Credit And Monetary Policy Of RBI
- 1.An increase in Bank Rate generally indicates that the market rate of interest is likely to fall.
- A.
Market rate of interest is likely to fall.
- B.
Central bank is no longer making loans to commercial banks.
- C.
Central bank is following an easy money policy.
- D.
Central bank is following a tight money policy.
- 2.In context of Indian economy , ‘Open Market Operations’ refers to?
- A.
Borrowing by Scheduled banks from RBI.
- B.
Lending by commercial banks to industry and trade.
- C.
Purchase and sale of govt securities by the RBI.
- D.
None of the above.
- 3.The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to?
- A.
Banking Operations
- B.
Communication Networking
- C.
Military Strategies
- D.
Supply and demand of agricultural products.
- 4.Under which qualitative tool, RBI fixes maximum limit to loan and advances that can be made, above which the commercial banks cannot exceed?
- A.
Rationing of credit
- B.
Margin requirement
- C.
Loan-Value ratio
- D.
Moral Suasion
- 5.When RBI reduces Statutory Liquidity Ratio by 50 basis points , which of the following is likely to happen?
- A.
India’s GDP growth rate increases drastically
- B.
Foreign Institutional Investors may bring more capital in to our country.
- C.
Scheduled Commercial Banks may cut their lending rates.
- D.
It may drastically reduce the liquidity to the banking system.
- 6.With reference to Indian economy, consider the following:
- A.
1)Bank rate 2)Open Market Operations 3)Public debt 4)Public revenue Which of the above is/are component(s) of Monetary Policy?
- B.
1 Only
- C.
2,3 And 4
- D.
1 And 2
- E.
1,3 And 4
- 7.What will be the impact on the Cash Reserves of commercial banks if RBI conduct a sale of securities?
- A.
Increase
- B.
Decrease
- C.
Remain Constant
- D.
None of these
- 8.RBI, on behalf of government, issues MSS bonds to mop up extra liquidity from the market. This is same as Open Market Operations(OMO), but has a significant difference. What is it?
- A.
Money raised from the market by MSS Bond is stored in government’s normal account.
- B.
Money raised from the market by MSS Bond is stored in a separate account, known as MSS Account, which cannot be used for normal government expenditure.
- C.
Money is not raised by MSS bonds
- D.
None of the above
- 9.Reverse Repo Rate is a tool used by RBI to?
- A.
Absorb liquidity
- B.
Inject liquidity
- C.
To keep liquidity at one leve
- D.
None of these
- 10.What is/are the purpose(s) of Marginal Cost of Funds Lending Rate(MCLR) announced by RBI? 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:
- A.
1 Only
- B.
2 Only
- C.
Both 1 and 2
- D.
Neither 1 Nor 2