Digital Banking and E-Banking Questions and Answers

Answer: B

UPI is an indigenously developed platform by National Payments Corporation of India (NPCI) and set up with the support of the Reserve Bank and Indian Banks Association (IBA).
Through UPI, all payments are instant but it provides 24/7 service, irrespective of banking hours.

Answer: B

Correct answer: Banking Companies Act, 1949

Section 17 of the Banking Regulation Act, 1949 - originally enacted as the Banking Companies Act - requires every banking company to transfer a prescribed percentage of its profit each year to a reserve fund before declaring any dividend.

The obligation is a prudential one, building a capital cushion out of retained earnings, and it is stricter than anything the Companies Act imposes on companies generally. Where the two statutes overlap, the banking legislation prevails for a banking company.

Answer: B

Correct answer: April 1, 2009

From 1 April 2009 the RBI directed that customers could use any bank's ATM for cash withdrawal without charge, with the cost of the transaction settled between the banks through an interchange fee rather than passed to the customer.

The measure made the ATM network effectively shared: a customer's card worked anywhere, and the acquiring bank was compensated by the issuing bank. Free-use limits at other banks' ATMs were introduced later, but the principle of interchange rather than customer charging dates from this point.

Answer: C

Correct answer: Branch Banking System

Indian banks operate on the branch banking model: a single bank incorporated once, operating through a network of branches under a head office, with capital, reserves and management held centrally.

The advantages are diversification of risk across regions, economies of scale and the ability to move funds from surplus to deficit areas. The alternative unit banking system, once common in the United States, confines a bank to a single office and leaves it exposed to the fortunes of one locality. Chain banking, where separate banks share common ownership, is not the Indian pattern.

Answer: C

Correct answer: SWIFT

SWIFT - the Society for Worldwide Interbank Financial Telecommunication - is the network banks use to exchange the instructions that move money across borders. Strictly it is a secure messaging system rather than a settlement system: it carries the payment instruction, while the funds move through correspondent accounts between the banks.

RTGS and NEFT are domestic Indian systems operated by the RBI, settling rupee payments between banks within India. Neither has any role in international transfers, which is the distinction the question is testing.

Answer: B

Correct answer: RTGS

Real Time Gross Settlement settles each instruction individually and immediately, rather than batching them. It carries a minimum of Rs. 2 lakh, which is what confines it to high-value transfers.

Answer: D

Correct answer: All of these

There is no single statutory definition of banking accepted everywhere, so the textbooks quote several authorities together - Hart, Whitehead and Kinley among them - each capturing the same essentials from a different angle.

What the definitions have in common is the two elements the law also relies on: accepting deposits from the public, repayable on demand or otherwise, and lending or investing those deposits. Section 5(b) of the Banking Regulation Act, 1949 puts the same two elements into statutory form for India.

Answer: D

Correct answer: All of the above

NABARD was established in 1982 by taking over the rural credit functions previously spread across three bodies. The Agricultural Refinance and Development Corporation was merged into it entirely; the Agricultural Credit Department of the RBI transferred its functions; and the Rural Planning and Credit Cell did likewise.

The purpose of the consolidation was to bring refinance, policy and supervision of rural credit under one apex institution, so that cooperative banks, regional rural banks and the credit needs of agriculture were dealt with coherently rather than by several agencies at once.

Answer: A

Correct answer: 24

Twenty-four is the figure carried in the standard texts for recognised stock exchanges in India - the two national exchanges, the BSE and the NSE, together with the many regional exchanges recognised under the Securities Contracts (Regulation) Act, 1956.

The number is historical rather than current. Almost all the regional exchanges have since exited, unable to meet SEBI's net worth and turnover requirements, so trading is now concentrated on the NSE and BSE with a small number of specialised exchanges alongside them.

Answer: D

Correct answer: A unique MMID and mobile number combination helps in identifying the beneficiary’s details. A single MMID can be linked to a mobile number.

The last sentence is the untrue part. The relationship runs the other way: a customer with several accounts at the same or different banks can obtain a separate MMID for each, so multiple MMIDs may be linked to one mobile number. That is precisely how the scheme lets a user choose which account to transact from.

The other statements are correct. The MMID is a seven-digit number issued by a bank, it is uniquely tied to the customer's mobile number and account, and both remitter and beneficiary need one for a mobile fund transfer, since the mobile number and MMID together identify the destination account.