Important Bank Exam Questions


Banking Theory questions and answers for Co operative bank examinations and other bank examinations.


1. The first European bank in India which was established in 1771.
a)Bank of England
b)State Bank of India
c)Bank of Bengal
d)None of these
Answer: d)None of these

2. With the approval of the parliament in 1806 the directors of the East India Company established the first presidency bank known as:
a)Bank of Bengal
b)Bank of Madras
c)Bank of Bombay
d)Bank of Maharashtra
Answer: a)Bank of Bengal

3. Bank of Bombay was the second presidency bank established in ………. With a capital of Rs. 52,25,000.
a)1840
b)1854
c)1862
d)1880
Answer: a)1840

4. Which one of the following is not a presidency bank?
a)Bank of Bengal
b)Bank of Madras
c)Bank of Sourastra
d)Bank of Bombay
Answer: c)Bank of Sourastra

5. Which one of the following joint stock banks were established during the period of swadeshi movement.
a)Allahabad bank in 1870
b)Oudh Commercial Banks in 1881
c)Punjab National Bank in 1895
d)All of these
Answer: d)All of these

6. Imperial Bank of India Act was passed in:
a)1919
b)1920
c)1921
d)1922
Answer: b)1920

7. ………….. are the private banks organized on a joint stock system, run basically with profit motive and specialize in financing short and long term needs of trade, industry and commerce.
a)Schedule Bank
b)Non Schedule Banks
c)Commercial Banks
d)Industrial Banks
Answer: c)Commercial Banks

8. Which one of the following is not a primary function of commercial banks?
a)Accepting deposit
b)Advancing loan
c)Discounting bills of exchange
d)Agency services
Answer: d)Agency services

9.The greatest advantage of …………… deposits are that the customers can remit any amount to the bank and withdraw unlimited quality of money without any notice to the banker.
a)Savings
b)Current
c)Fixed
d)Recurring
Answer: b)Current

10. Which of the following is an agency service of Commercial banks?
a)Buying and selling of securities for customers
b)Making periodical payments of insurance premium, collection of interest and dividends
c)Collection of cheques, draft, bill of exchange
d)All of these
Answer: d)All of these

11. Which of the following is not a secondary function of commercial bank?
a)Accept current deposit
b)Accept fixed deposit
c)Advancing loans
d)General utility services
Answer: d)General utility services

12. Time deposits are otherwise called:
a)Fixed deposit
b)Savings deposit
c)Current deposit
d)Recurring deposit
Answer: a)Fixed deposit

13. “A commercial bank is not merely purveyors of money, but also in an important sense, manufacturers of money.”- who said this statement?
a)J.M Keynes
b)J.B Say
c)Sayers
d)Crowther
Answer: c)Sayers

14. “If loans are the children of deposits, deposits are also the children of loan” said:
a)J.M Keynes
b)J.B Say
c)John Paget
d)Crowther
Answer: a)J.M Keynes

15. Bank Money is created by ………….
a)RBI
b)Government
c)Monetary authority
d)Commercial bank
Answer: d)Commercial bank

16. The bank mobilize deposits in different forms such as current, saving, fixed, recurring etc. These deposits are called:
a)Primary deposits
b)Cash deposit
c)All of these
d)None of these
Answer: c)All of these

17. The primary deposits accepted by banks used for providing loans and these loans are converted into deposist. The deposits is called:
a)Created deposit
b)Derivative deposits
c)Active deposit
d)All of these
Answer: d)All of these

18. The important factors which limit the creation of credit by commercial bank.
a)Reserve ratio
b)Cash ratio
c)Banking habits
d)All of these
Answer: d)All of these

19. The book ‘principles of money and banking’ is written by:
a)Dr. Walter Leaf
b)Dr. Edwin Cannon
c)Crowther
d)J.B Say
Answer: b)Dr. Edwin Cannon

20. …………. Is the proportion of cash held by the bank to its deposits.
a)Reserve ratio
b)Reserve fund
c)Cash ratio
d)Fixed ratio
Answer: c)Cash ratio

21. ……………. is the amount contributed by the shareholders by purchasing the shares of the bank.
a)Paid up capital
b)Authorized capital
c)Subscribed capital
d)Issued capital
Answer: a)Paid up capital

22.……………. is a part of net profit accumulated by banks to meet unforeseen losses in the future :
a)Cash ratio
b)Reserve ratio
c)Liquidity ratio
d)Reserve fund
Answer: d)Reserve fund

23.As per Banking Regulation Act of 1949, …………. Percent of the net profit transferred to reserve fund.
a)15
b)20
c)25
d)30
Answer: c)25

24. In India, …………… represents money lent to other banks or bullion market.
a)Bill discounted
b)Investment
c)Cash in hand
d)Money at call and short notice
Answer: d)Money at call and short notice

25. Unit banks, known as localized banking system is widely prevalent in …………..
a)India
b)Japan
c)England
d)U.S.A
Answer: d)U.S.A

26. The banking system which comprises investment banking function with commercial banking function is called:
a)Compound banking
b)Branch banking
c)Unit banking
d)Composite banking
Answer: c)Unit banking

27. A group of banks managed by a Cantralised management through individual banks which have their separate identity is called:
a)Mixed banking
b)Branch banking
c)Unit banking
d)Holding company banking
Answer: d)Holding company banking

28. Autonomous institutions where interbank transactions are settled by transfer of entries to mutual indebtedness
a)Clearing houses
b)RBI
c)SBI
d)Industrial bank
Answer: a)Clearing houses

29. Clearing house in India are controlled by ……………..
a)SBI
b)RBI
c)Subsidiaries of SBI
d)A or B or C
Answer: d)A or B or C

30. The leader of Indian Money Market:
a)Central Govt.
b)State Govt.
c)Reserve Bank of India
d)None of these
Answer: c)Reserve Bank of India

31. “The guiding principle for a Central Bank is that it should act only in the public interest and without regard to profits as a primary consideration ”, said:
a)Hilton
b)Young
c)M.H Dekock
d)Crowther
Answer: c)M.H Dekock

32. “If the government itself has the right of note issue, political considerations of sound monetary economy are likely sooner or later to become the determining factors” said:
a)Hilton-Young
b)Minto-Morley
c)Montague-Chemlsford
d)Kisch and Elkin
Answer: d)Kisch and Elkin

33. Fixed or partial fiduciary system of note issue is otherwise called:
a)Flexible maximum system
b)Fixed maximum system
c)Maximum fiduciary system
d)None of these
Answer: a)Flexible maximum system

34. The fixed amount of notes could be issued without gold backing is called:
a)Fixed fiduciary system
b)Maximum fiduciary system
c)Proportional reserve system
d)Minimum reserve system
Answer: a)Fixed fiduciary system

35. Fixed fiduciary system is adopted firstly in ……………
a)France
b)U.S.A
c)England
d)Germany
Answer: c)England

36. Maximum fiduciary system adopted in France in …………….
a)1860
b)1870
c)1880
d)1890
Answer: b)1870

37. India followed proportional reserve system of note issue from ……………
a)1914 to 1956
b)1927 to 1956
c)1914 to 1960
d)1920 to 1960
Answer: b)1927 to 1956

38. Proportional reserve system of note issue was first adopted in ………………
a)U.S.A
b)U.S.S.R
c)Japan
d)Germany
Answer: d)Germany

39. According to minimum reserve system, RBI keeps a minimum of Rs. …………… crores value of gold and foreign securities.
a)115
b)85
c)200
d)250
Answer: c)200

40. Which of the following is not a qualitative method of credit control:
a)Bank rate
b)Open market operation
c)Variable reserve ratio
d)Moral suasion
Answer: d)Moral suasion

41. Which of the following is not a selective method of credit control
a)Rationing of credit
b)Direct action
c)Moral suasion
d)Bank rate
Answer: d)Bank rate

42. The bank rate as “the standard rate at which the Central bank is prepared to buy or discount bills of exchange or other commercial paper eligible for purchase under RBI Act.” It deals in section …………. Of RBI Act.
a)41
b)45
c)49
d)51
Answer: c)49

43. During the time of inflation, the Central Bank …………… the bank rate:
a)Increase
b)Reduce
c)No change
d)Increase or decrease
Answer: a)Increase

44. …….. ….. means the purchase and sale of securities by the Central Bank
a)Bank rate
b)Open market operation
c)Variable reserve ratio
d)Direct action
Answer: b)Open market operation

45. According to ……………. , open market operation is deliberate and direct buying and selling of securities and bills in the money market by the Central Bank on its own initiative.
a)Deckock
b)Redcliffe
c)Crowther
d)Sayers
Answer: b)Redcliffe

46. During the time of inflation, the central bank ………….. the government securities.
a)Sells
b)Purchases
c)Purchase or sells
d)No action
Answer: a)Sells

47. In India variable resource ratio is between …………. to ………… percent.
a)3 to 10
b)3 to 15
c)5 to 10
d)5 to 15
Answer: b)3 to 15

48. OMO means:
a)Ordinary Monetary operation
b)Operating Management Organization
c)Open Market Operation
d)Open Membership in Organization
Answer: c)Open Market Operation

49. Variable reserve ratio was an effective weapon for credit control suggested by:
a)Crowther
b)Calvert
c)Sarayya
d)Keynes
Answer: d)Keynes

50. Credit creation is a function of commercial banks, but credit control is the function of …………
a)Central Bank
b)Commercial Banks
c)Central Govt.
d)Industrial Banks
Answer: a)Central Bank



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  1. i need co operative bank assistant previous year question paper. how can i get it. plz suggest

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