Digital Banking and E-Banking Questions and Answers

Answer: C

Correct answer: (i) is correct but (ii) is incorrect

Statement (i) is correct: capital adequacy norms strengthen the capital base, requiring a bank to fund itself with more of its own capital relative to its risk-weighted assets, so that losses fall on shareholders before depositors.

Statement (ii) is incorrect, and inverts the effect. The norms limit lending rather than enabling more of it: a bank whose capital ratio is at the floor cannot expand risk-weighted assets without raising fresh capital. That constraint is the whole point - it prevents a bank from growing its balance sheet on depositors' money alone.

Answer: D

Correct answer: Shivaraman committee

NABARD was established in 1982 on the recommendation of the Committee to Review the Arrangements for Institutional Credit for Agriculture and Rural Development, chaired by B. Sivaraman and appointed by the RBI in 1979.

The committee found rural credit fragmented across the Agricultural Refinance and Development Corporation and two RBI departments, and proposed a single apex institution - which NABARD became. The Tandon and Chore committees dealt with working capital norms, Talwar with customer service, and Narasimham with banking sector reform in the 1990s.

Answer: D

Correct answer: All of the above

All three contribute. Continuously rising public expenditure and money supply generate demand-pull inflation, as more money chases the available goods. Inadequate performance by agriculture and industry limits the supply of those goods, so the excess demand meets a constrained supply. And hikes in both market and administered prices - fuel, fertiliser, minimum support prices - feed cost-push inflation directly.

Indian inflation has characteristically combined all three, which is why monetary tightening alone has rarely been sufficient and supply-side measures have been needed alongside it.

Answer: D

Correct answer: All of the above

The question is framed to take all three descriptions together, since they overlap rather than compete. Price stability with an adequate flow of credit to productive sectors is the classic twin objective of Indian monetary policy; controlling prices and influencing the economy describes the same aim in broader terms; and moderating price and credit growth describes the contractionary stance adopted when inflation runs high.

Since 2016 the framework has been formalised around a flexible inflation target of 4 per cent with a band of plus or minus 2 percentage points, set by the Monetary Policy Committee.

Answer: B

Correct answer: To mobilize the saving of low and high income groups

The Unit Trust of India was established in 1964 to mobilise the savings of small investors and channel them into the capital market - bringing corporate securities within reach of people who could not sensibly buy and hold a diversified portfolio themselves.

Its Unit Scheme 1964 was designed for exactly that reach, so the fund drew from savers across the income range rather than being confined to any one group. Restricting the answer to corporates or to high income groups would miss the point of a unit trust, which is to pool many small subscriptions.

Answer: D

Correct answer: Bank of Venice

The Bank of Venice, usually dated to 1157, is named in the standard texts as the first public bank. It arose out of the Venetian republic's need to fund a war: the state took forced loans from its citizens, and the transferable claims on the government that resulted became a form of deposit banking.

The other options are modern and Indian. Both the Bank of Venice and Casa di San Giorgio of Genoa belong to the Italian city-states, where the institutions and much of the vocabulary of modern banking were first developed.

Answer: B

Correct answer: self actualisation

Maslow's hierarchy runs from physiological needs at the base, through safety, belongingness and love, and esteem, to self-actualisation at the top - the realisation of one's full potential. It comes last because the lower needs are held to be prepotent: they must be reasonably satisfied before the next becomes a motivator.

Of the options given, safety is lowest, then belongingness and love, then self-esteem, with self-actualisation above all of them. In marketing and banking contexts the hierarchy is used to explain how customer needs change as basic financial security is achieved.

Answer: D

Correct answer: All of the above are correct.

Every statement offered is true, so none of them is the untrue one and the correct response is that all are correct.

RTGS settles transactions individually and continuously as they are received, rather than netting them in batches, so the beneficiary bank receives the funds in real time as soon as the remitting bank sends them. The floor of ₹2 lakh applies to the transaction itself, so it is both the minimum that can be remitted and the minimum that can be received - the two statements describe the same limit from either side. There is no upper ceiling, which is why RTGS is the channel for large-value payments while NEFT serves smaller ones.

Answer: D

Correct answer: 3 types

On the basis of ownership banks fall into three types: public sector banks, in which the government holds a majority stake; private sector banks, owned by private shareholders; and cooperative banks, owned by their members on cooperative principles.

Ownership is only one axis of classification. Banks are also classified by law into scheduled and non-scheduled, according to inclusion in the Second Schedule to the RBI Act, and by function into commercial, industrial, agricultural, exchange and central banks.

Answer: D

Correct answer: None of the above

None of the three named instruments is selective. Bank rate policy, the cash reserve ratio and open market operations are all general, or quantitative, controls: they act on the total volume of credit in the system without distinguishing between its uses.

Selective, or qualitative, controls direct credit towards or away from particular purposes - margin requirements on advances against specified commodities, ceilings on credit for particular sectors, differential interest rates, and moral suasion. The distinction is between controlling how much credit there is and controlling where it goes.