Digital Banking and E-Banking Questions and Answers

Answer: B

The Ministry of Finance, Department of Economic Affairs had constituted a Committee on Digital Payments to review the payment systems in the country and to recommend appropriate measures for encouraging Digital Payments.
The Committee was constituted on 23rd August 2016 under the Chairmanship of Shri. Ratan P. Watal, Principal Advisor, NITI Aayog and former Finance Secretary to the Government of India.

Answer: A

Correct answer: Demand draft

A demand draft is a paper instrument. The remitter buys it at a branch, it is physically handed or posted to the payee, and the payee presents it for payment - nothing about it is electronic.

The other three are all electronic banking services: ECS, the Electronic Clearing Service, handles bulk repetitive credits and debits such as salaries and utility bills; an ATM dispenses cash and performs account operations electronically; and SPNS, the Shared Payment Network System, links ATMs of different banks so a card works across the network.

Answer: B

The government, in collaboration with telecom and IT industry, launched a toll-free helpline - 14444 - to address consumer queries on digital payments in January 2017.
The helpline was launched aiming at addressing questions regarding various platforms, including the newly-launched Bharat Interface for Money (BHIM), e-Wallets, Aadhaar-enabled payment system and USSD.

Answer: C

Correct answer: A proposition by EV to attract highly qualified professionals from other countries

The Blue Card is the European Union's work and residence permit for highly qualified non-EU nationals, introduced in 2009 and modelled loosely on the United States green card. It requires a recognised qualification and a job offer above a salary threshold, and it carries rights of residence, family reunification and movement between member states.

It is not a payment instrument at all. The name is the trap here - despite sounding like a companion to credit and debit cards, it belongs to immigration policy rather than to banking.

Answer: D

Correct answer: All of the above

Banks are classified along all three axes, and the classifications cut across one another. By ownership they are public sector, private sector or cooperative. By law they are scheduled or non-scheduled, according to inclusion in the Second Schedule to the RBI Act. By function they are commercial, industrial, agricultural, exchange or central banks.

A single institution therefore carries a label from each: the State Bank of India is public sector by ownership, scheduled by law and commercial by function.

Answer: C

Correct answer: Indian Banking Regulation Act, 1949

The Banking Regulation Act, 1949 is the governing statute for commercial banks in India. It defines banking business, requires a licence from the RBI, regulates capital, reserves, liquid assets, management and branch expansion, and empowers the RBI to inspect, direct, amalgamate and wind up banks.

The RBI Act, 1934 constitutes the central bank itself; the Companies Act governs banks in their character as companies, subordinate to the banking statute; and the SEBI Act concerns the securities market and applies only to a bank's capital market activities.

Answer: A

Correct answer: Nationalisation of commercial banks has achieved its objectives.

This is the false statement. Nationalisation achieved a great deal in reach - branch networks spread into rural India, deposits and priority sector credit grew enormously - but its objectives were not fully met: directed lending brought poor asset quality, weak recovery and mounting non-performing assets, and the reforms from 1991 onwards were a direct response to those shortcomings.

The other three statements are accepted. Private banks before 1969 were largely profit-driven and concentrated on industry and trade; nationalisation was motivated by the need to take credit to agriculture, small industry and weaker sections; and administrative efficiency did improve in several respects.

Answer: B

Correct answer: SEBI

The office of the Controller of Capital Issues was abolished when the Capital Issues (Control) Act, 1947 was repealed in 1992, and its functions passed to the Securities and Exchange Board of India.

The change was a substantive one, not merely administrative. Under the CCI, companies needed government approval for an issue and for its pricing; under SEBI, pricing was freed and regulation shifted to disclosure - the issuer must tell investors everything material, and investors judge for themselves. AMFI is the mutual fund industry association and has no such statutory role.

Answer: D

Correct answer: 1955

The Industrial Credit and Investment Corporation of India was formed in 1955 as a private sector development finance institution, with participation from Indian and British interests and support from the World Bank.

Its private character distinguished it from IFCI, set up by statute in 1948, and from IDBI, established in 1964 as a public apex institution. ICICI later reversed into its own banking subsidiary in 2002, becoming ICICI Bank - the first Indian institution to abandon the development finance model for universal banking.

Answer: D

Correct answer: 1668

The Sveriges Riksbank, the central bank of Sweden, was established in 1668 and is the oldest in the world. It grew out of the failure of Stockholms Banco, whose over-issue of notes prompted the Riksdag to take the institution under parliamentary control.

The Bank of England followed in 1694 and became the model for most later central banks, developing the note issue, the lender of last resort function and management of the government's debt. India's own central bank, the Reserve Bank, dates only from 1935.