FREE IBPS Financial Awareness: Banking Terms Questions and Answers

Question 1

Which of the following terms refers to the maximum amount of money a bank is legally allowed to lend to a single borrower or group of related borrowers?

Accepted Answer

Exposure Limit

Answer

Credit Ceiling

Answer

Lending Cap

Answer

Sanction Limit

Question 2

A customer receives an SMS alert stating that a certain amount has been 'debited' from their account. What does 'debited' signify in this context?

Accepted Answer

Money has been removed from the account.

Answer

Money has been added to the account.

Answer

The account balance has been frozen.

Answer

The transaction is pending approval.

Question 3

What is the primary function of a 'Cheque Truncation System' (CTS) in banking?

Accepted Answer

To digitize the cheque clearing process by submitting images instead of physical cheques.

Answer

To allow customers to issue cheques online without a physical cheque book.

Answer

To stop payment of a cheque electronically.

Answer

To provide real-time tracking of physical cheques during transit.

Question 4

Which of the following describes 'Repo Rate' in the context of monetary policy?

Accepted Answer

The rate at which the central bank lends money to commercial banks against government securities.

Answer

The rate at which commercial banks lend money to other commercial banks overnight.

Answer

The rate at which commercial banks offer loans to their most creditworthy customers.

Answer

The rate at which the central bank borrows money from commercial banks.

Question 5

If a customer's bank account has a 'lien' marked on it, what does this typically imply?

Accepted Answer

The funds in the account are blocked and cannot be withdrawn by the customer.

Answer

The customer is eligible for a pre-approved loan.

Answer

The account is dormant and cannot be operated.

Answer

The account is earning a higher interest rate.

Question 6

What is the term for a banking service that allows customers to receive funds directly into their account from a payer, typically for salaries, pensions, or bill payments, without the need for cheques or cash?

Accepted Answer

Electronic Funds Transfer (EFT)

Answer

Demand Draft (DD)

Answer

Banker's Cheque

Answer

Wire Transfer