IBPS Banking & Financial Awareness Questions and Answers — Questions and Answers
Question 1: What is the primary objective of the Reserve Bank of India (RBI) when it increases the Repo Rate?
- To increase the money supply in the economy
- To control inflation (Correct answer)
- To encourage commercial banks to lend more
- To reduce the cost of borrowing for consumers
Correct answer: To control inflation
An increase in the Repo Rate makes it more expensive for commercial banks to borrow money from the RBI. This leads to banks increasing their own lending rates, which in turn reduces borrowing and spending by businesses and consumers. This reduction in money supply and demand helps to control inflation.
Question 2: A small business takes a term loan from a commercial bank. Due to operational difficulties, it fails to pay the Equated Monthly Instalment (EMI) for three consecutive months. The loan account remains overdue on the 91st day. According to RBI guidelines, how will the bank classify this loan account?
- Standard Asset
- Doubtful Asset
- Non-Performing Asset (NPA) (Correct answer)
- Loss Asset
Correct answer: Non-Performing Asset (NPA)
As per RBI guidelines, a term loan is classified as a Non-Performing Asset (NPA) when the interest and/or instalment of the principal remains overdue for a period of more than 90 days. The initial stage of NPA classification is 'Sub-standard Asset', which falls under the broader category of NPA.
Question 3: Which of the following is a primary feature of the Pradhan Mantri Jan Dhan Yojana (PMJDY) aimed at promoting financial inclusion?
- Providing high-interest rate corporate bonds.
- Exclusively targeting salaried individuals in urban areas.
- Offering access to a basic savings bank account with a RuPay debit card and overdraft facility. (Correct answer)
- Mandating a high minimum balance to encourage saving.
Correct answer: Offering access to a basic savings bank account with a RuPay debit card and overdraft facility.
The Pradhan Mantri Jan Dhan Yojana (PMJDY) is a national mission for financial inclusion. Its core features include providing a basic savings bank account, often with a zero balance facility, a RuPay debit card with inbuilt accident insurance, and an overdraft facility to eligible account holders, thereby bringing the unbanked population into the formal financial system.
Question 4: The regulation and development of the commodity derivatives market in India fall under the purview of which regulatory body?
- Securities and Exchange Board of India (SEBI) (Correct answer)
- Reserve Bank of India (RBI)
- Insurance Regulatory and Development Authority of India (IRDAI)
- Pension Fund Regulatory and Development Authority (PFRDA)
Correct answer: Securities and Exchange Board of India (SEBI)
The Securities and Exchange Board of India (SEBI) is the regulator for the commodity derivatives market in India. This responsibility was transferred to SEBI after the Forward Markets Commission (FMC), the previous regulator, was merged with it in September 2015.
Question 5: A corporate client needs to transfer ₹50 lakhs urgently from their account to a vendor's account in another bank. They require the transfer to be settled individually and instantaneously. Which of the following payment systems would be most suitable for this transaction?
- National Electronic Funds Transfer (NEFT)
- Cheque Truncation System (CTS)
- Immediate Payment Service (IMPS)
- Real-Time Gross Settlement (RTGS) (Correct answer)
Correct answer: Real-Time Gross Settlement (RTGS)
Real-Time Gross Settlement (RTGS) is the ideal system for high-value transactions (minimum ₹2 lakh) that require immediate, real-time settlement on a gross, transaction-by-transaction basis. NEFT settles in batches, and IMPS typically has a lower transaction limit (up to ₹5 lakh).
Question 6: Which of the following statements accurately describes the primary function of the RBI's Integrated Ombudsman Scheme?
- To set the interest rates for various loan products offered by banks.
- To provide a single point of reference for customers to file complaints against regulated entities for deficiency in service. (Correct answer)
- To conduct annual audits of the financial statements of all scheduled commercial banks.
- To manage the issuance of currency and oversee the nation's credit system.
Correct answer: To provide a single point of reference for customers to file complaints against regulated entities for deficiency in service.
The RBI-Integrated Ombudsman Scheme was launched to provide a single, simplified, and cost-free grievance redressal mechanism for customers of regulated entities like banks, NBFCs, and payment system operators. It follows a 'One Nation, One Ombudsman' approach for complaints related to deficiency in service.
IBPS Banking & Financial Awareness Questions and Answers
What is the primary objective of the Reserve Bank of India (RBI) when it increases the Repo Rate?