First In India Questions and Answers

Answer: A

Correct answer: 1935

The Reserve Bank of India began operations on 1 April 1935, under the Reserve Bank of India Act 1934, following the recommendations of the Hilton Young Commission. It was nationalised on 1 January 1949 - two dates that are frequently confused, and that this topic tests separately.

Answer: A

Correct answer: May 23, 2008

The Reserve Bank sanctioned the amalgamation of Centurion Bank of Punjab with HDFC Bank on 23 May 2008, and it took effect that day. It was the largest merger in Indian private banking to that date, adding around four hundred branches and giving HDFC Bank a much stronger presence in Punjab and Kerala.

Answer: C

Deposits mobilised by the banks are utilised for loans and advances, investment in government and other approved securities in fulfilment of liquidity stipulation, and investment in commercial papers, shares, debentures up to stipulated ceilings. After the nationalisation of major commercial banks in the country, there has been marked expansion in their business, both with regard to the bank deposits as well as the bank credit. The accretion of deposits was primarily on account of time deposits which increased substantially despite the downward movement of the interest rates and reflected the “safe haven” sentiment.

Answer: A

Correct answer: Punjab National Bank

Punjab National Bank, founded at Lahore in 1894, was the second Indian bank with limited liability - Oudh Commercial Bank of 1881 being the first. Limited liability mattered: it let shareholders subscribe capital without risking their whole fortunes, which is what made joint-stock banking possible at all.

Answer: D

Correct answer: State Bank of Saurashtra

The State Bank of Saurashtra was the first associate bank to be merged into the State Bank of India, with effect from 13 August 2008. The State Bank of Indore followed in 2010, and the remaining five associates were merged together on 1 April 2017, completing the consolidation.

Answer: A

Correct answer: Those borrowers who do not have a good credit history

Subprime lending means lending to borrowers who do not meet prime credit standards - a poor repayment record, thin credit history, low income relative to the loan, or high existing debt.

Such loans carry higher interest rates to compensate for the greater risk of default. The term became familiar through the United States housing crisis of 2007–08, where subprime mortgages were packaged into securities whose ratings assumed a diversification of risk that did not survive a nationwide fall in house prices. "Debit history" is not a term in credit assessment at all.

Answer: B

Correct answer: 1955

The Imperial Bank of India was nationalised in 1955 and renamed the State Bank of India, on the recommendation of the All India Rural Credit Survey. The object was to extend banking into the countryside, which the Imperial Bank, as a commercial institution, had not done.

Answer: D

In the early years of independence the number of bank offices was very small. The process of expansion gathered momentum after the nationalisation of the major banks in July, 1969. At the end of March, 2009 there were over 80,547 scheduled commercial bank offices in India excluding the administrative offices. The major thrust in branch expansion in the country has come only from the public sector banks. Meanwhile, the RBI has liberated its branch licensing policy and given full freedom to nationalised banks for opening new branches.

Answer: A

Correct answer: Core Banking Solution

CBS in the technology sense is the Core Banking Solution - the central system that lets a customer's account be reached from any branch.

Answer: B

Correct answer: Asset Liability Management

Asset Liability Management is the discipline of matching the maturity, interest rate and currency profile of a bank’s assets against those of its liabilities, so that it can meet its obligations as they fall due without being unduly exposed to a movement in rates. It is the framework within which liquidity risk and interest rate risk are measured, and the Reserve Bank requires banks to report against it.