Here are 50 multiple-choice questions (MCQs) related to banking, covering various topics relevant to CUET Class 12 CBSE, IB, IGCSE, and UPSC exams:
1. What is the primary function of a commercial bank?
a) Issuing currency notes
b) Accepting deposits and granting loans
c) Regulating the stock market
d) Promoting international trade
Answer: b) Accepting deposits and granting loans
2. Which organization acts as the central bank of India?
a) State Bank of India
b) Reserve Bank of India (RBI)
c) Indian Overseas Bank
d) Punjab National Bank
Answer: b) Reserve Bank of India (RBI)
3. What does “ATM” stand for in the context of banking?
a) Automated Teller Machine
b) All-Time Money
c) Advanced Transaction Mechanism
d) Automated Transfer Mode
Answer: a) Automated Teller Machine
4. Which of the following is NOT a function of a central bank?
a) Issuing currency notes
b) Regulating the money supply
c) Managing government finances
d) Providing personal loans to individuals
Answer: d) Providing personal loans to individuals
5. What is the full form of “KYC” in banking?
a) Know Your Customer
b) Keep Your Cash
c) Know Your Currency
d) Keep Your Credit
Answer: a) Know Your Customer
6. Which committee recommended the establishment of the National Bank for Agriculture and Rural Development (NABARD) in India?
a) Raghuram Rajan Committee
b) Narsimham Committee
c) Shivaraman Committee
d) B. Sivaraman Committee
Answer: d) B. Sivaraman Committee
7. What is the main objective of the Basel III norms for banks?
a) Ensuring ethical banking practices
b) Strengthening bank capital and liquidity requirements
c) Promoting international trade
d) Regulating interest rates
Answer: b) Strengthening bank capital and liquidity requirements
8. What does the term “NPA” stand for in banking?
a) New Profitable Asset
b) Non-Performing Asset
c) Net Personal Account
d) Non-Profitable Allocation
Answer: b) Non-Performing Asset
9. What is the primary purpose of the International Monetary Fund (IMF)?
a) Providing grants to developing countries
b) Promoting international trade
c) Maintaining exchange rate stability
d) Providing financial assistance to countries facing balance of payments problems
Answer: d) Providing financial assistance to countries facing balance of payments problems
10. Which organization is responsible for issuing and regulating the Indian Rupee currency notes in India?
a) Finance Ministry of India
b) Reserve Bank of India (RBI)
c) Indian Minting Corporation
d) State Bank of India
Answer: b) Reserve Bank of India (RBI)
11. What is the purpose of the Statutory Liquidity Ratio (SLR) in India?
a) Regulating interest rates
b) Controlling inflation
c) Ensuring liquidity in the banking system
d) Promoting foreign trade
Answer: c) Ensuring liquidity in the banking system
12. Who is the lender of the last resort in the Indian financial system?
a) Finance Ministry of India
b) Reserve Bank of India (RBI)
c) Securities and Exchange Board of India (SEBI)
d) National Bank for Agriculture and Rural Development (NABARD)
Answer: b) Reserve Bank of India (RBI)
13. Which of the following tools is used by central banks to influence short-term interest rates?
a) Discount rates
b) Reserve requirements
c) Fiscal policy
d) Foreign exchange reserves
Answer: a) Discount rates
14. What is the primary function of the Money Market in the financial system?
a) Providing long-term loans to businesses
b) Facilitating the buying and selling of short-term financial instruments
c) Regulating interest rates
d) Issuing currency notes
Answer: b) Facilitating the buying and selling of short-term financial instruments
15. Which banking term is used to describe the interest rate at which one bank lends money to another bank for a short-term period?
a) Prime rate
b) Savings rate
c) Benchmark rate
d) LIBOR (London Interbank Offered Rate)
Answer: d) LIBOR (London Interbank Offered Rate)
16. What is the primary objective of the Money Laundering Act in the banking sector?
a) Encouraging illegal financial activities
b) Ensuring customer privacy
c) Preventing and detecting money laundering activities
d) Promoting tax evasion
Answer: c) Preventing and detecting money laundering activities
17. Which of the following is NOT a type of credit risk faced by banks?
a) Default risk
b) Liquidity risk
c) Market risk
d) Interest rate risk
Answer: c) Market risk
18. What is the role of the Financial Stability and Development Council (FSDC) in India’s financial system?
a) Regulating the stock market
b) Promoting international trade
c) Ensuring financial stability and development
d) Issuing currency notes
Answer: c) Ensuring financial stability and development
19. Which Indian Banking Regulation Act provides for the regulation of credit information companies and the collection and sharing of credit information?
a) Banking Regulation Act, 1949
b) Credit Information Companies (Regulation) Act, 2005
c) Securities and Exchange Board of India (SEBI) Act, 1992
d) Foreign Exchange Management Act (FEMA), 1999
Answer: b) Credit Information Companies (Regulation) Act, 2005
20. What is the primary purpose of the Foreign Exchange Management Act (FEMA) in India?
a) Regulating interest rates
b) Controlling inflation
c) Managing government finances
d) Regulating foreign exchange transactions
Answer: d) Regulating foreign exchange transactions
21. Which term refers to the rate at which the Reserve Bank of India (RBI) lends short-term money to commercial banks in India?
a) Prime rate
b) Savings rate
c) Repo rate
d) Base rate
Answer: c) Repo rate
22. What does the term “CRR” stand for in banking?
a) Currency Reserve Ratio
b) Cash Reserve Ratio
c) Capital Risk Ratio
d) Credit Risk Ratio
Answer: b) Cash Reserve Ratio
23. Which financial institution in India primarily focuses on providing long-term credit for agricultural and rural development?
a) Reserve Bank of India (RBI)
b) National Bank for Agriculture and Rural Development (NABARD)
c) Securities and Exchange Board of India (SEBI)
d) Industrial Development Bank of India (IDBI)
Answer: b) National Bank for Agriculture and Rural Development (NABARD)
24. What is the purpose of the “SWIFT” system in banking?
a) Regulating interest rates
b) Facilitating international trade
c) Standardizing accounting practices
d) Secure and efficient international fund transfers
Answer: d) Secure and efficient international fund transfers
25. What is the primary role of the Securities and Exchange Board of India (SEBI) in the Indian financial market?
a) Regulating commercial banks
b) Regulating credit rating agencies
c) Regulating foreign exchange
d) Regulating mutual funds and capital markets
Answer: d) Regulating mutual funds and capital markets
26. What is the primary function of the World Bank?
a) Providing loans to commercial banks
b) Promoting international trade
c) Providing financial assistance for infrastructure projects in developing countries
d) Regulating stock markets
Answer: c) Providing financial assistance for infrastructure projects in developing countries
27. What does the term “IFSC” stand for in the context of banking in India?
a) Indian Financial System Code
b) International Fund Security Code
c) Interbank Financial Services Committee
d) Internal Fund Settlement Code
Answer: a) Indian Financial System Code
28. Which of the following is NOT a type of bank account commonly offered by banks?
a) Savings account
b) Checking account
c) Fixed deposit account
d) Credit account
Answer: d) Credit account
29. Who is responsible for regulating and supervising credit rating agencies in India?
a) Reserve Bank of India (RBI)
b) Securities and Exchange Board of India (SEBI)
c) National Bank for Agriculture and Rural Development (NABARD)
d) Ministry of Finance
Answer: b) Securities and Exchange Board of India (SEBI)
30. What is the primary purpose of the National Electronic Fund Transfer (NEFT) system in India?
a) Facilitating international fund transfers
b) Providing personal loans to individuals
c) Regulating interest rates
d) Facilitating domestic fund transfers electronically
Answer: d) Facilitating domestic fund transfers electronically
31. Which committee recommended the establishment of the Small Industries Development Bank of India (SIDBI) in India?
a) Raghuram Rajan Committee
b) Narsimham Committee
c) Shivaraman Committee
d) S.S. Kohli Committee
Answer: d) S.S. Kohli Committee
32. What does the term “CIBIL” stand for in the context of credit scoring in India?
a) Credit Information Bureau of India Limited
b) Central Indian Banking and Investment Ltd.
c) Cooperative Industrial Bank of India Ltd.
d) Commercial and Industrial Banking and Investment Ltd.
Answer: a) Credit Information Bureau of India Limited
33. Which type of bank account typically offers a higher rate of interest but has a fixed maturity period?
a) Savings account
b) Current account
c) Fixed deposit account
d) Recurring deposit account
Answer: c) Fixed deposit account
34. What is the main objective of the Priority Sector Lending (PSL) guidelines in India?
a) Promoting foreign trade
b) Regulating stock markets
c) Ensuring that banks meet the credit needs of specific sectors
d) Regulating interest rates
Answer: c) Ensuring that banks meet the credit needs of specific sectors
35. Which organization is responsible for regulating and supervising the insurance industry in India?
a) Reserve Bank of India (RBI)
b) Securities and Exchange Board of India (SEBI)
c) Insurance Regulatory and Development Authority of India (IRDAI)
d) National Bank for Agriculture and Rural Development (NABARD)
Answer: c) Insurance Regulatory and Development Authority of India (IRDAI)
36. What does the term “UPI” stand for in the context of digital payments in India?
a) Universal Payment Interface
b) Unified Payment Infrastructure
c) Uniform Payment Integration
d) United Payment Initiative
Answer: a) Universal Payment Interface
37. Which financial institution in India specializes in providing long-term loans for housing and urban development?
a) Reserve Bank of India (RBI)
b) National Housing Bank (NHB)
c) Export-Import Bank of India (EXIM Bank)
d) Industrial Development Bank of India (IDBI)
Answer: b) National Housing Bank (NHB)
38. What is the primary purpose of the Financial Intelligence Unit – India (FIU-IND) in the banking sector?
a) Facilitating international fund transfers
b) Regulating interest rates
c) Preventing and detecting money laundering and terrorist financing
d) Regulating stock markets
Answer: c) Preventing and detecting money laundering and terrorist financing
39. What is the term for the interest rate at which one bank lends funds to another bank on an overnight basis?
a) Prime rate
b) Savings rate
c) Call rate
d) Repo rate
Answer: c) Call rate
40. In the context of banking, what does the term “EMI” stand for?
a) Equated Monthly Installment
b) Efficient Money Investment
c) Electronic Money Interface
d) External Market Index
Answer: a) Equated Monthly Installment
41. Which type of financial institution primarily offers services related to foreign exchange, investment banking, and asset management?
a) Commercial bank
b) Investment bank
c) Cooperative bank
d) Microfinance institution
Answer: b) Investment bank
42. What is the main function of the Indian Depositary Receipt (IDR) in the financial market?
a) Providing personal loans to individuals
b) Facilitating foreign currency exchange
c) Allowing Indian companies to raise capital from international markets
d) Regulating interest rates
Answer: c) Allowing Indian companies to raise capital from international markets
43. Which committee recommended the establishment of the Regional Rural Banks (RRBs) in India?
a) Raghuram Rajan Committee
b) Narsimham Committee
c) Shivaraman Committee
d) M. Narasimham Committee
Answer: d) M. Narasimham Committee
44. What is the primary purpose of the Financial Inclusion program in India?
a) Promoting international trade
b) Providing free insurance to all citizens
c) Ensuring access to financial services for all, especially in rural areas
d) Regulating interest rates
Answer: c) Ensuring access to financial services for all, especially in rural areas
45. Which Indian organization is responsible for regulating and supervising the pension sector in India?
a) Reserve Bank of India (RBI)
b) Securities and Exchange Board of India (SEBI)
c) Pension Fund Regulatory and Development Authority (PFRDA)
d) National Bank for Agriculture and Rural Development (NABARD)
Answer: c) Pension Fund Regulatory and Development Authority (PFRDA)
46. What is the primary objective of the Indian Factoring Regulation Act, of 2011?
a) Regulating foreign exchange
b) Promoting international trade
c) Regulating interest rates
d) Regulating factoring business in India
Answer: d) Regulating factoring business in India
47. What is the term for the difference between a bank’s interest rate on loans and the interest rate it pays on deposits?
a) Liquidity risk
b) Credit risk
c) Market risk
d) Net Interest Margin (NIM)
Answer: d) Net Interest Margin (NIM)
48. Which committee recommended the establishment of the Small Industries Development Bank of India (SIDBI) in India?
a) Raghuram Rajan Committee
b) Narsimham Committee
c) Shivaraman Committee
d) S.S. Kohli Committee
Answer: d) S.S. Kohli Committee
49. What is the main objective of the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme in India?
a) Promoting international trade
b) Providing financial assistance to farmers
c) Ensuring financial inclusion by providing access to basic banking services
d) Regulating interest rates
Answer: c) Ensuring financial inclusion by providing access to basic banking services
50. In the context of banking, what does the term “Savings Bank Account” represent?
a) An account for long-term savings and investments
b) An account for business transactions and payments
c) An account that offers the highest interest rates
d) An account for individuals to save and earn interest on their deposits
Answer: d) An account for individuals to save and earn interest on their deposits