Banking Awareness Practice Set on Banking Structure in India

Banking Structure in India?

1. What is the current number of Local Area Banks in India?
a. Four
b. Seven
c. Eight
d. Six

Answer: Four
Explanation: As of May 2015, these four local area banks are: 1.Coastal Local Area Bank Ltd ? Vijayawada (Andhra Pradesh) 2.Capital Local Area Bank Ltd ? Phagwara (Punjab)
3.Krishna Bhima Samruddhi Local Area Bank Ltd, Mahbubnagar (Andhra Pradesh)
4.Subhadra Local Area Bank Ltd., Kolhapur (Maharashtra)

2. Which of the following is NOT an advantage of Unit Banking?
a. They have high risk diversification
b. The management enjoys more autonomy
c. They have?fast decision making
d. All of above are advantages of Unit Banking

Answer: They have risk diversification
Explanation: Due to small size and due to unit structure; the decision making in unit banks is very fast. The management in unit banks enjoy more autonomy and more discretionary powers. However, due to single units, the risk is not distributed or diversified

3. Nainital Bank is a subsidiary of which of the following banks?
a. Bank of India
b. FDCI Bank
c. Bank of Baroda
d. Allahabad Bank

Answer: Bank of Baroda

4. Anywhere Banking is a common term used in Banking Sector, what does it refers to __
a.?The customer can deposit/ withdraw cash in foreign countries
b.?The customer can deposit/ withdraw cash at any branch other than the branch in which he holds the account
c.?The customer can deposit/ withdraw cash at any bank other than the bank in which he holds the account
d. The customer can deposit/ withdraw cash at all points of sale

Answer: The customer can deposit/ withdraw cash at any branch other than the branch in which he holds the account
Explanation: Anywhere Banking means that the customer can deposit/ withdraw cash at any branch other than the branch in which he holds the account. Anywhere banking frees the customer from geographical boundaries and limitations and gives the flexibility to the customer to use his account across the board

5. Which of the following bodies regulates the Regional Rural Banks?
a. RBI
b. NABARD
c. Department of Rural Development
d. State Government

Answer: NABARD

Explanation: They are regulated by NABARD; which is a subsidiary of RBI. Other banks are regulated by RBI directly. Report Error

6. In which year, Cooperative Societies Act was enacted?
a. 1910
b. 1912
c. 1913
d. 1915

Answer: 1912 Report Error

7. Which of the following rural cooperatives in India work at village or grassroots level?
a. State Cooperative Banks
b. District Central Cooperative Banks
c. Primary Agricultural Credit Societies
d. Primary Cooperative Agriculture and Rural Development Banks (PCARDBS)

Answer: Primary Agricultural Credit Societies

8. For the regional rural banks, which among the following is the correct share of Central, State and Sponsor Bank?
a. 50%, 40%, 10%
b. 50%, 35%, 15%
c. 50%, 15%, 35%
d. 40%, 50%, 10%

Answer: 50%, 15%, 35%
Explanation:
In RRBs:
1 . 50% share shall be held by the central government,
2. 15% by the concerned state government, and
3. 35% by the sponsor bank.
The RRB amendment act 2014 has allowed the RRBs to raise their capital from sources other than the central and state governments, and sponsor banks. In such a case, the combined shareholding of the central government and the sponsor bank cannot be less than 51%. Further, if the shareholding of the state government in the RRB is reduced below 15%, the central government would need to consult the concerned state government. Report Error

9. Which Indian bank has opened its first branch in China in May, 2015?
a. Axis Bank
b. HDFC Bank
c. ICICI Bank
d. Corporation Bank

Answer: ICICI Bank Country?s top private sector bank

Explanation: ICICI bank has opened its first branch in China. It was inaugurated by Prime Minister Narendra Modi. The bank will be based in Shanghai. ICICI Bank with presence in 17 countries earlier had a representative office in China, which it had opened over 10 years ago in 2003.

10. The owners of the cooperative bank are also its __
a. Customers
b. Debtors
c. Creditors
d. All of above

Answer: All of above
Explanation: A cooperative is jointly owned enterprise in which same people are its customers who are also its owners. Thus, basic difference between scheduled commercial banks and scheduled cooperative banks is in their holding pattern. Report Error

11. In which of the following types of banking, there is a direct execution of transactions between a bank and its consumers?
a. Retail banking
b. Universal Banking
c. Virtual Banking
d. Unit Banking

Answer: Retail banking
Explanation: When there is a direct execution of transactions between a bank and its consumers, rather than with corporations or other banks, then this type of banking system is known as Retail banking

12. In which country, the Unit Banking System originated?
a. United States
b. United Kingdom
c. France
d. Spain

Answer: United States
Explanation: Unit banking is a system of banking which originated in US. It is a limited way of banking where banks operate only from a single branch (or a few branches in the same area) taking care of local community.

13. In the constitution of India, ?Cooperatives? come under which among the following in the seventh schedule?
a. Union List
b. State List
c. Concurrent List
d. None of them

Answer: State List
Explanation: The item ?Cooperative Societies? is a State Subject in the 7th Schedule via entry 32 of the State List in the Constitution of India. Report Error

14. Bank branches are established under which section of Banking Regulations Act, 1949?
a. Section 20
b. Section 23
c. Section 22
d. Section 10

Answer: Section 23

Explanation: Branch banking involves business of banking via branches. The branches are set up under Section 23 of Banking Regulations Act, 1949. Report Error

15. With reference to various types of Banking, what is ?Mixed Banking???

a. when banks undertake the activities of commercial and investment banking together
b. when banks undertake the activities of wholesale and retail banking together
c. when banks undertake the activities of offline and online banking together
d. when banks undertake the activities of commercial and cooperative banking together

Answer: when banks undertake the activities of commercial and investment banking together

16. Which country has largest shadow banking market in the world??

a. China
b. UK
c. Netherland
d. USA

Answer: USA
Explanation: Shadow banking refers to the activities of financial institutions that operate outside government-regulated banking systems. United States has the largest shadow banking market followed UK and China

17. What is the share of the Foreign Banks in the branch network in India?
a. Less than 1 %
b. Around 5%
c. Around 3%
d. Around 6%

Answer: Less than 1%
Explanation: Foreign Banks account for less than 1% of the total branch network in the country

18. Which among the following types of Banking is most helpful in cross selling?
a. Virtual Banking
b. Relationship Banking
c. Wholesale Banking
d. Personal Banking

Answer: Relationship Banking

Explanation: Relationship banking is a banking system in which banks make deliberate efforts to understand customer needs and offer him products accordingly

19. Which of the following is the first financial institution of India that adopted the Universal Banking System?
a. ICICI
b. SBI
c. IDBI
d. None of the above

Answer: ICICI
Explanation: Universal banking is a one-stop shop of financial products and services. The Industrial Credit and Investment Corporation of India Limited (ICICI) is the first financial institution of India that adopted the Universal banking system. It was set up in January 1955 as a joint stock company with support from the Government of India, the World Bank, the Commonwealth Development Finance Corporation, and other foreign institutions.

20. A commercial bank will launch a medium term note (MTN) programme to ___
a. Provide loans
b. Raise Funds
c. Sell Equity
d. Purchase shares

Answer: Raise Funds
Explanation: Medium term note (MTN) is a debt bond which usually matures in 5 to 10 years. Obviously it is used for raising funds in domestic or international markets. Recently Union Bank of India has hit the global debt market to raise around USD 500 million through bond issuance

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