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Commercial Bank MCQs
The term commercial bank alludes to a monetary foundation that acknowledges stores, offers financial records administrations, makes different advances and offers essential monetary items like declarations of the store (CDs) and investment accounts to people and private companies. A commercial bank is a place where the vast majority do their banking. Commercial banks bring in cash by giving and acquiring revenue from advances, for example, contracts, car advances, business credits, and individual advances. Client stores give banks the money to make these advances.
Commercial Bank MCQs: This section contains multiple-choice questions and answers on Commercial Bank. It will help the students to prepare well for their exams.
List of Commercial Bank MCQs
1. What is a commercial bank?
- A financial institution that accepts deposits, offers to check account services
- An organization that is, generally, formed independently from the government
- Legal entity representing an association of people
- Precise kind of business structure found only in India
Answer: A) A financial institution that accepts deposits, offers to check account services
Explanation:
A commercial bank is a place where the vast majority do their banking. Commercial banks bring in cash by giving and acquiring revenue from advances, for example, contracts, car advances, business credits, and individual advances. Client stores give banks the money to make these advances.
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2. What is a presidency bank?
- A financial institution that accepts deposits, offers to check account services
- An organization that is, generally, formed independently from the government
- Legal entity representing an association of people
- Banks under a common statute and imposed some restrictions on their business
Answer: D) Banks under a common statute and imposed some restrictions on their business
Explanation:
The Presidency Banks were the Bank of Bengal, set up on 2 June 1806, the Bank of Bombay (consolidated on 15 April 1840), and the Bank of Madras (joined on 1 July 1843). The Imperial Bank was 80% exclusive while the rest were possessed by the state.
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3. Bank of Bengal was renamed after which bank?
- State Bank Of India
- Reserve Bank Of India
- Bank Of Calcutta
- Bank Of Hindustan
Answer: C) Bank Of Calcutta
Explanation:
The Bank of Calcutta was established on 2 June 1806, mostly to subsidize General Wellesley's fights with Tipu Sultan and the Marathas. It was the main bank of India and was renamed Bank of Bengal on 2 January 1809.
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4. When did the Imperial Bank Of India Act come into existence?
- 1947
- 1920
- 1895
- 1950
Answer: B) 1920
Explanation:
The Imperial Bank of India appeared on 27 January 1921 through the revamping and mixture of the three Presidency Banks of frontier India into a solitary financial substance. The Imperial Bank was 80% exclusive while the rest were possessed by the state.
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5. What is the most commonly used monetary policy tool?
- Issuing of Notes
- Close Market Operations
- Discount Rate
- Open Market Operations
Answer: D) Open Market Operations
Explanation:
Open market operations (OMO) allude to the Federal Reserve (the Fed) practice of trading U.S. Depository protections, alongside different protections, on the open market to control the inventory of cash that is on hold in U.S. banks. The Fed buys Treasury protections to expand the stockpile of cash and offers them to decrease the inventory of cash.
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6. What is the Reserve Bank Of India?
- The central bank and regulatory body and is responsible for the issue and supply of the Indian rupee
- Banks are owned by either individual or general partners with a limited partner
- A financial institution that accepts deposits
- Type of international bank that is required to obey both the home and host country's legislation
Answer: A) The central bank and regulatory body and is responsible for the issue and supply of the Indian rupee
Explanation:
The Reserve Bank of India will be India's national bank and administrative body and is answerable for the issue and supply of the Indian rupee and the guideline of the Indian financial framework. It likewise deals with the country's primary instalment frameworks and attempts to advance its financial turn of events.
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7. What are Private Banks?
- The central bank and regulatory body and are responsible for the issue and supply of the Indian rupee
- Banks are owned by either individual or general partners with a limited partner
- A financial institution that accepts deposits
- Type of international bank that is required to obey both the home and host country's legislation
Answer: B) Banks are owned by either individual or general partners with a limited partner
Explanation:
Private banks will be banks claimed by either the individual or an overall band together with a restricted accomplice. Private banks are not fused. In any such case, loan bosses can look to both the "sum of the bank's resources" just as the whole of the sole-owner's/general-accomplices' resources.
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8. What are Foreign Banks?
- The central bank and regulatory body and are responsible for the issue and supply of the Indian rupee
- Banks are owned by either individual or general partners with a limited partner
- A financial institution that accepts deposits
- Type of international bank that is required to obey both the home and host country's legislation
Answer: D) Type of international bank that is required to obey both the home and host country's legislation
Explanation:
A foreign bank office is a kind of global bank that is needed to obey both the home and host nation's regulations. Unfamiliar bank offices can give bigger credits than auxiliary banks because their advance limits are reliant upon all-out bank capital.
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9. What is Repo Rate?
- 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 prefixed day and price
- It is the 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
- Rate offered by banks to their premium customers
- When a bank needs cash it can it can discount bills of exchange and avail loan facilities from the Reserve Bank of India
Answer: B) It is the 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
Explanation:
Repo rate is the rate at which the national bank of a nation (Reserve Bank of India if there should arise an occurrence of India) loans cash to business banks in case of any deficit of assets. Repo rate is utilized by money related specialists to control expansion.
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10. What does the Reserve Bank Of India regulate when it does some open market transactions?
- Borrowing Power from Commercial Banks
- Inflation
- Supply of Money
- B & C
Answer: D) B & C
Explanation:
At the point when the Reserve Bank Of India needs to mix liquidity into the financial framework, it will purchase government protections in the open market. This way it furnishes business saves money with liquidity. Conversely, when it sells protections, it controls liquidity. Consequently, the Central Bank by implication controls the cash supply and impacts transient loan fees.
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11. When does a decrease in the supply of Money occur?
- Increase in Cash Reserve Ratio
- Decrease in Cash Reserve Ratio
- Inflation
- Increase in Cash Flow
Answer: A) Increase in Cash Reserve Ratio
Explanation:
At the point when RBI expands the CRR, fewer assets are accessible with banks as they need to keep bigger bits of their money close by with RBI. In this way climb in CRR prompts an expansion of financing costs on credits given by the Banks. A decrease in CRR drains cash out of the framework causing a reduction in the cash supply.
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12. What are Open Market Operations?
- Sale of agricultural products in the government regulated Mandis
- Sale and purchase of bonds and securities by the RBI to the government
- Sale and purchase of bonds and securities by commercial banks to the customers
- Sale and purchase of bonds and securities to commercial banks by the RBI
Answer: D) Sale and purchase of bonds and securities to commercial banks by the RBI
Explanation:
Open market operations (OMO) allude to the Federal Reserve (the Fed) practice of trading U.S. Depository protections, alongside different protections, on the open market to manage the stock of cash that is on hold in U.S. banks. The Fed buys Treasury protections to expand the stock of cash and offers them to lessen the stockpile of cash.
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13. How does Commercial Banks create money?
- Through Cash Reserve Ratio
- Through Investing
- Issue of Loans
- Accepting New Deposits
Answer: C) Issue of Loans
Explanation:
Commercial Bank Loan is an obligation based subsidizing course of action between a business and a monetary establishment like a bank. It is ordinarily used to subsidize significant capital uses or potentially cover functional costs that the organization may somehow not be able to bear. Costly forthright expenses and administrative obstacles frequently keep independent companies from having direct admittance to security and value markets for financing. This implies that similar to individual customers, more modest organizations should depend on other loaning items, for example, credit extensions, unstable advances or term advances.
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14. When was the Lead Bank Scheme introduced in India?
- 1947
- 1955
- 1969
- 1949
Answer: C) 1969
Explanation:
The Lead Bank Scheme, presented towards the finish of 1969, conceives the task of leading jobs to individual banks (both in open areas and private areas) for the locale allocated to them. A bank has a somewhat huge organization of branches in the rustic region of a given locale and enriched with satisfactory monetary and labour assets has commonly been dependent on the lead liability regarding that region. Likewise, every one of the locales in the nation has been allocated to different banks. The lead bank goes about as a pioneer for organizing the endeavours of all credit foundations in the designated locale to expand the progression of credit to horticulture, limited scope enterprises and other monetary exercises remembered for the need area in the country and semi-metropolitan regions, with the region being the fundamental unit as far as a topographical region.
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15. Which is the latest commercial bank in India?
- HDFC Bank
- Axis Bank
- IDFC First Bank
- AU Small Finance Bank
Answer: C) IDFC First Bank
Explanation:
IDFC First Bank is an Indian private area bank that structures part of IDFC, a coordinated foundation finance organization. The bank began procedure on 1 October 2015, after getting a general financial permit from the Reserve Bank of India in July 2015. It is recorded on BSE and NSE.
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16. What are BASEL Norms/Accords?
- Series of three sequential banking regulation agreements
- Generating funds to finance the deficit
- Sale and purchase of bonds and securities by the RBI to the government
- Sale and purchase of bonds and securities by commercial banks to the customers
Answer: A) Series of three sequential banking regulation agreements
Explanation:
BASEL Norms or BASEL Accords are the worldwide financial guidelines given by the Basel Committee on Banking Supervision. The Basel standards is a work to arrange banking guidelines across the globe, determined to reinforce the worldwide financial framework. It is the arrangement of the understanding by the Basel advisory group of Banking Supervision that centres around the dangers to banks and the monetary framework.
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17. The Supply of Coins is managed by ___ in India?
- Reserve Bank Of India
- State Bank Of India
- Banker's Association Of India
- Ministry Of Finance
Answer: D) Ministry Of Finance
Explanation:
Regarding coins, the job of the Reserve Of India is restricted to the conveyance of coins that are provided by the Government of India. The Government of India is liable for the planning and printing of coins in different groups according to the Coinage Act, 2011.
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18. What happens when Repo Rate is increased?
- Lower Inflation
- Higher Inflation
- Higher Cash Reserve Ratio
- Lower Cash Reserve Ratio
Answer: A) Lower Inflation
Explanation:
During undeniable degrees of expansion, The Reserve Bank Of India makes solid endeavours to cut down the progression of cash in the economy. One method for doing this is by expanding the repo rate.
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19. Which Organisation has the maximum stake in NABARD?
- State Bank Of India
- Commercial Bank
- Banker's Association
- The Reserve Bank Of India
Answer: D) The Reserve Bank Of India
Explanation:
The Reserve Bank Of India stripped its whole stake in NABARD and NHB adding up to ₹ 20 crores (Rupee twenty crore) and ₹ 1450 crore (Rupees 1,000 400 and fifty crores) on February 26, 2019, and March 19, 2019, individually. With this, the Government of India currently holds a 100 per cent stake in both monetary organizations.
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20. The Reserve Bank Of India is not responsible for?
- Printing of Notes
- Foreign Currency Custodian
- Credit Controller
- Issuance Of Coins
Answer: D) Issuance Of Coins
Explanation:
Regarding coins, the job of the Reserve Bank Of India is restricted to the circulation of coins that are provided by the Government of India. The Government of India is answerable for the planning and stamping of coins in different divisions according to the Coinage Act, 2011.
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