MCQs on Commercial Banks

Following are some of the multiple choice questions and answers, that will help the students in brushing up their understanding of the concept of commercial banks.

Q1. Current account deposits are

a) Non repayable

b) Non repayable on demand

c) Repayable on demand

d) None of these

Answer: C

Q2. What is Repo Rate?

a) Rate at which RBI allows temporary loan facilities to commercial banks against government securities only on the condition that the bank will repurchase the securities within a short period.

b) Rate offered by banks to their prime customers.

c) When any bank has excess cash, securities are bought from RBI against cash with the condition that they will resell the securities to RBI on a pre fixed day and price.

d) When a bank is in need of cash it can discount bills of exchange and avail loan facilities from Reserve Bank of India.

Answer: A

Q3. Which is the first commercial bank incorporated by the Indians in 1881?

a) Imperial Bank Of India

b) Avadh Commercial Bank

c) Reserve Bank Of India

d) State Bank Of India

Answer: B

Q4.By performing open market operation transactions, RBI regulates which of these factors

a) Borrowing power of the commercial banks

b) Inflation

c) Money supply in the economy

d) B & C

Answer: D

Q.5 When RBI increases the cash reserve ratio (CRR), it will

a) Decrease money supply in the economy

b) Increase money supply in the economy

c) Increase supply initially but decrease automatically later on.

d) No impact on money supply in the economy

Answer: A

Q6. Canara Bank is an example of

a) Private Bank

b) Public Bank

c) Foreign Bank

d) None of these

Answer: B

Q7. Banking sector falls under which of the following sectors?

a) Industrial sector

b) Service sector

c) Manufacturing sector

d) None of these

Answer: B

Q7. What is known as ‘Lender of Last Resort’?

a) Whenever the government declares a debt relief, the RBI will have to bear the brunt of it.

b) If a person or firm which is eligible to get a loan, does not get it from any commercial bank, may approach the Reserve Bank of India for a loan.

c) If the state governments are in crisis and need money for short term , they can approach RBI for this purpose

d) If a commercial bank is in crisis, it may place its reasonable demand for accommodation to Reserve Bank of India

Answer: D

Q8. The most widely used tool of monetary policy is known as?

a) Open market operations

b) Discount rate

c) Issuing of notes

d) None of these

Answer: A

Q9. NBFC stands for

a) New banking finance company

b) New business finance and credit

c) National banking and Finance Corporation

d) Non banking financial company

Answer: D

Q10. Which is the primary activity of a commercial bank?

a) Maintaining deposit accounts including current accounts

b) Issue and pay cheques

c) Collect cheques for the bank’s customers

d) All of these

Answer: D

For more such interesting MCQs on various Commerce topics, visit here

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