1.

In a modern state, commercial banks play an important role in

a. Mobilizing service
b. Accelerating the rate of capital formation
c. Allocation of funds to different sectors
d. All the above
2. Commercial banks in india
a. Have remained neutral to the process of economic growth
b. Have retarded the process of economic growth
c. Have accelerated the process of economic growth
d. None of the above
3. Banks perform the function of
a. Receiving deposits
b. Lending of money
c. Agency services
d. All the above
4. A commercial banks can accept deposit from the public in the form of
a. Saving account
b. Current account
c. Fixed deposits
d. All the above
5. Commercial banks provide
a. Loans
b. Agency services
c. Both (a) and (b)
d. None of the above
6. Which one of the following is not a function of commercial banks?
a. Advancing loans
b. Accepting deposits
c. Issuing notes
d. Discounting bills of exchang
7. Demand deposits of the banks are considered as
a. Assets to the bankers
b. Liability to the bankers
c. Loans to the banks
d. None of the above
8. Commercial banks suffer from
a. Regional imbalance
b. Increasing over dues
c. Lower inefficiency
d. All the above
9. Commercial banks in india were nationalized in 1969 because
a. There was urban bias
b. Agriculture sector was neglected
c. There was concentration of economic power
d. All the above
10.Major commercial banks of india were nationalized in
a. 1969
b. 1970
c. 1971
d. 1972

11.The rationale behind the nationalization of commercial banks in 1969 was

a. Removal of control by few
b. Provision of inadequate credit for agricultural and small industry
c. Encouragement to a new class of entrepreneur
d. All the above
12.Monetary policy means
a. Policy relating to non-banking financial situation
b. Policy relating to public revenue and public expenditure
c. Policy relating to money and banking in a country
d. All the above
13.Prior to its nationalization the state bank of india was known as
a. Imperial bank of india
b. Reserve bank of india
c. Royal bank
d. None of the above
14.The number of banks nationalized in 1969 was
a. 8
b. 10
c. 14
d. 16
15.The number of banks nationalized in 1980 was
a. 12
b. 10
c. 8
d. 6
16.The rural branches constitute _____ per cent of total bank branches in india in
2012
a. 14
b. 60
c. 37
d. 82
17.In 1969 ________ per cent of bank offices were in rural areas.
a. 20
b. 22
c. 25
d. 15
18.Population per bank in india is
a. Around 5000
b. Around 20000
c. Around 12000
d. Around 45000
19.At present there are ______ nationalized banks in india
a. 14
b. 6
c. 21
d. 19
20.The number of bank branches increased from just ______ to 69616 in 2006
a. 8226
b. 8622
c. 8262

d. 8862
21.In December 2012 the aggregate deposits mobilized by commercial banks
was
a. Rs. 32,50,000 crore
b. Rs. 23,05,000 crore
c. Rs. 20,00,000 crore
d. Rs. 60,00,000 crore
22.In march, the percentage of commercial bank credit to small scale,
agriculture and small retail trade accounted for
a. 30 per cent
b. 15 per cent
c. 44 per cent
d. 56 per cent
23.In terms of deposit mobilization ______ leads other states
a. UP
b. Maharashtra
c. Kerala
d. Bihar
24.In terms of lending, priority sectors constitute about _____ of total lending.
a. 60
b. 80
c. 30
d. 40
25.Nationalization of banks aimed at all of the following except
a. Removal of control by a few
b. Provision of credit to big industries only
c. Provisions of adequate credit for agriculture, small industry and export
units
d. None of the above
26.Gross NPA of commercial banks have fallen of late due to stringent norms and
stood at ____ in 2006-2007
a. Rs. 70,000 crore
b. Rs. 45,000 crore
c. Rs. 51,000 crore
d. Rs. 54,000 crore
27.The profitability ratio of banks has declined over the years due to
a. Lower interest on government borrowings from banks
b. Subsidization of credit to priority sector
c. High expenditure resulting from over staffing and mushrooming of
branches
d. All the above
28.Which of the following statement is correct?
a. Rural areas have nearly 50 per cent of bank branches but 75 per cent of
the population residing there
b. Banks are evenly spread out
c. Most of the banks have very less NPA s ranging between 0 to 5 per cent
d. None of the above
29.Which one of the following is the important functions of the apex bank of a
country?

a. Accepting deposits from foreign residents and institutions

b. Accepting the deposits and lending money to the public
c. Regulation of currency in accordance with the requirements of the
business and general public
d. None of the above
30.The difference between a central bank and a commercial bank is that
a. Central bank has no branch
b. Central bank does not deals with customers
c. Central bank does not deal with foreign exchange
d. Central bank does not control not issue
31.As an apex monetary institution RBI plays
a. An important role in strengthening, developing and diversifying the
countrys economic and financial structure
b. Responsible role in the maintenance of economic stability and assisting
the growth of the economy
c. Both (a) and (b)
d. None of the above
32.The reserve bank of india was set up in
a. 1949
b. 1956
c. 1935
d. 1901
33.Reserve bank of india was nationalized in
a. 1959
b. 1947
c. 1945
d. 1949
34.Banks are regulated by
a. SEBI
b. RBI
c. Company law board
d. ROC
35.RBI makes advances to the central and state government repayable within
______ from the date of advancing
a. 60 days
b. 45 days
c. 90 days
d. 75 days
36._______ is the official lender of the last resort in india
a. State bank of india
b. Reserve bank of india
c. Punjab national bank
d. Central bank of india
37.Which of the following statements about central bank is incorrect?
a. Central bank regulates currency in accordance with the requirements of
business and the general public
b. Central bank performs general banking and agency service for the state
c. Central bank generally deals with the public and tries to encourage saving
habits among people

d. None of the above

38.______ refers to that portion of total deposits which a commercial bank has to
keep with the central bank
a. SLR
b. Bank rate
c. CRR
d. None of the above
39._________ refers to that portion of total deposits which a commercial bank has
to keep as additional reserve with themselves
a. Bank rate
b. SLR
c. CRR
d. None of the above
40.Before the implementation of narasimham committees recommendations the
SLR reached a level of ____ per cent
a. 28.5
b. 38.5
c. 25
d. 36
41.At present, SLR is ____ per cent for entire net demand and time liabilities of
the scheduled commercial banks
a. 38
b. 25
c. 24
d. 38.5
42.Monetary policy is formulated by
a. RBI
b. SEBI
c. CLB
d. Finance ministry
43.In case RBI, wants to increase rate of interest then it should
a. Sell securities
b. Buy securities
c. Hold securities
d. None of the above
44.In order to encourage investment in the country, the RBI may
a. Reduce CRR
b. Increase CRR
c. Sell securities in the open market
d. Increase bank rate
45.In order to discourage investment in the economy, the RBI may
a. Decrease bank rate
b. Buy securities in the open market
c. Increase bank rate
d. Decrease CRR
46.Rationing of credit takes place when
a. Demand for credit is zero
b. Demand for credit is higher than supply
c. Demand for credit is low
d. None of the above

47.The cash reserve ratio is determined by

a. Free play of market forces
b. Commercial banks
c. Monetary authority
d. None of the above
48.Open market operation by a central bank involve
a. Sale and purchase of government securities
b. Increase and decrease of discount rate
c. Changing the reserve ratio up and down
d. Raising or lowering of the margin requirements
49.A merchant has a stock of Rs. 10 lakhs. Banker prescribed 25% as margin the
merchant will be granted a loan of _____
a. Rs. 2.5 lakhs
b. Rs. 0.25 lakhs
c. Rs. 7.5 lakhs
d. Rs. 0.75 lakhs
50.During inflation the central bank adopts _______ policy
a. Near money
b. Cheap money
c. Dear money
d. All the above
51.During deflation the central bank follows _____
a. Cheap money policy
b. Dear money policy
c. Near money policy
d. All the above
52.When bank rate is increased _____ will take place
a. Expansion in credit
b. Contraction in credit
c. No change in credit
d. None of the above
53.When bank rate is decreased _____ will take place
a. Expansion in credit
b. Contraction in credit
c. No change in credit
d. None of the above
54.Major limitation of Indian monetary policy is
a. The dominance of money lenders
b. Money market is under developed
c. Both (a) and (b)
d. None of the above
55.The current bank rate is
a. 5
b. 6
c. 6.5
d. 5.5
56.NPA refers to
a. The assets of commercial banks
b. Bills receivables of commercial banks
c. Bad and doubtful debts of scheduled commercial banks

d. None of the above

57.The NPAs stood more than ______ crores in 2001-02
a. Rs. 45000
b. Rs. 51000
c. Rs. 70000
d. Rs. 15000
58.NPAs as a percentage of gross advances have fallen to ____ per cent in 200607
a. 10.5
b. 16
c. 2.5
d. 3
59.Which one of the following is a selective credit control method?
a. Bank rate
b. Open market operation
c. Statutory liquidity ratio
d. Margin requirements
60.Which of the following is a quantitative credit control?
a. Moral suasion
b. Rationing credit
c. Direct action
d. Cash reserve ratio
61.The basic distinction between narrow and broad money is the
a. Treatment of post office deposits
b. Treatment of time deposits of banks
c. Treatment of time deposits of banks
d. Treatment of currency
62.During depression, it is advisable to
a. Lower bank rate and purchase securities in the market
b. Increase bank rate and purchase securities in the open market
c. Decrease bank rate and sell securities in the open market
d. Increase bank rate and sell securities in the open market
63.Commercial banks are part of
a. Money market
b. Capital market
c. Bond market
d. None of the above
64.Money market in india is having dichotomy because there are
a. Organized segment
b. Unorganized segment
c. Both (a) and (b)
d. None of the above
65.Money traditional sense
a. Serves as a medium of exchange
b. Serves as a store of value
c. Serves as both medium of exchange and store of value
d. Serves neither as medium of exchange and store of value
66.Money in dynamic sense
a. Serves as encouragement to division of labour
b. Serves as smooth transformers of saving into investment

c. Serves as both (a) and (b) of the above

d. Serves neither as (a) or (b) of the above
67.Money is
a. The basis of purchasing power
b. Acceptable only where it has intrinsic value
c. The most liquid of all assets
d. All the above
68.Money includes
a. Currencies and demand deposits
b. Bonds, government securities
c. Equity shares
d. All the above
69.Which of the following statement about money is incorrect?
a. There are many assets which carry the attribute of money
b. Money is what money does
c. In modern sense, money has stability, high degree of substitutability and
feasibility of measuring statistical variation
d. None of the above
70.The chief function of money is that of
a. A medium of exchange
b. A reserve base for credit creation
c. Providing liquidity
d. None of the above
71.money is what money does who among the following gave this definition of
money?
a. Crowther
b. Engine
c. Bustein
d. Walker
72.Which of the following is a function of money?
a. Medium of exchange
b. Store of value
c. Transfer of value
d. All the above
73.Which of the following is not a function of money?
a. Medium of exchange
b. Unit of account
c. Standard of deferred payments
d. Basis of credit system
74.Cheque is an example of
a. Actual money
b. Commodity money
c. Credit money
d. Paper money
75.Which of the following components of demand for money can be better
described as a function of rate of interest?
a. Transactionary
b. Precautionary
c. Speculative
d. None of the above

76.Bad money drives out good money out of circulation is known as

a. Gossens law
b. Pigou effect
c. Greshams law
d. Crowthers law
77.Exchange is necessary in an economy if
a. Output is to be produced
b. Output is to be consumed
c. Individuals are self-sufficient
d. Families are self-sufficient
e. Labor is specialized
78.Under a system of barter
a. No rates of exchange are defined
b. There are as many different rates of exchange as there are pairs of goods
to trade
c. Rates of exchange are expressed in goods per dollar
d. Rates of exchange are expressed in dollars per good
e. Rates of exchange are dominated in gold or silver
79.Which of the following is not a function of money?
a. To act as a medium of exchange
b. To act as a unit of account
c. To act as a store of value
d. To facilitate trade
e. To provide a double coincidence of wants
80.How does money function as a unit of account?
a. Money has intrinsic worth as a commodity
b. Money is convertible into commodities that have intrinsic worth
c. The prices of all goods and services are measured in terms of money
d. Things that function as money can do so because people know there is a
standard of value that ultimately backs the money even if it is only faith
e. Bank accounts make it easy for people to store their wealth
81.If two kinds of money are circulating at the same time
a. One of them must be commodity money
b. One of them must be fiat money
c. One of them must be paper money
d. The poorer quality one will be offered by purchasers of goods and the
better one will be hoarded
e. The better quality one will be offered by purchasers of goods and the
poorer one will be hoarded
82.Greshams law state that people
a. Sell goods for money but prefer to buy goods with other goods
b. Buy and sell goods with money
c. Spend some money and hoard some money
d. Spend lower-quality money and hoard higher-quality money
e. Spend higher-quality money and hoard lower quality money
83.Money is legal tender if
a. People willingly accept it in payment of debts
b. It is backed by gold or silver
c. It is commodity money
d. The government says it is

e. It is in bank account
84.When price rise
a. The purchasing power of money increases
b. The purchasing power of money decreases
c. The purchasing power of money remains unchanged
d. The purchasing power of money either increases or decreases, depending
upon the size of the national debt
e. The purchasing power of money either increases or decreases, depending
upon the level of government expenditures
85.The distinction between depository institutions and other financial institutions
is that
a. Only depository institutions seek to maximize profit
b. Only depositors institutions dont seek to maximize profit
c. Depository institution do not make loans
d. Only depositors institutions make loans
e. Only depositors institutions receive funds through customer deposits
86.Some financial institutions are classified as depository institutions based on
a. The way they acquire funds
b. The number of customers they have
c. The number of loans they make
d. The size of the loans they make
e. The amount of reserves they hold
87.Reserve bank if india does all of the following except one. Which is the
exception?
a. It holds banks reserves an deposits
b. It makes loans to banks
c. It issue bank notes
d. It serves as bankers to the government
e. It holds deposits of households and firms
88.The statutory liquidity requirement is
a. The percentage of deposits that banks are required to hold as reserves
b. The amount of gold required to back up all notes
c. The requirement that banks reserves part of their lending capacity to
small businessman
d. The treasury deposits held by the bank
89.Open-market operation involve
a. Clearing cheques
b. Lending money to member banks
c. Accepting deposits from member banks
d. The RBIs purchases and sale of government securities
e. Any monetary policy actions
90.Failing interest rates usually increase bank profits because
a. Banks can make more loans at low rates
b. Bank deposit costs fall faster than the average return on bank lending
c. Short-term rates fall faster than long-term rates
d. Long-term rates fall faster than short-term rates
e. None of the above is correct; banks increases profitability with rising
interest rates, not falling rates
91.The reserve bank

a.
b.
c.
d.

Was nationalized in 1949

Governed by the banking regulation act, 1949
Is wholly owned by the government of india
All of the above

1-d
11-d
21-d
31-c
41-c
51-a
61-b
71-d
81-d
91-d

2-c
12-c
22-c
32-c
42-a
52-b
62-a
72-d
82-d

3-d
13-a
23-b
33-d
43-a
53-a
63-a
73-d
83-d

4-d
14-c
24-b
34-b
44-a
54-c
64-c
74-c
84-b

5-c
15-d
25-b
35-c
45-c
55-b
65-a
75-c
85-e

6-c
16-c
26-c
36-b
46-b
56-c
66-b
76-c
86-a

7-b
17-b
27-d
37-c
47-c
57-c
67-d
77-e
87-e

8-d
18-c
28-a
38-c
48-a
58-c
68-a
78-b
88-a

9-d
19-d
29-c
39-b
49-c
59-d
69-a
79-e
89-d

10-a
20-c
30-c
40-b
50-c
60-d
70-a
80-c
90-b