Digital Banking and E-Banking Questions and Answers

Answer: B

Correct answer: CREDIT

A credit card lets the holder buy without paying at the time: the issuer settles with the merchant and bills the cardholder later, so the card is a short-term credit facility with a revolving limit and an interest-free period before the due date.

A debit card, by contrast, draws immediately on the holder's own account, so payment is not deferred at all. An ATM card is for cash withdrawal and account operation rather than merchant purchase, and a Kisan Credit Card is a specific agricultural credit product for farmers' input needs.

Answer: A

Correct answer: Only (i) is correct

The cash reserve ratio and the statutory liquidity ratio are liquidity instruments. The CRR requires banks to hold a proportion of their net demand and time liabilities as cash with the RBI, and the SLR requires a further proportion in cash, gold or approved securities - together ensuring that a bank can meet withdrawals and that credit creation is contained.

They are not designed to secure a bank's financial or profit position. Indeed both work against profitability, since the funds they immobilise earn little or nothing compared with what lending them would return.

Answer: D

Correct answer: IDBI

IDBI was the apex institution for industrial finance, and one of its principal functions was refinancing loans made by banks and other institutions to industrial units - supplying the long-term funds the banks themselves lacked.

The others serve different purposes: NABARD refinances agricultural and rural credit, the DICGC insures deposits, and the ECGC insures exporters against payment risk. Only IDBI stood behind industrial lending in this way.

Answer: D

Correct answer: IFCI

The Industrial Finance Corporation of India, established in 1948, was the first development financial institution set up in independent India. Its purpose was to provide medium and long-term finance to industry at a time when the capital market was too shallow to supply it.

The others came later and filled different gaps: ICICI in 1955, with World Bank support and a private sector orientation; IDBI in 1964, initially as a subsidiary of the RBI and intended as the apex institution; and IRBI in 1985, to rehabilitate sick industrial units.

Answer: A

Correct answer: SIDBI

SIDBI, the Small Industries Development Bank of India, has not become a commercial bank. It remains a development financial institution, refinancing and lending to the micro, small and medium enterprise sector rather than accepting demand deposits or running a branch network for the public.

The other three all converted. ICICI Ltd merged into ICICI Bank in 2002, IDBI became IDBI Bank, and UTI's banking arm became UTI Bank, later renamed Axis Bank. Those conversions reflected a general shift away from the development finance model after liberalisation.

Answer: B

Correct answer: Both (i) and (ii)

Both statements are correct. Statement (i) - Microfinance Institutions do draw a large share of their funds from banks, and that lending sits inside the RBI’s framework: bank credit to MFIs for on-lending qualifies as priority sector lending subject to RBI conditions, and MFIs organised as NBFC-MFIs are themselves registered with and regulated by the RBI. Statement (ii) - this is simply what an MFI is. They extend small-value collateral-free loans, typically through joint-liability groups, to low-income households and to tiny informal enterprises that ordinary banks find uneconomic to serve. Since neither statement contains an error, the answer is that both are correct. The record had been keyed to “Only (ii)”, which wrongly treats the RBI’s role in statement (i) as false.

Answer: D

Aadhaar Enabled Payment System or AEPS is a new payment service offered by the National Payments Corporation of India to banks, financial institutions using Aadhaar number and online UIDAI authentication through their respective Business correspondent service centres.
AEPS allows four types of banking transactions: Balance Enquiry, Cash Withdrawal, Cash Deposit, and Aadhaar to Aadhaar Funds TransferE) Customers can find out information and do transfer of funds through the help of business correspondents of any bank.

Answer: B

Correct answer: Providing personal banking services directly to the consumers

Retail banking is the provision of banking services directly to individual consumers - savings and current accounts, personal, housing and vehicle loans, cards, and payment services - as distinct from wholesale banking, which serves corporates and institutions.

The name misleads: it has nothing to do with retail traders, whose finance would be ordinary commercial lending. Collecting dividend and interest warrants is a service a bank performs, but it is one product rather than a definition of the segment.

Answer: B

NEFT used to operate in hourly batches.
On may 8, 2017, the RBI announced that additional 11 settlement batches at half- hourly intervals will be introduced from July 10 2017 , beginning from 8.30 am till 6.30 pm.
With this, the total number of half hourly settlement batches during the day will increase to 23.

Answer: B

Correct answer: They kept a special type of table to transact their business

The Italian money lenders worked at a bench or table in the marketplace, and the Italian word for that bench - banco - is where "bank" itself comes from. The lenders were named after the furniture they traded across.

The etymology carries a second, grimmer trace: a lender who failed had his bench broken, banca rotta, which gives us "bankrupt". That the lenders were wealthy or held deposits was true but is not the origin of the name, which is what the question asks.