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Question 1 of 10
1. Question
2 points
An increase in Capital to Risk Weighted Asset Ratio of a bank indicates which of the following?
Lower safety of bank deposits
Bank’s freedom to lend is reduced
Select the correct answer using the code given below:
Correct
Ans d
A higher the capital to risk weighted asset ratio (CRAR), higher is the safety of bank deposits.
The higher the capital is above the regulatory minimum, the greater the freedom banks have to make loans.
Incorrect
Question 2 of 10
2. Question
2 points
The Reserve Bank has specified certain regulatory trigger points, as a part of Prompt Corrective Action (PCA) Framework. Which of the following are included as parameters for introducing a Prompt Corrective Action Framework in a particular bank?
Capital to risk weighted assets ratio
Debt Service Obligation
Net non-performing assets
Return on Assets
Select the correct answer using the codes given below:
Correct
Ans d
The Reserve Bank has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) Framework, in terms of three parameters, i.e.
Capital to risk weighted assets ratio (CRAR)
Net non-performing assets (NPA)
Return on Assets (RoA)
Incorrect
Question 3 of 10
3. Question
2 points
In context of the Prompt Corrective Action Framework of RBI, consider the following statements:
The Prompt Corrective Action Framework is applicable only to commercial banks
Under PCA, RBI can stop banks from lending and there can be a cap on lending to specific sectors/entities
PCA can constrain normal operations of the banks for the general public like lending and depositing
Which of the statements given above is/are correct?
Correct
Ans b
The RBI has clarified that the PCA framework is not intended to constrain normal operations of the banks for the general public like lending and depositing.
Incorrect
Question 4 of 10
4. Question
2 points
Consider the following pairs:
Currency Feature
1. Hard currency Least liquidity
2. Soft currency Easily available
3. Heated Currency Currency under depreciation
4. Cheap Currency Currency with the public
Which of the statements given above is/are correctly matched?
Correct
Ans b
Hard currency is the most liquid form of currency.
Incorrect
Question 5 of 10
5. Question
2 points
Consider the following groupings:
Asian Pacific Economic Cooperation.
Indian Ocean Rim Association.
Organization for Economic Co-operation and Development.
South Asian Free Trade Area.
Which of the above groupings does not include India as its member?
Correct
Ans c
Asia Pacific Economic Cooperation (APEC) is a group of 21 members of the Pacific rim of ocean economies with its headquarters in Singapore. India is not a member of this grouping.
Organization of the Petroleum Exporting Countries (OECD) is a group of oil exporting countries with its headquarters in Austria. It was established in 1961. It includes 13 members. India is not a member of this.
Incorrect
Question 6 of 10
6. Question
2 points
Which one of the following statements appropriately describes “Globalisation”?
Correct
Ans c
Both option A and B describe Globalisation.
Incorrect
Question 7 of 10
7. Question
2 points
With reference to the Indian economy, consider the following:
Long Term Repo Auctions
KYC Norms
Currency Swap
Capital Adequacy Norms
Which of the above can be considered as the steps taken to achieve effective Monetary Policy Transmission by the Reserve Bank of India?
Select the correct answer using the codes given below:
Correct
Ans c
KYC means “Know Your Customer”. It is a process by which banks obtain information about the identity and address of the customer. It has little to no role in monetary policy transmission.
Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in relation to its risk weighted assets and current liabilities. However, Capital Adequacy ratio is related to a bank’s financial soundness and not policy transmission.
Incorrect
Question 8 of 10
8. Question
2 points
When the Reserve Bank of India increases the Cash Reserve Ratio by 50 basis points, which of the following is likely to happen?
Correct
Ans d
The amount of cash that the scheduled commercial banks are required to maintain with RBI with respect to their NDTL (on a fortnightly basis) is called Cash Reserve Ratio.
When the Cash Reserve Ratio is increased banks will have a lesser quantity of money to lend than before.
Incorrect
Question 9 of 10
9. Question
2 points
Which of the following terms indicates a mechanism used by the Reserve Bank of India for absorbing excess liquidity from the market?
Correct
Ans d
Market Stabilization Scheme (MSS) is a monetary policy intervention by the RBI to withdraw excess liquidity (or money supply) by selling government securities in the economy.
Incorrect
Question 10 of 10
10. Question
2 points
Consider the following financial institutions:
Insurance Companies
Chit Companies
Stock Broking Companies
Micro Financial Institutions
Which of the given financial institution(s) can be considered as Non-Banking Financial Companies?