MCQ on Employment of Funds

[MCQ on Employment of Funds MCQs, CRR and SLR MCQs, Banking MCQs, Objective Types Questions and Answers]

Banking MCQs
Multiple Choice Questions and Answers
MCQ on Employment of funds

1. Write the full form of SLR and CRR.

Ans: Statutory Liquidity Ratio and Cash Reserve Ratio

2. Give the meaning of Cash Reserve Ratio.

Ans: All the banks operating in a country, beside, cash in hand must maintain statutory cash reserve in the Reserve Bank of India against their time and Demand liabilities which is called cash reserve ratio. The Cash Reserve Ratio (CRR) refers to the portion of total deposits of a commercial bank which it has to keep with the RBI in the form of cash reserves.

3. What is CRR at Present?

Ans: Present CRR is 3%.

4. Give the meaning of Statutory Liquidity Ratio.

Ans: Statutory Liquidity ratio of the total deposits of a bank which it has to maintain with itself in the form of liquid funds like government securities and cash in hand at any given conditions and point of time.

5. What is SLR at present?

Ans: Present SLR is 18%.

6. What do you mean liquidity of asset?

Ans: Liquidity of assets means ability to convert the asset into cash within a short period of time and without any loss in its value.

7. The provision relating to maintenance of cash reserve ratio by banks is contained in:

Ans: RBI Act.

8. A transferable letter of credit cannot be transferred more than once.

Ans: True

9. What are various modes of creating charge?

a) Lien

b) Pledge

c) Mortgage

d) Assignment and Hypothecation

e) All of the above.

10. What is lien?

Ans: Lien is the right of the lender or creditor to retain the possession of the property given as security by the borrower or debtor until the debt is satisfied.

11. What is pledge?

Ans: Pledge is the delivery of goods as security for payment of a debt by the borrower or debtor known as pledger to the lender or creditor known as pledgee.

12. Define Mortgage.

Ans: A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan. This type of loan is long term in nature. If the borrower fails to repay the loan with interest amount, then the banker has the right to recover the loan amount by disposing the property mortgaged.

13. What is assignment?

Ans: Assignment is a process in which an existing or future right over property or money is transferred by one person to another person. This is applicable in case of fixed deposit in a bank, interest of a partner in dissolved firm etc.

14. What is the meaning of Hypothecation?

Ans: Hypothecation is mode of creating a charge against a movable property for payment of a debt without transferring the possession of the property. The goods remain at the disposal and in the godown of the borrower. The bank is given access to goods whenever it so desires.

15. Define bearer bonds and gilt-edged securities.

Ans: Bearer bonds are debt instruments which are issued by government or corporation without the name of the holder of the bond.

Government securities or instruments issued by the government and blue chip companies to borrow money are called gilt-edged securities. For example, TBs, Commercial Papers etc.

16. Write a short note of Traveler’s Letter of Credit.

Ans: Traveler’s letters of Credit are issued by the banks for the convenience of the travelers. The travelers are saved from the risk of traveling with heavy cash with them. The facility of such letter of credit can be available both for traveling in or outsides the country.

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Also Read:
1. HS 12 Banking Chapter wise Notes

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17. Write short note on Commercial Letter of Credit.

Ans: Commercial Letter of Credit is used of financing foreign trade. Commercial Letter of Credit is used by different banks in different countries in different languages.

18. First line of defence of banks includes:

a) Cash held by the banks itself

b) Cash balance with RBI

c) Cash balance with other banks

d) All of the above

19. Second line of defence of banks includes

Ans: Liquid assets excluding cash in hands

20. Third line of defence of banks includes

Ans: Investments made by bank

MCQ on Employment of Funds | Banking MCQs