Sample Paper 2

Quiz – Banking Practices & Regulations

1) Commercial Bank means

a. Bank financing only commercial transaction

b. Bank working for profits (Answer)

c. Bank dealing in commercial paper

d. Bank working payment system, intermediation and other services

2) Securitization means

a. Creation of an instrument for liquidity (Answer)

b. Obtaining collateral security

c. Providing all physical and armed security

d. None of the above

3) Liquidity risk means

a. Non maintenance of CRR and SLR

b. Bank having less cash

c. Bank having no investment in Govt. Securities

d. Measurement of inability of a bank to meet its current liabilities in full (Answer)

4) Where do you find the following items of transactions in the Balance sheet of a Bank? (Asset side (A), Liability side (L))

a. Statutory Reserves (L)

b. Loss (A)

c. Bills for collection being bills receivable as per contra (A & L)

d. A devolved guarantee (L)

e. Borrowing from Central Bank (A & L)

5) Can the following items be found under contingent liabilities in a Balance sheet of a bank? (Answer as Yes and No only)

a. Default in Forward Contract by non-delivery (No)

b. An invoked guarantee (No)

c. Claim against the bank not acknowledge as debt (Yes)

6) Regulation is mandatory and supervision is not (No)

a. Yes

b. No

7) Regulations are always administered by central Banks (Yes)

a. Yes

b. No

8) Ownership of banks and supervising the banks by same authority involve conflict of interests (Yes)

a. Yes

b. No

9) Tools of Central Bank are (Answer – F)

a. Bank Rate

b. Open Market operation

c. Variable Cash Reserve

d. Moral suasion

e. None of the above

f. All the above

10) Tick the Areas of Regulation not included in Banking Regulatory laws (Answer – C,D,E)

a. Management

b. Balance sheet disclosure

c. Wage agreements

d. Size of the Board of Directors

e. Striking out the Name of a banking company