1..The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following?

  1. Other banks retain their deposits with the RBI.
  2. The RBI lends funds to the commercial banks in times of need.
  3. The RBI advises the commercial banks on monetary matters.

Select the correct answer using the codes given below.
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3

  • ANS-D

2..Which of the following is incorrect?

(a)  Cash Reserve Ratio and Statutory Liquidity Ratios are inversely related to base rate.
(b)  Repo rate is directly related to base rate.
(c)  Open market operations are related to selling of government bonds by RBI.

(d)  Cut in repo rate may or may not lead to monetary transmission.

  • ANS-A
  • Cut in CRR and SLR affects the supply side of the banks, thus leading to decrease in base rate.
  • Hence they are directly related to base rate.
  • Cut in repo rate affects the demand side and thus lead to decrease in base rate.
  • Thus, it is also directly proportional to base rate.
  • Open market operations are carried out by RBI for selling and re-selling of government bonds to monitor liquidity.
  • Cut in repo rate will lead to monetary transmission only if bank decreases the base rate.

3..Which of the following is/are quantitative credit control measures?

  1. Open Market Operations
  2. Statutory Liquidity Ratio
  3. Variation of margin requirements
  4. Repo rate

Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 1, 2 and 4 only
(d) 1, 2 and 3

  • ANS-C
  • For quantitative credit control, the Central Bank takes the help of bank rate, open market operations, statutory liquidity ratio and cash reserve ratio.
  • Whereas rationing of credit, regulation of consumer credit, moral suasion, variation in margin requirements are the qualitative credit control methods.

4..What is base rate?

(a)  It is the rate at which RBI lends longterm to commercial banks and is a tool to regulate money supply in the economy.
(b)  It is the portion of the bank deposits that a bank should keep with the RBI in cash form.
(c)  It is the rate below which banks are not allowed to lend and was introduced to make credit market more transparent.

(d)  None of these


5..Which of the following banks are covered under the Banking Ombudsman?

  1. Regional Rural Banks
  2. Scheduled Commercial Bank
  3. Non-Scheduled Primary Co-operative Banks
Select the correct answer using the code given below.
(a) 1 and 3 only
(b) 2 and 3 only
(c) 1 and 2 only

(d) 1, 2 and 3

  • ANS-C
  • The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks.
  • The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
  • The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services.
  • All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

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