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Test: Principles and Practices of Banking - 5 - Bank Exams MCQ


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30 Questions MCQ Test - Test: Principles and Practices of Banking - 5

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Test: Principles and Practices of Banking - 5 - Question 1

What is the difference between balance sheet lending (BSL) and marketplace lending (MPL)?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 1

Balance sheet lenders (BSL) carry the credit risk in their balance sheet and provide capital for such assets and associated credit risk, generated organically or non-organically. Market Place Lenders (MPLs) or Market Place Aggregators (MPAs) essentially perform the role of matching the needs of a lender and borrower without any intention to carry the loans in their balance sheet.

Test: Principles and Practices of Banking - 5 - Question 2

What can senior managers do to become ethical leaders of the employees at banks?
(i) Convey the importance of ethics
(ii) Walk their talk about ethics
(iii) Effectively lead the ethics

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 2

The senior managers at banks can follow the above-mentioned steps to become role models for the employees and become their ethical leaders.

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Test: Principles and Practices of Banking - 5 - Question 3

What is Financial Literacy?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 3

Financial literacy is the process of improving one's knowledge and understanding of the use of financial products and services.

Test: Principles and Practices of Banking - 5 - Question 4

Who is eligible for coverage under PMFBY?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 4

All farmers including sharecroppers and tenant farmers growing the notified crops in the notified areas are eligible for coverage.

Test: Principles and Practices of Banking - 5 - Question 5

What is a custodian bank?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 5

A custodian bank is a bank that is mainly concerned with the safekeeping of customer's financial assets.
Custodian banks hold and safeguard financial assets on behalf of their clients, which can include securities such as stocks, bonds, and mutual funds, among others. The custodian bank is responsible for ensuring the safekeeping of these assets and for processing any transactions related to them, such as buying and selling securities, collecting dividends, and paying out interest.
While banks may provide loans, extend credit, and offer other financial services, a custodian bank specifically focuses on the safekeeping and management of financial assets for its clients.

Test: Principles and Practices of Banking - 5 - Question 6

What are some security tips to avoid phishing, vishing, and smishing attacks?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 6

To avoid phishing, vishing, and smishing attacks, it is important to be vigilant and not respond to suspicious emails or phone calls asking for personal information. Instead, call the legitimate organization's customer service number to verify any requests for personal information. Additionally, reviewing account activity regularly can help identify any unauthorized activity.

Test: Principles and Practices of Banking - 5 - Question 7

What is the maximum amount that can be repatriated abroad from a resident account held by a foreign national leaving India?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 7

When foreign nationals leave India, the amounts repatriated abroad should not exceed USD one million per financial year.

Test: Principles and Practices of Banking - 5 - Question 8

Why is ethical conduct important in information security?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 8

Any failure of professionals handling the IT desk and data can result in major leakages of sensitive information, with huge losses to the banks, reputation risk, and expensive legal battles. Hence, ethical conduct is important in information security.

Test: Principles and Practices of Banking - 5 - Question 9

Direction: Bank computerization during the initial stages involved the transition of traditional manual banking processes to computer-based systems. This transition aimed to improve the efficiency and accuracy of banking operations and to provide better customer service. During the initial stages of bank computerization, banks typically adopted standalone computer systems that were not connected to any network. One of the key challenges during the initial stages of bank computerization was the lack of standardization and interoperability between different systems. Overall, the initial stages of bank computerization laid the foundation for the modern digital banking systems that we have today. The use of technology has transformed banking operations and has made it possible to offer a wide range of services to customers through online and mobile platforms.

Q. What advantage(s) do/does Centralized data processing give to the banks?
(i) Each branch shares the same set of software, hardware, and other infrastructure.
(ii) The corporate-level information is made available to all the branches.
(iii) If the central server goes down, it will not affect the productivity of the systems connected.

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 9

Statement iii is incorrect as it is a disadvantage of centralized processing, rather than an advantage. If the central server/computer goes down, all the connected users/systems will lose access to the data and services provided.

Test: Principles and Practices of Banking - 5 - Question 10

Direction: Bank computerization during the initial stages involved the transition of traditional manual banking processes to computer-based systems. This transition aimed to improve the efficiency and accuracy of banking operations and to provide better customer service. During the initial stages of bank computerization, banks typically adopted standalone computer systems that were not connected to any network. One of the key challenges during the initial stages of bank computerization was the lack of standardization and interoperability between different systems. Overall, the initial stages of bank computerization laid the foundation for the modern digital banking systems that we have today. The use of technology has transformed banking operations and has made it possible to offer a wide range of services to customers through online and mobile platforms.

Q. When did the concept of Bank Computerization practically start?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 10

The concept of Bank Computerization practically started during 1980-81.

Test: Principles and Practices of Banking - 5 - Question 11

Which philosophy of ethics is described by the following statement:
Each of us with a wealth surplus to his or her essential needs should be giving most of it to the people suffering from poverty so dire as to be life-threatening

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 11

The above statement is given by Peter Singer about trusteeship and says that the trustees have to create, preserve and increase wealth without expecting its enjoyment.

Test: Principles and Practices of Banking - 5 - Question 12

Which ethical code of conduct says that the banks must offer suitable products or services to customers as per their requirements and profile?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 12

Being transparent means keeping the customers updated about their rights and obligations and offering them products and/or services suitable to their requirements and profile.

Test: Principles and Practices of Banking - 5 - Question 13

What is the holistic approach to ethical production?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 13

The holistic approach to ethical production involves focusing on the well-being of society as a whole, including the well-being of consumers and the impact of production on the environment.

Test: Principles and Practices of Banking - 5 - Question 14

Read the following statements about Values at the workplace.
(i) The extent to which personal values match with the values in an organization is considered an indicator of the "fit" between the organization and the individual.
(ii) Improving corporate performance on a single value does not affect the way a company functions.

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 14

Statement ii is incorrect. The correct statement is - Improving corporate performance on a single value can virtually transform the way a company functions.

Test: Principles and Practices of Banking - 5 - Question 15

What is the main purpose of NICNET?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 15

Though NICNET has been allowed connectivity to banks in India for e-mail services, its main purpose is to support the communication needs of the Central/State Governments in India and facilitate e-Governance applications in Government Ministries/ Departments at the Centre, States, Districts, and Block level, resulting in better efficiency and accountability to the people of India.

Test: Principles and Practices of Banking - 5 - Question 16

Which of the following machines helps to withdraw cash?
(i) Cash Recycler Machine
(ii) Cash Dispenser Machine
(iii) Automated teller Machine

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 16

Cash dispensers are ones intended to serve customers for making cash withdrawals only. A Cash Recycler machine is a self-service terminal that lets one deposit and withdraw cash. ATMs are an extended version of Cash recyclers and dispensers that are used to withdraw cash, along with a wide variety of functions.

Test: Principles and Practices of Banking - 5 - Question 17

What is/are the requirement for due diligence in the case of opening a Savings account for a Self-Help Group?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 17

In the case of opening a Savings account for a Self-Help group, the due diligence of only the office bearers shall suffice. However, for credit linking of SHGs, the due diligence of all the members of the group is mandatory.

Test: Principles and Practices of Banking - 5 - Question 18

Can a Regulated Entity appeal against an Award issued for the non-furnishing of documents/ information by it?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 18

A Regulated Entity can appeal against an Award or order of rejection, but only with the prior sanction of the Chairman or the MD/ CEO or, in their absence, the ED/Official of equal rank. However, a Regulated Entity will not have a right to appeal for an Award issued for the non-furnishing of documents/ information by it.

Test: Principles and Practices of Banking - 5 - Question 19

What is the purpose of the loan provided by MUDRA?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 19

The loan provided by MUDRA is for income-generating activities and not for the consumption/personal needs.

Test: Principles and Practices of Banking - 5 - Question 20

Which of the following statements is correct about Non-Resident (External) Rupee Account Scheme - NRE Account?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 20

An NRE Account can be maintained by NRIs and POIs. Two or more NRIs and/or POIs can open an NRE account jointly. Further, the minimum tenure of NRE Term Deposits is one year. Also, there is no monetary limit to avail loans against the NRE Deposits, subject to the condition that the amount cannot be used for re-lending, agricultural/plantation activities, or investments in the real estate business.

Test: Principles and Practices of Banking - 5 - Question 21

Direction: Non-Banking Financial Companies (NBFCs) are financial institutions that provide banking services without holding a banking license. They operate in various segments such as consumer finance, vehicle finance, housing finance, and microfinance, among others. Banks provide finance to NBFCs in the form of term loans, working capital loans, and credit lines. The finance is typically used by NBFCs to fund their lending activities, purchase assets, and other operational expenses. Banks also provide credit enhancement facilities such as guarantees and letters of credit to support NBFCs in raising funds from the market. The Reserve Bank of India (RBI) regulates the lending activities of banks to NBFCs. The RBI has mandated that banks should classify their lending to NBFCs as per their risk assessment and ensure that the exposure to individual NBFCs does not exceed the prescribed limits.

Q. Which of the following institutions is not included in the definition of NBFC?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 21

The definition of NBFC excludes any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities), or providing any services and sale/purchase/construction of an immovable property.

Test: Principles and Practices of Banking - 5 - Question 22

Direction: Non-Banking Financial Companies (NBFCs) are financial institutions that provide banking services without holding a banking license. They operate in various segments such as consumer finance, vehicle finance, housing finance, and microfinance, among others. Banks provide finance to NBFCs in the form of term loans, working capital loans, and credit lines. The finance is typically used by NBFCs to fund their lending activities, purchase assets, and other operational expenses. Banks also provide credit enhancement facilities such as guarantees and letters of credit to support NBFCs in raising funds from the market. The Reserve Bank of India (RBI) regulates the lending activities of banks to NBFCs. The RBI has mandated that banks should classify their lending to NBFCs as per their risk assessment and ensure that the exposure to individual NBFCs does not exceed the prescribed limits.

Q. Which of the following activities are NBFCs engaged in, that banks may extend working capital and term loans to?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 22

Banks may extend need-based working capital facilities as well as term loans to all NBFCs registered with RBI and engaged in infrastructure financing, equipment leasing, hire-purchase, loan, factoring, and investment activities subject to the guidelines.

Test: Principles and Practices of Banking - 5 - Question 23

Direction: Non-Banking Financial Companies (NBFCs) are financial institutions that provide banking services without holding a banking license. They operate in various segments such as consumer finance, vehicle finance, housing finance, and microfinance, among others. Banks provide finance to NBFCs in the form of term loans, working capital loans, and credit lines. The finance is typically used by NBFCs to fund their lending activities, purchase assets, and other operational expenses. Banks also provide credit enhancement facilities such as guarantees and letters of credit to support NBFCs in raising funds from the market. The Reserve Bank of India (RBI) regulates the lending activities of banks to NBFCs. The RBI has mandated that banks should classify their lending to NBFCs as per their risk assessment and ensure that the exposure to individual NBFCs does not exceed the prescribed limits.

Q. Under what conditions can banks rediscount bills discounted by NBFCs arising from the sale of commercial vehicles?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 23

All conditions must be satisfied for banks to rediscount bills discounted by NBFCs arising from the sale of commercial vehicles.

Test: Principles and Practices of Banking - 5 - Question 24

How are retail loans mainly processed and monitored?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 24

Retail loans are mainly processed and monitored through computerized systems and scorecards.

Test: Principles and Practices of Banking - 5 - Question 25

What is the Credit Information Companies (Regulation) Act, of 2005?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 25

The Act requires all credit institutions to become members of at least one Credit Information Company within three months of its commencement and provide credit data in the format required by the CIC. All Credit Institutions are required to become members of all CICs.

Test: Principles and Practices of Banking - 5 - Question 26

What are the two fundamental criteria that determine the liability of a bank under a guarantee?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 26

The liability of a bank under a guarantee depends on two fundamental criteria, which are the amount guaranteed and the period of the guarantee. These two factors must be specifically stated in the guarantee agreement because, in the absence of any one or both of these factors, the bank’s liability could be unlimited either in the amount guaranteed or the period during the guarantee.

Test: Principles and Practices of Banking - 5 - Question 27

Direction: A bank has a large number of customers who are not individuals but are entities like partnerships, companies, trusts, and associations. These entities hold different types of accounts with the bank, such as current accounts, savings accounts, term deposits, and foreign currency accounts. The bank has to ensure that the accounts of these entities comply with the relevant laws and regulations and that the transactions are consistent with the purpose of the account. The bank has a dedicated team of professionals who handle these accounts and ensure that they comply with the law. Banks should also inform the authorized signatories of any issues with the account and advise them to take appropriate measures to safeguard the funds.

Q. Which of the following rules is incorrect regarding the obtaining of Photographs of account holders?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 27

Photocopies of an OVD with photographs would not suffice in place of photographs, and the customer has to submit the recent photograph only.

Test: Principles and Practices of Banking - 5 - Question 28

Direction: A bank has a large number of customers who are not individuals but are entities like partnerships, companies, trusts, and associations. These entities hold different types of accounts with the bank, such as current accounts, savings accounts, term deposits, and foreign currency accounts. The bank has to ensure that the accounts of these entities comply with the relevant laws and regulations and that the transactions are consistent with the purpose of the account. The bank has a dedicated team of professionals who handle these accounts and ensure that they comply with the law. Banks should also inform the authorized signatories of any issues with the account and advise them to take appropriate measures to safeguard the funds.

Q. According to the rules for opening and operations of a partnership firm's account, when should the operations in the account be stopped if a partner gives notice of stoppage of operation?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 28

When a partner gives notice of stoppage of operation, all operations must be stopped immediately under intimation addressed as a joint letter sent to all the partners as well as the firm. Then the account would be operative only by all partners jointly.

Test: Principles and Practices of Banking - 5 - Question 29

What is smishing?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 29

Smishing is a type of cyber-attack where fraudulent text messages are sent to steal personal information, such as account numbers and passwords. The text message typically contains a link to a fake website or an automated voice response system.

Test: Principles and Practices of Banking - 5 - Question 30

What is the maximum number of State Information Commissioners that can be appointed?

Detailed Solution for Test: Principles and Practices of Banking - 5 - Question 30

As per Section 15(2) of the Right to Information Act, 2005, the State Information Commission can have State Information Commissioners not exceeding ten in number.

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