Q.1 Which of the following is considered a primary function of a commercial bank?
Insurance
Lending money
Issuing currency
Regulating interest rates
Explanation - The primary function of a commercial bank is to accept deposits and provide loans to individuals and businesses.
Correct answer is: Lending money
Q.2 What is the meaning of 'Demand Deposit'?
Deposit that can be withdrawn on notice
Deposit that can be withdrawn anytime
Deposit for a fixed period
Deposit in foreign currency only
Explanation - Demand deposits are funds deposited in a bank account from which money can be withdrawn at any time without prior notice.
Correct answer is: Deposit that can be withdrawn anytime
Q.3 Which regulatory body supervises commercial banks in India?
SEBI
RBI
IRDAI
SIDBI
Explanation - The Reserve Bank of India (RBI) regulates and supervises commercial banks to ensure financial stability.
Correct answer is: RBI
Q.4 What does 'KYC' stand for in banking?
Know Your Customer
Keep Your Cash
Key Your Credit
Know Your Credit
Explanation - KYC refers to the process by which banks verify the identity of their customers to prevent fraud and money laundering.
Correct answer is: Know Your Customer
Q.5 Which type of account typically earns interest for the depositor?
Current Account
Savings Account
Overdraft Account
Loan Account
Explanation - Savings accounts are designed to encourage savings and typically earn interest on the balance.
Correct answer is: Savings Account
Q.6 The term 'Cheque' in banking refers to:
A credit card
A written order to pay money
A bank loan
A bank statement
Explanation - A cheque is a written order from a depositor to the bank, instructing it to pay a certain sum to a specified person.
Correct answer is: A written order to pay money
Q.7 Which of the following is an example of negotiable instruments?
Cheque
Savings Account
Fixed Deposit Receipt
Passbook
Explanation - Negotiable instruments are written documents guaranteeing payment of a specific amount. Cheques are a primary example.
Correct answer is: Cheque
Q.8 What is an 'Overdraft' facility?
A fixed deposit with interest
Withdrawal beyond available balance
Deposit without interest
Monthly bank charges
Explanation - An overdraft allows a customer to withdraw more money than is currently available in their account, up to a sanctioned limit.
Correct answer is: Withdrawal beyond available balance
Q.9 Which of the following is NOT a function of commercial banks?
Accepting deposits
Granting loans
Issuing currency
Providing investment advice
Explanation - Issuing currency is the function of the central bank (RBI in India), not commercial banks.
Correct answer is: Issuing currency
Q.10 What is a 'Fixed Deposit'?
Deposit that can be withdrawn anytime
Deposit for a fixed period with interest
Deposit for businesses only
Government savings only
Explanation - A fixed deposit is a sum of money deposited for a fixed term in a bank, earning a predetermined interest rate.
Correct answer is: Deposit for a fixed period with interest
Q.11 Which account is most suitable for daily transactions for a business?
Current Account
Savings Account
Recurring Deposit
Fixed Deposit
Explanation - Current accounts are designed for frequent transactions and are typically used by businesses for daily operations.
Correct answer is: Current Account
Q.12 What is the minimum age to open a savings account in India?
10 years
16 years
18 years
No minimum age
Explanation - A minor can open a savings account in India with the consent of a guardian.
Correct answer is: No minimum age
Q.13 The process of converting a cheque into cash is called:
Endorsement
Clearing
Discounting
Depositing
Explanation - Cheque clearing is the process through which banks process cheques and transfer funds from one bank to another.
Correct answer is: Clearing
Q.14 Which of the following is a type of electronic payment?
Cheque
NEFT
Demand Draft
Cash Deposit
Explanation - NEFT (National Electronic Funds Transfer) is an electronic method of transferring money from one bank to another.
Correct answer is: NEFT
Q.15 Which bank instrument can be used to make a payment guaranteed by the bank?
Bank Draft
Cheque
Passbook
ATM Card
Explanation - A bank draft is a payment instrument issued by a bank, guaranteeing the payment to the payee.
Correct answer is: Bank Draft
Q.16 The term 'IMPS' in banking stands for:
Immediate Payment Service
Instant Money Processing System
Internal Money Payment System
International Money Payment Service
Explanation - IMPS is a real-time electronic fund transfer service available 24x7 across banks in India.
Correct answer is: Immediate Payment Service
Q.17 Which of the following is a liability for a bank?
Loans given
Cash in hand
Customer deposits
Fixed assets
Explanation - Customer deposits are liabilities because the bank owes this money to the depositors.
Correct answer is: Customer deposits
Q.18 What is 'SWIFT' used for in banking?
International messaging system for payments
Domestic clearing of cheques
Bank audits
Calculating interest rates
Explanation - SWIFT provides a secure network for financial institutions to send and receive information about international money transfers.
Correct answer is: International messaging system for payments
Q.19 Which of the following is a non-banking financial company (NBFC)?
HDFC Bank
SBI
LIC Housing Finance
Punjab National Bank
Explanation - NBFCs provide financial services similar to banks but do not hold a banking license and cannot accept demand deposits.
Correct answer is: LIC Housing Finance
Q.20 What does 'RTGS' stand for in banking?
Real Time Gross Settlement
Rapid Transfer of Government Securities
Real Transaction Guarantee System
Registered Transfer of Gold Securities
Explanation - RTGS is a system for transferring funds in real-time and on a gross basis from one bank to another.
Correct answer is: Real Time Gross Settlement
Q.21 Which type of cheque is payable only to the person whose name is written on it?
Bearer Cheque
Order Cheque
Crossed Cheque
Post-dated Cheque
Explanation - An order cheque is payable only to the specified person or their authorized agent, not to anyone holding it.
Correct answer is: Order Cheque
Q.22 What is the main purpose of a 'Credit Rating'?
To determine a customer's spending habits
To assess the repayment ability of a borrower
To fix interest rates for all banks
To track bank profits
Explanation - Credit ratings help banks and lenders evaluate the creditworthiness of an individual or organization.
Correct answer is: To assess the repayment ability of a borrower
Q.23 Which of the following is an example of a primary market transaction in banking?
Issuing a new bank loan
Trading an existing bond
Buying shares in the stock market
Depositing cash in savings account
Explanation - Primary market transactions involve the creation of new financial instruments or loans, unlike secondary market trading.
Correct answer is: Issuing a new bank loan
Q.24 What is the full form of 'MICR' in banking?
Magnetic Ink Character Recognition
Maximum Interest Calculation Rate
Money International Credit Registry
Micro Industry Credit Record
Explanation - MICR is a technology used to verify the authenticity of cheques using magnetic ink characters.
Correct answer is: Magnetic Ink Character Recognition
Q.25 Which of the following best describes a 'Recurring Deposit'?
Deposit for a fixed term with one-time payment
Deposit that earns no interest
Deposit made periodically for a fixed term
Demand deposit without notice
Explanation - A recurring deposit allows a customer to deposit a fixed amount regularly over a specified term and earn interest.
Correct answer is: Deposit made periodically for a fixed term