Digital Banking and E-Banking Questions and Answers

Answer: D

Correct answer: 1990 - lDBI

The Small Industries Development Bank of India was set up in 1990 as a wholly owned subsidiary of IDBI, to act as the principal financial institution for the promotion, financing and development of small-scale industry and to coordinate the institutions engaged in that work.

It was later delinked from IDBI, whose own shareholding was transferred, and now stands as an independent development financial institution serving the micro, small and medium enterprise sector - chiefly through refinance to banks and other lenders rather than by direct lending alone.

Answer: B

Correct answer: Virtual Banking

Virtual banking is banking conducted through the World Wide Web - the bank exists for the customer as a website or application rather than as a branch, and all account operation, transfers and payments happen online.

The other terms describe quite different distinctions. Universal banking refers to a bank offering the whole range of financial services under one roof, including insurance and investment banking; wholesale banking refers to services provided to corporates, institutions and other banks rather than to retail customers. Both describe what a bank does, not the channel through which it reaches the customer.

Answer: C

Correct answer: Both (a) and (b)

Currency chest balances are verified both by the bank's own officials and by officials of the Reserve Bank of India. The bank conducts its own periodic verification as an internal control, and RBI officers inspect independently, since the chest holds the RBI's currency and the notes remain its property until issued.

The dual arrangement reflects the nature of the arrangement: the chest is operated by the commercial bank on the RBI's behalf, so accountability runs in both directions and neither party's verification alone would be sufficient.

Answer: B

Airtel Payments Bank and Mastercard, a leading global payments and technology firm has launched India’s first online debit card along with a prepaid card, both accessible via the Myairtel App.
The online debit card will enable customers of Airtel Payments Bank to make digital payments at over 100,000 online merchants.

Answer: A

Correct answer: 91 Days

The 91-day bill is the classic Treasury Bill, and the maturity the question asks for. Treasury Bills are short-term instruments issued by the Government of India through the RBI at a discount to face value, redeemed at par, with the difference constituting the investor's return.

India also issues 182-day and 364-day bills, so an answer of "both" may look tempting; but 364-day paper is a separate tenor rather than an alternative maturity for the same instrument, and the 91-day bill is the benchmark to which the question refers.

Answer: D

Correct answer: Improving the earning of equity holders

SEBI has no mandate to improve what shareholders earn. Investment returns depend on company performance and market conditions, and a regulator that guaranteed or targeted returns would be underwriting risk that properly belongs to the investor.

Its statutory functions are to protect the interests of investors, to promote the development of the securities market and to regulate it - which covers ensuring fair practice by companies through disclosure and governance requirements, and promoting efficient service by brokers and other intermediaries through registration and conduct rules.

Answer: A

Correct answer: E-Banking

E-banking, or electronic banking, is the general term for conducting financial transactions by electronic means, and it is the umbrella under which the other channels sit.

M-banking is the subset carried out through a mobile phone, and POS banking refers to card transactions at a point-of-sale terminal - both are forms of e-banking rather than alternatives to it. Universal banking is not a channel at all but a description of a bank offering the full range of financial services. The question asks for the general category, and e-banking is it.

Answer: D

A first-of-its kind application, ‘Eazypay’ offers customers the improved convenience of paying by using their mobile phone through Unified Payment Interface (UPI), any credit / debit card & internet banking, and ‘Pockets’, digital wallet of ICICI Bank.

Answer: B

Correct answer: Unified Payments Interface

UPI allows several bank accounts to be operated through a single mobile application, addressing payments by a virtual identifier rather than account and IFSC details. It was launched in 2016 and is operated by the National Payments Corporation of India.

Answer: A

Correct answer: iii, ii, iv, i

Place each event on the timeline and read them off in ascending order:

(iii) The Industrial Development Bank of India was established in 1964, originally as a wholly owned subsidiary of the RBI.
(ii) General insurance business was nationalised in 1972, under the General Insurance Business (Nationalisation) Act, which brought 107 insurers together into GIC and its four subsidiaries.
(iv) Capital adequacy norms were introduced for commercial banks in 1992, when the RBI adopted the Basel I framework on the Narasimham Committee’s recommendation.
(i) The rupee became convertible at the market rate on the current account in 1993–94, after the dual exchange rate of LERMS was unified in March 1993 and full current account convertibility was accepted in August 1994.

The order is therefore iii, ii, iv, i. Note that none of the four options as recorded carried this sequence - the keyed option read “iv, iii, ii, i” - so the keyed option’s text has been corrected to the true chronology.