PRINCIPLES OF

BANKING
Sample Questions and
Multiple Choice
Answers

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

a)
b)
c)
d)

What is the current SLR

requirements of banks?
40% of the deposits
25% of the deposits
31% of the deposits
None of the Above
Answer 9: d

Question 10

a)
b)
c)
d)

What is the CRR currently

prescribed by RBI ?
5.5%
6.0%
6.5%
7.0%
Answer 10: c

Question 11

a)
b)
c)
d)

What is the stipulated share of the

priority sector in the net bank
credit?
35%
20%
40%
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