A QUESTIONNAIRE REPORT ON BANKING SERVICES AND

OPERATIONS

In Partial Fulfillment of the Requirement for the Degree of

Master of Business Administration (MBA)
November 2016
SUBMITTED TO:
Dr. T. RAMACHANDRAN
Asst. Professor
DEPARTMENT OF MANAGEMENT

SRM UNIVERSITY
SUBMITTED BY:
K CHANDRASEKHAR

RA1552001010497

SRM Nagar,
Potheri, Kattankulathur

Banking operations - questions and answers for bank recruitment

Q1. Name some negotiable instruments.
Ans. The negotiable instruments include
-

promissory note
bill of lading
Bank draft/ pay order/bankers cheque.
Railway receipts
Dock warrant
Warehouse receipt
Certificate of deposit
Commercial paper
Treasury bills
Hundi

Q2. What are the features of Negotiability?

Ans. Features of Negotiability:
- Freely transferable by delivery (when it is bearer).
- Freely transferable by endorsement (when it is an order instrument).
- The transferee taking the instrument in good faith.
Q3. What is Promissory Note (PN)?
Ans. Its an instrument in writing which contains an unconditional undertaking
signed by the maker to pay a certain sum of money to the order or the bearer of
instrument. The Promissory Notes require being stamped ad per Indian Stamp Act.
Q4. How many types of Promissory Notes are there?
Ans. Types of Promissory Note:
1. Demand Promissory Note
2. Usance Promissory Note
Q5. What is Demand Promissory Note?
Ans. The Promissory Note which is payable immediately on demand is called
Demand Promissory Note.
Q6. What is Usance Promissory Note?
Ans. The Promissory Note which is payable after a predefined definite period is
called Usance Promissory Note.
Q7. How many parties are required in Promissory Notes?
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Ans. Basically it requires two parties. The one is maker who promises to pay and the
other is payee to whom it is payable. For example a person take loan from the bank
then the person is the maker and the bank is payee.
Q8. What is Bill of Exchange (BoE)?
Ans. Its an instrument containing an unconditional order signed by the maker
directing a certain person to pay a certain sum of amount only to the bearer of that
instrument.
Q9. How many types of bills are used in Banking Operations?
Ans. Following are the types of Bills used in Banking Operations:
-

Inland bills and Foreign bills

Time bills and Demand bills
Trade bills and Accommodation bills
Clean bills and Documentary bills.

Q10. What are Inland bills?

Ans. Inland bills are contract agreements which define the information related to the
transportation of goods overseas. Inland bills must be drawn on a person resident in
India although it is payable outside India. The essential condition is that it must be
drawn in India. For example a bill is drawn in Nagpur and payable in Hyderabad by
an importer in New York is an inland bill.
Q11.What is Foreign Bill?
Ans. A foreign bill is a financial instrument which is drawn at in country and payable
in another country. Any bill which is not an inland bill is a Foreign Bill. For example
a bill drawn in London and payable in Bhopal by a resident Indian is a foreign bill.
Q12. What is Accommodation Bill?
Ans. Accommodation bill is the bill of exchange by the third party which is also
known as an Accommodation party or Accommodation endorser who acts as a
guarantor. This kind of bill is not a genuine trade bill and it is drawn to
accommodate a known party. After actual sale of goods, when a bill is drawn by a
seller and accepted by another person claim to be buyer is accommodation bill.
Q13. What is Hundi?
Ans. Hundi is kind of bill of exchange. In Hundi any seller sells his good under bill
of exchange. These bill of exchange are known as Hundi. Then the seller sends
the Hundi to the buyer for its acceptance. These bills of exchange are generally
written in native language of that place and governed by local usage and practices.
Generally four types of Hundi are used.
1. Darshani Hundi- It is similar to the demand bills.
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2. Miadi Hundi- It is similar to the usance bills.

3. Namyog Hundis- It is similar to the order instruments.
4. Khokha- which has been paid and cancelled.
Q14. What is Cheque?
Ans. A cheque is an instrument drawn on a specified bank and it is only payable on
demand.
Q15. How is Cheque is different from BoE?
Ans. Cheque is different from bill of exchange in following ways:
-

Cheque is valid only 6 months from the date of issue.

Cheque is payable to the bearer on demand.
Cheque is drawn in a bank.
Notice of dishonor is not necessary in cheque.

Q16. When should banks not pay the Cheque?

Ans. Bank should not pay a cheque in the following cases:
-

Death of the drawer.

Insane customers
Insolvent customers
On receipt of valid stop payment instruction.
When cheque is post-dated.
When account has insufficient fund.

Q17. What is Stale Cheque?

Ans. If the cheque is not presented for payment for a period of 6 months from the
date of its issuance, it is then considered as Stale Cheque.
The validity of the cheque can be reduced by the drawer, like valid for 3 months but
the maximum validity of any cheque is 6 months.
Q18. What is Saving Bank Account?
Ans. If a person has limited income and he wants to save some money for future,
then the account he opens is a Saving Bank Account. The account can be opened
with the minimum initial deposit amount decided by the bank. The account holder
can deposit the money anytime. He can also withdraw the money by withdrawal
form or ATM or cheque. The rate of interest varies from bank to bank and changes
time to time.
Q19. What is Current Deposit Account?
Ans. Big institutions, companies, businessman etc. normally open their current
deposit accounts. There are some restrictions on withdrawal in saving accounts and
in current accounts there are no such restrictions.
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Current account can be opened with some initial amount decided by the bank. Here
the bank does not pay any interest on their balance, in fact the bank charges the
customer certain amount each year as Operational Charge. It also provides the
facility of withdrawing excess of the balance of deposit.
Q20. What is Overdraft Facility?
Ans. It is a facility provided by the banks that permits an account holder to use or
withdraw more than they have in their accounts, but they cant withdraw exceeding
the maximum minus balance.This facility is called Overdraft Facility.
Q21. What is Fixed Deposit Account?
Ans. This facility allows us to save money for long time. In saving accounts the rate
of interest is less, but in fixed deposit account the rate of interest is higher. It is also
known as term deposit account. The depositor can deposit the money for long
periods like 7 to 10 years. During this period withdrawal is not allowed however the
depositor can encash the money before the maturity period but at that time the
rate of interest will be less.
Q22. What is Recurring Deposit Account?
Ans. In this type of account the depositor saves regularly and in return gets a fair
return of deposit. While opening this account the deposit per month is fixed. We can
deposit the amount once in the month on a fixed date and the amount is also fixed.
The total amount with interest we can receive after the maturity. The rate of interest
in recurring deposit account is higher than the saving account. The account can be
opened by a person individually as well as jointly with another.
Q23. What are Non- performing assets (NPA)?
Ans. The asset which is not producing income is a Non-Performing Asset. It is an
asset or an account of a borrower which is considered as loss asset or doubtful by
the bank account or the financial institution is called non-performing asset.
Q24. What is 90 days overdue?
Ans. Its a norm for the identification of the Non-performing asset (NPA) starting
31 March 2014.
The norm is as follow:
- Interest or installment of principal remain overdue for more than ninety days in
respect of term loan.
- The account remains out of order for the period of more than ninety days.
- The bill remains overdue for the period of more than ninety days.
- Any amount to be received is due for more than ninety days.
Q25. What is Money Laundering?

Ans. The process of converting illegal money into legal money is Money Laundering.
According to Section 3 of the Prevention of Money laundering Act 2002 as:
Whosoever directly or indirectly attempts to indulge or knowingly assists or is
involved in any process or activity connected with the proceeds of crime and is
projecting it as the untainted property shall be guilty of the offence of money
laundering.
Q26. What are the common factors of Money Laundering?
Ans. Generally there are four factors of money laundering:
- The true ownership and real source of money is not revealed.
- The launderers change the form of the proceeds in order to shrink the huge
volume of cash generated by the initial unlawful activity.
- The trail left by the process is not known so that it make it difficult to follow the
money from the beginning to end.
- Constant control is maintained on the money.
Q27. What are the stages of Money Laundering process?
Ans. The following are the stages of money laundering process:
1. Placement stage:-It is the first introduction of entry for funds derived for any
criminal activities.
2. Layering/Agitation stage: - The object of this stage is to prevent the tracing of
illegal proceed. It creates a complex network of transactions which attempts to not
reveal the link between the initial entry and the end of the money laundering cycle.
3. Integration stage: - This process achieves the appearance of total legitimacy of
funds thereby it refers to the return of funds to the legitimate economy for later
extraction.
Q28. Give few ways of Money Laundering?
Ans. Following are the few ways of money laundering:-

Frequent exchange of cash into other currencies.

Large withdrawals from inactive account.
Transferring large sum of money to or from abroad.
More use of safe deposit facilities.
Customer having several accounts in different banks but in same location.

Q29. What is BANKNET?

Ans. Its a kind of payment network established by RBI. It was launched during 1991
in India. In this network the user can BANKNET from their premises through leased
or dial up lines at the local centers. Here the messages of banking transactions are
transferred in the form of codes for the settlement of the transaction and advice. It
also provides access to SWIFT through its system.

Q30. What is RBINET?

Ans. It is a communication system running on BANKNET and RBINET is a client
running a personal computer called RBINET. It can communicate with its server over
the dedicated leased or dial-up lines.
Q31. What is I-net?
Ans. I-net was opened in 1983. It is owned by the Department of Telecommunication
which uses Packet Switching Public Data Network (PSPDN). PSPDN is a kind of data
sending technology. I-net uses telephone connections and satellites for
communication which replaces the slow speed data communication. This technology
connects major metropolis and international networks.
Q32. What is NICNET?
Ans. NICNET stands for National Informatic Centre Network, which was set up in
1975. It promotes information culture which is a government organization and work
for government organizations. It provides multiple facilities to finance, agriculture,
industry, commerce by providing various applications. Currency chest operations in
banks are performed by NICNET.
Q33. What is INFINET?
Ans. The abbreviation for INFINET is Indian Financial Network. It was developed by
RBI sponsored organization which provides fast and secure intra bank and interbank communication system.
Q34. What is SPNS?
Ans. The full form of SPNS is Shared Payment Network System. It provides roundthe-clock banking convenience to customer of any bank performing basic banking
functions like cash withdrawal, balance enquiry etc. at any ATM belonging to any
bank.
Q35. Which banking services can be used through Information Technology
(IT)?
Ans. Following banking services can be achieved by using IT:
-

Faster remittance services

Home banking
Tele- banking
Cash management products
Banking online

Q36. What is Digital Signatures (DS)?

Ans. Digital Signature is used for security purpose and it is equivalent to the
handwritten signature. It is a signature in electronic form attached to an electronic
7

record. Digital signature identifies the origin of the message and maintain the
integrity of message. It defines authentication of an electronic record by a person
whose name the digital signature certificates. In India Information Technology Act
2000 considers digital signature as personalized thumb print.
Q37. What is Mobile Banking?
Ans. Mobile banking provides us the ease of carrying out certain banking
transactions through their mobile phone. This facility is provided by the banks. Many
operations can be performed by using mobile banking like checking account
balance, paying bills, request for cheque book. Stop payment instruction,
summaries of last three transactions, transferring money to other account etc.
Q38. What is Electronic Fund Transfer System (EFTS)?
Ans. Electronic fund transfer provides us to transfer fund electronically replacing the
paper instruments. The electronic fund transfer is fast and easily available. It saves
time of customers standing in queue. The products of EFTS includes:-

WTs- wireless transfers.

ATM- Automated Trailer Machine
CDs- Cash Dispensers
POS- Point of Sale terminals
Home banking

Q39. What is Smart Card?

Ans. The Smart Card is an Integrated Circuit Card (ICC) to store information. It is a
cash card or we can say electronic purse which is a pre-paid cash card. The card
provides an option to the customers for debit and credit facilities. These cards can
be reloaded by ATM or by telephone. It reduces the need of carrying cash for
shopping and enables the card holder to increase the amount at any time.
Q40. What is Credit Card?
Ans. It is an instrument of payment. The customer gets some credit on the card
which he can use for shopping, ticket booking, encashment etc. The credit cards are
of different types having different credit limits depending upon the bank.
Q41. What is Debit Card?
Ans. It is a payment card used to obtain cash, purchasing goods and services
automatically debiting the payment to the card holders bank account.
Q42. What are the advantages of Debit Card?
Ans. The advantages of Debit Card:
- No need to carry cash.
- Quick and less complicated than using cheque.
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- Used for withdrawal of cash.

- It can be issued to any individual having bank account
Capital market - questions and answers for bank recruitment
Q1. Name the three components of capital market?
Ans. There are three component of capital market are:- EQUITY MARKET
- DEBT MARKET
- DERIVATIVE MARKET
Q2. Which organisation regulates capital market?
Ans. Security and exchange board of India (SEBI) regulates the capital market.
Q3. What are the instruments of money market?
Ans. Following are the instruments of money market:-

Call money
Notice money
Certificate of deposits (1989)
Commercial papers (1990)
Forward rate agreement / interest rate swaps (1999)
Bills rediscounting

Q4. Categorize the Industrial Security Market?

Ans. There are two categories of industrial security market:- Primary market (new issue market)
- Secondary market / stock market (old issue market or stock exchange)
Q5. What is Gilt-Edged Market?
Ans. The market refers to government and semi-government securities which are
supported by RBI and is called GILT-EDGED market.
Q6. Name the types of Repurchase Agreement?
Ans. Following are the types of repurchase agreement:-

Market repo
RBI repo (LAF)
Treasury bills
Inter-bank participation certificate (1988)
CBLO (2003)

Q6. Name the participants of CBLO?

9

Ans. Following are the participants of CBLO:-

Scheduled commercial banks

Co-operative banks
Primary dealers (PDs)
Select all-India financial institutions
Insurance companies
Mutual funds and other corporate

Q7. What is the tenor of transaction of overnight market?

Ans. The tenor of transaction of overnight market is one working day.
Q8. What is FOREX market?
Ans. FOREX market deals with the exchange of currency. With help of FOREX market
we are able to meet the multi-currency requirements of market.
Q9. Name the major institutions involved with the CREDIT market?
Ans. Following are the major institutions involves with the CREDIT market:- Banks
- Financial institutions
- NBFCs
Q10. What is STRIPS?
Ans. STRIPS stands for Separate Trading of Registered Interest and Principle of
Securities. It is basically a ZERO-COUPON where the investor receives payment at
maturity only.
Q11. On which day in the week does RBI conduct the auction to issue the
treasury bills?
Ans. On every Wednesday RBI conducts auction to issue treasury bills.
Q12. What are COMMERCIAL PAPERS?
Ans. COMMERCIAL PAPERS (CP) is an unsecured money market instrument issued in
the form of promissory notes.
Q13. What is CERTIFICATE OF DEPOSITS?
Ans. CERTIFICATE OF DEPOSITS (CD) is a negotiable money market instrument and
is issued in the form of USANCE promissory note.
Q14. What do we call a market instrument which has features of equity as
well as debenture?
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Ans. The market instrument which has the feature of both equity and debenture is
called HYBRID INSTRUMENT.
Q15. What are the various forms of derivative instruments?
Ans. Following are the forms of derivative instruments:- Forward contract
- Options
- Swaps
Q16. How many forms of SWAPS are there in derivatives, name them?
Ans. There are two forms of SWAPS in derivatives:
- Interest rate swaps
- Overnight index swaps
Q17. What is PARTICIPATARY NOTE?
Ans. PARTICIPATARY NOTE (PN) is an instrument used by foreign funds. It is not used
for domestic trading because it is not registered in India.
Q18. What is dated government securities?
Ans. Dated government securities are the long term securities. They carry fixed or
floating coupons which are paid on the face value and payable at fix time period.
Q19. What is ASSET SECURITISATION?
Ans. ASSET SECURITISATION is the process through which illiquid assets are
transformed into a more liquid form of assets and distribute to broad range of
investor through capital market.
Q20. Name the financial institutions that provide credit to various sectors
of economy?
Ans. Following are the financial institutions that provide credit to various sectors of
economy:-

Commercial banks
Regional rural banks (RRBs)
Urban co-operative banks (UCBs)
State co-operative banks (STCBs)
District central co-operative banks (DCCBs)
Primary agriculture credit society (PACS)
State co-operative and agriculture rural development banks (SCSCARDBs)
Primary co-operative and agriculture rural development banks (PCARDBs)
Financial institutions
Non-banking financial companies (NBFCs)
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Q21. What is SPECIALIZED FINANCIAL INSTITUTION (SFI)?

Ans. SPECIALIZED FINANCIAL INSTITUTIONS (SFI) have been set up to serve the
increasing financial needs of commerce and trade in the area of VENTURE CAPITAL,
CREDIT RATING and LEASING.
Q22. Name the types of NBFCs registered with RBI?
Ans. Following are the types of NBFCs registered with RBI:-

Equipment leasing company

Hire-purchase company
Loan company
Investment company

Q23. What do you mean by DELIVERY versus PAYMENT (DvP)?

Ans. DELIVERY versus PAYMENT (DvP) is the mode of settlement of securities where
the transfer of securities and the funds happens simultaneously, this ensure that
unless the funds are paid, security are not delivered and vice-versa.
Q24. Name the type of ALL-INDIA DEVELOPMENT BANKS (AIDB)?
Ans. Following are the types of ALL-INDIA DEVELOPMENT BANKS:-

Industrial development bank of India(IDBI)

Industrial finance corporation of India ltd(IFCI)
Small industrial development bank (SIDBI)
Industrial investment bank of India ltd (IIBI)

Q25. Name some de-recognized stock exchange in India?

Ans. Following are some de-recognized stock exchange of India:-

Hyderabad stock exchange

Magadha stock exchange
Saurashtra kutch stock (SKSE)
Mangalore stock exchange

Q26. What is a Bonus Share?

Ans. Shares issued by the companies to their share-holders free of cost by
capitalization of accumulated reserves from the profit earned in the earlier year is
called Bonus Share.
Q27. What do you mean by Equity Shares?
Ans. Equity shares are commonly referred to as ordinary share that also represent
the form of fractional ownership in which a share-holder, as a fractional owner,
12

undertakes the maximum entrepreneurial risk associated with a business venture.

Q28. What are Security Receipts?
Ans. Security receipts means a receipt or other security issued by a securitisation
company to any qualified institutional buyer pursuant to a scheme evidencing the
purchase or acquisition by the holder there of an undivided right, title or interest in
the financial asset involved in securitisation.
Q29. What do you mean by Bull as regarding capital market?
Ans. If a person is optimistic and believes that stock will go up, he or she is called a
BULL and is said to have a bullish outlook.
Q30. What is cumulative preference share?
Ans. It is a type of preference stock in which the unpaid dividend accumulates. All
arrear of preference dividend have to be paid out before paying dividend on equity
shares.
Q31. Categorize the NBFC based on the way they accept public deposits?
Ans. There are two types of NBFC based on their public deposits:- NBFC- deposit taking (NBFC-D)
- NBFC- non deposit taking (NBFC-ND)
Q32. What are the important sources of long term finance?
Ans. Following are the important source of long-term finance:-

Issue of shares
Issue of debentures
Loan from financial institutions
Reinvestment of profits

Q33. What do you mean by short term capital?

Ans. Short-term capital is required for a short period, less than a year. It involves
financing assets and meeting day-to-day expenses.
Q34. What are the important sources of short term finance?
Ans. Following are the important sources of long term finance:- Banks
- Trade credit
- Instalment credit
Q35. What is Special Data Dissemination Standard (SDDS)?

13

Ans. SDDS is an international monetary fund standard to guide member that have
access to international capital market in the provision of their economic and
financial data to the public.
Q36. What is TAP SALE?
Ans. Under TAP SALE a certain amount of securities are created and made available
for sale, generally with minimum price and sold to the market as bids are made.
Q37. What do you mean by HELD TILL MATURITY (HTM)?
Ans. The securities acquired by banks with the intention to hold them up to
maturity.
Q38. What is COUPON FREQUENCY?
Ans. Coupon payments are made at regular intervals throughout the life of a debt
security and may be quarterly, half-yearly or annual payment.
Q39. What is Bond Ledger Account(BLA)?
Ans. BOND LEDGER ACCOUNT is an account with the RBI or an agent in which the
government securities are held in a dematerialised form at the credit of the holder.
Q40. What is the tenor of market repo?
Ans. The tenor for market repo ranges from one day to one year.
01. Which of the following cannot be called as a debt instrument as
referred in the financial transactions?
a) Certificate of deposit; b) Bonds; c) Stocks; d) Commercial papers; e)
Debentures
02. Whenever RBI does some open market operation transactions,
actually it wishes to regulate which of the following?
a) Inflation; b)Liquidity in economy; c) Borrowing powers of the banks; d)Flow of
foreign direct investments;
e) None of the above
03. In economics, it is generally believed that the main objective of a
public sector financial company like bank is to:
e) Employ more and more people; b) Maximize the total profits; c) Maximize
total production; d) Provide financial services to the people of the nation of its origin
across the country; e) Sell the goods at subsidized rates
04. In a company by the use of price sensitive corporate information
about the company, people closer to the company try to adopt the
technology to make gains or cover losses in share market dealings and
such process is known as:

14

a) Insider trading; b) Future trading; c) Foreign trading; d) Stock trading; e)

None of these
05. What is meant by Repo rate?
a) When a bank is in need of cash it can it can discount bills of exchange and avail
loan facilities from Reserve Bank of India.
b) When a bank has excess cash, they buy securities from RBI against cash on the
condition that they resell the securities to RBI on a pre fixed day and price
c) It is rate at which RBI allows temporary loan facilities to commercial
banks against government securities on the condition that the bank will
repurchase the securities within a short period.
d) It is a rate which is offered by banks to their most valued customers or prime
customers; e) None of these

06. Bharat Nirman does not cover which of the following areas?
a) Rural employment; b) Rural housing c) Rural water supply; d) Irrigation
facilities; e) It covers all the above areas
07. Which of the following committee has given its recommendations on
Financial inclusions?
a) Rakesh Mohan committee; b) Rangarajan committee; c) Sinha committee; d)
Gadgil committee; d) None of these
08. The actual return of an investor is reduced sometimes when the prices
of the commodities go up all of a sudden and in financial sector this type
of phenomenon is known as
a) Probability risk; b) Market risk; c) Inflation risk; d) Credit risk; e) None of
these
09. An industry which is fighting hard to increase its market share in
existing market(with new popular products) is known as:
a) Market vendor; b) Market operator; c) Market leader; d) Market follower; e)
Market challenger
10. Which of the following products launched by most of the banks help
farmers in getting instant credit for various agricultural purposes?
a) Kisan credit card; b) Personal loan; c) Business loan; d) ATM card; e) None of
these
11. Which of the following products of a bank is specifically designed to
provide financial help to children in their higher studies in India or in a
foreign country?
a) Personal loan; b) Corporate loan; c) Housing loan; d) Educational loan; e)
Mortgage loan
12. Which of the following policies of the financial sectors is basically
designed to transferring local financial assets into foreign assets freely
and at market determined exchange rates?

15

a) Capital account convertibility; b) Financial deficit management; c) Minimum

support price; d) Restrictive trade practices
e) None of these
13. A customer is willing to purchase some US dollars in the country.
He/she should go to:
a) Public Debt Division of the RBI only; b) American Express Bank only; c) RBI or
any branch of a bank which is authorized for conducting such business; d)
Ministry of Foreign affairs; e) None of these
14. Which of the following is not a social assistance program launched by
the Government of India?
e) National old age pension scheme; b) Annapurna scheme; c) National family
benefit scheme; d) Indira Gandhi National Disability Pension Scheme; e) All are
social assistance programs
15. Many times we see in newspapers that some projects are launched by
the Government authorities on PPP basis. What is the full form of PPP?
a) Preferential Payment Plan; b) Public Private partnership; c) Partial payment
project; d) Popular private project
e) Public private plan
16.The ratio of the cash reserves that the banks are required to keep with
RBI is known as:
a) Liquidity ratio; b) Statutory liquidity ratio; c) Cash Reserve Ratio; d) Net
demand and time liabilities; e) None of these
17. The availability of cash and other cash like marketable instruments
that are useful in purchases and investments are commonly known as:
a) Cash crunch; b)Liquidity; c) Credit; d) Marketability; e) None of these
18. Which of the following schemes launched by the Government of India
provides a guaranteed 100 days employment to rural employment seekers
in India?
a) Bharat Nirman; b) SwarnajayanthiGrameenRozgarYojana; c) Mahatma Gandhi
National Rural Employment Guarantee act; d) National Food for Work
Programme; e) None of these
19. The Reserve Bank of India keeps on modifiying various rates/ratios to
keep the flow of liquidity in the market in a balanced manner and which of
the following rates/ratios/indexes is not directly controlled by the RBI?
a) Cash reserve ratio; b) Bank rate; c) Repo rate; d) Reverse repo rate; e)
Wholesale price index

20. Many banks have adopted/launched Core Banking Solutions and

what do you mean by core banking solutions?
a) A marketing strategy adopted by the banks; b) A new type of automated teller
machines useful for rural population; c) A delivery channel for quick and fast

16

delivery; d) A new product launched to help senior citizens only as they are not
able to visit the branches/ATMs frequently; e) None of these
21. Which of the following terms are not used in banking sector?
a) Statutory liquidity ratio; b) Non performing asset; c) Credit rating;d) Fixed; e)
REPO
22. Banking sector comes under which of the following sectors?
a) Agriculture sector; b) Service sector; c) Manufacturing sector; d) Industrial
sector; e) None of these
23. An account in which trading of shares in their electronic form is done
is known as:
a) Demat account; b) NRE account; c) NRO account; d) FCNR account; e) RFC
account
24. Which of the following programmes/schemes of the Government of
India is not directly related with agriculture activities?
a) Drought Prone areas programme; b) Promotion of integrated pest management;
c) Integrated wastelands development programme; d) Annapurna scheme; e)
Desert Development programme
25. Find the odd man out from the following groups?
a) ICICI Bank, Canara Bank, Central Bank of India, Punjab National Bank, Indian
Bank
b) Canara Bank, State Bank of India, Lakshmi Vilas Bank, KarurVysya Bank, United
Bank of India
c)
Bank of India, Corporation Bank, Indian Bank, IDBI Bank, Axis bank
d) Bank of Maharashtra, Barclays bank, Oriental Bank of Commerce,
Indian Bank, IDBI bank
e) Union Bank of India, Bank of India, Andhra Bank, Dena Bank, Indian Bank
26. Which among the following is the recently opened private sector bank
in the country?
a) ICICI bank; b) HDFC bank; c) AXIS Bank; d) Kotak Mahindra Bank;e) Yes bank
27. Mortgage relates to which type of loan among the following?
a) Housing loan; b) Educational loan; c) Car loan; d) Gold loan; e) Personal loan
28. Fourteen banks were nationalized in the country during the first stage
on:
a) 19.07.1970; b) 19.07.1969; c) 19.07.1971; d) 18.07.1969; e) 15.07.1969
29. The sponsorship between State government, central government and
sponsor bank is in the ratio of--------- in respect of Regional Rural Banks in
the country:
a) 15-50-35; b) 50-35-15; c) 35-15-50; d) 35-50-15; e) 15-35-50
30. When it comes to providing locker facility to the customer of any
bank, the relationship between the customer and banker is that of:

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a) Debtor and creditor; b) Bailor and bailee; c) Lessee and lessor; d) Lessor and
lessee; e) Agent and principal
IBPS BANK EXAMINATIONS BANKING AWARENESS PRACTICE TEST
01. When does Reserve Bank of India issues annual policy statement?
b) January; b) April; c) July; d) October; e) None of the above
02. Which of the following has been renamed as Annual Policy
Statement by the Reserve Bank of India?
a) Busy season banking policy; b) Slack season banking policy; c) Monetary and
credit policy; d) Annual statistical report; e) None of the above
03. When does RBI review its annual policy statement?
a) July; b) October; c) January; d) All the above; e) None of the above
04. Which is the monitoring and reviewing authority regarding fair
practices code as per recent annual policy statement of Reserve Bank of
India?
b) Banking codes and standards Board of India; b) Banking Ombudsman; c)
Institute for development in banking technology; d) debt recovery tribunal; e) none
of the above
05. Which committee has recommended introduction of smart card?
a) Rangarajan committee; b) Saraf committee; c) Nayak committee; d)
Pannirselvan committee; e) None of the above
06. Which committee had formulated consultative profile in connection
with electronic funds transfer?
a) A.K. Purwar committee; b) Y V Reddy committee; c) K S Shere committee; d)
S. A. Dave committee; e) none of the above
07. The process of transformation of physical shares, commercial paper or
certificate of deposit into electronic form is called as:
a) Electronic clearing service; b) Electronic securitization; c) Share truncation; d)
Dematerialisation; e) None of the above
08. Providing banking services to a customer without his entrance inside
the banks branch is called as:
a) Virtual banking; b) relationship banking; c) universal banking; d) mobile
banking; e) none of the above
09. Where is the headquarters of Society for worldwide Interbank
Financial Telecommunication SWIFT situated?
a) New York; b) Los Angels; c) Brussels; d) Hague; e) None of the above
10. Where has National Financial Switch of IDRBT established?
a) Mumbai; b) New Delhi; c) Hyderabad; d) Bangalore; e) None of the above
11. Cheque truncation means:
a) Tearing a cheque into two or more pieces; b) Sending the photostat copy of a
cheque in collection; c) Using the electronic image of a cheque; d) Keeping the
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Photostat copy of a cheque with collecting bank before sending the original cheque
to the drawee branch; e) None of the above
12. What do you mean by universal banking?
a) Provision of all financial services in one country; b) Provision of all financial
services in one bank; c) Provision of all financial services at a branch; d) Provision
of all financial services at any of the counters of a branch of a bank; e) None of the
above
13. Corporate governance is a system
a) By which a company is directed and controlled; b)In which Board of directors
are responsible for managing the business affairs of a company; c) Both the
above; d) Governing corporate companies by the government; e) None of the
above
14. Whose interest is kept in mind in a good corporate governance
system?
a) Shareholders of the company; b) Stakeholders of the company; c) Employees of
the company; d) All the above; e) None of the above
15. What do you mean by risk?
a) Loss; b) Depreciation of capital; c) Decrease in profitability; d) Possible loss
that depends upon occurrence and non occurrence of an incident; e) None
of the above
16. The employees of the bank went on strike and when it comes to risk
what do you mean by this?
a) Operational risk; b) Employee risk; c) Credit risk; d) Market risk; e) Systemic
risk
17. Basel II accord is mostly concerned with:
a) Central vigilance commission; b) Non performing assets; c) Capital adequacy
ratio; d) Foreign direct investment; e) None of the above
18. A bank is unable to pay its short term deposits because the banks
funds are blocked in long term investments. The risk derived in this case
is known is:
a) Market risk; b) Operational risk; c) Liquidity risk; d) Interest rate risk; e) None
of the above
19. A bank recently introduced a new deposit scheme which was not
popular amongst the public and what do you mean by the riskassociated
with this?
a) Operations risk; b)Credit risk; c) Liquidity risk; d) Market risk; e) None of the
above
20. The Assets Liabilities committee in a bank makes the assessment of:
a) Liquidity risk; b) Credit risk; c) Operations risk; d) All the above; e) None of
the above

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21. A debtor makes default in repayment of a bank loan and which type of
risk is this for a lending bank?
a) Liquidity risk; b) Operational risk; c)Interest rate risk; d) Credit risk; e) None
of the above
22. Which type of risk arises before a bank that trades in government
securities?
a) Liquidity risk; b) Market risk; c) Credit risk; d) Trade risk; e) None of the above
23.
a)
b)
c)
d)
e)

Which of the following options best defines the risk?

Loss occurred due to happening of an event
Loss occurred due to non happening of an event
Risk experienced due to uncertainty
Probability of loss due to uncertainty
None of the above

24. Which of the following is not included in three pillars of BASEL capital
accord?
a) Minimum capital requirement; b) Supervisory review; c) Market discipline; d)
Core banking solution; e) None of the above
25. When ICICI Limited merged with ICICI bank?
a) 1st August, 2000; b) 1st August 2001; c) 1st August, 2002; d) 1stAugust, 2003;
e) none of the above
26. Bank of Madura Limited merged with:
a) ICICI bank limited; b) UTI bank limited; c) HDFC bank limited; d) IDBI bank e)
None of the above
27. Which bank has changed its name to AXIS bank limited?
a) Centurion bank; b) Times bank; c) Bank of Punjab Limited; d) Bank of Karad; e)
UTI bank limited
28. Bank of Cochin merged with:
a) Punjab National Bank; b) Bank of Baroda; c) State Bank of India;d) Canara
Bank; e) United Commercial bank
29. Times Bank Limited merged with:
a) HDFC Bank; b) Bank of India; c) Punjab National Bank; d) Central Bank of
India; e) none of the above
30. What do you mean by horizontal merger?
a) Merger of two or more companies that manufacture homogenous
products;
b) Merger of two or more companies that manufacture heterogonous products;
c)
Merger of a principal company with its subsidiary company
d) All the above
e) None of the above

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