Friday, April 17, 2015

Day 5 - Questions


Day 5 - Primary Functions of Banks - Part II

(Loans and Advances, Cash Credit (CC), Overdraft (OD), Bill Discounting, Base Rate, Non Performing Assets (NPA), Priority Sector Lending (PSL), SARFAESI Act, Loan Securities - Pledge, Hypothecation, Mortgage, Lien, etc.)


Recommended Study links - (Go through these topics before attempting MCQs)


1.  
What is Spread?
a.  Difference between deposit interest rate (paid by bank) and loan interest rate (charged by bank)
b.  Difference between interest rate paid in savings deposit and term deposit
c.  Difference between base rate and savings deposit interest rate
d.  None of the above

2.  Which loans are referred as Clean loans/advances?
a.  Loans against deposits
b.  Loans against mortgages
c.  Loans against personal worth
d.  Hypothecated loans

3.  Cash Credit (CC) accounts have a certain limit of withdrawal, known as -
a.  Credit Facility
b.  Current Facility
c.  No such limit is there
d.  None of the above

4.  Which one is true regarding Cash Credit (CC) and Overdraft (OD) -
i.  Cash credits are generally offered to businessmen, whereas overdraft can be used both by individual and businessmen
ii.  There is no need for any separate account for availing Overdraft facility.
iii.  A certain percentage of the value of the commodities / debts pledged by the account holder is the credit limit or credit facility of Cash Credit Account

a.  Only (iii) is true
b.  Only (ii) is true
c.  All are true
d.  Only (i) and (ii) are true

5.  If the Bill of Exchange is not honored on the due date, there is always a change the drawer will become liable on the bill. This is called a Contingent Liability. What does it mean?
a.  A liability that will only arise if a certain event occurs
b.  A liability that will remain valid until the debtor pays his debt
c.  Both (a) and (b)
d.  None of the above

6.  What is the time period to mark a loan asset as non-performing?
a.  1 year non-payment of interest or principal of loan amount
b.  6 months non-payment of interest or principal of loan amount
c.  3 months non-payment of interest or principal of loan amount
d.  None of the above

7.  Sub-standard Assets are those loan assets, whose -
a.  Interest or principal of loan amount is not defaulted for 3 months
b.  Interest or principal of loan amount is defaulted for 3 to 12 months
c.  Interest or principal of loan amount is defaulted for more than 12 months
d.  None of the above

8.  What is the full form of SARFAESI Act?
a.  Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest
b.  Securitization and Restructurization of Financial Assets and Enforcement of Security Interest
c.  Securitization and Reconstruction of Financial Assets and Enforcement of Securitization Interest
d.  None of the above

9.  SARFAESI Act is not applicable for -
i.  Secured loans (loans backed by underlying securities)
ii.  Unsecured loans (loans not backed by underlying securities)
iii.  Loans for agricultural purpose

a.  Only (i)
b.  Both (i) and (ii)
c.  Both (ii) and (iii)
d.  Only (iii)

10.  What is the notice period to seize secured assets by SARFAESI Act?
a.  1 month
b.  2 months
c.  3 months
d.  1 year

11.  Which of the following is/are Asset Reconstruction Companies (ARC)?
a.  ARCIL
b.  ACRE
c.  Phoenix ARC Pvt. Ltd.
d.  All of the above

12.  Which of the following is not a sector for Priority Sector Lending (PSL)?
a.  Agriculture and Allied Activities
b.  Large Industrial Sector
c.  Weaker Section
d.  Micro Credit

13.  Which one is the Priority Sector Lending target percentage?
a.  30 % of ANBC
b.  40 % of ANBC
c.  20 % of ANBC
d.  35 % of ANBC

14.  Which one is the sub-target of PSL for Agricultural activities?
a.  10 % of ANBC
b.  18 % of ANBC
c.  20 % of ANBC
d.  28 % of ANBC

15.  Loans against deposits is which type of loan security?
a.  Pledge
b.  Hypothecation
c.  Mortgage
d.  Lien

16.  Vehicle loans, such as bus loan, is a type of -
a.  Pledge
b.  Hypothecation
c.  Mortgage
d.  Lien

17.  Which is the minimum chargeable interest for the credit sanctioned to the borrower by a bank?
a.  Repo rate
b.  Reverse Repo rate
c.  Base rate
d.  MSF rate

18.  Base rate replaced -
a.  Prime Lending Rate
b.  Repo Rate
c.  Reverse Repo Rate
d.  MSF Rate

19.  Is it possible to sanction loan bearing interest rate less than Base rate? If yes, then which one is the case -
a.  Not possible
b.  Loans to bank's own employees and loans against deposits
c.  DRI scheme beneficiaries
d.  Both (b) and (c)

20.  Choose the correct option regarding DRI Scheme -
i.  Family income ceiling per annum in rural and urban area should be less than Rs. 18,000 and Rs. 25,000 respectively.
ii.  Maximum loan limit is Rs. 15,000 (Housing loan up to Rs. 20,000)
iii.  Banks are required to lend 1 % of their total outstanding advances under DRI Scheme every year.

a.  Only (i)
b.  (i), (ii) and (iii)
c.  (ii) and (iii)
d.  (i) and (iii)





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