A bank is best described as an institution that
A Prints currency
B Accepts deposits and advances loans
C Controls inflation
D Regulates stock market
Banks mobilize deposits and lend funds, acting as financial intermediaries.
The primary function of commercial banks is
A Issue currency
B Accept deposits
C Regulate money supply
D Control inflation
Deposit acceptance forms the foundation of banking operations.
Which of the following is a demand deposit?
A Fixed deposit
B Recurring deposit
C Current account
D Time deposit
Current accounts are payable on demand without notice.
Fixed deposits are also known as
A Demand deposits
B Savings deposits
C Time deposits
D Credit deposits
Fixed deposits are repayable after a specified time period.
Savings bank accounts are mainly meant for
A Business firms
B Government departments
C Households and individuals
D RBI only
Savings accounts encourage small savings among individuals.
Which of the following is a credit creation activity of banks?
A Accepting deposits
B Issuing currency
C Granting loans
D Collecting cheques
By lending more than reserves, banks create credit.
Which type of bank mainly deals with long-term finance?
A Commercial bank
B Central bank
C Development bank
D Cooperative bank
Development banks provide long-term funds for industry and infrastructure.
Cooperative banks mainly serve
A Large industries
B Urban elites
C Small borrowers and farmers
D Foreign investors
Cooperative banks focus on rural and small-scale credit needs.
The central bank of India is
A State Bank of India
B Reserve Bank of India
C Punjab National Bank
D NABARD
RBI is India’s monetary authority and central bank.
The RBI was established in
A 1911
B 1935
C 1947
D 1951
RBI was set up under the RBI Act, 1934, and began operations in 1935.
One important function of RBI is
A Accepting public deposits
B Issuing currency notes
C Advancing loans to individuals
D Accepting fixed deposits
RBI has monopoly over issue of currency notes.
RBI is known as banker’s bank because it
A Accepts public deposits
B Lends to government only
C Keeps cash reserves of commercial banks
D Regulates stock exchanges
Commercial banks keep a part of their reserves with RBI.
Which of the following is NOT a function of RBI?
A Banker to government
B Custodian of foreign exchange
C Accepting deposits from public
D Controller of credit
RBI does not deal directly with the general public.
RBI acts as banker to the government by
A Printing currency
B Collecting taxes
C Managing public debt
D Providing consumer loans
RBI manages borrowing and debt of the government.
Which function of RBI helps maintain internal price stability?
A Note issue
B Custodian of cash reserves
C Credit control
D Banker to banks
Credit control regulates money supply to curb inflation.
Bank rate is the rate at which
A Banks lend to public
B RBI lends to commercial banks
C Government borrows from banks
D Banks lend to RBI
Bank rate influences overall interest rate structure.
Increase in bank rate generally leads to
A Increase in borrowing
B Expansion of credit
C Reduction in credit
D Increase in inflation
Higher bank rate makes borrowing costlier.
Repo rate refers to
A Rate of interest on savings accounts
B Rate at which RBI buys securities
C Rate at which RBI lends short-term funds to banks
D Rate charged by banks on loans
Repo rate is a key monetary policy tool.
Reverse repo rate is the rate at which
A Banks borrow from RBI
B RBI borrows from banks
C Government borrows from banks
D Banks borrow from public
RBI absorbs excess liquidity by borrowing from banks.
Cash Reserve Ratio (CRR) means
A Cash kept by banks with public
B Cash kept by banks with RBI
C Cash kept by RBI with banks
D Cash kept by banks with government
CRR is mandatory reserve requirement.
Statutory Liquidity Ratio (SLR) requires banks to keep
A Cash only
B Gold only
C Cash, gold, or approved securities
D Foreign currency only
SLR ensures liquidity and solvency of banks.
Increase in CRR will
A Increase lending capacity
B Reduce lending capacity
C Have no effect on banks
D Increase deposits
Higher CRR leaves fewer funds for lending.
Open Market Operations refer to
A Issue of currency
B Sale and purchase of securities by RBI
C Foreign trade operations
D Commercial bank lending
OMO directly affects liquidity in the economy.
Selective credit control aims at
A Controlling total credit
B Controlling use of credit for specific purposes
C Increasing savings
D Encouraging exports
It regulates credit flow to priority or speculative sectors.
Moral suasion is
A Legal compulsion
B Forceful control
C Persuasion by RBI
D Automatic control
RBI persuades banks through advice and guidance.
Which of the following is a qualitative credit control tool?
A Bank rate
B CRR
C Repo rate
D Credit rationing
Credit rationing controls allocation, not volume.
Which institution regulates the banking system in India?
A SEBI
B Ministry of Finance
C RBI
D NABARD
RBI supervises and regulates banks.
Commercial banks create credit mainly by
A Issuing notes
B Accepting deposits
C Advancing loans
D Printing money
Loans create deposits, expanding money supply.
Credit creation depends on
A Population size
B Cash reserve ratio
C Number of banks
D Government expenditure
Lower reserves allow higher credit creation.
Which of the following limits credit creation?
A Excess reserves
B High CRR
C High demand for loans
D Economic growth
High CRR restricts banks’ lending power.
Primary deposits refer to
A Deposits created by banks
B Initial cash deposits by customers
C Government deposits
D Fixed deposits
Primary deposits arise from actual cash deposits.
Derivative deposits are created through
A Cash deposits
B Lending operations
C Government transfers
D Foreign exchange
Loans granted create new deposits.
Which type of bank mainly finances agriculture in India?
A SBI
B RBI
C NABARD
D SEBI
NABARD supports agricultural and rural credit.
Which bank is known as apex development bank for agriculture?
A RBI
B NABARD
C SBI
D ICICI
NABARD coordinates rural credit institutions.
Which of the following is NOT a function of commercial banks?
A Accepting deposits
B Advancing loans
C Issuing currency
D Agency services
Currency issue is RBI’s function.
Agency functions of banks include
A Advancing loans
B Accepting deposits
C Collection of cheques
D Credit creation
Banks act as agents for customers.
General utility functions of banks include
A Issuing drafts
B Accepting deposits
C Advancing loans
D Creating credit
Drafts, lockers, remittances are utility services.
Credit multiplier shows
A Increase in prices
B Expansion of deposits
C Increase in income
D Reduction in credit
It measures multiple expansion of deposits.
Credit multiplier is inversely related to
A Income
B Population
C Cash reserve ratio
D Interest rate
Higher CRR reduces multiplier.
Which condition is essential for credit creation?
A Full employment
B Excess reserves
C Zero interest rate
D Balanced budget
Banks need excess reserves to lend.
Credit creation process stops when
A Excess reserves become zero
B Demand for loans increases
C Interest rates fall
D Deposits increase
No excess reserves means no new loans.
Which bank accepts deposits from other banks only?
A Cooperative bank
B Commercial bank
C Central bank
D Development bank
Central bank deals primarily with banks.
The lender of last resort function of RBI means
A Lending to public
B Lending to banks in emergencies
C Lending to government
D Lending to industries
RBI provides emergency liquidity to banks.
RBI’s role as custodian of foreign exchange helps in
A Promoting exports
B Stabilizing exchange rate
C Increasing inflation
D Increasing imports
RBI manages forex reserves to stabilize currency.
Which type of bank mainly deals with foreign exchange?
A Cooperative bank
B Regional rural bank
C Exchange bank
D Development bank
Exchange banks specialize in foreign trade finance.
Scheduled banks are those which
A Are listed on stock exchange
B Are included in RBI’s second schedule
C Are government banks
D Are private banks
Scheduled banks enjoy RBI facilities.
Non-scheduled banks are
A Illegal banks
B Banks not listed in RBI schedule
C Cooperative banks only
D Foreign banks
They do not meet RBI’s criteria for scheduled status.
Banking regulation in India is governed by
A RBI Act
B Companies Act
C Banking Regulation Act
D SEBI Act
Banking Regulation Act, 1949 governs banks.
Which institution supervises commercial banks in India?
A SEBI
B Ministry of Finance
C RBI
D NABARD
RBI supervises banking operations.
The ultimate objective of credit control by RBI is
A Profit maximization
B Price stability and growth
C Export promotion
D Population control
Credit control balances growth with price stability.