Banking & Financial Awareness Mixed Quiz: Set 11

The correct answer is C, eleven. The Indian Financial System Code is made of eleven characters: the first four letters stand for the bank, the fifth is always the digit zero and is kept in reserve for future use, and the last six identify the particular branch. It is required for RTGS, NEFT and for an IMPS transfer made with an account number. Option A is wrong because nine is the length of the MICR code printed on a cheque, which is made of three digits each for the city, the bank and the branch. Option B is wrong because no Indian banking code has ten characters. Option D is wrong because twelve is the length of an Aadhaar number, which is used in the Aadhaar Enabled Payment System but is not a bank branch code. Papers mix IFSC, MICR and MMID in one question, so learn eleven, nine and seven together.

The correct answer is A, Muhammad Yunus. Muhammad Yunus, an economist from Bangladesh, founded Grameen Bank. He grew it out of a lending experiment begun in the village of Jobra in 1976, and the bank was given formal status by law in 1983. It lends small sums without collateral, mostly to poor rural women organised in small groups whose members stand behind one another's repayment, and this model of microcredit has since been copied across Asia, Africa and Latin America. Yunus and the bank shared the Nobel Peace Prize in 2006 for creating economic and social development from below. B is wrong because Abdullah Abu Sayeed is a Bangladeshi writer and educationist. C is wrong because Anu Muhammad is an economist known for his writing on development, not the bank's founder. D is wrong because Atiur Rahman served as Governor of Bangladesh Bank. Exam tip: Muhammad Yunus, Grameen Bank of Bangladesh, microcredit, Nobel Peace Prize 2006.

The correct answer is A, the bank account number and IFSC. A virtual payment address takes the form of a name followed by a bank handle and acts as a pointer to the underlying account, so a payment can be made or collected without revealing the account number or the branch code. Option B is wrong because the Aadhaar number is the identifier used in the Aadhaar Enabled Payment System and the Aadhaar Payments Bridge, not the detail that a UPI address hides. Option C is wrong because the PAN is a tax identifier and plays no part in a UPI transaction. Option D is wrong because the mobile number is often the very thing linked to the address, and in the UPI number facility it is used to receive money. The privacy of bank details is the design idea being tested.

The correct answer is D, Financial service to disadvantaged people. A microfinance institution exists to lend small sums to poor and low-income people who cannot offer the security an ordinary bank asks for. It gives tiny loans, takes small savings and sells simple insurance, usually working through self-help groups or joint liability groups in which the members stand guarantee for one another, so no collateral is needed. The loans are small, are repaid weekly or monthly, and are often used for a small shop, a sewing machine, cattle or seed. In India these bodies are registered with the Reserve Bank of India as NBFC-MFIs, and NABARD's SHG-Bank Linkage programme works on the same idea. A and B are wrong because government employees and Union ministers draw regular salaries and can borrow from ordinary banks. C is wrong because corporate borrowers are served by commercial banks and the capital market. Exam tip: microfinance means small collateral-free loans to the poor, through SHGs and NBFC-MFIs under the RBI.

The correct answer is B, the Payment and Settlement Systems Act, 2007. This Act designates the Reserve Bank as the authority for payment systems, makes its authorisation necessary before any payment system may be operated, and provides for the Board for Regulation and Supervision of Payment and Settlement Systems. Option A is wrong because the Banking Regulation Act of 1949 governs the licensing, management and business of banking companies. Option C is wrong because the Negotiable Instruments Act of 1881 deals with cheques, bills of exchange and promissory notes, and it is under its section 138 that a dishonoured cheque becomes an offence. Option D is wrong because the Reserve Bank of India Act of 1934 established the Reserve Bank itself and deals with currency and monetary matters. The year 2007 for payments and 1881 for cheques are the two dates worth fixing.

The correct answer is C, SBI. YONO, short for You Only Need One, is the State Bank of India's digital banking app, launched in November 2017. Its YONO Cash feature lets a customer start a withdrawal on the phone, get a six-digit reference number, and then collect the cash from an ATM, a branch counter or a shop point by entering that number with a PIN, so no debit card is needed. YONO Cash Point extended the same cardless service to retail outlets, which helps in small towns where ATMs are few. Option A is wrong because Citi Bank's Indian retail business was later sold to Axis Bank and it ran no YONO service. Option B is wrong because UBS is a Swiss investment bank with no retail ATM network in India. Option D is wrong because HDFC Bank's own apps are PayZapp and MobileBanking, not YONO. Exam tip: YONO belongs to SBI; iMobile is ICICI, PayZapp is HDFC and BHIM is the NPCI app.

The correct answer is B, India's domestic card payment network. RuPay was launched by NPCI in 2012 so that debit and credit card transactions between Indian cardholders and Indian merchants are authorised and settled within the country instead of being switched abroad, and its name joins Rupee with Payment. Option A is wrong because the Reserve Bank does not run a mobile wallet; it authorises prepaid instrument issuers under the Act of 2007. Option C is wrong because the digital currency of the central bank is the e-rupee or CBDC, which is a different instrument altogether and is issued by the RBI, not by NPCI. Option D is wrong because remittance abroad is handled by other channels, and NPCI's cross border work is done through its subsidiary NIPL. RuPay is a card scheme, like the international schemes it replaced.

The correct answer is B, Banking. The Basel Norms are international standards for banking supervision.

They are issued by the Basel Committee on Banking Supervision, which works under the Bank for International Settlements at Basel in Switzerland. Their purpose is to make sure a bank holds enough capital against the risks it takes, so that losses fall on its shareholders and not on depositors. Basel I of 1988 dealt with credit risk, Basel II of 2004 added market and operational risk along with supervision and disclosure, and Basel III, framed after the crisis of 2008, raised the quality of capital and brought in liquidity and leverage rules. In India the Reserve Bank applies them and asks for a capital to risk weighted assets ratio of nine per cent.

Options A, C and D are wrong because insurance is governed by IRDAI, and the share and commodity markets by SEBI.

Exam tip: Basel Committee, Basel, Switzerland; India's CRAR requirement is nine per cent.

The correct answer is C, 2016. UPI was launched in 2016 and allows a customer to pay from a bank account using a virtual payment address, so that the account number and the IFSC need never be shared; it runs on the same immediate settlement arrangement that IMPS introduced. Option A is wrong because 2010 is the year IMPS itself was launched. Option B is wrong because 2012 is the year the RuPay card network was launched by the same organisation. Option D is wrong because 2019 is the year in which NEFT was made available on all days of the year and the Reserve Bank did away with its own charges on RTGS and NEFT. A short timeline is worth memorising: the corporation in 2008, IMPS in 2010, RuPay in 2012, UPI in 2016, NEFT round the clock in 2019 and RTGS round the clock in 2020.

The correct answer is A. The Banking Ombudsman is a senior officer appointed by the Reserve Bank of India to hear and settle customer complaints about deficiency in banking service. The scheme was first brought in under Section 35A of the Banking Regulation Act, 1949, and the ombudsman decides complaints on matters such as delayed payment, wrongly levied charges, card and digital transaction disputes and refusal to accept small coins. A customer must first take the complaint to the bank and may approach the ombudsman when the bank does not reply in thirty days or the reply is unsatisfactory. Option B is wrong because private banks, foreign banks, regional rural banks and scheduled cooperative banks are covered too, not only public sector banks. Option C is wrong because the complainant is free to reject the award and go elsewhere; it binds the bank once accepted. Option D is wrong because the whole process is free of cost to the customer. Exam tip: the ombudsman is appointed by the RBI, complain to the bank first, and the service costs nothing.

The correct answer is A, Dr B. R. Ambedkar. BHIM stands for Bharat Interface for Money, and the acronym was chosen in honour of Dr Bhimrao Ramji Ambedkar, the chairman of the drafting committee of the Constitution and a trained economist. Option B is wrong because Bhimsen Joshi was a Hindustani classical vocalist and a Bharat Ratna, honoured in music rather than in payments. Option C is wrong because the app is not named after the Mahabharata character, though the name is often assumed to be mythological. Option D is wrong because no such person is connected with the launch; the option exists only to look plausible. Along with the name, remember that BHIM is only one UPI app and any bank app can pay a BHIM user, because UPI is interoperable by design.

The correct answer is B, 2008. NPCI was incorporated in 2008 as a not for profit company under Section 25 of the Companies Act, 1956 to act as the umbrella organisation for all retail payment systems in India, and it began by taking over the National Financial Switch the following year. Option A is wrong because 2005 saw no such company; the enabling law itself came only in 2007. Option C is wrong because 2012 is the year RuPay, a product of NPCI, was launched, which candidates often mistake for the year of the company. Option D is wrong because 2016 is the year of UPI and BHIM, again products rather than the parent body. Fix the sequence in order: the Act in 2007, the company in 2008, RuPay in 2012 and UPI in 2016.

The correct answer is C, nine. The Magnetic Ink Character Recognition code has nine digits, of which the first three stand for the city, the next three for the bank and the last three for the branch; it is printed in magnetic ink so that a sorting machine can read it during cheque clearing. Option A is wrong because six digits make up only the branch part of an IFSC, not a code by itself. Option B is wrong because seven is the length of the MMID used in IMPS, whose first four digits identify the bank. Option D is wrong because eleven is the length of the IFSC, which is alphanumeric rather than numeric. Note also that with the Cheque Truncation System the image of the cheque now travels for clearing rather than the paper, although the MICR line is still read from that image.

The correct answer is B, Mumbai. The National Bank for Agriculture and Rural Development has its head office in Mumbai, in the Bandra Kurla Complex. NABARD was set up on 12 July 1982 under an Act passed in 1981, on the advice of the Sivaraman Committee, and it took over the rural credit work that the Reserve Bank and the Agricultural Refinance and Development Corporation had been doing. It is the apex body for rural finance: it refinances cooperative banks and regional rural banks rather than lending much directly to farmers, supervises those banks, runs the Rural Infrastructure Development Fund and links self-help groups to banks under its microfinance programme. It is fully owned by the Government of India. A is wrong because Pune houses the National Insurance Academy, not NABARD. C is wrong because Chennai is the headquarters of Indian Bank and Indian Overseas Bank. D is wrong because Kolkata is the headquarters of UCO Bank and Bandhan Bank. Exam tip: NABARD, Mumbai, set up 12 July 1982 on the Sivaraman Committee's recommendation.

The correct answer is C, the Payment and Settlement Systems Act, 2007. Under this Act no person may commence or operate a payment system in India without authorisation from the Reserve Bank, and it created the Board for Regulation and Supervision of Payment and Settlement Systems within the RBI. Option A is wrong because the Banking Regulation Act of 1949 governs the licensing and working of banks as banks, not payment systems as such. Option B is wrong because the Negotiable Instruments Act of 1881 deals with cheques, bills of exchange and promissory notes, including the offence of dishonour. Option D is wrong because the RBI Act of 1934 constituted the central bank and covers currency issue and monetary matters. Questions pair the year 2007 with the system operators authorised under it, such as NPCI.

The correct answer is C, Fourteen. On 19 July 1969 the government promulgated an ordinance nationalising fourteen major commercial banks, each of which held deposits of fifty crore rupees or more. The list included Central Bank of India, Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India, Allahabad Bank, Indian Bank, Indian Overseas Bank, Syndicate Bank, Dena Bank, United Bank of India, United Commercial Bank and Bank of Maharashtra.

Option A, six, is the number nationalised in the second round of 15 April 1980. Option B, eight, matches no round, although the State Bank group once had seven associate banks. Option D, twenty, is the sum of the two rounds, fourteen plus six, and is the distractor that catches most candidates. Remember the pairs as fourteen in 1969 with fifty crore rupees, and six in 1980 with two hundred crore rupees.

The correct answer is C, NACH and the National Payments Corporation of India. The National Automated Clearing House is a bulk clearing service of that corporation, used for repeated credits such as salary, pension, dividend and subsidy and for repeated debits such as loan instalments and utility bills. Option A is wrong because RTGS is operated by the Reserve Bank of India itself. Option B is wrong because NEFT is also operated by the Reserve Bank; the Indian Banks Association only helped promote the corporation and runs no payment system of its own. Option D is wrong because UPI belongs to the National Payments Corporation of India, not to the Reserve Bank, although the Reserve Bank regulates it like every other system. The safe rule is that the Reserve Bank runs exactly two of the systems named in this topic, RTGS and NEFT, and the corporation runs the rest.

The correct answer is B, PAN card. The list of officially valid documents in the KYC rules is closed and contains the passport, the driving licence, proof of possession of an Aadhaar number, the voter identity card issued by the Election Commission, a job card issued under MGNREGA and signed by an officer of the state government, and a letter issued by the National Population Register. The PAN card is not in this list because it proves neither address nor, by itself, the standard of identity the rules require.

Options A, C and D are all in the list and are the documents customers most often produce. Note the separate rule that a bank must obtain the permanent account number or a declaration in Form 60 for income tax purposes, which is why many candidates wrongly treat the PAN card as a KYC document. Examiners exploit exactly this confusion, sometimes also placing the ration card among the options.

The correct answer is B, radio frequency identification. A FASTag is an RFID sticker on the windscreen which a reader at the toll plaza identifies from a distance, so the toll is debited from the linked account or wallet without the vehicle stopping; the programme is run by NPCI as National Electronic Toll Collection. Option A is wrong because near field communication works only over a few centimetres and is used in contactless cards and phone payments, not at a moving vehicle. Option C is wrong because the global positioning system fixes a location by satellite and is used in tracking and navigation, and a satellite based tolling idea is a separate and later proposal. Option D is wrong because Bluetooth pairing is unsuited to fast identification of passing vehicles. Tie FASTag to RFID and to the letters NETC.

The correct answer is A, the Electronic Clearing Service. NACH is the bulk payment system for many credits or debits at once, such as salary, pension, dividend, subsidy and direct benefit transfer on the credit side and loan instalments, insurance premiums and utility bills on the debit side, and it took over the work of the older ECS with a single national presentation. Option B is wrong because RTGS is a large value real time system operated by the Reserve Bank and still very much in use. Option C is wrong because the Cheque Truncation System clears cheques from their images and is a separate NPCI system, not something NACH replaced. Option D is wrong because the National Financial Switch is the ATM network NPCI took over in 2009. The mandate based e-mandate facility is part of NACH.