Banking System, NPA & IBC — Set 12
Economy Advanced · बैंकिंग प्रणाली, NPA और IBC · Questions 111–120 of 160
The Urban Cooperative Banks provide banking services in urban and semi-urban areas. Which state has the most UCBs in India?
Correct Answer: A. Maharashtra
The correct answer is Maharashtra. Maharashtra has the highest number of Urban Cooperative Banks in India. They serve urban populations with affordable banking and credit services. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.
The Deposit Insurance Corporation ensures depositors' funds are protected. What is the maximum insurance coverage for deposits?
Correct Answer: B. Rs. 5 lakh
Deposit insurance coverage is up to Rs. 5 lakh per depositor per bank. This protection was increased from Rs. 1 lakh in 2020.
The Government Guaranteed Advances support priority sector lending without risk. What is the typical advance against government guarantee?
Correct Answer: B. Up to Rs. 25 crore
The correct answer is Up to Rs. 25 crore. Government guaranteed advances typically support up to Rs. 25 crore for priority sectors like agriculture and small enterprises, reducing bank risk. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.
The Treasury Management in banks involves managing assets and liabilities to optimize returns. What is the primary function of the Treasury Department?
Correct Answer: B. Managing bank's balance sheet and liquidity
The correct answer is Managing bank's balance sheet and liquidity. The Treasury Department manages the bank's balance sheet, liquidity position, and investment in securities to optimize returns and manage risks. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.
The Asset-Liability Management (ALM) is critical for bank stability. What is the main objective of ALM?
Correct Answer: B. Match assets and liabilities to manage interest rate and liquidity risk
The correct answer is Match assets and liabilities to manage interest rate and liquidity risk. ALM matches banks' assets and liabilities to minimize interest rate risk and manage liquidity, ensuring financial stability and profitability. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.
The Gap Analysis is an ALM tool used to measure interest rate risk. What does positive gap indicate?
Correct Answer: B. More assets than liabilities maturing
The correct answer is More assets than liabilities maturing. Positive gap indicates more assets maturing than liabilities. This exposes banks to falling interest rates as they must reinvest maturing assets at lower rates. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.
The Behavioral Finance studies irrational decision-making by investors. How does herd behavior affect financial markets?
Correct Answer: B. Leads to bubbles and crashes
The correct answer is Leads to bubbles and crashes. Herd behavior in markets leads to asset bubbles and subsequent crashes as investors follow each other rather than fundamental values. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.
The Portfolio Management Services (PMS) provide customized investment advice to HNIs. What is the minimum investment for PMS?
Correct Answer: B. Rs. 25 lakh
The correct answer is Rs. 25 lakh. PMS typically requires a minimum investment of Rs. 25 lakh for high-net-worth individuals seeking personalized investment management and advisory services. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.
The Systematic Investment Plan (SIP) in mutual funds allows regular investing with small amounts. What is the minimum SIP amount?
Correct Answer: B. Rs. 500
The correct answer is Rs. 500. SIP allows investment with a minimum amount of Rs. 500 per month, making mutual funds accessible to retail investors for disciplined, long-term wealth creation. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.
The Exchange-Traded Funds (ETFs) are passively managed investment funds. Which index does the Nifty 50 ETF track?
Correct Answer: B. NIFTY 50
The correct answer is NIFTY 50. Nifty 50 ETF tracks the NIFTY 50 index, providing investors exposure to India's top 50 large-cap companies with lower fees than active mutual funds. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.