Banking Law & Operations

RBI & Monetary Policy

1. The Reserve Bank of India was established under:
A. Banking Regulation Act
B. RBI Act, 1934
C. Companies Act
D. SARFAESI Act
Answer: B
Explanation: The Reserve Bank of India Act, 1934 established the RBI as the central bank responsible for monetary policy, currency issuance, and banking regulation.

2. RBI commenced operations in:
A. 1934
B. 1935
C. 1947
D. 1950
Answer: B
Explanation: RBI began functioning on 1 April 1935.

3. RBI headquarters is located in:
A. Delhi
B. Mumbai
C. Kolkata
D. Chennai
Answer: B
Explanation: The central office of RBI is located in Mumbai, which is India’s financial capital.

4. Monetary policy in India is framed by:
A. Ministry of Finance
B. RBI
C. SEBI
D. NABARD
Answer: B
Explanation: The Reserve Bank of India formulates and implements monetary policy.

5. The Monetary Policy Committee consists of:
A. 4 members
B. 5 members
C. 6 members
D. 7 members
Answer: C
Explanation: The MPC has six members—three from RBI and three appointed by the Government.

6. Repo rate means:
A. Rate at which RBI lends to banks
B. Rate banks lend to public
C. Deposit interest rate
D. Bond rate
Answer: A
Explanation: Repo rate is the interest rate at which RBI lends money to commercial banks for short-term needs.

7. Reverse repo rate means:
A. Rate at which RBI borrows from banks
B. Rate banks borrow from RBI
C. Interest on deposits
D. Government borrowing rate
Answer: A
Explanation: Reverse repo is the rate at which banks park surplus funds with RBI.

8. CRR stands for:
A. Cash Reserve Ratio
B. Credit Reserve Ratio
C. Capital Reserve Ratio
D. Currency Reserve Ratio
Answer: A
Explanation: CRR is the portion of deposits banks must maintain with RBI as cash reserve.

9. SLR stands for:
A. Statutory Liquidity Ratio
B. Security Liquidity Ratio
C. State Liquidity Ratio
D. System Liquidity Ratio
Answer: A
Explanation: SLR is the minimum percentage of deposits banks must maintain in liquid assets such as cash, gold, or government securities.

10. RBI acts as lender of:
A. First resort
B. Last resort
C. Market lender
D. Government lender
Answer: B
Explanation: RBI provides emergency funding to banks facing liquidity problems.

11. RBI regulates:
A. Commercial banks
B. NBFCs
C. Payment banks
D. All of the above
Answer: D
Explanation: RBI supervises the entire banking and financial system.

12. RBI governor is appointed by:
A. Parliament
B. Central Government
C. Supreme Court
D. RBI Board
Answer: B
Explanation: The Central Government appoints the RBI Governor.

13. RBI issues:
A. Currency notes
B. Coins
C. Government bonds
D. Shares
Answer: A
Explanation: RBI issues currency notes except ₹1 note, which is issued by the Government of India.

14. Coins in India are issued by:
A. RBI
B. Government of India
C. SEBI
D. Finance Commission
Answer: B
Explanation: Coins and ₹1 notes are issued by the Government of India, though circulated through RBI.

15. RBI manages:
A. Public debt
B. Currency issue
C. Monetary policy
D. All of the above
Answer: D
Explanation: RBI performs multiple central banking functions including debt management and monetary regulation.

16. RBI regulates payment systems under:
A. Payment and Settlement Systems Act, 2007
B. Banking Regulation Act
C. Companies Act
D. Consumer Act
Answer: A
Explanation: This Act empowers RBI to supervise and regulate payment systems like NEFT and RTGS.

17. RBI controls inflation through:
A. Monetary policy
B. Fiscal policy
C. Trade policy
D. Industrial policy
Answer: A
Explanation: RBI adjusts interest rates and liquidity to control inflation.

18. Bank rate is determined by:
A. RBI
B. SEBI
C. Finance Ministry
D. Parliament
Answer: A
Explanation: Bank rate is the rate at which RBI lends long-term funds to banks.

19. RBI acts as banker to:
A. Government
B. Banks
C. Both
D. Public
Answer: C
Explanation: RBI acts as banker to banks and banker to the Government.

20. RBI supervises banks through:
A. Inspection
B. Regulation
C. Monitoring
D. All of the above
Answer: D
Explanation: RBI supervises the banking system through regulatory inspections and compliance monitoring.

PART-II (21–40)

Digital Banking & Payment Systems

21. UPI was developed by:
A. RBI
B. NPCI
C. SEBI
D. NABARD
Answer: B
Explanation: National Payments Corporation of India (NPCI) developed the Unified Payments Interface.

22. UPI stands for:
A. Unified Payments Interface
B. Universal Payment Interface
C. Unique Payment Interface
D. Universal Payments Index
Answer: A
Explanation: UPI enables instant mobile payments between bank accounts.

23. IMPS stands for:
A. Immediate Payment Service
B. Instant Money Payment System
C. Immediate Money Payment Scheme
D. Instant Payment Settlement
Answer: A
Explanation: IMPS allows instant interbank electronic fund transfer.

24. NEFT stands for:
A. National Electronic Fund Transfer
B. Net Electronic Fund Transfer
C. National Exchange Fund Transfer
D. None
Answer: A
Explanation: NEFT enables electronic fund transfer across banks in batches.

25. RTGS stands for:
A. Real Time Gross Settlement
B. Rapid Transfer Gross Settlement
C. Reserve Transfer Gross System
D. None
Answer: A
Explanation: RTGS enables large-value transactions processed individually in real time.

26. IFSC code contains:
A. 9 characters
B. 10 characters
C. 11 characters
D. 12 characters
Answer: C
Explanation: IFSC has 11 characters identifying bank branch for electronic transfers.

27. NPCI stands for:
A. National Payments Corporation of India
B. National Processing Corporation of India
C. National Payment Council of India
D. None
Answer: A
Explanation: NPCI operates UPI, RuPay, IMPS, and other payment systems.

28. BHIM app is based on:
A. NEFT
B. RTGS
C. UPI
D. ECS
Answer: C
Explanation: BHIM is a UPI-based digital payment application.

29. KYC stands for:
A. Know Your Customer
B. Know Your Credit
C. Keep Your Customer
D. Key Your Customer
Answer: A
Explanation: KYC norms ensure customer identification and prevention of money laundering.

30. CKYC means:
A. Central Know Your Customer
B. Central KYC Registry
C. Customer KYC
D. Central Knowledge System
Answer: B
Explanation: CKYC allows single KYC across financial institutions.

31. Digital wallets are regulated by:
A. RBI
B. SEBI
C. Government
D. Finance Commission
Answer: A
Explanation: RBI regulates Prepaid Payment Instruments (PPIs).

32. Payment banks are licensed by:
A. RBI
B. SEBI
C. NABARD
D. Government
Answer: A
Explanation: RBI introduced payment banks to promote financial inclusion.

33. Small Finance Banks are regulated by:
A. RBI
B. SEBI
C. NABARD
D. Government
Answer: A
Explanation: RBI licenses Small Finance Banks for inclusive banking services.

34. Cyber security guidelines for banks are issued by:
A. RBI
B. SEBI
C. IT Ministry
D. Finance Commission
Answer: A
Explanation: RBI issues cyber security frameworks to protect digital banking systems.

35. ATM stands for:
A. Automated Teller Machine
B. Automatic Transfer Machine
C. Automated Transfer Mode
D. None
Answer: A
Explanation: ATMs allow customers to withdraw cash and perform basic banking transactions.

36. Digital payment settlement handled by:
A. NPCI
B. RBI
C. Both
D. SEBI
Answer: C
Explanation: NPCI operates systems while RBI regulates and settles transactions.

37. Online banking fraud complaints are handled by:
A. Banking Ombudsman
B. Civil Court
C. SEBI
D. Police only
Answer: A
Explanation: RBI’s Ombudsman Scheme addresses customer grievances.

38. Aadhaar based e-KYC introduced by:
A. RBI
B. UIDAI
C. SEBI
D. NPCI
Answer: B
Explanation: UIDAI provides Aadhaar authentication services used for e-KYC.

39. Mobile banking guidelines are issued by:
A. RBI
B. SEBI
C. Finance Ministry
D. Telecom Authority
Answer: A
Explanation: RBI regulates mobile banking operations for security and compliance.

40. Digital banking mainly promotes:
A. Financial inclusion
B. Cashless economy
C. Faster transactions
D. All of the above
Answer: D
Explanation: Digital banking improves access, speed, and efficiency of financial services.