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RBSE Prav Voc BFSI study materials
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RBSE Prav Voc BFSI practice questions

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Question 1BFSI sector overview, structure and career pathways

In the Indian financial system, the acronym BFSI is used to group which set of sectors?

  1. Banking, Financial Services and Insurance Correct answer.
  2. Budgeting, Financial Systems and Insurance
  3. Business, Finance and Securities
  4. Banking, Fiscal Services and Investment

Explanation

BFSI is an umbrella term used across the Indian financial sector for Banking, Financial Services and Insurance. It covers banks, non-banking lenders, insurers, brokers, mutual funds and allied service providers. Recruitment and skilling programmes in the sector often use this grouping.

Question 2BFSI sector overview, structure and career pathways

Which regulator licenses and supervises insurance companies in India?

  1. IRDAI Correct answer.
  2. PFRDA
  3. RBI
  4. SEBI

Explanation

IRDAI is the Insurance Regulatory and Development Authority of India, established to license insurers and protect policyholders. It regulates life, general and health insurance business. SEBI handles securities, RBI handles banking and PFRDA handles pensions.

Question 3BFSI sector overview, structure and career pathways

Regional Rural Banks (RRBs) in India were created primarily to do which of the following?

  1. Finance large corporate infrastructure projects nationwide
  2. Manage India's foreign exchange reserves
  3. Meet rural and semi-urban credit needs Correct answer.
  4. Regulate cooperative credit societies across states

Explanation

Regional Rural Banks were set up under the RRB Act to serve rural and semi-urban areas, especially small farmers, artisans and agricultural labourers. They combine local reach with scheduled bank status. Their mandate is developmental as well as commercial.

Question 4BFSI sector overview, structure and career pathways

A payments bank in India is permitted to do which of the following?

  1. Operate as a full-service universal bank
  2. Lend to customers through home loans
  3. Accept small deposits and provide payment services Correct answer.
  4. Issue credit cards to retail customers

Explanation

Payments banks can accept demand deposits up to the prescribed limit and offer payment and remittance services. They cannot lend or issue credit cards, so their income comes mainly from fees and investments in government securities. This model is designed to deepen financial inclusion.

Question 5BFSI sector overview, structure and career pathways

Which statement best distinguishes a non-banking financial company (NBFC) from a bank?

  1. It can accept demand deposits but cannot lend
  2. It is regulated only by SEBI
  3. It is always owned and controlled by the central government
  4. It lends and invests but cannot take demand deposits Correct answer.

Explanation

An NBFC can lend and invest, but unlike a bank it cannot accept demand deposits and is not part of the payment and settlement system. NBFCs are registered with RBI under the RBI Act, not with SEBI alone, and ownership may be private.

Question 6BFSI sector overview, structure and career pathways

Which function is performed by SEBI?

  1. Issuing currency notes for public circulation
  2. Setting the repo rate for commercial banks
  3. Regulating the securities market and protecting investors Correct answer.
  4. Supervising insurance claim settlements

Explanation

SEBI is the statutory regulator of the Indian securities market. It registers intermediaries, oversees stock exchanges and mutual funds, and acts against market misconduct to protect investors. Monetary policy and currency issuance are RBI functions.

Question 7BFSI sector overview, structure and career pathways

Which of the following is a defining feature of cooperative banks in India?

  1. They are owned by shareholders and run purely for profit
  2. Member-owned institutions run on cooperative principles Correct answer.
  3. They may issue foreign currency loans without any approval
  4. They are constituted under the Companies Act, 2013

Explanation

Cooperative banks are member-owned institutions established under cooperative societies laws, not the Companies Act. They follow the principle of one member, one vote and pass surplus back to members, though they are also regulated by RBI.

Question 8BFSI sector overview, structure and career pathways

A graduate preparing for a Bank Probationary Officer (PO) role should expect the selection process to include which combination?

  1. Only a group discussion followed by a final interview
  2. Direct recruitment based only on academic marks
  3. A prelims test, a mains test and an interview Correct answer.
  4. A single subject test focused on insurance law

Explanation

Bank PO recruitment in public sector banks typically runs through a preliminary objective test, a main test and an interview. The preliminary stage is qualifying in nature, while the main exam and interview determine the final merit. Candidates should also check the language proficiency requirement.

Question 9BFSI sector overview, structure and career pathways

Which of these is included as a priority sector category under RBI's priority sector lending guidelines?

  1. Loans to foreign subsidiaries of Indian companies
  2. Micro, small and medium enterprises Correct answer.
  3. Large corporate loans for mergers and acquisitions
  4. Personal loans for luxury cars and holidays

Explanation

RBI's priority sector lending framework includes agriculture, micro, small and medium enterprises, education, housing and weaker sections. Large corporate loans, luxury consumption loans and lending to foreign subsidiaries are not priority sector categories. Banks must meet specified PSL targets.

Question 10BFSI sector overview, structure and career pathways

Under the Lead Bank Scheme, the lead bank assigned to a district is expected to do which of the following?

  1. Insure deposits of all rural households
  2. Coordinate district credit planning and inclusion efforts Correct answer.
  3. Regulate all cooperative societies in the district
  4. Collect direct taxes from bank customers

Explanation

Under the Lead Bank Scheme, RBI assigns each district to a lead bank, usually a public sector bank. The lead bank coordinates credit planning, branch expansion and financial inclusion with other banks and government agencies. It does not regulate cooperatives or collect taxes.

Question 11BFSI sector overview, structure and career pathways

Which regulator administers the National Pension System (NPS) and registers pension funds in India?

  1. Insurance Regulatory and Development Authority of India (IRDAI)
  2. Reserve Bank of India (RBI)
  3. Pension Fund Regulatory and Development Authority (PFRDA) Correct answer.
  4. Securities and Exchange Board of India (SEBI)

Explanation

PFRDA is the statutory regulator for pensions under the PFRDA Act, 2013. It registers pension funds, approves NPS products, and protects subscribers. RBI regulates banks and payment systems, SEBI regulates securities markets, and IRDAI regulates insurance business.

Question 12BFSI sector overview, structure and career pathways

Which institution was established as India's statutory development finance institution dedicated to long-term infrastructure financing?

  1. EXIM Bank
  2. NABARD
  3. SIDBI
  4. NaBFID Correct answer.

Explanation

NaBFID was set up under the NaBFID Act, 2021 as a development finance institution focused on long-term infrastructure financing. SIDBI focuses on MSME finance, EXIM Bank on trade finance, and NABARD on agriculture and rural development.

Question 13BFSI sector overview, structure and career pathways

Which BFSI professional typically uses mortality and morbidity tables to calculate insurance premiums and reserves?

  1. Actuary Correct answer.
  2. Credit analyst
  3. Relationship manager
  4. Treasury dealer

Explanation

Actuaries quantify long-term insurance risks using mortality and morbidity assumptions and use them to set premiums and reserves. Credit analysts assess borrower repayment capacity, treasury dealers manage liquidity and market positions, and relationship managers handle client relationships.

Question 14BFSI sector overview, structure and career pathways

Which examination is conducted by the Reserve Bank of India for direct recruitment to its Grade B officer cadre?

  1. SEBI Grade A Officer
  2. IRDAI Grade A Officer
  3. NABARD Grade A Officer
  4. RBI Grade B Officer Correct answer.

Explanation

The RBI Grade B examination is RBI's own recruitment process for officers, typically involving objective and descriptive phases followed by an interview. SEBI, NABARD, and IRDAI conduct separate recruitment examinations for their own cadres.

Question 15BFSI sector overview, structure and career pathways

A candidate wishes to act as a mutual fund distributor in India. Which certification is specifically required for this role?

  1. IIBF JAIIB
  2. IRDAI agent licence
  3. NISM Series V-A Correct answer.
  4. CFA Level I

Explanation

SEBI requires persons engaged in mutual fund distribution to obtain the NISM Series V-A Mutual Fund Distributors certification. JAIIB is a banking proficiency examination, an IRDAI licence covers insurance agency, and CFA Level I is a general investment credential.

Question 16BFSI sector overview, structure and career pathways

In India, a primary dealer in government securities is primarily engaged in which activity?

  1. Insuring bank deposits up to the DICGC limit
  2. Buying and selling government securities and underwriting auctions Correct answer.
  3. Providing small loans to micro-enterprises under priority sector norms
  4. Managing pension corpus for NPS subscribers

Explanation

Primary dealers are RBI-authorised entities that deal in government securities, underwrite primary auctions, and support secondary market liquidity. They are not deposit insurers, pension fund managers, or micro-lending institutions.

Question 17BFSI sector overview, structure and career pathways

Under RBI's norms for small finance banks (SFBs), what minimum share of adjusted net bank credit must be deployed in priority sector lending?

  1. 100 percent
  2. 40 percent
  3. 75 percent Correct answer.
  4. 25 percent

Explanation

Small finance banks must maintain at least 75 percent of adjusted net bank credit in priority sector lending, a higher requirement than for universal banks. This reflects their financial inclusion mandate. The 25, 40, and 100 percent figures are not the prescribed SFB threshold.

Question 18BFSI sector overview, structure and career pathways

Which role in a bank is primarily responsible for monitoring compliance with KYC and anti-money laundering (AML) requirements?

  1. Treasury dealer
  2. Credit analyst
  3. Wealth relationship manager
  4. Compliance officer Correct answer.

Explanation

The compliance officer ensures that the bank follows KYC and AML rules, regulatory reporting, and internal compliance policies. Treasury dealers manage trading positions, credit analysts appraise loans, and relationship managers focus on client sales and service.

Question 19BFSI sector overview, structure and career pathways

In discussions of India's BFSI sector, the 'twin balance sheet' problem refers to which situation?

  1. Mismatch between assets and liabilities of insurers
  2. Shortfall in bank deposits and mutual fund inflows
  3. Simultaneous bank and corporate balance-sheet stress Correct answer.
  4. Fiscal deficit combined with current account deficit

Explanation

The twin balance sheet problem describes simultaneous stress on bank balance sheets, mainly high non-performing assets, and on corporate borrower balance sheets, mainly high leverage. This combination weakens credit growth and investment. It is distinct from insurance asset-liability mismatch, twin deficits, or a funding shortfall.

Question 20BFSI sector overview, structure and career pathways

In Indian banking group structures, what is a Non-Operative Financial Holding Company (NOFHC)?

  1. An asset reconstruction company that purchases stressed loans from banks
  2. A non-operating holding company for a banking group Correct answer.
  3. A deposit insurance fund managed by DICGC
  4. A retail payments operator approved by RBI

Explanation

A NOFHC is a non-operative holding company used in Indian bank licensing to hold the bank and other regulated financial entities of a group. It does not itself carry on banking or financial business and helps ring-fence ownership. Asset reconstruction companies, DICGC deposit insurance, and retail payment operators perform different functions.

Question 21Banking operations, deposit and lending products, digital banking

Which type of bank account is primarily meant for business transactions and generally does not earn interest?

  1. Recurring deposit account
  2. Savings account
  3. Current account Correct answer.
  4. Fixed deposit account

Explanation

Current accounts are designed for business and commercial transactions, and banks generally do not pay interest on them. Savings accounts earn interest, while recurring and fixed deposits are term products that also earn interest.

Question 22Banking operations, deposit and lending products, digital banking

Which organisation operates the Unified Payments Interface (UPI) in India?

  1. NPCI Correct answer.
  2. Reserve Bank of India
  3. Securities and Exchange Board of India
  4. State Bank of India

Explanation

UPI is operated by the National Payments Corporation of India (NPCI), an umbrella organisation promoted by the RBI and banks. The RBI regulates payment systems, but it does not run UPI's day-to-day operations.

Question 23Banking operations, deposit and lending products, digital banking

Under KYC norms, which document is normally accepted as proof of both identity and address when opening a savings bank account?

  1. A blank cheque
  2. Aadhaar card Correct answer.
  3. A self-written letter
  4. A recent electricity bill

Explanation

Aadhaar is an officially valid document that can serve as proof of identity as well as proof of address for KYC. An electricity bill generally proves address only, while a self-written letter and a blank cheque are not valid KYC documents.

Question 24Banking operations, deposit and lending products, digital banking

A customer opens a fixed deposit for three years but withdraws it after one year. What does the bank normally do?

  1. Pays one-year rate less penalty Correct answer.
  2. Pays no interest at all
  3. Pays the three-year contracted rate
  4. Pays savings rate for the whole period

Explanation

On premature closure, a bank generally pays interest at the rate applicable for the period the deposit actually stayed with it, minus a penalty. The original three-year rate is not paid because the deposit did not run for the full tenure.

Question 25Banking operations, deposit and lending products, digital banking

Which payment system settles each transaction individually in real time and is used for high-value interbank transfers?

  1. UPI
  2. RTGS Correct answer.
  3. NEFT
  4. IMPS

Explanation

RTGS stands for Real Time Gross Settlement, and it settles each transaction individually at the time it is processed. It is used for high-value, time-critical transfers, generally of ₹2 lakh and above, while NEFT settles in batches and UPI and IMPS are retail instant systems.

Question 26Banking operations, deposit and lending products, digital banking

In a home loan repaid through EMIs on a reducing balance basis, what happens to the interest component over the loan tenure?

  1. It is charged only in the final year
  2. It remains constant throughout the loan
  3. It rises steadily as the loan matures
  4. It falls as outstanding principal reduces Correct answer.

Explanation

In a reducing balance loan, interest is calculated on the outstanding principal. As the principal is repaid over time, the interest component falls and the principal component rises, even though the EMI amount stays level.

Question 27Banking operations, deposit and lending products, digital banking

A customer uses a debit card at a merchant outlet. What is the immediate effect on the customer's bank account?

  1. The payment is converted into a loan
  2. The account is debited only at month-end
  3. The linked account is debited immediately Correct answer.
  4. The amount is added to a credit card bill

Explanation

A debit card draws funds directly from the linked savings or current account, so the account is debited at the time of the transaction or within the settlement cycle. It does not create a credit card bill or a loan.

Question 28Banking operations, deposit and lending products, digital banking

What is the main purpose of MICR technology on cheques?

  1. Encryption of the cheque amount before clearing
  2. High-speed automated clearing and sorting Correct answer.
  3. Manual verification of the customer's signature
  4. Calculation of interest on the cheque amount

Explanation

MICR uses magnetic ink characters to encode information such as the bank code, branch code and cheque number. This allows cheques to be sorted and cleared automatically at high speed; it does not verify signatures or encrypt amounts.

Question 29Banking operations, deposit and lending products, digital banking

Which statement about the Basic Savings Bank Deposit Account (BSBA) is correct as per RBI guidelines?

  1. Unlimited free transactions are allowed without any conditions
  2. One BSBA per bank, no other savings account there Correct answer.
  3. A minimum monthly average balance must always be maintained
  4. Only registered companies are permitted to open this account

Explanation

A BSBA is a no-frills account that offers basic banking facilities free of charge and does not require a minimum balance. RBI rules allow only one BSBA per customer in a bank, and the customer cannot hold another savings account in the same bank.

Question 30Banking operations, deposit and lending products, digital banking

Under RBI's priority sector lending norms, which category is included as a priority sector?

  1. Loans to foreign banks' overseas branches
  2. Loans for purchase of luxury cars
  3. Loans to micro enterprises Correct answer.
  4. Loans to large corporate houses

Explanation

Priority sector lending covers areas such as agriculture, micro, small and medium enterprises, education, housing and weaker sections. Loans to micro enterprises fall within this framework, while large corporate and luxury car loans do not.

Question 31Banking operations, deposit and lending products, digital banking

A customer tells the bank that she wants to build a corpus by depositing a fixed sum every month for two years and receiving the accumulated amount along with interest at the end of that period. Which product should the bank offer her?

  1. A fixed deposit for a two-year term
  2. A savings bank account operated with a standing instruction
  3. A current account with an overdraft limit attached
  4. A recurring deposit for twenty-four months Correct answer.

Explanation

A recurring deposit is designed exactly for this need: the customer commits to a fixed monthly instalment for a chosen tenure, and the bank compounds interest and pays the maturity value as a lump sum. A fixed deposit requires the entire amount to be funded upfront, while a savings account would pay a lower rate and leave the discipline of monthly saving to the customer.

Question 32Banking operations, deposit and lending products, digital banking

A cheque drawn on a savings account is dated 5 March and reaches the clearing house on 20 June of the same year. Assuming the account has sufficient balance and the signature is genuine, what will the paying bank normally do?

  1. Honour it after recovering a charge for late presentation
  2. Hold it until the drawer confirms the payment in writing
  3. Honour the cheque because the account balance is sufficient
  4. Return it as a stale cheque because its validity period has expired Correct answer.

Explanation

A cheque is payable only within three months of the date written on it, and a cheque presented after that window is treated as stale or time-barred and returned unpaid. The bank cannot honour it merely because funds are available, since the drawer's mandate is presumed to lapse with the validity period.

Question 33Banking operations, deposit and lending products, digital banking

In Indian bank reporting, what does the CASA ratio measure?

  1. The share of cash balances that a bank must keep with the RBI
  2. The share of current and savings deposits in total deposits Correct answer.
  3. The ratio of a bank's capital to its risk-weighted assets
  4. The proportion of advances that must go to agriculture

Explanation

CASA stands for current account and savings account deposits, and the ratio expresses these low-cost or no-cost deposits as a proportion of total deposits. Because current accounts pay no interest and savings accounts pay a modest rate, a higher CASA ratio lowers a bank's overall cost of funds and supports its net interest margin.

Question 34Banking operations, deposit and lending products, digital banking

A customer submits an NEFT transfer request through internet banking at 10:05 a.m. on a working day. How does the NEFT system normally process that transfer?

  1. It queues the request and settles it in the next half-hourly batch Correct answer.
  2. It settles the transfer at the same time on the following working day
  3. It settles the transfer instantly, one transaction at a time
  4. It holds the request until the RBI closes its books for the day

Explanation

NEFT uses deferred net settlement, in which transactions are queued and cleared in batches at fixed half-hourly slots, so a request received at 10:05 a.m. is taken up in the next available batch. The service now runs round the clock on all days, but the batch mechanism remains the defining feature that separates it from real-time gross settlement.

Question 35Banking operations, deposit and lending products, digital banking

A bank values 50 grams of 22-carat gold jewellery pledged by a customer at ₹3,00,000. Applying the RBI ceiling on loan-to-value for gold loans by banks, what is the maximum amount the bank may lend against this security?

  1. ₹2,40,000
  2. ₹1,50,000
  3. ₹3,00,000
  4. ₹2,25,000 Correct answer.

Explanation

RBI caps the loan-to-value ratio for gold loans advanced by banks at 75 per cent of the value of the gold ornaments, so the maximum permissible loan here is 75 per cent of ₹3,00,000, that is ₹2,25,000. The cap protects the bank against a fall in gold prices between sanction and recovery.

Question 36Banking operations, deposit and lending products, digital banking

A customer wants to send money at 11 p.m. on a Sunday to a beneficiary, using only the beneficiary's mobile number and MMID, with the funds credited immediately. Which facility matches all these conditions?

  1. RTGS, since it operates around the clock
  2. NEFT, since it runs on all days including holidays
  3. IMPS, which works round the clock through mobile banking Correct answer.
  4. A cheque marked for same-day clearing

Explanation

Immediate Payment Service is operated by NPCI and is available 24x7, including weekends and holidays, with instant credit to the beneficiary. It specifically supports addressing a beneficiary through a mobile number and MMID, which is why it fits the customer's requirement.

Question 37Banking operations, deposit and lending products, digital banking

A borrower offers a bank a charge over raw material stock that stays in the borrower's own godown and is verified through periodic stock statements and inspections. What is this form of security called?

  1. Hypothecation Correct answer.
  2. Pledge
  3. Lien
  4. Mortgage

Explanation

Hypothecation creates a charge over movable goods while possession remains with the borrower, which is why stock statements and physical inspection are used to monitor the security. It is the usual arrangement for working capital limits such as cash credit.

Question 38Banking operations, deposit and lending products, digital banking

A bank offers a savings account in which any balance above a set threshold is automatically moved into a linked fixed deposit and pulled back when the customer needs funds. What is the main advantage of this arrangement?

  1. A rate higher than a normal fixed deposit of the same tenure
  2. Conversion of the deposit into a tax-saving fixed deposit with a five-year lock-in
  3. Higher interest on the surplus while the money stays available for withdrawal Correct answer.
  4. Exemption from tax deduction at source on the interest earned

Explanation

A sweep-in arrangement lets the customer earn the higher fixed deposit rate on surplus balances without losing liquidity, because the swept amount is automatically restored to the account when a withdrawal or cheque requires it. The trade-off is that the funds are treated as a fixed deposit for interest purposes, not that they become inaccessible.

Question 39Banking operations, deposit and lending products, digital banking

A home loan is priced at "repo rate plus 2.50 per cent" and is reset quarterly. If the RBI reduces the repo rate by 25 basis points and the bank passes on the change at the next reset, what is the effect on the borrower?

  1. The loan converts into a fixed-rate loan at the original rate for the remaining tenure
  2. The borrower must pay a conversion fee before the lower rate can be applied
  3. The spread over repo widens automatically by 25 basis points
  4. The effective interest rate falls by 25 basis points and the EMI or tenure is reset accordingly Correct answer.

Explanation

When the benchmark is the repo rate and the spread is contractually fixed, a 25 basis point cut in repo lowers the effective rate by the same 25 basis points at the next reset. The bank then recalculates the EMI or the remaining tenure so that the outstanding loan is repaid at the new rate.

Question 40Banking operations, deposit and lending products, digital banking

A customer holds a savings deposit of ₹4 lakh and a fixed deposit of ₹3 lakh in the same bank. The bank fails and is liquidated. What is the maximum amount the customer can recover under deposit insurance?

  1. ₹3 lakh, because only term deposits are covered
  2. ₹7 lakh, because every deposit account is insured separately
  3. ₹5 lakh, because the cover is per depositor per bank Correct answer.
  4. ₹4 lakh, because only savings deposits are covered

Explanation

DICGC insures deposits up to ₹5 lakh per depositor per bank, and the limit applies to the total of all deposits held in the same right and capacity. Savings and fixed deposits in the same bank are therefore aggregated, and the customer receives a maximum of ₹5 lakh rather than the full ₹7 lakh.

Question 41Banking operations, deposit and lending products, digital banking

Which of the following accounts is classified as a demand deposit with a bank?

  1. Tax-saving fixed deposit
  2. Recurring deposit
  3. Fixed deposit
  4. Savings bank deposit Correct answer.

Explanation

A demand deposit is one that the customer can withdraw at any time without prior notice, and savings and current accounts fall in this category. Fixed, recurring and tax-saving deposits are time liabilities because they carry an agreed maturity and generally attract a penalty for early closure.

Question 42Banking operations, deposit and lending products, digital banking

A bank fixed deposit is opened specifically to claim deduction under Section 80C of the Income-tax Act. What is the lock-in period of such a deposit?

  1. Ten years
  2. One year
  3. Five years Correct answer.
  4. Three years

Explanation

A fixed deposit qualifies for Section 80C deduction only if it is a five-year tax-saving deposit, during which premature withdrawal is not permitted. Ordinary fixed deposits have no such lock-in, though breaking them early usually attracts a lower rate of interest.

Question 43Banking operations, deposit and lending products, digital banking

In an electronic funds transfer, what does the Indian Financial System Code (IFSC) of a bank branch identify?

  1. The bank branch that will handle the transfer Correct answer.
  2. The currency in which the transfer will be settled
  3. The type of account held by the beneficiary
  4. The credit rating of the beneficiary's bank

Explanation

IFSC is an eleven-character code in which the first four characters denote the bank, the fifth character is a zero, and the last six characters identify the particular branch. It is used by payment systems such as NEFT, RTGS and IMPS to route a transaction to the correct branch.

Question 44Banking operations, deposit and lending products, digital banking

Under the Cheque Truncation System, what does a collecting bank forward to the clearing house instead of the physical cheque?

  1. The original cheque with a covering letter
  2. An image of the cheque with its MICR data Correct answer.
  3. A scanned copy of the depositor's passbook
  4. A demand draft for the cheque amount

Explanation

Cheque truncation stops the physical movement of cheques: the collecting bank captures an image of the cheque and the MICR line data and sends these electronically to the clearing house. The image is treated as the cheque for presentation and the original stays with the collecting bank.

Question 45Banking operations, deposit and lending products, digital banking

How does the Positive Pay System, mandated by the RBI for high-value cheques, protect a drawer?

  1. It registers the cheque details with the bank for verification before payment Correct answer.
  2. It pledges securities with the bank as collateral for the cheque amount
  3. It confirms the beneficiary's KYC with the beneficiary's bank before issuance
  4. It asks the drawee bank to stop payment after the cheque is presented

Explanation

Under Positive Pay, the drawer submits details such as cheque number, date, payee and amount, and the drawee bank pays only when the presented cheque matches those details. This reduces the risk of fraud from altered or counterfeit cheques.

Question 46Banking operations, deposit and lending products, digital banking

What is the principal feature of UPI Lite?

  1. It pays small amounts from an on-device wallet without a UPI PIN Correct answer.
  2. It permits individual UPI transfers above ₹5 lakh for property purchases
  3. It converts each UPI payment into a bank draft for settlement
  4. It is a credit line that settles UPI dues after thirty days

Explanation

UPI Lite creates a small prepaid balance on the user's device that is loaded from the bank account and used for low-value payments. Each such payment is PIN-less and does not debit the bank account in real time, which keeps the banking channel free for heavier transactions.

Question 47Banking operations, deposit and lending products, digital banking

A savings account has seen no customer-induced transaction for more than ten years and is treated as unclaimed. Where does the balance get transferred?

  1. To the bank's own profit and loss account as miscellaneous income
  2. To the RBI's Depositor Education and Awareness Fund Correct answer.
  3. To the State Bank of India, which acts as custodian for all banks
  4. To the Deposit Insurance and Credit Guarantee Corporation

Explanation

Banks are required to transfer balances in accounts unoperated for ten years or more, along with unclaimed deposits, to the RBI's Depositor Education and Awareness Fund. The depositor or legal heir can still claim the amount from the bank later, and the bank settles with the Fund.

Question 48Banking operations, deposit and lending products, digital banking

What does the Statutory Liquidity Ratio require a bank to maintain?

  1. A prescribed portion of deposits with the RBI in cash
  2. Capital held against the bank's risk-weighted assets
  3. A fixed proportion of loans that must go to priority sectors
  4. The minimum NDTL held in cash, gold or approved securities Correct answer.

Explanation

SLR is the minimum percentage of a bank's net demand and time liabilities that must be held in the form of cash, gold or unencumbered approved securities. It is maintained with the bank itself, unlike the cash reserve ratio, which is kept with the RBI.

Question 49Banking operations, deposit and lending products, digital banking

A borrower takes a home loan of ₹6,00,000 at 12 per cent per annum on a reducing balance basis, repayable through monthly EMIs. What is the interest component of the first EMI?

  1. ₹500
  2. ₹6,000 Correct answer.
  3. ₹72,000
  4. ₹5,000

Explanation

On a reducing balance loan, interest for each month is charged on the outstanding principal at the monthly rate. Twelve per cent a year works out to one per cent a month, so the first month's interest is one per cent of ₹6,00,000, that is ₹6,000. The principal repaid through the EMI reduces the balance and hence the interest charged in later months.

Question 50Banking operations, deposit and lending products, digital banking

When a secured creditor invokes the SARFAESI Act against a defaulting borrower, how long does the demand notice give the borrower to discharge the liability?

  1. One hundred eighty days
  2. Ninety days
  3. Thirty days
  4. Sixty days Correct answer.

Explanation

Section 13(2) of the SARFAESI Act requires the secured creditor to serve a demand notice calling upon the borrower to discharge the secured debt within sixty days. If the borrower does not comply, the creditor may proceed under Section 13(4) to take possession of the secured asset without court intervention.