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IBPS PROBATIONARY OFFICERS

Banking Knowledge

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'Banking Company' means any company which transacts the business of

banking in India.

'Banking business' means any company which accepts deposits of money from
public and finance its own business is said to be in banking business.

1.

General credit control by RBI is done through?

2.

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.
a

a) Bank rate

b) CRR

d) All the above

e) None of these

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d

c) SLR

Commercial bank can increase their lending and investing ability through?
a) Level liquidity and excess cash

b) Commercial papers

c) Taking the help of public

d) Productive methods

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e) None of these
3.

h
b
i

Who is also known as lender of the last resort?

a) Commercial banks

b) RBI

c) Regional rural banks

d) Union Government of India

e) None of these

4.

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a

Basic banking services making available with nil or very minimum balance
saving account is done through which of the following?

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b
i

a) Recurring savings account

b) Government sponsored credit account

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r

c) QAB quarterly minimum balance

d) No frills savings account

p
u
d

e) None of the these

5.

Take the odd one out.

na

a) Pledge

b) Hypothecation

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e
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d) Mortgage
6.

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c) Assignment

e) Lien

In primary and secondary markets dealer of Government securities is known as?

a) Primary dealer

c) Ledger

b) Secondary dealer
d) Corporate bond dealer

e) None of these

R-26-8-14

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7.

What are/ is the source of income to banks?

a) Bill discounting

b) Commission/ Brokerage

c) Interest on loans

d) Interest on investments

e) All the above

8.

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a

What are the agency services provided by commercial banks?

a) Collecting and payment of credit instruments

h
b
i

b) Letter credit

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r

c) Collecting statistics
d) Traveler's cheques and credit cards

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u
d

e) Merchant banking
9.

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Banks underwrite securities issued by ......

a
n

a) Government of india

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c) Private sector companies

e) All the above

b) Public sector companies

d) Both b and c

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10. Bank grant loan for very short period not exceeding 7 days and payable
immediately at short notice is what kind of advancing?

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a
h

a) Consumer credit
b) Smart money advancing

b
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c) Call money or money at call advancing

d) Money credit

a
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p

e) Cash credit

11. Commercial banks provide locker facility to their customer for .......

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d
a

a) Safe custody

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b) Storing excess gold and valuables of banks

c) Filing important documents

d) Satisfying the Bank's jewellry and gold needs.

e) All the above

12. Current deposits are also known as .......

a) Fixed Deposits

b) Demand Deposits

c) Time Deposits

d) All the above

e) None of these

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13. Identify the way(s) of bank lending ........
a) Cash credit

b) Overdraft facility

c) Bill discounting

d) Term loans

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n

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a
h

e) All the above

14. Which of the following system encourages the habit of thrift?

b
i
t

a) Savings account deposit

b) Fixed deposit

c) Economy deposit

d) Commercial deposit

a
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p

e) None

u
d
a

15. The rate at which bank quote to their most credit worthy customers ......
a) Statutory Liquidity Rate

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ww

c) Floating Rate

b) Fixed Rate
d) Prime Lending Rate

e) None

16. Identify the corresponding banking services.

a) Cheque collection

b) Securities safe keeping and trading

c) Loan participating

d) Fund transfer

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e) All the above

17. Local area banks are those which operates?

.
a

a) In a single branch or unit banks

h
b

b) In a city or town

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t
a

c) In a specific metropolitan cities

d) In a couple of districts which are contiguous

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e) None of these

18. Who are all can not open a savings account in commercial banks?

ad

a) Illiterate and blind persons

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e

c) Self helping groups

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e) None

b) Legal business entity

d) Hindu undivided family

19. Cash reserves include ........

a) Money market instruments

b) Cash

c) Treasury bills

d) All of these

e) None of these

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20. An instrument which enable a account holder to draw money from his bank
deposit account is known as ......
a) Cheque

b) Demand Draft

d) Challan

e) None

c) Pay in slip

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21. Identify the main and major source of income to bank from the following ......
a) Commission received by Issuing Demand Drafts against money deposited.

.
a
h

b) QAB Charges.

c) The difference between the rate of interest allowed on deposits and the rate

b
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t

charged on the Loans.

d) Charges collected on current account transactions.

a
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e) None

22. Which are/ is the Instruments used by Central Government to barrow money from

u
d
a

RBI?
a) Treasury bills

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c) Commercial paper

b) Certificate of deposit
d) Both b and c

e) None of these

23. Identify the odd from following negotiable instrument.

a) Cheque

b) Bank draft

d) Fixed deposit

e) Promissory notes

c) Bill of exchange

24. Public sector banks are owned by ......

a) Wholly by Government of India
b) Government of India and with minor share of RBI
c) Government of India with major share and along with general public share
holders
d) Only RBI
e) None of these
25. The act that helps banks in their day to day banking activities is ...
a) Negotiable instrument act

b) Service sector act

c) RBI act

d) Banking act

e) None

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26. Which is the largest commercial bank in India?
a) PNB

b) ICICI Bank

c) SBI

d) Central Bank of India

e) None of these

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n
.
a

27. What is an unconditional order in writing be drawn by a customer on his bank?

a) Cheque

b) Complaint

d) Bank note

e) All the above

h
b
i

c) Draft

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r

28. Which bank says that our bank is 'India's International Bank' .......
a) ICICI Bank

b) Bank of Baroda c) SBI

d) HDFC Bank

e) RBI

p
u
d

29. Which is not a function of commercial bank from the following?

a
n

a) Issuing letter of credits, travelers cheques

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w

b) Safe custody of valuables

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n

c) Collecting and distrusting business information

d) Providing reports on credit worthiness of customers

.
a
h

e) None of these

30. Indian rupee is also known as ......

b
i
t

a) Standard token coin

b) Nickel coin

c) Silver or gold coin

d) Token coin

a
r
p

e) None of these

du

KEY

a
n

1-d; 2-a; 3-b; 4-d; 5-c; 6-a; 7-e; 8-a; 9-e; 10-c; 11-a; 12-b; 13-e; 14-a; 15-d; 16-e;

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17-d; 18-b; 19-d; 20-a; 21-c; 22-a; 23-d; 24-c; 25-a; 26-c; 27-a; 28-b; 29-e; 30-a.

Banking System in India

In India banks are classified into scheduled banks and non scheduled banks.

Scheduled banks are those institutions which are listed in the second schedule of RBI
act, 1934 satisfying the criteria laid down wide section 42(6)(A) of RBI act. Non
scheduled bank means banking company as defined in the section 5 clause (C) of
banking regulation act, 1949.

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Scheduled banks:
All scheduled banks must fulfil the criteria under sec 42(6)(A) of RBI Act 1934.
The criteria is the institution carries on business of banking in India and satisfies the
bank that its affairs are not being conducted in a manner detrimental to the interests of
its depositors. Schedule banks are further classified into co-operative banks and
commercial banks. All commercial banks, regional rural banks, and state
co-operative banks are scheduled banks. Most recently added bank under this
schedule is Bharatiya Mahila Bank (BMB) on 21st May, 2014.

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Co-operative banks:

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Co-operative banks are organized under provision of the co-operative society

laws of states. Hence these banks are called as state cooperative banks. These banks
are established with the primary aim of rural development and in particular
agricultural and agricultural allied development in the state.

Commercial banks:

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These are Banks which deals in money and credit. The primary objective is
profit. Commercial banks have a wide range of activities and functions which covers
the complete banking service system.

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Commercial banks are further classified into public sector banks, private sector
banks, regional rural banks and foreign banks. Public sector banks are again
classified into nationalized banks and SBI and it's associated. There are 27
nationalised banks, in which 6 are SBI and its associates.

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The major functions of Commercial banks are .....

a
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Receiving money in the form of deposits from public and business units. The
deposits are of like savings accounts, current accounts, fixed deposits and lend
money, generally for short periods, in the form of loans, overdrafts, bills
discounting, money market, term loans, consumer credit and cash credits. The
difference between the rate of interest allowed on deposits and the rate charged
on the loans is the income source and cycle of money flow in economy. This
generates money in the economy.

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They provide foreign trade and services.

Promotes the usage of banking services with a aim of mobilizing financial

transactions form un-organized sector to organized banking sector with the help
of clearing system and instruments like cheques, drafts which are cheaper way of
medium of exchange.

Writer - S. Rundranad

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