Miscellaneous Questions and Answers

Answer: A

Correct answer: 7.4%

The Central Statistics Office estimated Indian growth for 2014-15 at 7.4%, on the then-new series with 2011-12 as base year. The revision of the base was itself notable: it raised the measured growth rate appreciably and provoked considerable debate about the new method.

Answer: C

Correct answer: Purchase of Securities in the Open Markets

Buying securities injects money into the system, which is expansionary - the opposite of what is wanted against inflation. To fight inflation the central bank sells securities, raises the bank rate, raises reserve requirements and rations credit, all of which reduce the money available for lending.

Answer: A

Correct answer: Maastricht Treaty

The Maastricht Treaty of 1992 created the European Union as such, adding the political and monetary union - and the commitment to a single currency - to what had been an economic community. The Treaty of Rome (1957) had established the earlier European Economic Community, and Lisbon (2007) reformed the EU’s institutions.

Answer: B

Correct answer: both revenue and capital accounts

The budget deficit is total expenditure less total receipts, taken over both the revenue and the capital accounts. Confining the comparison to the revenue account gives the revenue deficit, and adding back borrowing gives the fiscal deficit.

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: A

Correct answer: MICR

Magnetic Ink Character Recognition reads the numbers along the bottom of a cheque, printed in magnetic ink in a special typeface. Because the characters are read magnetically rather than optically, a cheque that has been folded, stamped or written over is still read correctly - which is why the technique survived so long.

Answer: C

Correct answer: Governance of bank boards

The P. J. Nayak Committee (2014) examined the governance of bank boards, and was blunt about public sector banks: divided and unclear ownership responsibilities, short tenures for chief executives, boards without the skills to oversee risk. Its central recommendation was that the government reduce its holding below 50% and let the banks be governed like companies.

Answer: D

Correct answer: ICICI

ICICI Bank acquired the Bank of Rajasthan in 2010 in a share-swap deal, gaining about 460 branches, most of them in Rajasthan where ICICI’s own presence was thin.

Answer: D

Correct answer: We understand your world

“We understand your world” is HDFC Bank’s tagline. “India’s International Bank” belongs to Bank of Baroda and “Relationships beyond banking” to Union Bank of India.

Answer: A

Correct answer: Swadeshi movement

The Swadeshi movement, from 1905, urged Indians to use Indian goods and Indian institutions, and a wave of Indian-owned banks followed - among them Bank of India, Central Bank of India, Bank of Baroda and Canara Bank. The point was to keep Indian savings in Indian hands and to finance Indian enterprise, which the British-managed banks were reluctant to do.