Banking & Financial Awareness Mixed Quiz: Set 12

The correct answer is C, BHIM. The Bharat Interface for Money application was released in December 2016 by the National Payments Corporation of India so that payments over the Unified Payments Interface, launched earlier that year, could be made from any smartphone with a bank account linked to it. The app is named after Dr B. R. Ambedkar and works through a virtual payment address and a UPI PIN. Options A, B and D are wrong because NAKUL, GANDIV and JANAK are not payment applications at all; they are names drawn from the epics and are placed in the options only as distractors. In questions of this kind the safe method is to remember that the National Payments Corporation of India runs RuPay, IMPS, UPI, BHIM, AePS and FASTag.

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, 1982. The National Bank for Agriculture and Rural Development began work in 1982, set up on the recommendation of the Sivaraman Committee, and it is the apex development bank for agriculture and the rural economy, refinancing and supervising both Regional Rural Banks and cooperative banks. Option B is wrong; 1991 is the year of the economic reforms and of the first Narasimham Committee on the financial system, not of NABARD. Option C is wrong because 1987 has no connection with the founding of this institution. Option D is wrong although it is the most tempting choice, since 2 October 1975 is the day the first five Regional Rural Banks were set up, seven years before NABARD came into being; candidates who remember only that rural credit began in the mid nineteen seventies fall into it. Keep 1975 for Regional Rural Banks and 1982 for NABARD.

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 D, State Bank of India. YONO, which stands for You Only Need One, was launched by the State Bank of India as a single application for banking, investment, insurance and online shopping, and it also allows cash withdrawal at the bank's machines without a card. Option A is wrong because HDFC Bank offers its own mobile banking and payment applications under different names. Option B is wrong because Punjab National Bank runs its own digital platform and is not connected with YONO. Option C is wrong because ICICI Bank has its own application as well. Questions on bank applications are answered by holding the app and the bank together as a pair, exactly as the folk forms are held with their states in another subject.

The correct answer is C, White Label ATMs. An ATM set up, owned and operated by a non-bank company registered under the Companies Act is called a white label ATM, because it carries no bank's logo. The Reserve Bank allowed them in 2012 under the Payment and Settlement Systems Act to spread cash access into small towns and villages, and the first one in India was opened by Tata Communications Payment Solutions under the Indicash brand. The cash in the machine and the customer's account still belong to a sponsor bank, while the non-bank operator runs the machine and earns a fee from the banks. A brown label ATM, by contrast, is one whose hardware is owned by a service provider while a bank holds the licence and supplies the cash. A, B and D are wrong because yellow, black and grey label ATMs are not categories the Reserve Bank recognises. Exam tip: white label means non-bank owned; brown label means bank licensed, outsourced hardware.

The correct answer is B, the Regional Rural Banks Act, 1976. The first five Regional Rural Banks were created on 2 October 1975 by an Ordinance, and that Ordinance was replaced the next year by the Regional Rural Banks Act, 1976, which fixes their objects, capital and shareholding. Option A is wrong because the Banking Regulation Act of 1949 is the general law of banking in India and applies to these banks as it does to others, but it did not create them. Option C is wrong; the NABARD Act of 1981 set up the National Bank for Agriculture and Rural Development, which supervises and refinances Regional Rural Banks rather than establishing them. Option D is wrong because the Cooperative Societies Act of 1912 belongs to the cooperative side of rural credit altogether. Keep the pair of 1975 for the first banks and 1976 for the Act.

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 B, the National Payments Corporation of India. UPI was launched in 2016 and allows a payment from one bank account to another through a mobile application, using a virtual payment address instead of the account number and a UPI PIN for authentication. Option A is wrong because the Reserve Bank of India regulates payment systems and itself operates NEFT and RTGS, but not UPI. Option C is wrong because the Indian Banks' Association is one of the promoters of the National Payments Corporation of India but does not run the system. Option D is wrong because the State Bank of India is a member bank, like every other bank on the network. Remember the division: the central bank runs NEFT and RTGS, the corporation runs the retail systems.

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 C, thirty five per cent. The capital of a Regional Rural Bank is shared in the ratio of fifty, thirty five and fifteen: the Central Government holds fifty per cent, the sponsor bank thirty five per cent and the State Government fifteen per cent. Option A is wrong because fifty per cent is the share of the Central Government, and choosing it means reading the largest holder as the sponsor bank. Option B is wrong since fifteen per cent belongs to the State Government, the smallest of the three shares. Option D is wrong because twenty five per cent appears nowhere in this pattern and is put in as a plain distractor. After the amendment of 2015 such a bank may raise capital from other sources as well, but the three original holders together must keep at least fifty one per cent, so government control cannot be lost.

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 B, the National Payments Corporation of India. RuPay was launched as an Indian card network so that domestic card payments would be settled within the country instead of through foreign networks, and its cards are issued by banks for savings accounts and under government schemes. Option A is wrong because the Reserve Bank of India is the regulator of the payment system and the promoter of the corporation, but the network itself is not its product. Option C is wrong because the Securities and Exchange Board of India regulates the securities market and has no role in card payments. Option D is wrong because the Ministry of Finance frames policy but does not operate a card network. The name is a combination of rupee and payment.

The correct answer is B, 1 April 2016. The Reserve Bank introduced the MCLR from that date so that the price of a loan would follow the marginal, that is the latest, cost of raising funds rather than the average cost of old deposits. The MCLR is built from the marginal cost of deposits and borrowings, the negative carry on the balance kept for the cash reserve ratio, operating cost and a tenor premium, and every bank publishes it for tenors from overnight up to one year.

Option A, 1 July 2010, is the date the base rate came into force. Option C, 1 October 2019, is the date from which new floating rate retail and small business loans had to be linked to an external benchmark such as the repo rate. Option D, 2003, is close to the year the Benchmark Prime Lending Rate system was brought in. The three dates in order are 2010, 2016 and 2019.

The correct answer is A, Prathama Bank. Prathama Bank, with its head office at Moradabad in Uttar Pradesh and sponsored by Syndicate Bank, was the first of the five Regional Rural Banks set up on 2 October 1975, and its name, meaning the first, is itself the hint. Option B is wrong because Haryana Gramin Bank came much later and is a product of the amalgamations that began in 2005. Option C is wrong; Kerala Gramin Bank was likewise formed by merging earlier banks of that state. Option D is wrong because Baroda Rajasthan Kshetriya Gramin Bank is also an amalgamated bank, and its name gives away the sponsor rather than the date. Since amalgamation keeps changing the list of Regional Rural Banks, learn the fixed facts instead: the first bank, the first date and the sponsor.

The correct answer is A, 1975. The rupee was tied to the pound sterling from colonial times and stayed pegged to it after independence. In 1975 the link was cut and the rupee was tied instead to a basket of currencies of India's major trading partners, with the Reserve Bank fixing the daily rate. The step was taken because the pound itself had become unstable after the breakdown of the fixed exchange rate system in the early 1970s.

Option B, 1947, is independence, when the sterling link was retained. Option D, 1963, belongs to no exchange rate change; the two devaluations students confuse it with are 1949 and 1966. Option C, 1982, is the year NABARD and the EXIM Bank were set up, not an exchange rate landmark. The basket peg lasted until the reforms of 1991 to 1993, when India moved to a market determined exchange rate.

The correct answer is B, automated teller machine. The machine does the work of a teller at the counter, giving cash, accepting deposits, printing statements and taking requests, and it works at any hour without a member of the staff. Option A is wrong because automatic transfer machine is not the expansion, although transfers can be made at some machines. Option C is wrong because any time money is only a popular description used in advertisements and not the technical expansion of the letters. Option D is wrong because account transaction module is not a term in use. Full forms are asked very often in banking papers, so the exact words matter: the letter T stands for teller, the human cashier whose work the machine took over.

The correct answer is B, the Narasimham Working Group of 1975, which proposed a new kind of rural institution combining the local feel of a cooperative with the discipline of a commercial bank, and the first Regional Rural Banks followed on 2 October of that year. Option A is wrong because the Gorwala Committee, formally the All India Rural Credit Survey Committee of 1954, dealt with cooperative credit and state partnership in cooperatives. Option C is wrong; the Maclagan Committee of 1915 examined the working of cooperative societies in the colonial period. Option D is wrong because the Vaidyanathan Committee of 2004 recommended the revival of the short term rural cooperative credit structure. Note that the same name Narasimham also attaches to the two committees on banking sector reform of 1991 and 1998, so the year in the stem matters.

The correct answer is B, a non-bank entity authorised by the Reserve Bank. Such an operator is authorised under the Payment and Settlement Systems Act of 2007, the machine carries the operator's own brand instead of a bank's, cards of every bank work on it, and the cash is supplied through a sponsor bank. Option A is wrong because a machine owned by a bank is simply that bank's ATM. Option C is wrong because the Reserve Bank regulates and authorises but does not run cash machines for the public. Option D is wrong because a co-operative bank's machine is again a bank's own ATM. The contrast to learn is the brown label ATM, where the hardware belongs to a service provider but the bank supplies the cash and holds the licence, so the bank's name is displayed.

The correct answer is C, the Primary Agricultural Credit Society. In the short term cooperative credit structure the base is the Primary Agricultural Credit Society in the village, above it stands the District Central Cooperative Bank and at the apex of the state stands the State Cooperative Bank. Option A is wrong because the State Cooperative Bank is the top tier and deals with the district banks, not directly with farmers. Option B is wrong since the District Central Cooperative Bank is the middle tier. Option D is wrong because the land development bank belongs to the long term or investment credit structure, now called the Primary Cooperative Agriculture and Rural Development Bank at the base and the State Cooperative Agriculture and Rural Development Bank at the apex. Remember that the long term structure has two tiers while the short term one has three; a paper often tests exactly that difference.