INDIAN FINANCIAL SYSTEM - IBS Kayamkulamibskayamkulam.in/OnlineExam/file/2013-11... · INDIAN...

INSTITUTE OF BANKING STUDIES (IBS)

IBS,2nd Floor, Centre Point, Near Head Post Office, Kayamkulam, 0479 2440014, 9447873644 1

INDIAN FINANCIAL SYSTEM

1. A financial system means:

a) Structure in an economy to mobile the capital.

b) Structure in an economy to mobile the capital and distribute to various needy sectors.

2. The transformation of „Savings‟ into „investments and consumption‟ is facilitated by _____________

a) the financial system in an economy

b) the finance department of the central government

3. IRDA stands for _____________

a) Insurance Regulatory and Development Authority

b) Indian Rural Development Authority

4. The _____________ provide clearing housing facilities for netting of payments and securities.

a) Primary dealers

b) Stock exchanges

5. Cash Reserve Ratio is the _____________ deposit to be held by banks:

a) Mandatory

b) Voluntary



6. RBI is a state owned institution under _____________

a) the Reserve Bank ( Transfer of Public ownership) of India Act, 1948

b) the Reserve Bank of India Act, 1934

7. The control of the RBI vests in the _____________

a) Central Board of Directors

b) Parliament

c) Finance ministry

8. The main objectives of the RBI are contained in _____________

a) the pre amble of the RBI Act, 1934

b) the Reserve Bank of India Act 1948

State whether the following statements True/ False

9. IDBI was established in 1964. T

10. Small industries Development Bank of India was established in the year.

11. Small Industries Developmental role, RBI has created specialized financial institutions like EXIM bank &

Deposit Insurance and Credit Guarantee Corporation of India.

12. Bill market scheme of 1952 and 1970 was initiated by Union fiancé ministry.



13. Lead bank Scheme (1970) was introduced by RBI aims for:

a) Backward district development

b) Co-ordination between government authorities and banks

c) Giving door step banking to the excluded segment of urban poor.

d) All the above

e) 1 & 3

State the following statements True or False

14. RBI can prescribe SLR from 0 to 30% of bank‟s DTL.

15. One of the objective of SLR is to ensure solvency of banks.

16. An increase in SLR will have the effect of increasing the lending capacity banks.

17. An increase in SLR will result in an increase in lending rates of bank credit.

18. Banks _____________ loan again the security of the bank‟s own shares.

a) are allowed to grant

b) are not allowed to grant

19. Bank _____________ shares in a company in which the managing Director or Manager of the bank is

interested.

a) can hold



b) are restricted to hold

20. Banks _____________ loan against FD‟s issued by other banks .

a) Can grant


21. Banks _____________ loan against money market mutual funds.

a) Can grant


22. Banks are _____________ loans against certificate of Deposits.

a) Can grant


23. Financial inclusion in banking means:

a) Inclusion of all classes of society in banking activities.

b) Providing banking services at affordable cost to low-income and downtrodden sections of society

24. Whole sale banking refers to _____________

a) Doing banking business with wholesale business entities.

b) Doing banking business, with industrial and business entities.



25. EEFC means:

a) Exchange earners foreign currency account

b) Export earners foreign currency account

Key

1.b 2.a 3.a 4.a 5.a 6.a 7.a 8.a 9.T 10.F 11.T 12.F 13.e

14.F 15.T 16.F 17.T 18.b 19.b 20.b 21.b 22.b 23.b 24.b 25.a



1. ADR stands for _____________ American depository Receipts

2. GDR stands for_____________ Global depository Receipts

3. ADRs typically traded on

a) New York stock exchange

b) London stock exchange

4. GDRs are commonly traded in:

a) New York stock exchange

b) London stock exchange

5. Participatory notes are like_____________

a) Negotiable instruments

b) Contract notes

6. Foreigners or non-residents are _____________ to invest directly in the Indian stock market.

a) Allowed

b) Not allowed

d) SEBI



7. In primary market_____________

a) Securities are offered to the public directly

b) Securities are traded with the help of share brokers

8. NSE is a _____________

a) Non-profit making stock exchange

b) profit making organization

9. OTECI stands for _____________

a) over the counter exchange of India

b) Open transaction exchange centre of India

.10. Shares issued by the companies to their shareholders free of cost by capitalisation of accumulated

reserves are:

a) Rights shares

b) Bonus shares

c) Preference shares

11. Preference shareholders _____________

a) do not have voting rights.

b) have equal priority over the equity shareholders in the payment of surplus .



c) are entitled to a fixed dividend

d) 1 & 3

e) All the above

12. Cumulative preference shares are:

a) shares on which dividend accumulates if it remains unpaid.

b) shares on which bonus accumulates if it remain unpaid.

13. Participating preference shares are:

a) shares having the right to participate in profits after a specified dividend is paid.

b) shares having the right to participate in the decision making process of management.

14. Government securities are issued by:

a) Union finance ministry

b) RBI on behalf of the Government of India

c) State governments in consultation with RBI.

15. _____________ are bonds issued by a company bearing a fixed rate of interest.

a) Security receipts

b) G-secs

c) Debentures



16. Debentures are normally _____________ against the asset of the company.

a) secured

b) unsecured

17. _____________ is a negotiable certificate evidencing indebtedness.

a) Commercial paper

b) Bond

c) Debenture

18. A bond issued at a discount and repaid at a face value is called:

a) Coupon bonds

b) Zero coupon bond

19. Commercial papers are issued by:

a) Government

b) RBI

c) Companies with a high credit standing

20. Commercial papers are issued normally for :

a) 45 days

b) 60 days



c) 90 days

21. Clearing corporations are _____________

a) the nodal agency of stock exchange

b) registered as the Approved intermediaries of the stock exchange.

c) 1 & 2

d) None of these

22. Qualified institutions placement is _____________

a) a private placement of equity shares to existing shareholders

b) a prive placement of equity shares to qualified institutional buyers only

23. Prior to the formation of SEBI, the control functions of securities market were carried on by

_____________

a) RBI

b) the company law board

c) controller of capital issue

d) All the above

e) 2 & 3



State whether the following statements are True/False

24. SEBI has the power to call for any records from any bank in respect of any transaction in securities

which is under investigation by the Board.

25. SEBI has no control over the insider training in securities.

26. SEBI shall have the same powers as are vested in a civil court under the code of civil procedure while

trying a suit in issuing commissions for the examination of witnesses or documents .

27. SEBI, by general or special orders prohibit any company from issuing prospectus, any offer document or

advertisement soliciting money from the public for the issue of securities.

28. If SEBI finds, after an inquiry that any person has violated any provisions of this Act, it can pass on order

to cease and desist from committing such violation.

29. All intermediaries in the stock market should deal in securities under the conditions of a certificate of

registration obtained from RBI obtained from RBI.

30. SEBI can cancel a certificate of registration even without giving a reasonable opportunity of being heard.

Key

1. American depository Receipts 2. Global depository Receipts 3.a 4.b

5.b 6.b 7.a 8.b 9.a 10.b 11.d 12.a 13.a 14.b 15.c 16.a 17.b

18.b 19.a 20.c 21.c 22.b 23.e 24.T 25.F 26.T 27.T 28.T 29.F 30.F



1. The draft offer document means _____________

a) prospectus

b) offer document in a draft stage

2. The validity period of SEBI‟s observation letter is _____________

a) only 1 months

b) only 2 months

c) only 3 months

3. An FPO is made when _____________ makes a fresh issue.

a) an unlisted company

b) an already listed company

4. _____________ is the day when the brokers make payments or delivery of securities to the exchange.

a) Pay – in Day

b) Pay-out Day

c) None of these

5. _____________ is the day when the exchange makes payment or delivery of securities to the market.

a) Pay – in Day

b) Pay-out Day



c) None of these

6. _____________ formulates the polices and regulate the mutual funds to protect the interest of the

investors.

a) RBI

b) Union finance ministry

c) SEBI

7. _____________ is a mechanism for pooling resources from the public by issuing units and investing the

funds in securities is disclosed in the offer document.

a) Right issue

b) Factoring

c) Mutual funds

8. Mutual fund issues units to investors in accordance with _____________

a) Maturity of the investment

b) Quantum of money invested

c) Period of investment



9. The profit or losses of mutual fund are shared by the investors _____________

a) according to the agreement at the time of investment

b) in proportion of their investment

c) equally

d) None of these

10. A mutual fund is required to be registered with _____________ before it collect funds from the public.

a) Company low board

b) controller of capital issue

c) SEBI

11. Mutual fund is set up in the form of _____________

a) a trust

b) company

12. _____________ of the mutual fund hold its property for the benefit of the unit holders.

a) trustees

b) sponsors

c) None of these



13. _____________ manages the funds of mutual fund by making investments in various type of securities.

a) trustees

b) sponsors

c) Asset Management Companies

14. SEBI regulations require that _____________ of the directors of the trustee company or board of

trustees should not be associated with the sponsors.

a) at least one-thirds

b) at least two-thirds

c) at least half

15. The performance of a particular scheme of a mutual fund is denoted by _____________

a) net profit of the year

b) net asset value

c) dividend distributed

16. NAV per unit of mutual fund is calculated as _____________

a) Market value of securities −expense incurred on the scheme

Total no .of units on any particular date



b) Market value of securities

total no .of units on any particular date

c) Total amount of investment

Total no .of units on any particular date

17. A mutual fund scheme can be classified depending its maturity period as:

a) Open-ended scheme

b) Close – ended scheme

c) Income-fund

d) 1 & 2

e) All the above

18. Open-ended mutual fund scheme is one that is available for subscription and repurchase__________.

a) on a continuous basis

b) only during a specified period

c) None of these

19. Open ended mutual fund scheme _____________ fixed maturity period.

a) do not have

b) have



c) none of these

20. The key feature of the open ended mutual fund scheme is _____________

a) higher profitability

b) less risk

c) liquidity

21. _____________ fund is open for subscription only during a specified period at the time of launch of

the scheme.

a) Open – ended scheme

b) Close- ended scheme

22. Investors in close – ended mutual fund scheme can exist from the scheme_____________

a) by repurchasing the units at NAV related price

b) by sale of the units of the scheme through stock exchange.

c) None of these

d) 1 & 2

23. Considering the investment objective of a mutual fund scheme it can be classified into:

a) Open –ended scheme



b) 1 & 2

c) Close – ended scheme

d) None of these

24. NAV is required to be disclosed by the mutual funds on a _____________ basis:

a) daily

b) weekly

c) depending on the type of scheme

d) None

25. The aim of Growth fund is to provide _____________

a) capital appreciation

b) regular & steady income

c) None of these

key

1.b 2.c 3.a 4.a 5.b 6.c 7.c 8.b 9.b 10.c 11.a 12.a 13.a

14.b 15.b 16.a 17.d 18.a 19.a 20.c 21.b 22.d 23.d 24.c 25.a



1. Growth Schemes normally invest the funds in _____________

a) bonds

b) corporate debentures

c) equities

d) government securities

2. Growth funds have comparatively _____________ risks.

a) Low

b) High

c) No

3. The aim of income fund is _____________

a) to provide regular and safely income to investors

b) to provide capital appreciation

c) None of these

4. Income scheme of mutual fund generally invest in _____________

a) Equities

b) money market instruments



c) corporate debentures

d) 1,2 & 3

e) 2 & 3

5. Income scheme of mutual fund _____________ by fluctuation in equity markets.

a) are affected

b) are not affected

6. Opportunities for capital appreciation are _____________ in income scheme of mutual fund.

a) limited

b) higher

7. Balanced plan/scheme invest funds in _____________

a) equities

b) fixed income securities

c) 1 & 2

d) None of these



8. NAVs of Balance plan of mutual fund are _____________ compared to pure equity funds.

a) Volatile

b) less volatile

9. Aim of money market scheme of mutual fund is to provide:

a) easy liquidity b) preservation of capital

c) moderate income d) all the above

e) None of these

10. Money market scheme of mutual fund invest fund in _____________

a) treasury bills

b) certificates of deposit

c) commercial paper

d) 1,2 & 3

e) 1 & 2

11. Returns on money market schemes of mutual fund _____________ compared to other funds.

a) fluctuate considerably

b) fluctuate less



12. GIH funds invest exclusively in _____________ securities.

a) corporate

b) government

c) None of these

13. NAVs of GIH fund schemes fluctuate due to _____________ .

a) change in interest rates

b) rise or fall in the index

c) None of these

14. Sector specific funds invest in the securities of _____________ .

a) sectors in which the investor gives particular instruction

b) sectors or industries as specified in the offer document

15. A fund of Funds ( FoF) is a scheme that invest primarily .

a) in money market instruments

b) in other schemes of the same mutual fund or other mutual funds

c) in the bullion market

d) only in primary market



16. As per SEBI guidelines, any entity/ person engaged in marketing and selling of mutual fund to pass a

certification test and obtain a registration number from:

a) SEBI

b) AMFI

c) NSE

d) None

17. AMFI stands for _____________

a) Association of mutual funds in India

b) Authorized mutual fund of India

18. The first insurance company in India was started at:

a) Kolkata

b) Chennai

c) Mumbai

d) New Delhi

19. National Insurance Company Limited was the subsidiary of _____________ till 2000.

a) LIC



b) GIC

c) NIC

20. The entry level capital requirement for a new insurance company in India is:

a) Rs. 1 crore

b) Rs. 50 crore

c) Rs. 500 crore

d) None of these

21. _____________ is the authority to regulate and develop the business of insurance and reinsurance.

a) IRDA

b) RBI

c) Company Law Board

d) Controller of Capital Issue.

22. The primary legislations that deal with the insurance business in India are:

a) Insurance Act, 1938

b) Insurance Regulatory & Development Authority

c) Insurance Act , 1935



d) 1 & 2

e) 2 & 3

23. The popular products of Life Insurance which cover more then percent of the life insurance business are:

a) Endowment Assurance

b) Money back policies

c) Term Assurance Policies

d) Third party insurance

e) 1,2 & 3

f) All the above

24. _____________ lays down tariff rates for some of the general insurance products.

a) TAC

b) IRDA

c) RBI

25. A contract of insurance is a contract of at most good faith means:

a) Before entering into an insurance contract both the parties should disclose all the relevant fact.

b) Any misrepresentation, non disclosure or fraud leading to the insurance contract is null and void.



c) 1 & 2

Key

1.c 2.b 3.a 4.e 5.b 6.a 7.c 8.b 9.d 10.d 11.b 12.b 13.a

14.b 15.b 16.b 17.a 18.a 19.b 20.a 21.a 22.d 23.e 24.a 25.c



1. “uberrima fides” means:

a) Contract should be fulfilled, only when one of the party died.

b) Contract of at most good faith

c) Contract should be completed only fulfilling certain conditions

2. Advantages of Life Insurance include:

a) Generally accepted as security even for a commercial loan.

b) best way to enjoy tax deductions

c) assuring a return than any other type of products in the financial market

d) 1 & 2

e) 1,2 & 3

3. In a with profit insurance policy.

a) bonuses are payable along with contracted amount.

b) the contracted amount is paid without any addition

c) None of these



4. Keyman Insurance is _____________

a) taken by a business firm on the life of key employee(s)

b) taken by a business firm on the life of owner of the firm

c) a theft insurance

5. _____________ are key distribution channels to any insurer.

a) Agents

b) branch offices

c) internet

6. _____________ is empowered to redress customer grievances in respect of insurance contracts on

personal lives.

a) Insurance ombudsmen

b) IRDA

c) Consumer Court

7. Bans assurance is _____________

a) Insurance business by bank

b) distributing insurance products developed by insurance companies



c) joining hands with insurance companies to sell their products to the bank‟s customers

d) All the above

8. In India the generally followed models of Bancassurnace are:

a) corporate agency model & joint venture model

b) joint venture model & merger between a bank and an insurer

c) Merger between a bank and an insurer

d) Build own insurance operation.

9. IRDA is _____________

a) department of RBI

b) an autonomous body

c) a department of union finance ministry

10. Jana Shree Bima Yojana policy is insurance product introduced by _____________

a) Life Insurance Company

b) Union bank

c) Government of India



11. The key objective of the IRDA is to _____________

a) to promote market efficiency

b) to ensure consumer protection

c) to ensure maximum profit to insurance companies

d) 1 & 2

e) All the above

12. The functions of IRDA includes:

a) Specifying requisite to qualifications, and practical training for insurance intermediaries.

b) Regulating investment of funds by insurance companies

c) Supervising the functioning of the TAC.

d) 1,2 & 3

e) 1 & 2

13. As on 31 March 2006, the total number of insurance companies in the life insurance business is:

a) 15

b) 14

c) 1



d) None

State whether the following statements are True/False

14. IRDA specify the form and manner in which books of account shall be maintained and statement of

accounts shall be rendered by insurers and other insurance intermediaries.

15. Adjudication of disputes between insures and intermediaries or insurance intermediaries are the

functions of insurance ombudsman.

16. IRDA specifies the percentage of life insurance business and general insurance business to be

undertaken by the insurer in the rural or social sector.

17. Factoring Service means:

a) Collection of bills

b) Discounting of bills

c) Maintenance of account books

d) All the above

18. The different types of factoring services include:

a) Recourse factoring

b) Non recourse factoring



c) forfeit factoring

d) All the above

e) 1 & 2

f) 2 & 3

19. In _____________ factoring in the case of non-payment the factor will recover the amount advanced

from the client.


b) Non-resource factoring

c) Forfeit factoring

20. In _____________ factoring the factor provides both finance and credit protection.


b) Non-recourse factoring

c) Forfeit factoring

21. Under domestic factoring, the payment of the bills that the seller gets from the factor is :

a) 100 percent of the value of the bills immediately on submission

b) Nearly 80 percent of the bill amount upon tendering the bill and the balance on due date.



c) Nearly 80 percent of the bill amount upon tendering the bill and the balance on due date after

collecting it from the buyer.

d) 100 percent of the value of the bill only after collection from the buyer.

22. The maximum debt period normally permitted under factoring is _____________

a) One hundred and fifty days inclusive of a maximum grace period of sixty days.

b) One hundred and sixty days inclusive of a maximum grace period of fifty days.

State whether the following statements are True/False – regarding factoring services.

23. Factoring replaces high cost market credit and enables purchases on cash basis for availing cash

discounts.

24. The customer gets instant financing against cash invoice.

25. Factoring accelerates receivables turnover and improves operating cycle, resulting in more production,

larger sales, higher profits and increased RoI.

Key

1.b 2.d 3.a 4.a 5.a 6.a 7.d 8.a 9.b 10.c 11.d 12.d 13.b

14.T 15.F 16.T 17.d 18.e 19.a 20.b 21.c 22.a 23.T 24.T 25.T



1. In international factoring, the number of factors will be:

a) 2

b) 1

c) 1 or 2

d) more than 2

2. Forfaiting is used for _____________

a) International trade transactions

b) domestic and international trade transactions

c) domestic trade transactions

3. Forfaiting is a means of _____________ an exporter of goods avails from an intermediary called

forfeiter.

a) finance

b) subsidy

c) None of these



4. Forfeiting the financing of factor is on:

a) Recourse basis

b) No recourse basis

c) None of these

5. The documents required by the for faiter from the exporter includes:

a) Copy of supply contract or of its payment terms

b) Letter of credit or guarantee

c) Copy of signed commercial invoice

d) copy of shipping documents including certificates of receipt, railway bill, airway bill, bill of lading or

equivalent documents.

e) 1,2 & 3

f) 2,3 & 4

g) All the above

State whether the following statements are True/False regarding forfeiting

6. Forfaiting provides 100 percent financing without recourse and not occupying exporter‟s credit line.

7. Forfaiting improves cash flow of the exporter by converting receivables into cash inflow.



8. By using for faiting, the exporter will be freed from the management of the receivables.

9. Forfaiting has no role in reducing interest –rate risk, currency risk, credit risk and political risk.

10. For faiter is :

a) an intermediary between an exporter and importer

b) an exporter

c) an importer

d) a bank

11. Off- balance sheet items are _____________

a) those items which are not mentioned in the balance sheet of the bank

b) not assets or liabilities on the date of balance sheet but may get converted into asset or liability at a

later date.

c) 1 & 2

d) None of these

12. Off-balance sheet items are also called _____________

a) contingent liabilities

b) export & import Assets & liabilities



c) Profit and loss a/c items

13. Off-balance sheet items include:

a) Direct credit substitutes

b) performance bonds

c) Forward asset purchase

d) All the above

Match the following columns;

14. Stand by letters of credit Full off- balance sheet items

15. Bid bonds Medium risk off-balance sheet items

16. Currency swaps low risk off balance sheet items

17. Options

18. Futures

19. _____________ is a contract to perform the promise or discharge the liability of third person in case of

his default.

a) factoring

b) forfeiting



c) guarantee

20. Parties involved in Guarantee are:

a) surety, Debtor and creditor

b) surety and creditor.

21. Guarantees can be classified as:

a) Performance guarantees

b) Financial guarantees

c) Payment guarantees

d) 1 & 2

d) All the above

22. Guarantee in lien of tender money is ____________.

a) a performance guarantee

b) a financial guarantee

c) deferred payment guarantees

23. Bank guarantees in favour of tax authorities is ____________

a) a performance guarantee



b) a financial guarantee

c) deferred payment guarantee

24. Bank guarantees are issued by:

a) any bank

b) only specified banks

c) only banks permitted to do this type of business

d) None

25. Letter of credit is defined in the:

a) Indian contract Act

b) Negotiable Instruments Act

c) Transfer of property Act

d) None

Key

1.a 2.a 3.a 4.b 5.g 6.T 7.T 8.T 9.F 10.a 11.c 12.a 13.d

(14-a) (15-b) (16-c) (17-c) ( 18-c) 19.c 20.a 21.d 22.a 23.b 24.a 25.d



1. Parties to a letter of credit includes:

a) Buyer, opening branch seller

b) Buyer, seller & negotiating bank

c) Buyer, opening branch, seller & negotiating

State whether the following statements are True/ False

2. Without recourse letter of credit can be cancelled by the buyer on whose behalf it is opened.

3. A revolving letter of credit is one which, credits may be modified or cancelled at any moment without

notice to the beneficiary.

4. A reinstatement clause if usually incorporated in irrevocable –without Recourse Letter of Credit.

5. A forward exchange contract is a contract for the purchase / sale of foreign currency at a predetermined

exchange rate between the bank and its ____________

a) exporters

b) importers

c) both

d) none



6. In forward exchange contract:

a) the transaction will be put through at the contracted rate of exchange.

b) the transaction will be put through at the spot rate then prevailing.

7. Forward exchange contract is a method of protecting oneself against.

a) interest rate fluctuations

b) exchange rate fluctuations

c) market price of commodities

8. Foreign exchange contracts are the most common means of ____________ in foreign currencies.

a) heading transactions

b) helping exporters / importers

c) 1 & 2

d) None of these

9. Forward Rate Agreement is an instrument which provide effective hedge against ____________

a) Market rate risk

b) Interest rate risk

c) currency rate risk



10. Interest Rate Swaps is an instrument which provide effective hedge against ____________

a) Market rate risk

b) interest rate risk against lending or borrowings

c) currency rate risk

11. ____________ is a financial contract between two parties to exchange interest payments for a notional

principal amount on the settlement date for a specified period from start date to maturity date.

a) Forward Exchange contract

b) Forward Rate Agreement

c) Interest rate swap

d) None of these

12. ____________ is a financial contract between two parties exchanging a stream of payments for a

„notional principal‟ amount on multiple occasions during a specified period.

a) Forward exchange contract

b) Forward Rate Agreement

c) Interest Rate Swap



13. A strategic Alliance is ____________

a) a formal collaboration between companies.

b) Integrating specific business resources for mutual gain

c) Cooperation but remain separate

d) All the above

14. Alliances are ____________

a) Equity based

b) Non- equity based

c) 1 & 2

d) None of these

15. The aim of Alliances between companies is :

a) to obtain market growth

b) to link company‟s internal core competencies

c) to contract broader business systems

d) All the above

e) None of these



16. Reasons for failure of Alliances are:

a) Regulatory changes

b) New technologies

c) economic cycle

d) All the above

e) None of these

State the following statements are True/False

17. Alliances are more suitable when compared to mergers to avoid problems related to cultural integration.

18. A strategic alliance with a local player is better than merger, if the market is an unknown one.

19. The sharing of ATMs, participating in each other‟s training programmes is examples of strategic

alliances.

20. Benefits of strategic Alliances include:

a) Decrease in product lead times and life cycle.

b) Building credibility in the industry and brand awareness

c) Providing added value to the customers

d) 1 & 2



e) All the above

f) None of these

21. The combination of two or more companies into a single company where one survives with its name and

the others lose their corporate existence is called.

a) Merger

b) Alliance

c) Consolidation

d) Acquisition

22. Three mid-sized public sector banks have entered into a strategic alliance in October 2006. They are:

a) Indian Bank, Corporation bank and Oriental bank of commerce.

b) Indian bank, Punjab National bank and Corporation bank

c) Canara bank, Syndicate bank and corporation bank.

23. In 1921, the three presidency banks – the Bank of Bengal , the Bank of Bombay and the Bank of Madras

were amalgamated into one bank which is now called the :

a) State Bank of India

b) Reserve Bank of India



C) Indian Bank

d) None

24. Objectives of mergers include:

a) Achieve optimum size of business

b) serve the customers better

c) Reduction of staff

d) 1 & 2

. e) All the above

f) None of these

25. Different types of mergers include:

a) Concentric mergers

b) Conglomerate mergers

c) Circle mergers

d) Vertical mergers

e) 1,2 & 4

f) All the above



key

1.c 2.F 3.F 4.F 5.c 6.a 7.b 8.a 9.b 10.b 11.b 12.c 13.d

14. C 15.d 16.d 17.T 18.T 19.T 20.e 21.a 22.a 23.a 24.d 25.e



1. Merger of two or more companies which are producing similar products or services is ____________

a) Horizontal merger

b) Concentric merger

c) Conglomerate merger

d) None of these

2. ____________ type of merger normally result in reduction in the number of players.


b) Vertical merger

c) Concentric merger

3. ____________ merger is made to ensure the source of supply or an outlet for the product.


b) Vertical merger

c) Concentric merger

4. In ____________ mergers the two companies may be related through the basic technologies, production

process or markets.

a) horizontal



b) vertical

c) concentric

d) conglomerate

5. ____________ merger involves a predominant element of diversification of activities.

a) Horizontal

b) Vertical

c) Concentric

d) Conglomerate

6. Conglomerate mergers derives the benefits of:

a) Greater stability of earnings

b) Economics of scale

c) Technologic advantages

d) 1 & 2

e) All the above

State whether the following statements True/False.

7. Merger of two companies may result in dilution of competition.



8. Mergers may result in abuse of market power.

9. Higher concentration arising out of consolidation could have larger potential for systematic risk.

10. Consolidation is ____________

a) the combining of two existing companies to a new company

b) the combining of two existing companies in which one of them lose their corporate existence

c) None of these

11. In the Indian corporate history the formation of Aditya Birla Nuvo Ltd by the combination of Indian Rayon

and industries Ltd and Indo Guly Industries Ltd is an example of ____________

a) Vertical merger conglomerate Merger

b) consolidation

c) None of these

12. ____________ refers to the acquiring of a controlling stake in the ownership of a company by another.

a) Consolidation

b) Merger

c) Acquisition

d) None of these



13. Acquisition is same as ____________

a) Merger

b) Consolidation

c) take – over

State whether the following statements are True/ false.

14. Consolidation will provide banks with new capabilities, technologies and products and lower operating

cost.

15. In earlier mergers are initiated by the regulator to protect the interest of depositors of weak banks.

16. In the liberalized era mergers are market driven.

17. The merger of Global Trust bank ltd with oriental Bank of India is a market driven merger.

18. The merger of Time bank and HDFC bank is a market driven bank.

19. The ongoing economic reforms would help the weaker and smaller banks to stand alone in the future.

20. Consolidation benefit employees since it would lead to re-training and re-skilling of the work force.

21. CIBIL was established by:

a) SBI

b) HDFC



c) Punjab National Bank

d) Standard Chartered bank

e) 1 & 2

f) 1,2 & 3

g) All the above

22. CIBIL is ____________

a) a repository of credit information regarding commercial borrowers

b) a repository of credit information regarding the commercial and consumer borrowers

c) None of these

23. RBI expect a ____________ ownership for CIBIL:

a) diversified

b) Centralised

24. RBI demand in CIBIL no single entity should own more than ____________% of the paid up capital in

the first stage.

a) 2%

b) 5%



c) 10%

d) None of these

25. Which of the following bank does not own 10 percent equity stake in the capital of CIBIL.

a) HDFC

b) SBI

c) ICICI

d) Standard Chartered bank

Key

1.a 2.a 3.b 4.c 5.d 6.d 7.T 8.T 9.T 10.a 11.b 12.c 13.c

14.T 15.T 16.T 17.F 18.T 19.F 20.T 21.e 22.b 23.a 24.c 25.d



1. The aim of CIBIL‟s commercial credit Bureau is :

a) to minimize instances of concurrent & serial credit defaults

b) to recommend sanctioning of credit to commercial borrowers

c) None of these

2. Commercial Credit Bureau covers:

a) Credit availed by non-individuals .

b) Credit availed by persons engaged in commercial activities.

c) Credit availed by private & public limited companies.

d) 1 & 3

e) All the above

3. The securitization and reconstruction of Financial Assets and enforcement of security interest Act was

enacted in ____________

a) 2004

b) 1992

c) 2002

d) None of these



4. ____________ finalized the set of codes called “ the fair practices code for lenders‟ and advised banks

to adopt the guide lines.

a) Government of India

b) Individual banks

c) RBI

5. All the banks in India started to implement fair practices codes from ____________

a) November. 1. 2003

b) April. 1.20002

c) November.1.2004

6. In the case of small borrowers seeking loan up to Rs. 2 lakh the bank has ____________

a) the responsibility to convey in writing the reasons led to rejection of the loan applications with the

stipulated time.

b) no responsibility to convey in writing the reasons led to rejection of the loan applications within the

stipulated time.

State whether the following statements are True/False regarding the fair practices code for lenders

7. Lenders should use margin and security stipulation as a substitute for due diligence on credit

worthiness.



8. Banks and financial institutions shall give acknowledgement for receipt of all loan applications.

9. The lender should convey to the borrower the sanction of credit limit along with the terms and conditions

thereof and keep the borrower‟s acceptance of these terms and conditions on record.

10. Lenders have no obligation to give notice of any change in the terms and condition regarding interest

rates.

11. Lenders have the right of lien for any other claim they have against borrower on the securities even after

receiving payment of loan, without any notice regarding it.

12. banks often put on their website” The fair practices code, adopted by them and given wide publicity.

13. ____________ had brought out its “Bankers Fair Practice Code in June 2004.

a) Indian Bank‟s Association

b) BCSBI

c) None of these

14. BCSBI stands for ____________

15. The banking codes and standards Board of India was set up on____________

a) 18 January 2005

b) 18 February 2006



c) 18 February 2007

d) None of these

16. „Code of Bank‟s Commitment to customers‟ to be followed by member banks are brought out by

____________.

a) Indian Bank‟s Association

b) BCSBI

c) RBI

d) None of these

17. Credit information reports can be accessed by:

a) only those members who have provided all their data to CIBIL

b) by any bank

c) by any Indian citizen

d) None

18. In case of receipt of request for transfer of borrowal account, the consent or objection of the lender, if

any, should be conveyed within:

a) twenty-one days from the date of receipt of request.



b) fifteen days from the date of receipt of request

c) Immediately on receipt of request.

d) None

19. The Banking codes and standards Board of India was registered on 18 February, 2006 under :

a) RBI Act

b) Banking Regulation Act

c) the societies Registration Act 1860

d) None

20. Banking Ombudsman is appointed by ____________

a) IBA

b) BCSBI

c) RBI

d) None of these

21. Banking Ombudsman is appointed by RBI under ____________

a) Banking Ombudsman Scheme 2006

b) Banking Regulation Act 1949



c) RBI act 1949

22. Within ____________ days of lodging a complaint with a bank . If the customer does not get a

satisfactory response he may approach the Banking Ombudsman.

a) 60 days

b) 30 days

c) 45 days

d) None of these

23. In November 2003, RBI constituted the Committee on procedures and performance Audit of Pubic

services under the chairmanship of ____________

a) Rangarao

b) S.S Tarapore

c) Narasimham

d) None of these

e) R. N Mathotra

24. The committee on procedures and performance Audit of public services under the chairmanship of Shri.

S.S Tarapore address ____________



a) the issues relating to the recovery of bank debts

b) the issues relating to availability of adequate banking services to the common man.

c) the issues relating to lead Banking Scheme.

25. The committee under the chairmanship of Shri. S.S Tarapore recommended setting up of the Banking

codes and standards Board of India, broadly on the lines of ____________

a) Banking codes and standards board function in U.S

b) Banking codes and standards Board functioning in the U.K

c) Banking codes and standards Board functioning in Japan.

Key

1.a 2.d 3.c 4.c 5.a 6.a 7.F 8.T 9.T 10.F 11.F 12.T 13.a

14. The Banking Codes and Standards Board of India 15.b 16.b 17.a 18.a 19.d

20.c 22.b 23.b 24.b 25.b



1. The BCSBI has been, registered as ____________

a) a department organization under RBI Act .

b) a company limited under the banking regulation Act.

c) a society under societies Registration Act 1860.

2. The BCSBI has been registered on ____________

a) 18 February 2006

b) 18 February 2005

c) 18 September 2006

3. The BSCBI functions as on ____________

a) a reporting body to the RBI

b) an autonomous body

c) None of these

4. „Fair practice code, for credit card operations‟ and model code for collection of dues and repossession of

security are brought by ____________

a) IBA

b) BSCBI



c) RBI

5. With the adoption of „code of Bank‟s commitment to customers by member banks who are members of

BCSBI, the following voluntary codes of IBA would not be applicable to them.

a) Banker‟s Fair Practice code

b) Fair Practice Code for Credit Card Operations.

c) Model code for collection of Dues and Repossession of security.

d) All the above

6. Function of BCSBI are :

a) to ensure adherence to the „ Code of Bank‟s commitment to customers.

b) to generate awareness in the common man about his rights as a consumer of banking services.

c) 1 & 2

State whether the following statements true/ False

7. Banking Ombudsman is a Redressal mechanism.

8. BCSBI is an industry watch dog to oversee compliance with the „code of bank‟s commitment to

customers.



9. Till the mid-1980s the Indian money market was regulated heavily with regard to participants and interest

rates.

10. The important segments of Indian financial system includes:

a) Money market

b) Government securities market

b) Forex market

d) Capital market

e) All the above

f) 1,3 & 4

11. Policy initiatives to strengthen the financial system includes:

a) Introduction of new instruments

b) Improve information base for all participants

c) Introduce efficient settlement mechanisms

d) All the above

e) 1 & 2

f) 2 & 3



12. DFHI stands for ____________

a) Discount and Finance House of India Ltd.

b) Debenture and Fund House of India Ltd.

c) None of these

13. LAF stands for ____________

a) Liquidity Adjustment Facility

b) Liquid Assets Fund

c) None of these

14. CBLO stands for ____________

a) Collateralized Borrowing and Lending obligation

b) Centralized Borrowing and Lending obligation

15. CCIL stands for ____________

a) Clearing Corporation of India limited

b) Corporate Credit India Limited

c) None of these



16. In the call notice money market the following participants are allowed to trade:

a) all corporates

b) all banks, primary dealers and mutual funds

c) only banks

17. The minimum maturity period of certificates of deposits with effect from 29 April 2005 is:

a) 8 days

b) 15 days

c) 21 days

d) None

18. Reserve Bank exercises its supervisory role over the financial system through ____________

a) Board for Financial Supervision

b) IBA

c) CIBIL

d) BSCBI



19. The different circumstances that lead to the development of a genuine market for government securities

include:

a) Abolition of the systems of automatic monetization of deficits

b) Switch over to market related interest rates for market borrowings

c) 1 & 2

d) None of these

20. The different areas of reforms in the government securities market include:

a) Introduction of zero coupon bonds

b) establishment of securities trading corporation

c) Delivery versus payments system

d) All the above

f) 1 & 2

g) None of these

21. NSDL stands for ____________

22. SHCIL stands for ____________

23. NSCCL stands for ____________



24. ____________ have been allowed to open SGL accounts with the Reserve Bank.

a) NSDL

b) SHCIL

c) NSCCL

d) All the above

25. The factors helped to improve the efficiency of capital market include:

a) Setting of depositories

b) Introduction of online trading

c) All the above

26. Chandratre committee gives recommendations on :

a) Development of Capital market

b) Development Securities Market

c) Development of Forex Market

27. LERMS stands for ____________

a) Liberalised Exchange rate Management System

b) Liberalised except Renewal Management System.



c) None of these

28. Sodhani Committee recommendations are on ____________

a) Development of capital market

b) Development of Forex Market

c) None of these

29. Resident individuals are free to remit in a financial year for any current or capital account transaction or a

combination of both up to.

a) Us $ 25,000

b) US $ 50,000

c) US $ 10,000

d) None

30. The recommendations of RBI on the basis of report of the committee on “Fuller Capital Account

Convertibility” are:

a) Liberalised procedures with regard to project and service exports

b) Enhancement of ceiling in overseas investment by mutual funds.

c) Liberalisation of forward contract regulations .



d) 1 & 2

e) 1,2 & 3

Key

1.c 2.a 3.b 4.a 5.d 6.c 7.T 8.T 9.T 10.e 11.d 12.a 13.a

14.a 15.a 16.c 17.a 18.a 19.c 20.d

21. National Securities Depository Ltd

22. Stock Holding Corporation of India Ltd.

23.National Securities Clearing Corporation Ltd. 24.d 25.c 26.a 27.a 28.a 29.b

30.e

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