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PSEB SS NSQF BFSI (BC/BF) study materials
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PSEB SS NSQF BFSI (BC/BF) practice questions

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Question 1Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Under the NSQF BFSI course, which document is issued by a bank to a customer at the time of opening an account, containing the terms and conditions governing the account?

  1. Loan sanction letter
  2. Cheque return memo
  3. Fixed deposit receipt
  4. Account opening form and welcome kit Correct answer.

Explanation

When a savings or current account is opened, the bank provides an account opening form copy along with a welcome kit that states the terms and conditions, charges and rules governing the account. These documents define the contractual relationship between the bank and the account holder.

Question 2Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer deposits a cheque drawn on another bank into her savings account. Which process must the collecting bank complete before the funds become available to her?

  1. Clearing and realisation of the cheque Correct answer.
  2. Opening of a lockers facility
  3. Sanction of an overdraft
  4. Immediate cash payment over the counter

Explanation

A cheque drawn on another bank must pass through the clearing house so that the drawee bank can confirm funds and honour it. Only after clearing and realisation is the customer's account credited with usable funds.

Question 3Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following is the primary regulator of banks in India?

  1. Reserve Bank of India Correct answer.
  2. Insurance Regulatory and Development Authority of India
  3. Securities and Exchange Board of India
  4. Ministry of Corporate Affairs

Explanation

The Reserve Bank of India regulates and supervises commercial banks, cooperative banks and payment systems under the Banking Regulation Act, 1949 and the RBI Act, 1934. The other bodies regulate securities markets, insurance and corporate affairs respectively.

Question 4Banking and Financial Services (BFSI) NSQF vocational trade content - theory

In banking terminology, what does KYC primarily require a bank to do?

  1. Fix the interest rate on a loan
  2. Insure the deposits of the customer
  3. Verify the identity and address of the customer before opening an account Correct answer.
  4. Report the customer's tax returns to the income tax department

Explanation

Know Your Customer norms require the bank to obtain and verify identity and address proof and to monitor transactions to prevent money laundering and terrorist financing. It does not set interest rates, provide deposit insurance or file tax returns.

Question 5Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A person wants to remit money to a beneficiary using UPI. Which detail is essential to complete the transfer?

  1. The beneficiary's bank locker number
  2. The beneficiary's Virtual Payment Address or UPI ID Correct answer.
  3. The beneficiary's income tax return copy
  4. The beneficiary's PAN card number

Explanation

UPI transfers are made using a Virtual Payment Address or UPI ID linked to the beneficiary's bank account. The system routes the payment through the NPCI switch, so PAN, tax returns and locker numbers are not needed.

Question 6Banking and Financial Services (BFSI) NSQF vocational trade content - theory

What is the main purpose of the Deposit Insurance and Credit Guarantee Corporation (DICGC) in relation to bank deposits?

  1. To insure deposits up to a specified limit per depositor per bank Correct answer.
  2. To lend money to banks for agricultural purposes
  3. To regulate foreign exchange transactions
  4. To issue currency notes on behalf of the RBI

Explanation

DICGC insures deposits of member banks up to a statutory limit per depositor per bank, protecting small depositors if a bank fails. It does not lend for agriculture, regulate forex or issue currency.

Question 7Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following best describes a current account?

  1. An account meant for business transactions with no interest paid on the balance Correct answer.
  2. A pension account operated only by senior citizens
  3. An account that requires a minimum balance and earns interest
  4. A long-term deposit account with a fixed maturity

Explanation

Current accounts are designed for traders and businesses, allow frequent deposits and withdrawals and generally do not earn interest. Fixed deposits have a maturity, savings accounts earn interest, and pension accounts are specific to pensioners.

Question 8Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer writes a cheque for ₹50,000 but his account balance is ₹35,000. How should the bank treat this cheque when presented?

  1. Pay ₹35,000 and cancel the cheque
  2. Hold the cheque indefinitely until funds arrive
  3. Return it unpaid for insufficient funds Correct answer.
  4. Pay it in full and create an overdraft automatically

Explanation

A cheque can be honoured only up to the available balance unless an overdraft facility exists. Since the balance is insufficient and no overdraft is mentioned, the bank returns the cheque unpaid with the remark insufficient funds.

Question 9Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following is the correct order of steps in a typical loan appraisal process?

  1. Disbursement, application, sanction, credit appraisal
  2. Application, credit appraisal, sanction, disbursement Correct answer.
  3. Sanction, application, disbursement, credit appraisal
  4. Credit appraisal, disbursement, application, sanction

Explanation

A loan begins with the borrower's application, followed by appraisal of creditworthiness, then sanction by the competent authority, and finally disbursement of funds. Disbursement logically comes last, after sanction.

Question 10Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer wants to know the difference between a demand draft and a cheque. Which statement is accurate?

  1. A demand draft is issued by a bank and is payable on demand at another branch, while a cheque is drawn by a customer on a bank Correct answer.
  2. A demand draft can be drawn only by an individual on another individual
  3. A demand draft carries no signature of any bank official
  4. A cheque is always prepaid while a demand draft is post-dated

Explanation

A demand draft is a banker's instrument issued after collecting funds, making it a secure payment mode, whereas a cheque is written by an account holder on the bank. The draft bears the issuing bank's authority and is payable at the drawn branch.

Question 11Banking and Financial Services (BFSI) NSQF vocational trade content - theory

What is the effect of crossing a cheque with two parallel lines and the words 'Account Payee'?

  1. The cheque becomes invalid after six months
  2. The cheque can be endorsed to any third party in cash
  3. The cheque can be credited only to the payee's bank account and not paid in cash Correct answer.
  4. The cheque must be presented only at the issuing branch

Explanation

An account payee crossing restricts the cheque to collection through the payee's bank account, preventing cash payment and reducing the risk of fraud. It does not change the validity period or restrict presentation to one branch.

Question 12Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer approaches a Business Correspondent (BC) in a rural village to deposit ₹2,000. Which statement about the BC model is correct?

  1. The BC runs an independent bank and issues its own currency
  2. The BC acts as an agent of the bank and uses a biometric device to record the transaction in the customer's account Correct answer.
  3. The BC maintains no records and gives only a verbal receipt
  4. The BC can sanction home loans without bank approval

Explanation

Under the BC model, the correspondent is an agent of a regulated bank and uses devices such as micro-ATMs with biometric authentication to process deposits and withdrawals. All transactions are recorded in the customer's account with the bank.

Question 13Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following instruments is best suited for a customer who wants a guaranteed, pre-fixed return over a period of two years?

  1. A recurring deposit of six months
  2. A savings account
  3. A fixed deposit with the bank Correct answer.
  4. A current account

Explanation

A fixed deposit locks in a stated interest rate for a chosen tenure, providing a predictable return at maturity. Savings and current accounts offer variable or nil interest, and a six-month recurring deposit does not match the two-year horizon.

Question 14Banking and Financial Services (BFSI) NSQF vocational trade content - theory

What does the term 'NPA' mean in banking?

  1. A new pension account opened for a senior citizen
  2. A loan account where principal or interest has remained overdue for more than 90 days Correct answer.
  3. A negotiable promissory note accepted by a bank
  4. A non-personal account used only by companies

Explanation

A Non-Performing Asset is a loan or advance where interest or principal has been overdue for more than 90 days. Banks must classify and provide for such assets under RBI norms.

Question 15Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer's account shows a debit of ₹5,000 that he did not authorise. What is the first step the bank should take under its grievance redressal mechanism?

  1. Register the complaint, block the card or channel if needed, and investigate the disputed transaction Correct answer.
  2. Ask the customer to close the account immediately
  3. Refuse to entertain the complaint without a court order
  4. Transfer the disputed amount to the bank's profit account

Explanation

On receiving an unauthorised transaction complaint, the bank must log it, take protective steps such as blocking the card or channel, and investigate within the timelines set by RBI. The customer is not required to close the account or obtain a court order.

Question 16Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following is an example of an asset for a bank?

  1. Borrowings from the RBI
  2. Fixed deposits accepted from customers
  3. Savings account balances
  4. Loans and advances given to borrowers Correct answer.

Explanation

For a bank, loans and advances are assets because they generate interest income and represent amounts receivable from borrowers. Deposits and borrowings are liabilities because the bank owes them to depositors and lenders.

Question 17Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer wants to open a joint account with the operating instruction 'either or survivor'. What does this mean?

  1. Only the first-named holder can operate the account
  2. The account is frozen on the death of either holder
  3. Either account holder can operate the account during their joint lifetime, and the survivor can operate it after the other's death Correct answer.
  4. Both holders must sign every cheque

Explanation

The 'either or survivor' mandate allows either joint holder to operate the account while both are alive, and the surviving holder continues to operate it after the death of the other. It does not require joint signatures or freeze the account.

Question 18Banking and Financial Services (BFSI) NSQF vocational trade content - theory

What is the primary function of a clearing house in the banking system?

  1. To settle interbank cheques and payment obligations among member banks Correct answer.
  2. To sanction loans to corporate borrowers
  3. To insure the deposits of customers
  4. To print currency notes for the RBI

Explanation

A clearing house provides a common platform where member banks exchange cheques and settle the net obligations arising from them. Currency printing, lending and deposit insurance are functions of other institutions.

Question 19Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A student wants a small loan for buying books and has no collateral. Which type of facility is most appropriate?

  1. An unsecured personal loan or education loan under a government scheme Correct answer.
  2. A letter of credit for imports
  3. A gold loan requiring pledged ornaments
  4. A home loan with property mortgage

Explanation

For a small, short-term need without collateral, an unsecured personal loan or an education loan under a scheme is suitable. Gold loans and home loans require security, and a letter of credit is for trade transactions.

Question 20Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following best explains why banks maintain a Cash Reserve Ratio (CRR) with the RBI?

  1. To keep a portion of net demand and time liabilities as cash with the RBI for liquidity and monetary control Correct answer.
  2. To pay dividends to shareholders
  3. To fund the deposit insurance scheme
  4. To meet the salary expenses of bank staff

Explanation

CRR requires banks to hold a prescribed percentage of their net demand and time liabilities as cash balances with the RBI. It serves liquidity and monetary policy objectives and does not fund dividends, deposit insurance or salaries.

Question 21Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer requests a bank to stop payment on a cheque he issued but which has not yet been presented. What should the bank do?

  1. Return the cheque to the payee with the drawer's signature cancelled
  2. Pay the cheque if the payee is known to the bank
  3. Record the stop-payment instruction in writing and dishonour the cheque if presented later Correct answer.
  4. Cancel the customer's account automatically

Explanation

A drawer can instruct the bank to stop payment before the cheque is presented; the bank records this instruction and returns the cheque unpaid if presented. The bank cannot cancel the drawer's signature or override the instruction merely because the payee is known.

Question 22Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A bank's gross NPA ratio rises sharply in a year. Which conclusion is most defensible from this single indicator?

  1. The bank's deposit base has fallen by the same proportion
  2. The bank has stopped lending to all customers
  3. The bank's capital adequacy is automatically below the regulatory minimum
  4. The proportion of overdue loans in the loan book has increased, indicating deteriorating asset quality Correct answer.

Explanation

Gross NPA ratio measures overdue loans as a proportion of gross advances, so a rise signals worsening asset quality. It does not by itself show a fall in deposits, a halt in lending or a breach of capital adequacy norms.

Question 23Banking and Financial Services (BFSI) NSQF vocational trade content - theory

In a Kisan Credit Card scheme, what is the primary purpose of the facility?

  1. To provide education loans for overseas study
  2. To provide home loans to farmers for urban property
  3. To provide vehicle loans for commercial transport
  4. To provide short-term credit to farmers for crop production and related needs Correct answer.

Explanation

The Kisan Credit Card gives farmers a revolving credit limit for short-term needs such as seeds, fertilisers and cultivation expenses. It is not designed for urban housing, transport vehicles or overseas education.

Question 24Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer uses an ATM card abroad and the transaction is converted using the card network's exchange rate. Which statement about this transaction is correct?

  1. The transaction is always free of any markup
  2. The bank may levy a foreign currency markup over the network rate and this should be disclosed in the card terms Correct answer.
  3. The customer can choose the exchange rate after the transaction settles
  4. The rate used is the RBI reference rate without any bank margin

Explanation

For international card transactions, the network converts the amount and the issuing bank may add a disclosed foreign currency markup. The rate is not the plain RBI reference rate, and the customer cannot choose the rate after settlement.

Question 25Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following correctly describes the role of a Business Facilitator compared with a Business Correspondent?

  1. Both roles involve only lending decisions
  2. A Business Facilitator identifies and refers customers but does not handle cash, while a Business Correspondent can conduct cash transactions Correct answer.
  3. A Business Facilitator is a regulator while a Business Correspondent is a bank
  4. A Business Facilitator handles only cash deposits while a Business Correspondent only refers customers

Explanation

Business Facilitators support banks by identifying customers and providing services like awareness and counselling without handling cash. Business Correspondents are authorised to conduct cash transactions such as deposits and withdrawals on behalf of the bank.

Question 26Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Under the NSQF BFSI curriculum, which document is issued by a bank to a customer at the time of opening an account and records the terms governing the account relationship?

  1. Cheque book requisition slip
  2. Account opening form and passbook Correct answer.
  3. Know Your Customer (KYC) declaration
  4. Nomination registration slip

Explanation

The account opening form captures the customer's particulars and the signed mandate, while the passbook records transactions. Together they document the contractual relationship and are the basic account records a BC or bank officer must understand. KYC declarations and nomination slips are supporting documents, not the record of account terms.

Question 27Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer deposits ₹10,000 in cash into a savings bank account. Which entry should appear in the passbook?

  1. Debit entry of ₹10,000
  2. No entry until the cheque is cleared
  3. Credit entry of ₹10,000 Correct answer.
  4. Contra entry of ₹10,000

Explanation

From the bank's point of view the customer's deposit is a liability, so an increase in the customer's balance is recorded as a credit in the passbook. A debit reduces the balance, for example when the customer withdraws cash. Cash deposits are credited immediately because no clearing is involved.

Question 28Banking and Financial Services (BFSI) NSQF vocational trade content - theory

What is the meaning of 'minimum balance' in a savings bank account?

  1. The smallest amount that can be withdrawn in a single transaction
  2. The lowest average or end-of-day balance the customer must keep to avoid charges Correct answer.
  3. The balance below which the account is automatically closed
  4. The maximum amount the bank will lend against the deposit

Explanation

Banks prescribe a minimum balance, often calculated on a monthly average or end-of-day basis, and levy charges if it is not maintained. It is a condition of the account, not a withdrawal limit or a lending cap. Breach normally attracts a service charge rather than automatic closure.

Question 29Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer wants to send money to a beneficiary using UPI. Which detail is essential to complete the transfer?

  1. The beneficiary's income tax PAN
  2. The beneficiary's bank branch IFSC alone, with no account identifier
  3. The beneficiary's passport number
  4. The beneficiary's Virtual Payment Address or UPI-linked account details Correct answer.

Explanation

UPI transfers are addressed using a Virtual Payment Address or UPI-linked account identifier, which the payer enters in the app. The system then routes the payment through the beneficiary's bank. Passport or PAN details are not part of the UPI addressing scheme, and an IFSC alone cannot identify the account.

Question 30Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following is a liability for a bank?

  1. The bank's investment in government securities
  2. Cash held in the bank's vault
  3. The balance in a customer's savings account Correct answer.
  4. A loan advanced to a trader

Explanation

Customer deposits are funds the bank owes back to depositors, so they appear as liabilities on the balance sheet. Cash in the vault, loans and investments are assets because they are resources the bank owns or is owed. This distinction underpins how banks manage liquidity.

Question 31Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer wants to remit ₹2,00,000 to a supplier in another city on the same day. Which instrument is most appropriate?

  1. Real Time Gross Settlement (RTGS) transfer Correct answer.
  2. A demand draft sent by courier
  3. A cheque sent by ordinary post
  4. A UPI collect request

Explanation

RTGS settles high-value interbank payments individually in real time, so it suits large same-day transfers. Cheques and demand drafts depend on physical movement and clearing, which take time. UPI has transaction limits below the amount required here.

Question 32Banking and Financial Services (BFSI) NSQF vocational trade content - theory

What is the purpose of a lien marked by a bank on a fixed deposit?

  1. To convert the deposit into a savings account
  2. To transfer ownership of the deposit to the bank
  3. To increase the interest rate on the deposit
  4. To prevent premature withdrawal or closure while the deposit secures a loan Correct answer.

Explanation

A lien is a hold that stops the customer from withdrawing or closing the deposit while it is pledged as security. The bank retains the right to adjust the deposit against the loan if the borrower defaults. Ownership remains with the customer and the interest rate is unaffected.

Question 33Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer asks a BC what a 'no-frills' or Basic Savings Bank Deposit account offers. Which answer is correct?

  1. A loan account with no interest charged
  2. A fixed deposit with the highest available interest rate
  3. A current account for businesses with unlimited transactions
  4. A simple savings account with no requirement to maintain a minimum balance Correct answer.

Explanation

The Basic Savings Bank Deposit account is aimed at financial inclusion and does not require the customer to keep a minimum balance. It offers basic facilities such as deposits and a limited number of free withdrawals. It is not a business current account, a deposit product or a loan.

Question 34Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer's cheque is returned unpaid with the reason 'insufficient funds'. What does this indicate?

  1. The cheque was presented after the bank's cut-off time
  2. The beneficiary's account was closed
  3. The drawer's account balance was lower than the cheque amount Correct answer.
  4. The cheque was signed by an authorised signatory

Explanation

The return reason refers to the drawer's account, where the available balance was not enough to honour the cheque. Presentation timing and beneficiary account status would produce different return reasons. A valid signature does not guarantee funds.

Question 35Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following best describes the role of a bank's treasury department?

  1. Managing liquidity, investments and foreign exchange positions of the bank Correct answer.
  2. Sanctioning retail home loans to individual customers
  3. Conducting KYC verification at the branch counter
  4. Opening savings accounts for walk-in customers

Explanation

Treasury manages the bank's funds, including liquidity, investment portfolios and foreign exchange exposure, to balance return and risk. Retail lending and account opening are branch or business functions. KYC verification is a compliance task at the point of customer onboarding.

Question 36Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer with a savings account wants to set up a standing instruction to pay a monthly insurance premium. Which arrangement fits this need?

  1. An RTGS transfer initiated manually every month
  2. A cheque posted each month by the customer
  3. A one-time demand draft for the annual premium
  4. A standing instruction debiting the account on a fixed date each month Correct answer.

Explanation

A standing instruction is a standing mandate under which the bank debits the account automatically on the agreed date and amount. It removes the need for the customer to act each month. One-time drafts, posted cheques and manual RTGS transfers all depend on repeated customer action.

Question 37Banking and Financial Services (BFSI) NSQF vocational trade content - theory

What does 'Know Your Customer' (KYC) require a bank to do before opening an account?

  1. Collect a security deposit equal to the account balance
  2. Obtain a credit score from a credit information company
  3. Obtain the customer's employer's written consent
  4. Verify the customer's identity and address using prescribed documents Correct answer.

Explanation

KYC obliges the bank to establish the customer's identity and address through documents such as officially valid documents, and to understand the purpose of the account. Credit scores are relevant to lending, not to routine account opening. Security deposits and employer consent are not general KYC requirements.

Question 38Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer wants to know why a bank asks for a nominee when opening a deposit account.

  1. So that the nominee can change the account's interest rate
  2. So that the nominee becomes a joint holder with withdrawal rights during the depositor's lifetime
  3. So that the bank can pay the deposit to the nominee on the depositor's death Correct answer.
  4. So that the bank can recover the depositor's loans from the nominee

Explanation

Nomination allows the bank to release the deposit to the named person on the depositor's death, reducing delay and legal formalities. The nominee does not become a joint holder and has no rights while the depositor is alive. Nomination also does not create a liability for the nominee.

Question 39Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer's loan account is reported as a sub-standard asset. What does this classification indicate?

  1. The loan has been repaid in full ahead of schedule
  2. The loan was sanctioned without any collateral
  3. The loan has remained a non-performing asset for a period of up to twelve months Correct answer.
  4. The loan carries a floating interest rate

Explanation

A sub-standard asset is a non-performing asset that has remained so for a period not exceeding twelve months. It reflects deterioration in repayment behaviour and calls for higher provisioning. Repayment status, collateral and interest type are separate matters.

Question 40Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer wants to open a recurring deposit for ₹5,000 per month for two years. What is the essential feature of this product?

  1. Interest is paid only at the bank's discretion
  2. The deposit can be withdrawn without any notice at any time
  3. A fixed sum is deposited every month and repaid with interest at maturity Correct answer.
  4. A lump sum is deposited once and withdrawn at any time

Explanation

A recurring deposit requires equal monthly instalments over a fixed term, and the accumulated amount with interest is paid at maturity. It is not a lump-sum deposit and does not offer unrestricted withdrawal. Interest is contracted, not discretionary.

Question 41Banking and Financial Services (BFSI) NSQF vocational trade content - theory

Which of the following correctly describes the 'payee' of a cheque?

  1. The person who signs and issues the cheque
  2. The person to whom the cheque amount is payable Correct answer.
  3. The clearing house that processes the cheque
  4. The bank branch that maintains the drawer's account

Explanation

The payee is the beneficiary named on the cheque to whom the amount is to be paid. The drawer is the account holder who signs the cheque, and the drawee is the bank that holds the account. The clearing house only processes the instrument between banks.

Question 42Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer wants to make a fixed monthly payment towards a loan through an electronic mandate that the bank debits automatically. Which facility is designed for this?

  1. Letter of credit
  2. Bill of exchange
  3. Bank guarantee
  4. National Automated Clearing House (NACH) debit mandate Correct answer.

Explanation

NACH supports bulk and recurring electronic debits and credits, and a debit mandate authorises the bank to collect the instalment from the customer's account. A letter of credit and a bank guarantee are trade-finance instruments that assure payment to a beneficiary. A bill of exchange is a negotiable instrument, not a recurring debit arrangement.

Question 43Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer wants to know the difference between a fixed deposit and a recurring deposit. Which statement is accurate?

  1. A fixed deposit requires monthly instalments, while a recurring deposit is a one-time placement
  2. In a fixed deposit a lump sum is placed once, while in a recurring deposit instalments are paid periodically Correct answer.
  3. Both products permit unlimited withdrawals without penalty
  4. A recurring deposit always earns a higher rate than any fixed deposit

Explanation

The distinguishing feature is the funding pattern: a fixed deposit is funded by a single lump sum, whereas a recurring deposit is built up through periodic instalments. Both are term products with premature withdrawal conditions. Interest rates depend on the bank's card rates and tenor, not on the product name alone.

Question 44Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A bank customer wants to transfer funds to a beneficiary and asks whether IMPS can be used at night and on holidays. What is correct?

  1. IMPS works only during branch working hours
  2. IMPS works only on the first working day of each month
  3. IMPS operates round the clock on all days, including holidays Correct answer.
  4. IMPS is available only for transfers above ₹2 lakh

Explanation

Immediate Payment Service is available 24x7, including weekends and public holidays, which is one of its main advantages over traditional clearing. It is not restricted to branch hours or particular days. Transaction limits are set by banks and do not require a minimum of ₹2 lakh.

Question 45Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer with a savings account wants to know whether interest earned on the deposit is taxable. Which statement is most accurate?

  1. Interest is taxed at a flat rate of 30 per cent for every depositor
  2. Interest above the prescribed threshold is added to the depositor's income and taxed at the applicable slab Correct answer.
  3. Interest is taxed only if the deposit exceeds ₹10 lakh
  4. Interest on savings accounts is always fully exempt from income tax

Explanation

Interest earned on deposits forms part of the depositor's income and is taxed at the applicable slab rate, subject to the threshold and deduction provisions in force. It is not universally exempt, nor tied to a ₹10 lakh deposit threshold, and there is no flat 30 per cent rate for all depositors.

Question 46Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer's account is debited twice for the same card transaction because of a system error. What should the bank do after the customer reports the duplicate debit?

  1. Ask the customer to bear the loss as system errors are excluded
  2. Close the account to prevent further errors
  3. Investigate the entries and reverse the excess debit to restore the customer's balance Correct answer.
  4. Convert the excess amount into a fixed deposit for the customer

Explanation

A duplicate debit is an erroneous entry, and the bank must verify it against the transaction records and reverse the excess amount so that the customer is made whole. Asking the customer to bear the loss is unfair and contrary to customer-protection norms. Closing the account or converting the amount does not correct the error.

Question 47Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A bank's current account customer frequently issues cheques without sufficient balance. Which risk does this behaviour primarily create for the bank?

  1. Operational and reputational risk arising from repeated dishonour of instruments Correct answer.
  2. Foreign exchange risk on the bank's overseas borrowings
  3. Liquidity risk from a sudden fall in deposit inflows
  4. Interest rate risk on the bank's government securities portfolio

Explanation

Repeated dishonour of cheques is a conduct and operational issue that can attract customer complaints and regulatory scrutiny, damaging reputation. Interest rate risk relates to the investment portfolio's sensitivity to rate changes. Foreign exchange risk arises from currency exposures, and deposit-run liquidity risk is a different concern.

Question 48Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A bank finds that a large borrower's cash flows are volatile because the business is seasonal. Which credit structuring response is most appropriate?

  1. Align repayment instalments with the seasonal cash-flow cycle of the business Correct answer.
  2. Increase the interest rate sharply without changing the repayment schedule
  3. Convert the entire term loan into a demand loan repayable on notice
  4. Reduce the loan tenor so that repayment falls due during the lean season

Explanation

Structuring repayments to match the borrower's cash-flow cycle improves the likelihood of timely servicing and reduces default risk. Raising rates without addressing the schedule does not fix the mismatch. A demand loan repayable on notice and a shorter tenor falling in the lean season both increase repayment stress.

Question 49Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A bank's CASA ratio falls while its term deposits rise. Which interpretation is most defensible?

  1. The bank's capital adequacy has fallen below the regulatory minimum
  2. The bank's total deposits have necessarily fallen
  3. The bank's non-performing assets have increased
  4. The share of low-cost current and savings deposits in total deposits has declined Correct answer.

Explanation

The CASA ratio measures current and savings account balances as a share of total deposits, so a fall means cheaper deposits form a smaller proportion, raising the cost of funds. It says nothing directly about the absolute level of total deposits, asset quality or capital adequacy. Those need separate indicators.

Question 50Banking and Financial Services (BFSI) NSQF vocational trade content - theory

A customer asks a BC to help open a small deposit account but has only a mobile number and no officially valid document. What is the correct course of action?

  1. Explain the prescribed KYC documents required and help the customer obtain a valid document before opening the account Correct answer.
  2. Refuse to serve the customer and ask him to approach another bank
  3. Open the account immediately on the basis of the mobile number alone
  4. Open the account in the BC's own name and hold the funds on the customer's behalf

Explanation

Account opening requires identity and address verification through prescribed documents, so the BC should guide the customer to obtain a valid document and then complete onboarding. Using a mobile number alone does not satisfy KYC. Opening an account in the BC's name would be a serious misuse of the agency, and refusing service outright is not appropriate.