Explore topic-wise MCQs in Testing Subject.

This section includes 657 Mcqs, each offering curated multiple-choice questions to sharpen your Testing Subject knowledge and support exam preparation. Choose a topic below to get started.

1.

In case where the loan is sanctioned by the bank against the borrower submitting the fake/forged documents and thus, playing fraud on the bank, such a loan is to be treated in the bank's books as a........ asset, even when there is recovery in the account as per the repayment schedule approved by the bank at the time of sanctioning the loan.

A.  standard                    
B.  sub-standard
C.  doubtful                     
D.  loss
E.  None of these
Answer» E.  None of these
Discussion
2.

Initial repayment holiday given to a borrower for repayment of loan is called is

A.  subvention                 
B.  moratorium
C.  re-schedulement         
D.  amortisation
E.  EMI
Answer» C.  re-schedulement         
Discussion
3.

                  A Bill of Exchange in which a bank orders its branch or another bank, as the case may be, to pay a specified amount to a specified   person or to the order of the specified   person is called                            

A.  cheque           
B.  bank draft
C.  promissory note         
D.  insurance
E.  None of these     
Answer» D.  insurance
Discussion
4.

Commercial banks create credit in the form of

A.  secondary deposits    
B.  primary deposits
C.  tertiary deposits         
D.  both [a] and [b]
E.  None of these
Answer» B.  primary deposits
Discussion
5.

Which of the following statements is/are correct about an overdraft?                 i. It is issued against security in current account. ii. The borrower is given the facility of borrowing only as much as he requires.

A.  (i) only
B.  (ii) only
C.  Both (i) and (ii)
D.  None of these     
Answer» B.  (ii) only
Discussion
6.

General utility services of banks include

A.  issue of traveller's cheques
B.  underwriting securities issued by government, public or private bodies
C.  purchase and sale of foreign exchange
D.  All of the above
E.  None of these
Answer» E.  None of these
Discussion
7.

Which of the following statements is/are correct? i. Merchant banks help corporations issue securities through private placements. ii. Investment banks underwrite and sell securities to the general public through IPOs.

A.  i only
B.  ii only
C.  Both i and ii
D.  None of these
Answer» D.  None of these
Discussion
8.

A merchant bank is a company that deals mostly in

A.  international finance
B.  business loans for companies
C.  underwriting
D.  All of the above
E.  None of these
Answer» E.  None of these
Discussion
9.

Sub-prime refers to

A.  lending done by banks at rates below PLR
B.  funds raised by the banks at sub libor rates
C.  group of banks which are not rate as prime banks as per banker's almanac
D.  lending done by financing institutions including banks to customers not meeting with normally required credit appraisal standards
E.  None of these
Answer» E.  None of these
Discussion
10.

Which of the following correctly describes what sub-prime lending is? I. Lending to the people with less than ideal credit status. II. Lending to the people who are high value customers of the banks. III. Lending to those who are not a regular customer of a bank. Select the correct answer using the codes given below:

A.  Only I                         
B.  Only II
C.  Only III                       
D.  All of these
E.  None of these
Answer» B.  Only II
Discussion
11.

Which bank in India has introduced vertical credit cards?

A.  Kotak Bank                  
B.  Yes Bank
C.  HDFC Bank                 
D.  ICICI Bank
E.  SBI
Answer» B.  Yes Bank
Discussion
12.

Banking and financial services all over the world are regulated usually by the Monetary Authority of the land. Who controls this function in India?

A.  Ministry of Finance        
B.  SEBI
C.  RBI                             
D.  IRDA
E.  FEDAI
Answer» E.  FEDAI
Discussion
13.

Which of the following acts was framed specially to deal more effectively with the problem of non-performing assets in banking system?

A.  Companies Act
B.  Banking Regulation Act
C.  Foreign Exchange Management act
D.  Industrial Dispute Act
E.  SARFASESI Act
Answer» F.
Discussion
14.

Which of the following statements is/are correct about Strategic Debt Restructuring (SDR)? I. Under SDR, banks which have given loans to a corporate borrower have the right to convert the full or part of their loans into equity shares. II. The existing promoters are discontinued to hold majority stake in distressed companies.

A.  I only
B.  II only
C.  Both [a] and [b]
D.  None of these
Answer» D.  None of these
Discussion
15.

Which of the following committees recommended the formation of Debt Recovery Tribunals?

A.  Narasimham Committee
B.  A C Shah Committee
C.  Abid Hussain Committee
D.  Adhyarjina Committee
E.  None of these
Answer» B.  A C Shah Committee
Discussion
16.

Which of the following include(s) risk weighted assets?

A.  Credit risk                    
B.  Market risk
C.  Operational risk
D.  All of the above
E.  None of these
Answer» E.  None of these
Discussion
17.

Which of the following statements is/are correct? I. Union government has the power to direct the RBI to take necessary steps to initiate the NPA resolution. II. Only the President can direct the RBI to take necessary steps to initiate the NPA resolution.

A.  I only
B.  II only
C.  Both I and II
D.  None of these
Answer» B.  II only
Discussion
18.

Which of the following constitutes Tier-I Capital?

A.  Paid-Up Capital
B.  Statutory Reserves
C.  Capital Reserves
D.  All of the above
E.  None of these
Answer» E.  None of these
Discussion
19.

Capital Adequacy Ratio (CAR) is defined as

A.  the ratio of a bank's capital in relation to its risk weighted assets and current liabilities
B.  the ratio of a bank's assets and current liabilities
C.  the ratio of a bank's bad debt and current liabilities
D.  None of these
Answer» B.  the ratio of a bank's assets and current liabilities
Discussion
20.

Which of the following creates the need for higher level of capital adequacy of banks?

A.  Basel III Capital norms
B.  Credit demand
C.  Deterioration in asset quality
D.  All of the above
E.  None of these
Answer» E.  None of these
Discussion
21.

Which of the following would not be found on a standardized balance sheet?

A.  Tangible Assets
B.  Amounts written off Investments
C.  Debtors
D.  Share Premium Account
E.  None of these
Answer» C.  Debtors
Discussion
22.

The assets which get an extended repayment period at reduced interest rate are called

A.  stressed assets
B.  restructured assets
C.  substandard assets
D.  tangible assets
E.  None of these
Answer» C.  substandard assets
Discussion
23.

Which of the following empowered RBI to set up oversight committees for banks with NPAs?

A.  Presidential ordinance
B.  Reserve Bank of India Act, 1934
C.  Banking Regulation Act, 1949
D.  All of the above
E.  None of these
Answer» B.  Reserve Bank of India Act, 1934
Discussion
24.

Which of the following conditions result(s) in stressed assets?

A.  Bounced cheques
B.  Stock shortages
C.  Request for frequent overdrawal
D.  All of the above
E.  None of these
Answer» E.  None of these
Discussion
25.

Which of the following statements is/are correct about Presidential ordinance on NPA? I. It empowered the Reserve Bank of India to enforce expeditious resolution of non-performing assets of banks. II. The provisions of the Bankruptcy Code have been linked to the Banking Regulation Act.

A.  I only
B.  II only
C.  Both I and II
D.  None of these
Answer» D.  None of these
Discussion
26.

Assets which have remained NPA for a period of less than or equal to 12 months are called

A.  substandard assets
B.  doubtful assets
C.  loss assets
D.  None of these
Answer» B.  doubtful assets
Discussion
27.

Which among the following committees had recommended Income Recognition and assets classification norms?

A.  Rangarajan committee
B.  Goiporia committee
C.  Narasimhan committee
D.  Jankiraman committee
E.  None of these
Answer» D.  Jankiraman committee
Discussion
28.

Which among the following defines a non-performing asset?

A.  In a loan account, the principal due has not been paid for more than ninety days
B.  In a loan account, the interest due has not been paid for more than ninety days
C.  Both [a] and [b] as mentioned above
D.  Assets that have not been commented upon by the bank auditors
E.  None of these
Answer» D.  Assets that have not been commented upon by the bank auditors
Discussion
29.

Which of the following does not pertain to non-performance assets?

A.  Sub-standard assets                   
B.  doubtful assets
C.  loss assets
D.  standard assets
E.  All of the above
Answer» E.  All of the above
Discussion
30.

Which of the following is true about RBI's decision regarding sick micro and small enterprises?

A.  These guide lines made on recommendations of the working group chaired by Deputy Governor K. C. Chakrabarty
B.  RBI has suggested that an MSE is considered 'sick' when: any of the borrowed amount of the enterprise remains a non-performing asset (NPA) for three months or more
C.  RBI also suggested if there is erosion in the net worth due to accumulated losses to the extent of 50 percent of its net worth during the previous accounting year
D.  The stipulation that the unit should have been in commercial production for at least two years has been removed.
E.  All of the above
Answer» C.  RBI also suggested if there is erosion in the net worth due to accumulated losses to the extent of 50 percent of its net worth during the previous accounting year
Discussion
31.

Which among the following is called as non-performing assets?

A.  Assets that can exchange income
B.  Assets that cease to earn interest income
C.  assets that have not been commented upon by the auditors
D.  All of the above
E.  None of these
Answer» C.  assets that have not been commented upon by the auditors
Discussion
32.

BEF is the statement which banks submit to RBI relating to:

A.  Transactions in US Dollars
B.  Importers who have not submitted documentary evidence for import within stipulated time period
C.  Overdue export bills
D.  Non-performing assets
E.  Excess overnight limit position of the bank
Answer» C.  Overdue export bills
Discussion
33.

All of the following are examples of Quasi negotiable instruments, under the Negotiable Instrument Act, 1881, except  

A.  dividend warrants
B.  share warrants
C.  bearer debentures
D.  promissory note
E.  None of these
Answer» E.  None of these
Discussion
34.

Who is a banking ombudsman?

A.  The chief vigilance officer of a bank
B.  The chairman of a bank
C.  An official in the Finance Ministry, Government of India
D.  An independent authority appointed by RBI to address customer complaints
E.  None of these
Answer» E.  None of these
Discussion
35.

Which of the following is the drawee bank in respect of a cheque?

A.  The payee's bank
B.  The bank which collects the cheque
C.  The bank on which the cheque is drawn
D.  The endorsee's bank
E.  None of these
Answer» D.  The endorsee's bank
Discussion
36.

In case, a depositor wishes to withdraw his fixed deposits prematurely, banks

A.  do not allow the same till maturity of the deposits
B.  charge a penalty for the same
C.  do not charge any penalty and allow the same
D.  All of the above
E.  None of these
Answer» C.  do not charge any penalty and allow the same
Discussion
37.

Your bank's customer XYZ enjoys a CC limit of Rs. 100000. The CC account shows a credit balance of 10205. The relationship between your bank and XYZ limited is

A.  debtor/creditor
B.  creditor/debtor
C.  bailor/bailee
D.  bailee/bailor
E.  None of these
Answer» B.  creditor/debtor
Discussion
38.

Which of the following is not a part of the scheduled banking structure in India?

A.  State co-operative banks
B.  Public sector banks
C.  Private sector banks
D.  Regional rural banks
E.  Moneylenders
Answer» F.
Discussion
39.

A banker is expected to honour the cheques within the specified banking hours as per section of Negotiable Instrument Act, 1881.

A.  22                               
B.  25
C.  30                               
D.  45
E.  65
Answer» F.
Discussion
40.

Banker-Customer relationship is often considered a fiduciary one. What is this relation based on?

A.  Contract                      
B.  Faith
C.  Commercial                 
D.  Agent and principal
E.  None of these
Answer» C.  Commercial                 
Discussion
41.

Banking  Ombudsman  Scheme  is applicable to the business of

A.  all scheduled commercial banks excluding RRBs
B.  all scheduled commercial banks including RRBs
C.  only public sector banks
D.  all banking companies
E.  all scheduled banks except private banks
Answer» C.  only public sector banks
Discussion
42.

Whenever some people wish to enter into the business world, it is a must for them to approach a bank. What services do banks provide them in this regard? I. Banks act as payment agents by operating current accounts, paying cheques and receiving payments for them. II. Maintaining account books for them for their day-to-day activities, so that they are not required to appoint account/finance personnel on a regular basis. III. Lending money by way of overdraft, instalment loan, credit or advance for business activities. Select the correct answer using the codes given below:

A.  Only I
B.  Only II
C.  Only III
D.  I and III
E.  All of these
Answer» E.  All of these
Discussion
43.

A bank is under a statutory obligations to honour its customer's cheques vide

A.  Section 10 of the Banking Regulation Act, 1949
B.  Section 3 of the RBI Act, 1934
C.  Section 31 of the Negotiable Instruments Act, 1881
D.  All of the above
E.  None of these
Answer» D.  All of the above
Discussion
44.

Which of the following statements is incorrect about negotiable instruments?

A.  Pay A or Order
B.  Pay to Order to A
C.  Pay A and B
D.  Pay A only
E.  Pay Bearer
Answer» E.  Pay Bearer
Discussion
45.

Which of the following is/are correct about Banking Codes and Standards Board of India?

A.  It was formed on the recommendation by the RBI.
B.  It was set up on February 18, 2006.
C.  It was registered as a society under the Societies Registration Act, 1860 in February 2006.
D.  All of the above
E.  None of these
Answer» E.  None of these
Discussion
46.

Co-operative banks

A.  cannot create credit.
B.  are of 'unit banking' type.
C.  cannot mobilize deposits.
D.  both [b] and [c]
E.  None of these
Answer» C.  cannot mobilize deposits.
Discussion
47.

Suppose that machinery used by Bank- Twenty for sorting and clearing checks breaks down. This is a manifestation of

A.  Credit risk                    
B.  Insolvency risk
C.  Liquidity risk                
D.  Operational risk
E.  None of these
Answer» E.  None of these
Discussion
48.

'Basel Committee on Banking Supervision' is also known as

A.  Bank for International Settlements Committee
B.  Banking Regulation Committee
C.  Financial Stability Board
D.  Global Financial System
E.  None of these
Answer» B.  Banking Regulation Committee
Discussion
49.

Which of the following is/are to be followed by Commercial Banks for risk management?

A.  Basel II norms  
B.  Basel III norms
C.  Basel I norms               
D.  Solvency II norms
E.  None of these
Answer» B.  Basel III norms
Discussion
50.

Section 131 of Negotiable Instrument Act, 1881 extends protection to the

A.  paying banker
B.  collecting banker
C.  advising banker
D.  issuing banker
E.  All of these
Answer» C.  advising banker
Discussion