Economics: Banking and Credit Quiz

What is the primary function of a bank?

• Selling insurance policies

• Providing locker facility

• Issuing currency notes

• Accepting deposits from public

What is the meaning of credit in the context of banking?

• Claim to receive payments

• Claim to receive discounts

• Claim to receive gifts

• Claim to receive penalties

Which bank is the head of the banking system in India?

• Reserve Bank of India

• State Bank of India

• ICICI Bank

• Punjab National Bank

What is the function of Reserve Bank of India (RBI)?

• Acting as banker to the government

• Accepting deposits from public

• Providing locker facility

• Issuing currency notes

Which type of bank provides credit for farming in rural areas?

• Commercial bank

• Cooperative bank

• Development bank

• Central bank

What is the cash reserve ratio in the context of credit creation by a bank?

• The percentage of interest charged on loans

• The percentage of loan given to borrowers

• The percentage of profit earned by the bank

• The percentage of total deposit kept as cash

What is the credit creation capacity of a bank dependent on?

• The cash reserve ratio

• The number of employees it has

• The amount of profit it earns

• The number of branches it has

Which type of bank provides credit for self-employment activities in urban areas?

• Urban cooperative bank

• Development bank

• State Bank of India

• Industrial development bank of India

What is the total credit creation when the initial increase in deposit is Rs.100 and the cash reserve ratio is 10%?

• Rs.50

• Rs.200

• Rs.1000

• Rs.500

What is the main function of a commercial bank?

• Issuing currency notes

• Providing locker facility

• Earning profit by charging interest on loans

• Acting as banker to the government