Banking Affairs MCQ Quiz - Objective Question with Answer for Banking Affairs - Download Free PDF

The correct answer is Form 15H.

In News

• Form 15H is a self-declaration form submitted by senior citizens (aged 60 years and above) to avoid TDS deduction on interest income if it is within the exemption limit.
• The exemption limit for senior citizens is Rs. 50,000 for interest income in a financial year.

Key Points

• Form 15H must be submitted to banks, NBFCs, or financial institutions to avoid TDS on interest income.
• Applicable only to senior citizens aged 60 years or above.
• Submission of PAN card details along with Form 15H is mandatory.
• Form 15H is applicable only if the interest income is below the exemption threshold.
• The form needs to be submitted only once a year.

Additional Information

• Section 194A of the Income Tax Act
  • Mandates TDS deduction on interest income exceeding exemption limits.
• Exemption Limits
  • Rs. 40,000 for individuals below 60 years.
  • Rs. 50,000 for senior citizens aged 60 years and above.
• Basic Exemption Limit for Income
  • Rs. 3,00,000 for senior citizens (60 to 80 years).
  • Rs. 5,00,000 for super senior citizens (80 years and above).
• Form 15G vs Form 15H
  • Form 15G is for individuals below 60 years, while 15H is for senior citizens.

The correct answer is The difference between the interest rate a bank earns on loans and pays on deposits.

In News

• Net Interest Rate Spread is the difference between the yield a bank receives from its loans and the interest it pays on deposits and borrowings.
• This spread is a key indicator of a bank's profitability.

Key Points

• Represents the bank’s profit margin on interest-earning activities.
• Higher net interest rate spread generally indicates greater profitability for financial institutions.
• Spread arises because banks pay lower interest on deposits than they earn on loans like mortgages, car loans, and credit cards.
• Essential for banks to manage this spread to remain competitive and profitable.

Additional Information

• Sources of Interest Income
  • Loans such as mortgages, home equity, student loans, car loans, and credit cards.
  • Loans are typically offered at higher interest rates than deposits.
• Interest Paid on Deposits
  • Includes interest on checking, savings accounts, and certificates of deposit.
  • Deposits usually have lower interest rates, forming the cost base for the bank.
• Financial Institution Strategies
  • Use customer acquisition, retention, and principal investing to optimize spreads.
  • Spread management differentiates banks in competitive markets.
• Profitability Indicator
  • Net interest rate spread is a core component of a bank’s income statement.

The correct answer is Rs 5 lakh.

In News

• DICGC currently provides deposit insurance coverage up to Rs 5 lakh per depositor across all deposits held in the same capacity in a bank.
• The limit was increased from Rs 1 lakh to Rs 5 lakh effective February 4, 2020, with government approval.
• Finance Minister Nirmala Sitharaman stated that DICGC may propose further enhancement of this limit considering its financial position and banking system interests.

Key Points

• Deposit insurance covers all types of deposits (savings, fixed, current, recurring) held in the same capacity.
• Coverage is aggregate across all branches of a single bank.
• The scheme includes commercial banks, small finance banks, payment banks, regional rural banks, and cooperative banks.
• DICGC insurance aims to protect depositors against bank failures.
• Any enhancement to the insurance limit requires government approval based on DICGC’s proposal.

Additional Information

• Deposit Insurance and Credit Guarantee Corporation (DICGC)
  • Subsidiary of the Reserve Bank of India responsible for deposit insurance.
  • Provides insurance to depositors in case of bank failure.
• Scope of Coverage
  • Includes scheduled commercial banks, small finance banks, payment banks, and cooperative banks.
  • All deposits in the same capacity in a bank are aggregated for insurance coverage.
• Previous Insurance Limit
  • Before February 4, 2020, the limit was Rs 1 lakh.
• Proposal for Enhancement
  • DICGC may propose raising the insurance limit further to the government based on its financial health.

The correct answer is Banking Regulation Act, 1949.

In News

• The Statutory Liquidity Ratio (SLR) is prescribed under Section 24 (2A) of the Banking Regulation Act, 1949.
• SLR mandates banks to maintain a minimum percentage of deposits in liquid assets like cash, gold, or government securities.

Key Points

• SLR is a tool used by RBI to regulate liquidity, inflation, and credit growth in the economy.
• Increasing SLR helps control inflation by restricting credit availability.
• Decreasing SLR encourages economic growth by enabling more lending.
• SLR applies to scheduled commercial banks and impacts their lending capacity.
• SLR assets include cash, gold, and approved government securities.

Additional Information

• Banking Regulation Act, 1949
  • Legislation governing banking operations and regulations in India.
  • Empowers RBI to fix SLR for banks.
• Reserve Bank of India (RBI)
  • Uses SLR as a monetary policy tool to manage money supply and inflation.
  • Regularly reviews and adjusts the SLR rate as per economic conditions.
• SLR vs CRR
  • CRR is the cash amount banks must keep with RBI without earning interest.
  • SLR is the reserve in liquid assets where banks earn interest.
• Impact of SLR Changes
  • Higher SLR reduces funds available for lending, controlling inflation.
  • Lower SLR increases lending capacity, fostering economic growth.

The correct answer is ₹2,00,000.

In News

• As per Section 269ST of the Income Tax Act, PAN card details must be collected for any cash transaction exceeding ₹2 lakhs in a single transaction.
• This regulation aims to prevent large untracked cash transactions and enhance financial transparency.

Key Points

• Cash transactions of ₹2 lakhs or more require mandatory collection of the payer’s PAN.
• Non-compliance with PAN collection attracts penalties under the Income Tax Act.
• MocDoc introduced automated PAN validation for cash payments above this limit to ensure compliance.
• Smaller cash transactions below ₹2 lakhs do not require PAN collection.
• This rule is designed to promote financial transparency and reduce cash-based tax evasion.

Additional Information

• Section 269ST of Income Tax Act
  • Prohibits receipt of cash payments of ₹2 lakhs or more without PAN.
  • Targets curbing unaccounted cash transactions.
• Penalties for Non-Compliance
  • Penalty equal to the amount of cash received without PAN.
• MocDoc’s PAN Validation Feature
  • Automatically prompts for PAN entry during high-value cash transactions.
  • Ensures error-free and compliant billing processes.
• Financial Transparency
  • Mandatory PAN collection helps authorities track large cash flows.

The correct answer is Vijaya Bank and Dena Bank.

Key Points 

• Bank of Baroda became the third largest bank after the amalgamation.
• State Bank of India (SBI) and ICICI Bank are the largest banks in India.
• The government of India proposed the merger of Dena Bank and Vijaya Bank with the Bank of Baroda on 17th September 2018.
• Branches of Vijaya Bank and Dena Bank will function as Bank of Baroda after the amalgamation.
• It was the first-ever three-way consolidation of banks in India.
• The Government of India nationalized the Bank of Baroda on 19 July 1969.
• The headquarters of the Bank of Baroda is located at Vadodara in Gujarat.

Additional Information

• Syndicate bank merged with Canara Bank In 2019.
• Allahabad Bank merged with Indian bank In 2019.
•  Andhra Bank and Corporation Bank merged with Union Bank of India in 2019.

The correct answer is India.

Key Points

• India has the highest number of bank branches in the world.
• India is leading in the list prepared by the number of bank branches in the world based on an IMF report published in 2015.
• India has more than 1.2 lakh bank branches.
• China has the second-largest number of bank branches in the world with over 95,680 bank branches.
• Colombia stood in the third position on the list with over 94,074 bank branches.
• RBI data published in 2016 shows that India now has over 1.3 lakh bank branches.
• There only 13.54 bank branches per 1 lakh adults in India while compared to its population size.

Additional Information

• The Bank of Hindustan is the first bank in India.
• Punjab National Bank is the first complete indigenous bank in India.
• City Union Bank is the first private bank in India.

The correct answer is Sri Jayawardenepura Kotte.

Additional Information

• The current capital of Sri Lanka is Sri Jayawardenepura Kotte.
• Sri Lanka’s President Gotabaya Rajapaksa has officially resigned, Speaker Mahinda Yapa Abeywardena announced Friday morning, ending days of uncertainty since the widely despised leader fled the island, dislodged by monumental public protests over a grave economic crisis. 
• Sri Lankan president Gotabaya Rajapaksa emailed his resignation letter Thursday night, sparking celebrations among protesters in Colombo.
• Shri Jayawardenepura Kotte is the administrative and Colombo is the executive and judicial capital of Sri Lanka. ​

In News

• The current president of  Srilanka is Ranil Wickremesinghe. (As of Jan 2023).

The correct answer is State Bank of India.

Key Points

• The Indian Navy and State Bank of India (SBI) have launched SBI’s NAV-eCash Card onboard India’s largest Naval Aircraft Carrier INS Vikramaditya.
• NAV-eCash Card with its dual-chip technology will facilitate both online as well as offline transactions.
• The card will remove the difficulties faced by personnel onboard in handling physical cash during deployment of the ship at high seas.

Additional Information

•  Headquarters of some important banks:

The correct answer is Central Bank of India.

Key Points

• Central Bank of India launched a contactless ‘RuPay Select’ debit card in December 2020.
  • It was launched in association with the National Payments Corporation of India.
  • It was launched on the occasion of Bank’s 110th foundation day.
  • The card was officially launched by then MD and CEO of the Central Bank of India, Pallav Mohapatra.
• The Central Bank of India was founded on 21 December 1911.
• The headquarters of the Central Bank of India is located in Mumbai.
• Matam Venkata Rao is the current MD and CEO of the Central Bank of India.

Additional Information

• State Bank of India:
  • State Bank of India is the largest public sector bank in India.
  • SBI descends from the Bank of Calcutta founded in 1806 through the Imperial Bank of India.
  • The Bank of Madras merged into the other two presidency banks, the Bank of Calcutta and the Bank of Bombay to form the Imperial Bank of India which in turn became the SBI on this day in 1955.
    • Founded - 1 July 1955.
    • Chairperson - Dinesh Kumar Khara.
    • Headquarters - Mumbai.
• HDFC Bank Limited:
  • ​HDFC Bank Limited is the largest private sector bank by assets[and by market capitalisation in India.
  • Founded - August 1994
  • Chairperson - Atanu Chakraborty
  • Headquarters - Mumbai.
• ICICI Bank Limited:
  • ​ICICI Bank Limited is a financial services company in India.
  • Founded -June 1994
  • Chairperson - Girish Chandra Chaturvedi
  • Headquarters - Vadodara, Gujarat.

The correct answer is ICICI Bank.

Key Points 

• ICICI Bank became the first bank in India to offer an instant PPF account facility.
• ICICI Bank says it is the first lender in the country to introduce a fully digital and paperless procedure for opening a PPF account.
• Private lender ICICI Bank has launched a digital service to allow customers to open a PPF account online, eliminating the need for furnishing paper documents.
• The digital service will enable customers to open a public provident fund (PPF) account instantly and in a completely online and paperless manner.

Additional Information

• ICICI Bank Limited is an Indian multinational bank and financial services company with its corporate office in Mumbai, Maharashtra.
  • It offers a wide range of banking products and financial services for corporate and retail customers through a variety of delivery channels and specialized subsidiaries in the areas of investment banking, life, non-life insurance, venture capital, and asset management.
  • The bank has a network of 5,275 branches and 15,589 ATMs across India and has a presence in 17 countries.
  • The bank has subsidiaries in the United Kingdom and Canada; branches in the United States, Singapore, Bahrain, Hong Kong, Qatar, Oman, Dubai International Finance Centre, China, and South Africa as well as representative offices in United Arab Emirates, Bangladesh, Malaysia, and Indonesia.

The correct answer is Mumbai.

Key Points

• Headquater of Bank of India is located in Bandra kulra Complex,Mumbai.
• The Bank of India was established on 07th September,1906.
• Bank of India was initially a private owned bank.
• It is under the ownership of Ministry of Finance, Government of India.
• Bank of India was founded on 7 September by a group of eminent businessmen from Mumbai, Maharashtra, India.

Additional Information

• The Bank was under private ownership and control till 19 July 1969 when it was nationalized along with 13 other banks.
• The Reserve Bank of Indi is India's central bank and regulatory body.
• It is responsible for regulation of the Indian banking system.
• It is under the ownership of Ministry of Finance, Government of India.
• It is responsible for the control, issue and maintaining supply of the Indian rupee.
• RBI:
  • RBI 25th Governor: Shaktikanta Das
  • RBI Headquarters: Mumbai
  • RBI Founded: 1 April 1935, Kolkata

The correct is option 3, i.e Akodara

• Akodara village of Gujarat situated in Sabarkantha district became the first digital village of India.
• ICICI Bank in 2015 under its Digital Village Project adopted Akodara village and made cashless by adopting digital technology.
• The village has its own official website, has 100% financial rate and mobile banking facilities in Hindi, English and Gujarati languages.
• Digital India was launched by Prime Minister Narendra Modi on 1 July 2015.
• Khonoma is the first green Village.
• Chizami village of Nagaland's Phek district has been uplifting the lives of women through the Chizami Weaves initiative of the North East Network (NEN).
• Odanthurai village of Tamil Nadu is a self-powered village that produces 7.5 lakh units of electricity in a year through the wind farm.

The correct answer is 13.2%.

Key Points

• Indian Bank has picked up a 13.27 percent stake in the proposed bad bank National Asset Reconstruction Company Ltd (NARCL).
• The lender has subscribed to 1,98,00,000 equity shares of NARCL for cash consideration of Rs. 19.80 crore.
• Three state-owned lenders -- SBI, Union Bank of India, and PNB -- had picked up over 12 percent stake each in NARCL on 30 September 2021.

Important Points

•  Headquarters of some important banks: