Banking – Multiple Choice Questions (MCQs)

1. 1. What is the primary function of commercial banks?

   • A. Accepting deposits
   • B. Providing loans
   • C. Facilitating payments
   • D. All of the above

2. 2. What is the central bank of India?

   • A. State Bank of India
   • B. Punjab National Bank
   • C. Reserve Bank of India
   • D. ICICI Bank

3. 3. What is the role of the Reserve Bank of India (RBI)?

   • A. Controlling government expenditure
   • B. Formulating the budget
   • C. Regulating the money supply and supervising banks
   • D. Promoting foreign trade

4. 4. What is the repo rate?

   • A. The rate at which commercial banks borrow money from the RBI
   • B. The rate at which the RBI borrows money from commercial banks
   • C. The rate at which commercial banks lend to each other
   • D. The interest rate on government bonds

5. 5. What is the reverse repo rate?

   • A. The rate at which commercial banks borrow money from the RBI
   • B. The rate at which the RBI borrows money from commercial banks
   • C. The rate at which commercial banks lend to each other
   • D. The interest rate on treasury bills

6. 6. What is the Cash Reserve Ratio (CRR)?

   • A. The percentage of a bank's total deposits that it must maintain with the RBI in cash form
   • B. The percentage of a bank's total deposits that it can lend
   • C. The ratio of a bank's assets to its liabilities
   • D. The minimum capital requirement for banks

7. 7. What is the Statutory Liquidity Ratio (SLR)?

   • A. The minimum percentage of deposits that a commercial bank has to maintain in the form of liquid assets
   • B. The maximum percentage of deposits that a bank can lend
   • C. The ratio of a bank's liquid assets to its total assets
   • D. The interest rate charged by banks on loans

8. 8. What are Non-Performing Assets (NPAs)?

   • A. Assets that generate regular income
   • B. Loans and advances where the borrower has stopped making interest or principal payments
   • C. Assets held by the RBI
   • D. Government securities held by banks

9. 9. What is 'financial inclusion'?

   • A. Providing banking services to all citizens
   • B. Promoting the stock market
   • C. Encouraging foreign investment
   • D. Reducing the number of banks

10. 10. What is 'KYC' in banking?

    • A. Know Your Customer
    • B. Keep Your Cash
    • C. Key Yield Criteria
    • D. Know Your Creditworthiness

11. 11. What is 'RTGS'?

    • A. Real Time Gross Settlement
    • B. Rapid Transaction Gateway System
    • C. Revenue Transfer and Generation Scheme
    • D. Retail Transaction Governing System

12. 12. What is 'NEFT'?

    • A. National Electronic Funds Transfer
    • B. National Economy and Finance Transaction
    • C. Net Effective Funds Transfer
    • D. New Electronic Financial Transaction