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PPB Mock Test 3

Principles & Practices of banking

JAIIB Exam Study Material: PPB Mock Test 3

Eligibility Criteria for banks to apply for PD licence ...... (i) Minimum Net Owned Fund of 1,000 crore, (ii) Minimum CRAR of 9 per cent, (iii) Net NPAs of less than 3 per cent and a profit making record for the last three years

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

Ans - d
.............................................

Which of the following is included in Risk Based Supervision of Banks by the RBI? (i) It is essential on site inspection driven, (ii) The inspection are conducted with references to Balance sheet dates, (iii) Supervisions follow-up commences with the detailed findings of annual financial inspection

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

Ans - d
.............................................

Banker can exercise the right of general lien on ......

a. Valuable articles kept in safe deposit vault
b. Securities left with the bank negligently
c. Securities deposited for securing a loan
d. Securities in the name of other relatives

Ans - c
.............................................

Which of the following are not off-balance sheet items? (i) overdraft limit sanctioned to a firm, (ii) bid bond, (iii) credit balance in the overdraft account

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

Ans - b
.............................................

Primary dealers also known as PDs, deal ......

a. mutual funds
b. Shares
c. government securities
d. All the above

Ans - c
.............................................

Which of the following statements, is correct regarding licensing of a banking company under Banking Regulation Act 1949? (i) It is necessary to obtain a license for opening of Banking company, (ii) RBI has powers to cancel the license, (iii) The bank may make an appeal with the central government against the decisions of the RBI

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

Ans - d
.............................................

The central banking authority i.e. RBI in India, is performing two distinct roles in the context of money market that include ......

a. monetary control and banking supervision
b. issue of currency and maintenance of CRR
c. handling govt. business and maintaining price stability
d. banking supervision and financial stability

Ans - a
.............................................

Which of the following statement, is correct regarding Risk Based supervision of RBI? (i) The RBI will have effective review, evaluation and follow-up of the risk profile of the concerned bank, (ii) The focal point of contacts for all banks would be central office of RBI and its Regional offices, (iii) The risk profile would focus on high risk areas

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

Ans - d
.............................................

In periods of boom, which leads to economic instability Reserve Bank does not resort to ...... (i) Selling of first class securities in its precession in the market, to reduce the supply of money as a measure of open market operations, (ii) Bying of approved securities in the market as a measure of open market operations, (iii) Increasing the bank rate as a measure of open market operations

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

Ans - d
.............................................

Equity investment by a bank in companies engaged in non-financial services activities would be subject to a limit of ......

a. 10 per cent of the investee company’s paid up share capital
b. 10 per cent of the bank’s paid up share capital and reserves
c. Either a or b, whichever is less
d. Either a or b, whichever is more

Ans - c
.............................................

Which of the following is the advantage of bancassurance business to banks (which one cannot be included)? (i) improved customer retention and overall customer satisfaction, (ii) higher employee productivity, (iii) means of earning risk free non-interest income

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

Ans - d
.............................................

Which of the following is the supplementary liquid reserve requirements of banks, in addition to CRR?

a. CRAR
b. Marginal Ratio
c. SLR
d. CAR

Ans - c
.............................................

What are the features of selective credit control? (i) They effect only the lenders but not the borrowers, (ii) They distinguish between essential and non-essential uses of Bank credit, (iii) Only non-essential uses are brought under the scope of Credit Bank controls

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

Ans - c
.............................................

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