Which regulatory body oversees the functioning of Non-Banking Financial Companies (NBFCs) in India?
ASEBI
BRBI
CIRDA
DPFRDA
Correct Answer:
B. RBI
Explanation:
The Reserve Bank of India (RBI) is responsible for regulating and supervising NBFCs. SEBI oversees capital markets, IRDA handles insurance, and PFRDA manages pension funds.
What does the Basel III framework primarily focus on?
AImproving bank transparency and disclosure standards
BStrengthening bank capital requirements and liquidity standards
CRegulating cryptocurrency transactions
DManaging inflation rates across countries
Correct Answer:
B. Strengthening bank capital requirements and liquidity standards
Explanation:
Basel III is an international regulatory framework that aims to strengthen bank capital adequacy, stress testing, and market liquidity risk. It was developed post-2008 financial crisis to prevent systemic risks.
Under the RBI's regulatory framework, what is the minimum Statutory Liquidity Ratio (SLR) that banks must maintain?
A15%
B18%
C20%
D25%
Correct Answer:
B. 18%
Explanation:
As per RBI guidelines (2024-2025), the statutory minimum SLR is 18% of net demand and time liabilities. This ensures banks maintain sufficient liquid assets.
Which of the following best describes a 'repo transaction' in banking?
AA transaction where securities are sold and repurchased at a future date
BA direct loan given by one bank to another
CA transaction involving physical commodity exchange
DA long-term investment in mutual funds
Correct Answer:
A. A transaction where securities are sold and repurchased at a future date
Explanation:
A repo (repurchase agreement) is a short-term borrowing instrument where a seller sells securities with an agreement to repurchase them at a higher price. It's a key liquidity management tool for banks.
What is the primary purpose of Know Your Customer (KYC) norms in banking?
ATo increase bank profits
BTo prevent money laundering and terrorism financing
CTo reduce competition among banks
DTo simplify loan approval processes
Correct Answer:
B. To prevent money laundering and terrorism financing
Explanation:
KYC norms are essential anti-money laundering (AML) measures that require banks to verify customer identity and monitor transactions to prevent financial crimes and terrorism financing.
Which RBI initiative aims to facilitate real-time, 24/7 interbank fund transfers?
ANational Electronic Funds Transfer (NEFT)
BReal Time Gross Settlement (RTGS)
CUnified Payments Interface (UPI)
DImmediate Payment Service (IMPS)
Correct Answer:
C. Unified Payments Interface (UPI)
Explanation:
UPI allows real-time, 24/7 peer-to-peer and peer-to-merchant fund transfers. While RTGS is real-time for bulk transfers and NEFT/IMPS have specific timings, UPI provides true round-the-clock service.
What does the term 'haircut' mean in the context of banking and securities?
AA reduction in the market value of collateral accepted by banks
BA type of loan product offered by banks
CA charge levied by the RBI on deposits
DA tax imposed on banking transactions
Correct Answer:
A. A reduction in the market value of collateral accepted by banks
Explanation:
A haircut is a percentage discount applied to the market value of collateral to account for potential market volatility and protect the lender. For example, if a security worth Rs. 100 has a 10% haircut, it's valued at Rs. 90.
Which of the following is a core function of the Deposit Insurance and Credit Guarantee Corporation (DICGC)?
AProviding credit rating to companies
BInsuring deposits of bank customers up to a specified limit
CRegulating insurance companies
DManaging RBI's foreign exchange reserves
Correct Answer:
B. Insuring deposits of bank customers up to a specified limit
Explanation:
DICGC protects depositors by insuring their bank deposits up to Rs. 5 lakh per depositor per bank. This encourages public confidence in the banking system.
