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B Com Exam  >  B Com Tests  >  Test: Indian Banking System - 1 - B Com MCQ

Test: Indian Banking System - 1 - B Com MCQ


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10 Questions MCQ Test - Test: Indian Banking System - 1

Test: Indian Banking System - 1 for B Com 2024 is part of B Com preparation. The Test: Indian Banking System - 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Indian Banking System - 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Indian Banking System - 1 below.
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Test: Indian Banking System - 1 - Question 1
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What does the term "NPA" stand for in the context of banking and finance?

Detailed Solution for Test: Indian Banking System - 1 - Question 1
Non-Performing Assets (NPAs) refer to those assets, primarily loans, that do not generate periodical income due to non-repayment by borrowers within a certain period. These assets are considered as non-performing when borrowers fail to repay both the principal amount and interest for a specific time frame.
Test: Indian Banking System - 1 - Question 2
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What is the time frame for classifying an asset as NPA in India?

Detailed Solution for Test: Indian Banking System - 1 - Question 2
In India, an asset is classified as a Non-Performing Asset (NPA) if the borrower fails to repay the principal amount and interest within 180 days of the due date. This time frame is longer compared to the international norm of 45 to 90 days.
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Test: Indian Banking System - 1 - Question 3
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How are Performing Assets (PAs) different from Non-Performing Assets (NPAs)?

Detailed Solution for Test: Indian Banking System - 1 - Question 3
Performing Assets (PAs) are assets that generate regular income, such as interest payments, whereas Non-Performing Assets (NPAs) do not generate periodical income due to the borrower's failure to repay the loan and interest on time.
Test: Indian Banking System - 1 - Question 4
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Which of the following is not one of the types of NPA classification?
Detailed Solution for Test: Indian Banking System - 1 - Question 4
The correct classification of Non-Performing Assets (NPAs) includes: Standard Assets, Sub-Standard Assets, Doubtful Assets, and Loss Assets. "Distressed Assets" is not one of the standard classifications.
Test: Indian Banking System - 1 - Question 5
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What are some common causes of Non-Performing Assets (NPAs)?
Detailed Solution for Test: Indian Banking System - 1 - Question 5
Diversion of funds, which involves using borrowed money for purposes other than the intended ones, is a common cause of NPAs. It leads to financial stress and the inability to repay loans.
Test: Indian Banking System - 1 - Question 6
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Among the given types of NPA, which assets generate continuous income and repayments?
Detailed Solution for Test: Indian Banking System - 1 - Question 6
Standard Assets are performing assets that generate regular income and repayments as and when they fall due. They carry normal risk and are not considered NPAs.
Test: Indian Banking System - 1 - Question 7
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Which type of asset is considered as non-performing for a period of more than 12 months?
Detailed Solution for Test: Indian Banking System - 1 - Question 7
Doubtful Assets are those assets which are considered as non-performing for a period of more than 12 months. This indicates that there is a significant doubt about their repayment.
Test: Indian Banking System - 1 - Question 8
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How do commercial banks help in overcoming obstacles and promoting economic development in developing countries?
Detailed Solution for Test: Indian Banking System - 1 - Question 8
Commercial banks in developing countries help in economic development by mobilizing savings from individuals and redirecting them towards productive investments, thereby aiding in capital formation and overcoming various economic challenges.
Test: Indian Banking System - 1 - Question 9
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How do commercial banks contribute to employment generation in developing countries?
Detailed Solution for Test: Indian Banking System - 1 - Question 9
Commercial banks contribute to employment generation in developing countries by providing loans to young entrepreneurs, medical and engineering graduates, and other technically trained individuals. This supports the establishment of new businesses and ventures.
Test: Indian Banking System - 1 - Question 10
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In the context of NPAs, what is the role of commercial banks in relation to the central bank's monetary policy?
Detailed Solution for Test: Indian Banking System - 1 - Question 10
Commercial banks play a crucial role in implementing and following the central bank's monetary policy. Their adherence to the central bank's policies affects the overall economic environment of a country.
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