Digital Banking and E-Banking Questions and Answers

Answer: C

Correct answer: Vedic

Banking in India is traced to the Vedic period, which is what "as early as" points to. The Vedic texts refer to lending and to the charging of interest, and later the Manusmriti and Kautilya's Arthashastra set out rules on deposits, pledges, rates of interest and the conduct of moneylenders.

Indigenous banking continued through the Mughal period with the shroffs and the hundi, a bill of exchange in wide use. Modern joint-stock banking on the European model did begin in the British period, but that is the origin of banking's present form rather than of banking in India.

Answer: D

Correct answer: All of these

All three describe IDBI's mandate as it was constituted in 1964. It was to provide technical and administrative assistance for the promotion and expansion of industry; to undertake market and investment research and technical and economic studies bearing on industrial development; and to act as the lender of last resort within the industrial finance system, financing projects consistent with national priorities.

The breadth reflects its position as the apex institution: it coordinated and refinanced the other development finance institutions as well as lending directly, until the model was wound down and IDBI became a commercial bank.

Answer: B

Correct answer: IRDA

The IRDA - now the IRDAI - is the Insurance Regulatory and Development Authority, a statutory regulator of the insurance industry. It supervises insurers rather than conducting any financing business of its own, so it is not a finance company.

The other three are categories of non-banking financial company: hire-purchase finance companies fund the acquisition of assets on hire-purchase terms, loan companies lend, and mutual benefit finance companies, or nidhis, accept deposits from and lend to their own members.

Answer: D

One can choose the IMPS method to transfer money using net banking, mobile banking, ATMs or SMSs.D) - As internet banking also facilitates IMPS, so all internet banking account holders can use IMPS to transfer funds. There are 2 options available here - One is through MMID. And another is through IFSC Code of bank branch of beneficiary (to whose account amount to be transferred), in this option MMID of neither is needed to perform transaction.

Answer: A

Correct answer: J.M. Keynes

The Imperial Bank of India was constituted on 27 January 1921 by amalgamating the three Presidency Banks of Bengal, Bombay and Madras, following the recommendation of John Maynard Keynes, who had set out the case in his Indian Currency and Finance of 1913 and in his work on the Chamberlain Commission.

The new bank acted as the government's banker and performed some central banking functions until the Reserve Bank of India took them over in 1935. In 1955 the Imperial Bank was itself nationalised and renamed the State Bank of India.

Answer: A

Correct answer: Axis Bank

LIME was launched by Axis Bank in 2015 as India's first mobile application combining a wallet, shopping, payments and banking in a single app. The idea was to remove the separation between a bank's own app and the third-party wallets then gaining ground, letting a customer hold money in a wallet, pay merchants, shop and operate the bank account from one place.

Axis later folded the functionality into its main mobile banking application as the market consolidated around UPI, but LIME is remembered as an early attempt by a bank to meet the wallet providers on their own ground.

Answer: A

Correct answer: Sell securities in the open market and hike the cash reserve ratio.

Both actions drain liquidity from the banking system, which is what contraction requires. Selling securities in the open market takes cash out of the banks in exchange for the paper; raising the cash reserve ratio obliges banks to hold a larger fraction of their deposits with the central bank, where it cannot be lent.

The other combinations either work in the opposite direction or pull against themselves. Buying securities injects liquidity, and lowering the CRR releases it - those are the expansionary measures, used to encourage credit rather than to restrain it.

Answer: D

Correct answer: Reserve Bank of India

Section 22 of the Banking Regulation Act, 1949 provides that no company may carry on banking business in India unless it holds a licence issued by the Reserve Bank of India. The RBI is therefore the licensing authority, and it may refuse a licence, or cancel one, if the bank cannot pay its depositors in full or is being run in a manner detrimental to their interests.

The Act is the source of the power, not the body exercising it; and neither the Government of India nor the Ministry of Finance grants banking licences, though policy on entry is settled in consultation with them.

Answer: B

Correct answer: a body corporate having perpetual secession and a common seal

The Reserve Bank of India was constituted under the Reserve Bank of India Act, 1934 as a body corporate having perpetual succession and a common seal, with power to acquire and hold property and to sue and be sued in its own name.

That statutory personality matters: although the RBI was nationalised in 1949 and its capital is held by the Central Government, it is not a department or extension wing of the Ministry of Finance. It is neither owned by the Indian Banks' Association nor a private company, whatever its shareholding once was.

Answer: C

Correct answer: One Time Password

OTP stands for One Time Password - a numeric code, valid for a single transaction and for a few minutes only, sent to the cardholder's registered mobile number or email and required before the payment is authorised.

It provides the second factor in two-factor authentication: the card details are something the customer has or knows, while the OTP proves possession of the registered phone at the moment of the transaction. Because it expires and cannot be reused, an intercepted OTP is worthless afterwards, which is why the RBI made it mandatory for card-not-present transactions in India.