Banking Awareness for All Bank Exams: SBI, IBPS, RBI 2022-23 Exams

What is the smallest loan amount that the RBI’s Liquidity Adjustment Facility will allow?

1. INR 6 crores 
2. INR 2 crores
3. INR 5 crores
4. Minimum payments are not required.

Solution: Option C

Explanation:

Banks can borrow money from the RBI through the LAF using repurchase agreement methods like repo and reverse repo. Any RBI customer can use this quota, and the maximum loan amount is up to the borrower alone. The lowest bid that can be accepted under the LAF quota is INR 5 crores.

How much money can banks borrow through the Marginal Standing Facility?

1. 1.0% NDTL
2. 10% NDTL
3. 2% NDTL
4. NOTA

Solution: Option C

Explanation:

In 2011, the Reserve Bank of India set up the MSF to help banks deal with sudden changes in their cash flow. Under the MSF facility, banks can ask the RBI for loans with a higher interest rate than the repo rate. A bank can borrow as little as INR 1 crore, but they can borrow as much as 2% of the NDTL through this channel.

What applies if a bank asks the Reserve Bank of India for long-term financing?

1. Repo Rate 
2. Bank Rate 
3. Liquidity Rate of Facility
4. All of the above

Solution: Option B

Explanation:

Long-term loans to commercial banks are subject to the Bank Rate, which is regulated by the Reserve Bank of India (RBI). Most short-term loans like these are paid back in 90 days to a year. Most of the time, bank rates are used for long-term loans, while repo rates are used for short-term loans that last less than 90 days.

Which of the following does the Reserve Bank of India (RBI) in India use to measure the quality of monetary policy?

1. Reducing Repo and Reverse Repo Rates
2. Moral Solutions  
3. Both of the above
4. NOTA

Solution: Option A

Explanation:

The Reserve Bank of India controls the amount of money in the economy by using qualitative measures. This type of measure includes things like margin requirements, credit limits, moral persuasion, directive action, etc. The Repo Rate, the Reverse Repo Rate, the LAF and the MSF are quantitative measures.

The policy rates are set by the Monetary Policy Committee, which is made up of a group of ____ members (MPC). 

1. Five 
2. Four
3. Seven
4. Six

Solution: Option D

Explanation:

The government set up the MPC to help the RBI make important decisions about policy rates. There are six people on the MPC. Three of them work for the RBI, and the others work for the government. 

How much money do new private banks in India need to get started?

1. INR 250 crores 
2. INR 500 crores 
3. INR 50 crores 
4. INR 25 crores

Solution: Option B

Explanation:

India’s private sector has put so much money into the country’s private sector banks that they are more numerous than the government as a whole. In India, this kind of bank needs a minimum capital of INR 500 crores, and foreign direct investment (FDI) is limited to 74%.

The National Bank for Agriculture and Rural Development doesn’t care about:

1. Regional Federal Central Cooperative Institutions
2. Credit union banks in rural areas are owned and run by the state
3.  Both A and B 
4. NABARD keeps a close eye on everyone

Solution: Option D

Explanation:

NABARD’s job is to improve the agricultural sector of the country. The B. Sivaraman Committee suggested it be made, and finally, it was made official in 1982. Its main office is in Mumbai, Maharashtra. Its job is to keep the State Cooperative Banks, District Central Cooperative Banks and Regional Rural Banks in the country in line.

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