clear
  B)
   Personal loan done clear
  C)
   Educational loan done clear
  D)
   Vehicle loan done clear
  E)
   Housing loan done clear
  View Solution play_arrow

• question_answer38)
  The rate of interest banks charge its main/ major and prime customers is popularly called as
  A)
   Risk Premium done clear
  B)
   Prime Lending Rate done clear
  C)
   Repo Rate done clear
  D)
   Reverse Repo Rate done clear
  E)
   Cost of Fund done clear
  View Solution play_arrow

• question_answer39)
  Which of the following is not an activity of merchant banking in India?
  A)
   The management of the customers securities done clear
  B)
   The management of the portfolio done clear
  C)
   The management of projects and counselling as well as appraisal done clear
  D)
   The management of underwriting of shares and debentures done clear
  E)
   None of the above done clear
  View Solution play_arrow

• question_answer40)
  The industrial Finance Corporation of India provides loans to
  A)
   government companies only which are in core sector (i.e., power generation, steel, coal and cement, etc) done clear
  B)
   newly established industries in backward districts done clear
  C)
   industries in private sector done clear
  D)
   joint stock companies and cooperative societies engaged in the manufacturing and processing of goods done clear
  E)
   None of the above done clear
  View Solution play_arrow

• question_answer41)
   When a loan is granted by a bank for purchase of white goods it is called
  A)
   Consumption loan done clear
  B)
   White goods loan done clear
  C)
   Consumer durable loan done clear
  D)
   All of the above done clear
  E)
   None of these done clear
  View Solution play_arrow

• question_answer42)
  Which of the following statements is/are correct about bills of exchange?

  i. It represents a promise to pay a fixed amount of money at a specific point of time in future.

  ii. It can also be encashed earlier through discounting process of a commercial bank.

  iii. It acknowledges an amount of money owed in consideration of goods received.

  A)
   (ii) only                       done clear
  B)
   (i) and (iii) done clear
  C)
   (i) and (ii)                   done clear
  D)
   (i), (ii) and (iii) done clear
  E)
   None of these done clear
  View Solution play_arrow