Important Banking Terms or Terminology for IBPS PO/Clerk SBI PO/CLerk Important Banking/Bank Terms/Abbrevitaion or Banking

/BANK Terminology/Abbrevitaion for IBPS PO/Clerk or SBI PO/CLerk in Question / Answer form

Q1. What is a Repo Rate? Ans: Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the banks have any shortage of funds they can borrow it from RBI. Q2. What is Reverse Repo Rate? Ans: This is exact opposite of Repo rate. Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. RBI uses this tool when it feels there is too much money floating in the banking system. Q3. What is CRR Cash Reserve Ratio Rate? Ans: CRR is the amount of funds that the banks have to keep with RBI. Q4. What is SLR (Statutory Liquidity Ratio) Rate? Ans: SLR approved secis the amount a commercial bank needs to maintain in the form of cash, or gold or govt. urities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the RBI. SLR is used to control inflation and propel growth. Q5. What is Bank Rate? Ans: Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks. Q6. What is Inflation? Ans Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy. An increase in inflation figures occurs when there is an increase in the average level of prices in Goods and services. Inflation happens when there are fewer Goods and more buyers; this will result in increase in the price of Goods. Q7. What is Deflation? Ans: Deflation is the continuous decrease in prices of goods and services. Deflation occurs when the inflation rate becomes negative (below zero) and stays there for a longer period. Q8. What is PLR (Prime Lending Rate )? Ans: The PLR is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). The rate is almost always the same amongst major banks. Q9. What is Deposit Rate? Ans. Interest Rates paid by a depository institution on the cash on deposit. Q10. What is FII (Foreign Institutional Investor)?

Ans FII used to denote an investor, mostly in the form of an institution. An institution established outside India. Q11. What is FDI (Foreign Direct Investment)? Ans FDI occurs with the purchase of the “physical assets or a significant amount of ownership (stock) of a company in another country in order to gain a measure of management control” (Or) A foreign company having a stake in a Indian Company. Q12. What is IPO - Initial Public Offering? Ans This is the first offering of shares to the general public from a company wishes to list on the stock exchanges. Q13. What is Disinvestment? Ans: The Selling of the government stake in public sector undertakings. Q14. What is Fiscal Deficit? Ans: It is the difference between the government’s total receipts (excluding borrowings) and total expenditure. Q15. What is Revenue deficit? Ans: It defines that, where the net amount received (by taxes & other forms) fails to meet the predicted net amount to be received by the government. Q16. What is GDP - Gross Domestic Product ? Ans: The or GDP is a measure of all of the services and goods produced in a country over a specific period; classically a year. Q17. What is GNP - Gross National Product ? Ans: GNP is measured as GDP plus income of residents from investments made abroad minus income earned by foreigners in domestic market. Q18. What is National Income? Ans: National Income is the money value of all goods and services produced in a country during the year. Q19. What is Per Capita Income? Ans: The national income of a country, or region, divided by its population. Per capita income is often used to measure a country's standard of living. Q20. What is Vote on Account? Ans: A vote-on account is basically a statement ,where the government presents an estimate of a sum required to meet the expenditure that it incurs during the first three to four months of an election financial year until a new govt is in place, to keep the machinery running. Q21. Difference between Vote on Account and Interim Budget? Ans: Vote-on-account deals only with the expenditure side of the government's budget, an interim Budget is a complete set of accounts, including both expenditure and receipts. Q22. What is SDR (Special Drawing Rights) ?

Ans: The SDR is an artificial currency created by the IMF in 1969. SDRs are allocated to member countries and can be fully converted into international currencies so they serve as a supplement to the official foreign reserves of member countries. Q23. What is SEZ - Special Economic Zone ? Ans: SEZ means is the one of the part of government’s policies in India. A special Economic zone is a geographical region that economic laws which are more liberal than the usual economic laws in the country. Q24. What is Open Market operations(OMO)? Ans: The buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system by RBI. Q25. What is Micro Credit? Ans: It is a term used to extend small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families. Q26. What is Liquidity Adjustment Facility(LAF)? Ans: A tool used in monetary policy that allows banks to borrow money through repurchase agreements. Q27. What is RTGS System - Real Time Gross Settlement? Ans: RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis. Settlement in 'real time' means payment transaction is not subjected to any waiting period. QWhat is Bancassurance? Ans: It is the term used to describe the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products. QWhat is Wholesale Price Index(WPI)? Ans: The WPI is the index used to measure the changes in the average price level of goods traded in wholesale market. A total of 435 commodity prices make up the index. It is available on a weekly basis. QWhat is Consumer price Index(CPI)? Ans: It is a measure estimating the average price of consumer goods and services purchased by households. Q31. What is a Debenture? Ans: A debenture is basically an unsecured loan to a corporation. A type of debt instrument that is not secured by physical asset. Debentures are backed only by the general creditworthiness and reputation of the issuer. Q32. What is a hedge fund? Ans: ‘Hedge’ means to reduce financial risk. A hedge fund is an investment fund open to a limited range of investors and requires a very large initial minimum investment.

Q33. What is FCCB? Ans: A Foreign Currency Convertible Bond (FCCB) is a type of convertible bond issued in a currency different than the issuer’s domestic currency.
1. First Governor of RBI was – a) Hilton Young, b) Paul Samuelson, c) C.D.Deskmukh, d) O.A SmithAns. d) O.A Smith 2. At the time of nationalization who was the Governor of RBIa) O.A Smith, b) J.B Taylor, c) C.D. Deshmukh, d) K.C.NeogyAns. c) C.D. Deshmukh 3. The RBI was nationalized in the year – a)1949, b)1956, c)1959, d)1947Ans. a)1949 4. The general superintendence and director of the bank is entrusted to central board of directors of – a)10 members, b) 20 members, c) 25 members, d)30 membersAns. b) 20 members 5. Paper currencies of our country are issued by RBI under – a) Section- 22 of the RBI act -1934, b) Section- 24 of the RBI act -1934 c) Section- 28 of the RBI act -1934, d) None of theseAns. a) Section- 22 of the RBI act -1934 6. One rupee currency notes bear the signature of a) PM, b) President of India, c) Governor of RBI, d) Finance Secretary of IndiaAns. d) Finance Secretary of India 7. Ten rupees notes bear the signature of – a) President, b) Finance Minister, c) Secretary of Ministry of finance, d) Governor of RBIAns. d) Governor of RBI 8. Which of the following is the banker of the banks – a) IDBI, b) SBI, c) RBI, d)UTIAns. c) RBI 9. In which of the following banks one can’t open a personal account – a) Co-Operative Banks, b) Commercial banks, c) Regional Rural Banks, d) RBIAns. d) RBI 10. Which of the following banks is the banker to the government – a) SBI, b) SEBI, c) RBI, d) IRDAAns. c) RBI 11. Which of the followings are the function of RBI – a) Regulation of currency and flowing of credit system, b) Maintaining exchange values of rupee c) Formulating monetary policy of India, d) All of theseAns. d) All of these 12. Credit rationing in India is done by – a) SBI, b) LIC, c) UTI, d) RBIAns. d) RBI 13. The first bank of India was – a) Bank of Hindusthan, b) Imperial Bank, c) Bank of Bengal, d) Oudh Commercial BankAns. a) Bank of Hindusthan 14. The first Indian fully liability and managed bank was – a) PNB, b) Traders Bank, c) SBI, d) 0 Presidency Bank of IndiaAns. a) PNB 15. The rates at which the RBI extends credit to the commercial bank is called – a) Bank Rate, b) Reverse Repo Rate, c)Interest Rate, d) None of theseAns. a) Bank Rate 16. In which of the following is not the any element of monetary policy of RBI – a) Bank rate, b) Open Market Operation, c) Public Expenditure, d) All of theseAns. c) Public Expenditure

17. 100 rupees note bears the signature of – a) Governor of RBI, b) PM, c) Finance Secretary of India, d) Chairman of Finance CommissionAns. a) Governor of RBI 18. Which of the following is the last lender of the last resort of commercial banka) SBI, b) Union Govt., c) RBI, d) UTIAns. c) RBI 19. The RBI is agent of central government and of all state government except – a) Bihar, b) Goa, c) Jammu and Kashmir, d) MizoramAns. c) Jammu and Kashmir 20. Controller of credit of commercial banks in our country is – a) RBI, b)SEBI, c) ICI, d)UTIAns. a) RBI 21. The Banking Concept in India was first developed by – a) British, b) French, c) Indian, d) None of theseAns. a) British 22. The rate at which RBI gives short term credit to the commercial banks against government securities with buy back provision is called – a) Bank Rate, b) Repo Rate, c) Reverse repo rate, d) Interest rateAns. b) Repo Rate 23. The rate at which RBI takes loans from commercial banks is called – a) Repo Rate, b) Reverse Repo Rate, c) Bank Rate, d) Interest RateAns. b) Reverse Repo Rate 24. At present the Reverse Repo Rate of RBI is (As of 25th Nov) – a) 8.25, b) 7.25, c) 7.50, d)8.50Ans. d)8.50 25. Bank rate of RBI is also known as – a) Interest Rate, b) Discount Rate, c) fed rate, d) bid rateAns. b) Discount Rate 26. Which of the following is not the any element of quantitative credit control policy of RBI – a) CRR, b) SLR, c) Selective credit control, d) open market operation.Ans. c) Selective credit control 27. At present CRR** of RBI is – a) 6%, b) 7.5%, c) 8.5%, d) none of theseAns. a) 6% 28. The limitation of CRR** of RBI is – a)3-10 %, b) 3-15%, c) 15-38%, d) 10-25%Ans. b) 3-15% 29. The apex organization of Indian money market is – a)SBI, b) SEBI, c) RBI, d) IRDAAns. c) RBI 30. If the cash reserve is lowered by RBI, what will be its effect on credit creation – a) Decrease, b) Increase, c) No Change, d) None of theseAns. b) Increase 31. The expansion of money supply of an economy depends on – a) The policy of CRR, b) The bank rate policy, c) Open market operation, d) All of theseAns. d) All of these 32. Among the following who are eligible to benefit from the Mahatma Gandhi National Rural Employment Guarantee Act? – a) Adult Members of only the scheduled caste and scheduled tribe holders b) Adult of below poverty line household c) Adult members of household of all backward community d) adult members of any rural household, e) None of theseAns. d) adult members of any rural household 33. Which of the following banks merged with Punjab national banks in 1993 – a) New bank of India, b) Central Bank of India, c) Imperial Bank of India, d) Common bank of IndiaAns. a)

New bank of India 34. A currency, the exchange values of which is expected to remain stable due to strong performance by it’s economy. This currency is – a) Soft Currency, b) Hot currency, c) Fiat currency, d) None of these (Hard Currency)Ans. d) None of these (Hard Currency) 35. The Reserve Bank of India issues under the following note issue method? – a) Proportional Reserve System, b) Minimum Reserve System c) Maximum Reserve System, d) Fixed Fiduciary SystemAns. b) Minimum Reserve System 36. What is a Scheduled Bank? – a) A bank having Rs 10 Crore deposits, b) A bank having Rs 100 Crore deposits c) A bank having Rs 5 Crore deposits, d) A bank included in the second schedule of RBI act 1934.Ans. d) A bank included in the second schedule of RBI act 1934. 37. How many languages are used on a Ten Rupee note? – a) 2, b) 7, c) 10, d) 15, e) 16Ans. d) 15 38. The place where bankers meet and settle their mutual claims and accounts is known as – a) Treasury, b) Clearing House, c) Dumping House, d) Collection centreAns. b) Clearing House 39. The largest Public sector bank in India – a) SBI, b) PNB, c) RBI, d) ICICIAns. a) SBI 40. Which of the following is not the function of RBI – a) Banker’s bank, b) Banker to public, c) custodian of foreign exchange, d) Bankers to Govt.Ans. b) Banker to public 41. Who is responsible for the collection and publication of monetary and financial informationa) Finance Commission, b) Finance ministry, c) RBI, d) Auditor and Comptroller general of IndiaAns. c) RBI 42. Which of the following regulatory authority to oversee the new issues, protect the investment and investors, promote the development of Capital Market and regulate the working of Stock Exchange – a) UTI b) IRDA, c) RBI, d) SEBI, e) None of theseAns. d) SEBI 43. After a long span of 22 years, RBI released Rs.1000/- currency note for circulation in – a) 2000, b) 2002, c) 2005, d) 2008Ans. a) 2000 44. Regional Rural banks are working in all states of the country except – a) Sikkim and Goa, b) Sikkim and Manipur, c) Manipur and Nagaland, d) Jammu and KashmirAns. a) Sikkim and Goa 45. The National Housing Bank is a subsidiary of – a) RBI, b) NABARD, c) IDBI, d) UTIAns. a) RBI 46. At present the ceiling of Foreign Direct Investment (FDI)** in insurance sector in India is – a) 26%, b) 49%, c) 51%, d) 74%Ans. a) 26% 47. Rs. 25 Paisa was ceased by the Govt of India on – a) 30th june 2011, b) 30th July 2011, c) 1st January 2011, d) 1st July 2011Ans. a) 30th june 2011 48. Initial Public Offering (IPO) is associated with – a) RBI, b) Stock Exchange, c) IRDA, d) Indian Postal ServiceAns. b) Stock Exchange 49. The Basic regulatory authority for mutual funds and stock markets lies with the –

a) Government of India, b) Reserve Bank of India c) Securities and Exchange Board of India (SEBI), d) Stock ExchangeAns. c) Securities and Exchange Board of India (SEBI) 50. Monetary policy Referes to the policy of – a) Money Lenders, b) Government, c) Commercial Banks, d) RBIAns. d) RBI

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