1. An increase in Bank Rate generally indicates that the market rate of interest is likely to fall. (CSE, 2013)
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- Market rate of interest is likely to fall.
- Central bank is no longer making loans to commercial banks.
- Central bank is following an easy money policy.
- Central bank is following a tight money policy.
Ans: d) Central bank is following a tight money policy.
2) In context of Indian economy , ‘Open Market Operations’ refers to? (CSE, 2013)
- Borrowing by Scheduled banks from RBI.
- Lending by commercial banks to industry and trade.
- Purchase and sale of govt securities by the RBI.
- None of the above.
Ans: c) Purchase and sale of govt securities by the RBI.
3) The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to? (CSE, 2014)
- Banking Operations
- Communication Networking
- Military Strategies
- Supply and demand of agricultural products.
Ans: a) Banking Operations
4) When RBI reduces Statutory Liquidity Ratio by 50 basis points , which of the following is likely to happen? (CSE, 2015)
- India’s GDP growth rate increases drastically.
- Foreign Institutional Investors may bring more capital in to our country.
- Scheduled Commercial Banks may cut their lending rates.
- It may drastically reduce the liquidity to the banking system.
Ans: c) Scheduled Commercial Banks may cut their lending rates.
6) What is/are the purpose(s) of Marginal Cost of Funds Lending Rate(MCLR) announced by RBI? (CSE, 2016)
i) These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances.
ii) These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as banks.
Select the correct answer using the code given below:
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Ans: a)1 only.
