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OPERATIONS
SRM UNIVERSITY
SUBMITTED BY:
K CHANDRASEKHAR
RA1552001010497
SRM Nagar,
Potheri, Kattankulathur
promissory note
bill of lading
Bank draft/ pay order/bankers cheque.
Railway receipts
Dock warrant
Warehouse receipt
Certificate of deposit
Commercial paper
Treasury bills
Hundi
Ans. Basically it requires two parties. The one is maker who promises to pay and the
other is payee to whom it is payable. For example a person take loan from the bank
then the person is the maker and the bank is payee.
Q8. What is Bill of Exchange (BoE)?
Ans. Its an instrument containing an unconditional order signed by the maker
directing a certain person to pay a certain sum of amount only to the bearer of that
instrument.
Q9. How many types of bills are used in Banking Operations?
Ans. Following are the types of Bills used in Banking Operations:
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Current account can be opened with some initial amount decided by the bank. Here
the bank does not pay any interest on their balance, in fact the bank charges the
customer certain amount each year as Operational Charge. It also provides the
facility of withdrawing excess of the balance of deposit.
Q20. What is Overdraft Facility?
Ans. It is a facility provided by the banks that permits an account holder to use or
withdraw more than they have in their accounts, but they cant withdraw exceeding
the maximum minus balance.This facility is called Overdraft Facility.
Q21. What is Fixed Deposit Account?
Ans. This facility allows us to save money for long time. In saving accounts the rate
of interest is less, but in fixed deposit account the rate of interest is higher. It is also
known as term deposit account. The depositor can deposit the money for long
periods like 7 to 10 years. During this period withdrawal is not allowed however the
depositor can encash the money before the maturity period but at that time the
rate of interest will be less.
Q22. What is Recurring Deposit Account?
Ans. In this type of account the depositor saves regularly and in return gets a fair
return of deposit. While opening this account the deposit per month is fixed. We can
deposit the amount once in the month on a fixed date and the amount is also fixed.
The total amount with interest we can receive after the maturity. The rate of interest
in recurring deposit account is higher than the saving account. The account can be
opened by a person individually as well as jointly with another.
Q23. What are Non- performing assets (NPA)?
Ans. The asset which is not producing income is a Non-Performing Asset. It is an
asset or an account of a borrower which is considered as loss asset or doubtful by
the bank account or the financial institution is called non-performing asset.
Q24. What is 90 days overdue?
Ans. Its a norm for the identification of the Non-performing asset (NPA) starting
31 March 2014.
The norm is as follow:
- Interest or installment of principal remain overdue for more than ninety days in
respect of term loan.
- The account remains out of order for the period of more than ninety days.
- The bill remains overdue for the period of more than ninety days.
- Any amount to be received is due for more than ninety days.
Q25. What is Money Laundering?
Ans. The process of converting illegal money into legal money is Money Laundering.
According to Section 3 of the Prevention of Money laundering Act 2002 as:
Whosoever directly or indirectly attempts to indulge or knowingly assists or is
involved in any process or activity connected with the proceeds of crime and is
projecting it as the untainted property shall be guilty of the offence of money
laundering.
Q26. What are the common factors of Money Laundering?
Ans. Generally there are four factors of money laundering:
- The true ownership and real source of money is not revealed.
- The launderers change the form of the proceeds in order to shrink the huge
volume of cash generated by the initial unlawful activity.
- The trail left by the process is not known so that it make it difficult to follow the
money from the beginning to end.
- Constant control is maintained on the money.
Q27. What are the stages of Money Laundering process?
Ans. The following are the stages of money laundering process:
1. Placement stage:-It is the first introduction of entry for funds derived for any
criminal activities.
2. Layering/Agitation stage: - The object of this stage is to prevent the tracing of
illegal proceed. It creates a complex network of transactions which attempts to not
reveal the link between the initial entry and the end of the money laundering cycle.
3. Integration stage: - This process achieves the appearance of total legitimacy of
funds thereby it refers to the return of funds to the legitimate economy for later
extraction.
Q28. Give few ways of Money Laundering?
Ans. Following are the few ways of money laundering:-
record. Digital signature identifies the origin of the message and maintain the
integrity of message. It defines authentication of an electronic record by a person
whose name the digital signature certificates. In India Information Technology Act
2000 considers digital signature as personalized thumb print.
Q37. What is Mobile Banking?
Ans. Mobile banking provides us the ease of carrying out certain banking
transactions through their mobile phone. This facility is provided by the banks. Many
operations can be performed by using mobile banking like checking account
balance, paying bills, request for cheque book. Stop payment instruction,
summaries of last three transactions, transferring money to other account etc.
Q38. What is Electronic Fund Transfer System (EFTS)?
Ans. Electronic fund transfer provides us to transfer fund electronically replacing the
paper instruments. The electronic fund transfer is fast and easily available. It saves
time of customers standing in queue. The products of EFTS includes:-
Call money
Notice money
Certificate of deposits (1989)
Commercial papers (1990)
Forward rate agreement / interest rate swaps (1999)
Bills rediscounting
Market repo
RBI repo (LAF)
Treasury bills
Inter-bank participation certificate (1988)
CBLO (2003)
Ans. The market instrument which has the feature of both equity and debenture is
called HYBRID INSTRUMENT.
Q15. What are the various forms of derivative instruments?
Ans. Following are the forms of derivative instruments:- Forward contract
- Options
- Swaps
Q16. How many forms of SWAPS are there in derivatives, name them?
Ans. There are two forms of SWAPS in derivatives:
- Interest rate swaps
- Overnight index swaps
Q17. What is PARTICIPATARY NOTE?
Ans. PARTICIPATARY NOTE (PN) is an instrument used by foreign funds. It is not used
for domestic trading because it is not registered in India.
Q18. What is dated government securities?
Ans. Dated government securities are the long term securities. They carry fixed or
floating coupons which are paid on the face value and payable at fix time period.
Q19. What is ASSET SECURITISATION?
Ans. ASSET SECURITISATION is the process through which illiquid assets are
transformed into a more liquid form of assets and distribute to broad range of
investor through capital market.
Q20. Name the financial institutions that provide credit to various sectors
of economy?
Ans. Following are the financial institutions that provide credit to various sectors of
economy:-
Commercial banks
Regional rural banks (RRBs)
Urban co-operative banks (UCBs)
State co-operative banks (STCBs)
District central co-operative banks (DCCBs)
Primary agriculture credit society (PACS)
State co-operative and agriculture rural development banks (SCSCARDBs)
Primary co-operative and agriculture rural development banks (PCARDBs)
Financial institutions
Non-banking financial companies (NBFCs)
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Issue of shares
Issue of debentures
Loan from financial institutions
Reinvestment of profits
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Ans. SDDS is an international monetary fund standard to guide member that have
access to international capital market in the provision of their economic and
financial data to the public.
Q36. What is TAP SALE?
Ans. Under TAP SALE a certain amount of securities are created and made available
for sale, generally with minimum price and sold to the market as bids are made.
Q37. What do you mean by HELD TILL MATURITY (HTM)?
Ans. The securities acquired by banks with the intention to hold them up to
maturity.
Q38. What is COUPON FREQUENCY?
Ans. Coupon payments are made at regular intervals throughout the life of a debt
security and may be quarterly, half-yearly or annual payment.
Q39. What is Bond Ledger Account(BLA)?
Ans. BOND LEDGER ACCOUNT is an account with the RBI or an agent in which the
government securities are held in a dematerialised form at the credit of the holder.
Q40. What is the tenor of market repo?
Ans. The tenor for market repo ranges from one day to one year.
01. Which of the following cannot be called as a debt instrument as
referred in the financial transactions?
a) Certificate of deposit; b) Bonds; c) Stocks; d) Commercial papers; e)
Debentures
02. Whenever RBI does some open market operation transactions,
actually it wishes to regulate which of the following?
a) Inflation; b)Liquidity in economy; c) Borrowing powers of the banks; d)Flow of
foreign direct investments;
e) None of the above
03. In economics, it is generally believed that the main objective of a
public sector financial company like bank is to:
e) Employ more and more people; b) Maximize the total profits; c) Maximize
total production; d) Provide financial services to the people of the nation of its origin
across the country; e) Sell the goods at subsidized rates
04. In a company by the use of price sensitive corporate information
about the company, people closer to the company try to adopt the
technology to make gains or cover losses in share market dealings and
such process is known as:
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06. Bharat Nirman does not cover which of the following areas?
a) Rural employment; b) Rural housing c) Rural water supply; d) Irrigation
facilities; e) It covers all the above areas
07. Which of the following committee has given its recommendations on
Financial inclusions?
a) Rakesh Mohan committee; b) Rangarajan committee; c) Sinha committee; d)
Gadgil committee; d) None of these
08. The actual return of an investor is reduced sometimes when the prices
of the commodities go up all of a sudden and in financial sector this type
of phenomenon is known as
a) Probability risk; b) Market risk; c) Inflation risk; d) Credit risk; e) None of
these
09. An industry which is fighting hard to increase its market share in
existing market(with new popular products) is known as:
a) Market vendor; b) Market operator; c) Market leader; d) Market follower; e)
Market challenger
10. Which of the following products launched by most of the banks help
farmers in getting instant credit for various agricultural purposes?
a) Kisan credit card; b) Personal loan; c) Business loan; d) ATM card; e) None of
these
11. Which of the following products of a bank is specifically designed to
provide financial help to children in their higher studies in India or in a
foreign country?
a) Personal loan; b) Corporate loan; c) Housing loan; d) Educational loan; e)
Mortgage loan
12. Which of the following policies of the financial sectors is basically
designed to transferring local financial assets into foreign assets freely
and at market determined exchange rates?
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delivery; d) A new product launched to help senior citizens only as they are not
able to visit the branches/ATMs frequently; e) None of these
21. Which of the following terms are not used in banking sector?
a) Statutory liquidity ratio; b) Non performing asset; c) Credit rating;d) Fixed; e)
REPO
22. Banking sector comes under which of the following sectors?
a) Agriculture sector; b) Service sector; c) Manufacturing sector; d) Industrial
sector; e) None of these
23. An account in which trading of shares in their electronic form is done
is known as:
a) Demat account; b) NRE account; c) NRO account; d) FCNR account; e) RFC
account
24. Which of the following programmes/schemes of the Government of
India is not directly related with agriculture activities?
a) Drought Prone areas programme; b) Promotion of integrated pest management;
c) Integrated wastelands development programme; d) Annapurna scheme; e)
Desert Development programme
25. Find the odd man out from the following groups?
a) ICICI Bank, Canara Bank, Central Bank of India, Punjab National Bank, Indian
Bank
b) Canara Bank, State Bank of India, Lakshmi Vilas Bank, KarurVysya Bank, United
Bank of India
c)
Bank of India, Corporation Bank, Indian Bank, IDBI Bank, Axis bank
d) Bank of Maharashtra, Barclays bank, Oriental Bank of Commerce,
Indian Bank, IDBI bank
e) Union Bank of India, Bank of India, Andhra Bank, Dena Bank, Indian Bank
26. Which among the following is the recently opened private sector bank
in the country?
a) ICICI bank; b) HDFC bank; c) AXIS Bank; d) Kotak Mahindra Bank;e) Yes bank
27. Mortgage relates to which type of loan among the following?
a) Housing loan; b) Educational loan; c) Car loan; d) Gold loan; e) Personal loan
28. Fourteen banks were nationalized in the country during the first stage
on:
a) 19.07.1970; b) 19.07.1969; c) 19.07.1971; d) 18.07.1969; e) 15.07.1969
29. The sponsorship between State government, central government and
sponsor bank is in the ratio of--------- in respect of Regional Rural Banks in
the country:
a) 15-50-35; b) 50-35-15; c) 35-15-50; d) 35-50-15; e) 15-35-50
30. When it comes to providing locker facility to the customer of any
bank, the relationship between the customer and banker is that of:
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a) Debtor and creditor; b) Bailor and bailee; c) Lessee and lessor; d) Lessor and
lessee; e) Agent and principal
IBPS BANK EXAMINATIONS BANKING AWARENESS PRACTICE TEST
01. When does Reserve Bank of India issues annual policy statement?
b) January; b) April; c) July; d) October; e) None of the above
02. Which of the following has been renamed as Annual Policy
Statement by the Reserve Bank of India?
a) Busy season banking policy; b) Slack season banking policy; c) Monetary and
credit policy; d) Annual statistical report; e) None of the above
03. When does RBI review its annual policy statement?
a) July; b) October; c) January; d) All the above; e) None of the above
04. Which is the monitoring and reviewing authority regarding fair
practices code as per recent annual policy statement of Reserve Bank of
India?
b) Banking codes and standards Board of India; b) Banking Ombudsman; c)
Institute for development in banking technology; d) debt recovery tribunal; e) none
of the above
05. Which committee has recommended introduction of smart card?
a) Rangarajan committee; b) Saraf committee; c) Nayak committee; d)
Pannirselvan committee; e) None of the above
06. Which committee had formulated consultative profile in connection
with electronic funds transfer?
a) A.K. Purwar committee; b) Y V Reddy committee; c) K S Shere committee; d)
S. A. Dave committee; e) none of the above
07. The process of transformation of physical shares, commercial paper or
certificate of deposit into electronic form is called as:
a) Electronic clearing service; b) Electronic securitization; c) Share truncation; d)
Dematerialisation; e) None of the above
08. Providing banking services to a customer without his entrance inside
the banks branch is called as:
a) Virtual banking; b) relationship banking; c) universal banking; d) mobile
banking; e) none of the above
09. Where is the headquarters of Society for worldwide Interbank
Financial Telecommunication SWIFT situated?
a) New York; b) Los Angels; c) Brussels; d) Hague; e) None of the above
10. Where has National Financial Switch of IDRBT established?
a) Mumbai; b) New Delhi; c) Hyderabad; d) Bangalore; e) None of the above
11. Cheque truncation means:
a) Tearing a cheque into two or more pieces; b) Sending the photostat copy of a
cheque in collection; c) Using the electronic image of a cheque; d) Keeping the
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Photostat copy of a cheque with collecting bank before sending the original cheque
to the drawee branch; e) None of the above
12. What do you mean by universal banking?
a) Provision of all financial services in one country; b) Provision of all financial
services in one bank; c) Provision of all financial services at a branch; d) Provision
of all financial services at any of the counters of a branch of a bank; e) None of the
above
13. Corporate governance is a system
a) By which a company is directed and controlled; b)In which Board of directors
are responsible for managing the business affairs of a company; c) Both the
above; d) Governing corporate companies by the government; e) None of the
above
14. Whose interest is kept in mind in a good corporate governance
system?
a) Shareholders of the company; b) Stakeholders of the company; c) Employees of
the company; d) All the above; e) None of the above
15. What do you mean by risk?
a) Loss; b) Depreciation of capital; c) Decrease in profitability; d) Possible loss
that depends upon occurrence and non occurrence of an incident; e) None
of the above
16. The employees of the bank went on strike and when it comes to risk
what do you mean by this?
a) Operational risk; b) Employee risk; c) Credit risk; d) Market risk; e) Systemic
risk
17. Basel II accord is mostly concerned with:
a) Central vigilance commission; b) Non performing assets; c) Capital adequacy
ratio; d) Foreign direct investment; e) None of the above
18. A bank is unable to pay its short term deposits because the banks
funds are blocked in long term investments. The risk derived in this case
is known is:
a) Market risk; b) Operational risk; c) Liquidity risk; d) Interest rate risk; e) None
of the above
19. A bank recently introduced a new deposit scheme which was not
popular amongst the public and what do you mean by the riskassociated
with this?
a) Operations risk; b)Credit risk; c) Liquidity risk; d) Market risk; e) None of the
above
20. The Assets Liabilities committee in a bank makes the assessment of:
a) Liquidity risk; b) Credit risk; c) Operations risk; d) All the above; e) None of
the above
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21. A debtor makes default in repayment of a bank loan and which type of
risk is this for a lending bank?
a) Liquidity risk; b) Operational risk; c)Interest rate risk; d) Credit risk; e) None
of the above
22. Which type of risk arises before a bank that trades in government
securities?
a) Liquidity risk; b) Market risk; c) Credit risk; d) Trade risk; e) None of the above
23.
a)
b)
c)
d)
e)
24. Which of the following is not included in three pillars of BASEL capital
accord?
a) Minimum capital requirement; b) Supervisory review; c) Market discipline; d)
Core banking solution; e) None of the above
25. When ICICI Limited merged with ICICI bank?
a) 1st August, 2000; b) 1st August 2001; c) 1st August, 2002; d) 1stAugust, 2003;
e) none of the above
26. Bank of Madura Limited merged with:
a) ICICI bank limited; b) UTI bank limited; c) HDFC bank limited; d) IDBI bank e)
None of the above
27. Which bank has changed its name to AXIS bank limited?
a) Centurion bank; b) Times bank; c) Bank of Punjab Limited; d) Bank of Karad; e)
UTI bank limited
28. Bank of Cochin merged with:
a) Punjab National Bank; b) Bank of Baroda; c) State Bank of India;d) Canara
Bank; e) United Commercial bank
29. Times Bank Limited merged with:
a) HDFC Bank; b) Bank of India; c) Punjab National Bank; d) Central Bank of
India; e) none of the above
30. What do you mean by horizontal merger?
a) Merger of two or more companies that manufacture homogenous
products;
b) Merger of two or more companies that manufacture heterogonous products;
c)
Merger of a principal company with its subsidiary company
d) All the above
e) None of the above
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