Banking Terms — Set 4

Correct Answer: C. Follow-on Public Offer

• **Follow-on Public Offer** = A **Follow-on Public Offer** (FPO) is an issuance of stock to investors by a company already listed on an exchange. • **Additional capital** — FPOs are used by companies to raise this after their initial listing, unlike an IPO which is the first sale. • 💡 Wrong-option analysis: [First Public Offering]: This is the definition of an IPO, not FPO; [Financial Profit Option]: This term is not standard in share markets for FPO; [Fixed Profit Order]: This term does not describe FPO in share markets.

Correct Answer: D. Non-Banking Financial Company

• **Non-Banking Financial Company** = A **Non-Banking Financial Company** (NBFC) is a financial institution that does not have a full banking license but provides banking-type services. • **Demand deposits** — NBFCs are specifically not allowed to accept these from the public. • 💡 Wrong-option analysis: [Net Banking and Fiscal Company]: This is an incorrect expansion for NBFC; [Non-Bank Fiscal Council]: This is an incorrect expansion and definition; [National Banking and Finance Corporation]: This is an incorrect expansion for NBFC.

Correct Answer: A. National Savings Certificate

• **National Savings Certificate** = A **National Savings Certificate** (NSC) is a fixed income investment scheme available through post offices in India. • **Section 80C** — NSC investments are eligible for income tax benefits under this section. • 💡 Wrong-option analysis: [National Salary Component]: This is an incorrect expansion and not related to small savings schemes; [National Security Commission]: This refers to a different type of body, not a savings scheme; [Net Savings Code]: This is an incorrect expansion and not a recognized financial instrument.

Correct Answer: A. Credit Information Bureau (India) Limited

• **Credit Information Bureau (India) Limited** = **Credit Information Bureau (India) Limited** (CIBIL) is India's leading credit information company. • **CIBIL score** — This score helps lenders assess the creditworthiness of individuals based on their payment records. • 💡 Wrong-option analysis: [Capital Investment Banking and Insurance Limited]: This is an incorrect expansion for CIBIL; [Citizens Information Bureau of India Loans]: This is an incorrect expansion and does not accurately represent CIBIL's function; [Central Information Bureau of Investment Loans]: This is an incorrect expansion and does not accurately represent CIBIL's function.

Correct Answer: A. External Commercial Borrowing

• **External Commercial Borrowing** = **External Commercial Borrowing** (ECB) refers to loans raised by eligible Indian entities from non-resident lenders, often in foreign currency. • **Central bank** — ECBs are regulated by the central bank to manage external debt and related risks. • 💡 Wrong-option analysis: [European Central Bank]: This is a different financial institution, not the full form of ECB in the context of external borrowing; [Electronic Cash Bureau]: This is an incorrect expansion for ECB; [Economic Control Bureau]: This is an incorrect expansion for ECB.

Correct Answer: D. Goods and Services Tax

• **Goods and Services Tax** = **Goods and Services Tax** (GST) is an indirect tax used in India on the supply of goods and services. • **Multi-stage, destination-based** — GST is a comprehensive, multi-stage, destination-based tax that replaced many existing indirect taxes. • 💡 Wrong-option analysis: [General Sales Tax]: While related to sales, this is not the full form of GST; [Government Services Tax]: This is an incorrect expansion for GST; [Gross Salary Tax]: This is an incorrect expansion and refers to income tax, not GST.

Correct Answer: B. Money laundering

• **Money laundering** = KYC (Know Your Customer) is primarily used to prevent **money laundering** and terrorist financing in banking operations. • **Client identity** — By verifying the identity of clients, banks can monitor suspicious activities and adhere to global financial regulations. • 💡 Wrong-option analysis: [Tax evasion]: While KYC might indirectly help, its primary focus is not tax evasion; [Excess withdrawals]: KYC does not directly prevent excess withdrawals; these are usually controlled by account limits or balances; [Internal audits]: KYC is a compliance requirement, not an internal audit process itself, though it informs audits.

Correct Answer: A. Electronic Funds Transfer

• **Electronic Funds Transfer** = **Electronic Funds Transfer** (EFT) is the electronic transfer of money from one bank account to another. • **Multiple institutions** — EFT can occur either within a single financial institution or across multiple institutions. • 💡 Wrong-option analysis: [Easy Financial Transfer]: This is an incorrect expansion for EFT; [Electronic Fiscal Token]: This is an incorrect expansion for EFT; [Efficient Fund Transaction]: This is an incorrect expansion for EFT.

Correct Answer: D. Reserve Bank of India

• **Reserve Bank of India** = The **Reserve Bank of India** (RBI) is India's central bank and regulatory body responsible for the issue and supply of the Indian rupee. • **1935** — The RBI was established in **1935** and controls the monetary policy of the country. • 💡 Wrong-option analysis: [Rural Banking Institute]: This is an incorrect expansion for RBI; [Revenue Board of India]: This refers to a different government body, not the central bank; [Regional Bank of India]: This is an incorrect expansion for RBI.

Correct Answer: D. Foreign Institutional Investor

• **Foreign Institutional Investor** = A **Foreign Institutional Investor** (FII) refers to an investment fund or an asset from outside the country where the investment is made. • **Stock market direction** — FIIs play a major role in determining the direction and volatility of the stock market. • 💡 Wrong-option analysis: [Fiscal Institute of India]: This is an incorrect expansion for FII; [Financial Investment Index]: This is an incorrect expansion for FII; [Foreign Investment Instrument]: While related, this is not the correct full form for FII, which refers to the investor entity.