PRINCIPLES OF

BANKING
Sample Questions and
Answers
Multiple Choice
 Question 1
Which of the following instruments is used by
public to directly lend to the Government?
 (a) Bank Deposits
 (b) Public Provident Fund
 (c) T-Bills
 (d) Certificates of Deposit

Answer 1: b
 Question 2
 Inter-bank call money refers to borrowing among
banks for
 (a) Overnight
 (b) Two days
 (b) More than 14 days
 (c) Less than 14 days

Answer 2: a
 Question 3
 Certificates of Deposits have to be of a
minimum value of
 (a) Rupees 1 lakh
 (b) Rupees 10 lakh
 (c) Rupees 25 lakh
 (d) Rupees 1 crore

Answer 3: a
 Question 4
 Commercial paper can be issued
 (a) By all corporates
 (b) By all corporates with net worth of at
least Rs. 10 crores
 (c) By all corporates with net worth of at
least Rs. 5 crores
 (d) Can be issued only by banks

Answer 4: c
 Question 5
 Commercial Bills market is a part of
 (a) Organised money market
 (b) Unorganised money market
 (c) Stock market
 (d) None of the above

Answer 5: a
 Question 6
 Which of the following statements is not true?
 (a) Call money market deals with overnight
loans
 (b) As special cases, few FIs like LIC, UTI can
borrow in the call money market
 (c) Call loans are made on a ‘clean’ basis
 (d) Is a part of organised money market

Answer 6: b
 Question 7
 A scheduled commercial bank is one:
 (a) Which is included in the Second
Schedule of the RBI Act 1934
 (b) Which is included in the Banking
Regulation Act, 1949
 (c) Both (a) and (b)
 (d) None of the above

Answer 7: a
 Question 8
 Indigenous bankers are regulated by
 (a) Reserve Bank of India
 (b) Ministry of Finance
 (c) Registrar of Co-operative Societies
 (d) None of the above

Answer 8: d
 Question 9
 What is the current SLR requirements of
banks?
a) 40% of the deposits
b) 25% of the deposits
c) 31% of the deposits
d) None of the Above
Answer 9: d
 Question 10
 What is the CRR currently prescribed by
RBI ?
a) 5.5%
b) 6.0%
c) 6.5%
d) 7.0%

Answer 10: c
 Question 11
 What is the stipulated share of the
priority sector in the net bank credit?
a) 35%
b) 20%
c) 40%
d) 45%

Answer 11: c
 Question 12
 Mutual funds are regulated by
– (a) Association of Mutual Funds of India
(AMFI)
– (b) Securities and Exchange Board of India
(SEBI)
– (c) Reserve Bank of India
– (d) None of the above

Answer 12: b
 Question 13
 A growth fund is
– (a) One in which the money is invested in
equities
– (b) One in which the money is invested in
government bonds
– (c) One in which the money is invested
equally in equity and bonds
– (d) Money is invested only in money market
instruments
Answer 13: a
 Question 14
ARCIL is an example of
(a) A financial institution
(b) A mutual fund
(c) An asset management company set up
to acquire NPAs of banks
(d) A discount and financing house

Answer 14: c