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IBPS PROBATIONARY OFFICERS

Banking Knowledge

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Secondary Services of Banks

Banks' primary service or business is collecting deposits and lending them. In

order to support this primary service banks also provide supporting services to
deposit and advances products. This also generates some income to banks in the
form of commission or service charges.

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Remittances: Remitting money from one bank branch to another bank branch or
its own bank branches is called Remittances. This can be done through various
means like NEFT, RTGS, Demand Draft, Bankers' Cheque. In olden days banks
used to remit money through Mail Transfer (MT), Telegraphic Transfer (TT) etc.
For international transactions banks use Outward Remittance and Travelers'
Cheque (TC).

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National Electronic Funds Transfer (NEFT): This system was introduced by

RBI in order to transfer funds within the banking system through electronic
format. Under this system, an individual or a business entity can transfer funds
from a paisa to any amount as it has no upper limit. This is a reliable, secure,
efficient and economical system of funds transfer and clearing in banking
system. A service charge is collected per transaction from the customer.

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Real Time Gross Settlement System (RTGS): This is also an Electronic Fund
Transfer System like NEFT. But an important difference is seen in settlement.
This is settled on gross basis at real time. Each and every remittance transaction
will be settled individually. These transactions are irrevocable. Each
participating bank need to open an account with RBI for settlement of funds. The
settlement is done to the banks' account with RBI on individual transaction basis.
For both NEFT and RTGS, we need have IFSC code of beneficiary in order to
remit the funds.

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Bankers' Cheque (BC) and Demand Draft (DD): This is also an oldest method
of fund transfer with confirmed and secure way of transfer of funds. These are
the document based negotiable instruments used to transfer funds. An applicant
needs to purchase a bankers cheque or demand draft from a bank in order to pay
the payee on the same bank's different branch.

R-28-9-14

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Bankers' Cheque is issued on its own branch where as demand draft is issued on
other branches. Bankers' cheque is also called as pay order. The life of the BC is
of three months from the date of issue and the life of DD is six months from the
date of issue. And it can be revalidated.

BC and DD can be purchased across the counters through cash but as per RBI
anti money laundering and income tax provisions Rs.50000 and above need to
be routed through bank account only. Commission is the income generation from
DD and BC / PO to Banks. These types of services are being used less
nowadays due to introduction of online payment system.

1.

2.

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Where is the head office of Syndicate Bank located?

a) Bangalore

b) Manipal

d) Mumbai

e) Kolkata

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c) New Delhi

NABARD support lending to farmers, rural artisans and other non farmers in
rural areas through ..........

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a) Co -operative Banks

b) Regional Rural Banks

c) Land Development Banks

d) Scheduled Commercial Banks

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e) All the Above

3.

a) Monetary policy b) Fiscal policy

d) Only a and b

4.

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Identify the macro economic policy/ policies of India ..........

c) Regulatory policy

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e) None of these

RBI uses bank rate in order to control ..........

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a) Money supply, volume of bank credit and cost of bank credit.

b) Liquidity

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c) Cash holdings of banks

d) Financial position of banks

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e) None of these
5.

What are the steps taken by RBI, in order to meet demand and time liabilities of
banks in time?
a) Banks are asked to keep mandatory regulatory cash reserve with RBI

b) Banks are asked to maintain CRR

c) Both a and b as they are same
d) Banks are asked to keep enough cash in cash counters
e) None of these

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6.

India's own payment gate way 'RuPay' works in which of the following
channel/s?
a) Automated Teller Machines

b) Point of Sales

c) Online Sales

d) All of the Above

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e) None of these
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b) Exports or imports

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c) Indian rupee or foreign currency

e) None of these
8.

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Monetary policy is used by RBI for controlling ..........

a) Inflation or deflation

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d) State or Central Government

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Identify the difference between commercial paper and certificate of deposit ........

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a) Certificate of deposit is issued at discount while commercial paper at face

value
b) Certificate of deposit is a financial instrument while commercial paper is a
financial statement

c) Certificate of deposit is issued by banks while commercial paper is issued by

firms or public limited companies

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d) All the above

e) None of these
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When does money market is called as 'Tight'?

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a) When the call money rate is low

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b) When the call money rate is high

c) When money availability in the market is very high

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d) When participants in the money market are ready to lend

e) None of these

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10. If a bank needs to attract Provident Fund Deposits, what are the criteria that
banks must possess?

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a) Profitability in preceding 3 years

b) Minimum of Rs.200 crores as net worth

c) Capital adequacy of 9%
d) All the above
e) None of these

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11. If the stock markets are declining then it is called as ..........
a) Bull run

b) Down run

c) Bear run

d) Stage

e) None of these

12. A promissory note that is not secured by any collateral or not secured by a
mortgage or lien marked on any property is .......... instrument.
a) Debenture

b) Bill of exchange

c) Commercial bill

d) Currency bill

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e) None of these

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13. What does RBI do if a Re.1 note is issued by Government of India?

a) RBI object the issuance

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b) RBI put into circulation

c) RBI converts Re.1 in to higher denomination of Rs.10 and more.

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d) RBI asks banks to not to support for circulation

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e) None of these

14. RBI issue currency rupee notes on bases of ..........

a) By holding minimum value of gold coins and bullion
b) By holding minimum foreign securities as a part of the total approved assets

c) By holding minimum amount of commodities which are trading in

commodity exchanges
d) Only a and b
e) All the above

15. Which of the following entities are applicable for the new listing obligations and
disclosure requirements of SEBI regulations, 2014?
a) Listing of debentures

b) Listing of bonds

c) All listed companies

d) All the above

e) None of these
16. National Payments Corporation of India (NPCI) is being used by banks for ......
a) Remittance

b) Clearing and settlement

c) Payments and settlements

d) Advisory service

e) None of these

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17. NOSTRO account means ..........
a) An account opened by foreign citizens other than NRIs in India with Indian
banks in INR for their expenses in India.

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b) An account opened by foreign citizens other than NRIs in India with foreign
banks in foreign currency to convert Indian rupee to that currency and remit
back to their own country.

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c) An account opened by an Indian bank in the foreign countries in their banks

and in that country currency for settlement in that country's currency.

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d) An account opened by a foreign bank in India with their corresponding banks

in INR for settlements in INR.

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e) None of these

18. What kind of Treasury Bills (T-Bills) is/ are issued by State Government?

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a) No Treasury Bills issued by State Government

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b) 182 - days
c) 91 - days

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d) 364 - days

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e) None of these

19. Pick the odd one out from the following about Bharat Bill Payment System
(BBPS).

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a) BBPS is a unified bill payment system across the country.

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b) It will be setting up the standards in operations related to payments, clearance,

and settlements.

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c) G. Padmanabhan committee had provided a report on feasibility of Bharat Bill

Payment System (BBPS).

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d) Payment gateways, service providers, banks, and agents will be participants

in this system.
e) None of these

20. Electronic fund transfers like RTGS and NEFT are operated and maintained by
..........

a) National Payments Corporation of India (NPCI)

b) Bharat Bill Payment System (BBPS)
c) Reserve Bank of India (RBI)

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d) Clearing Corporation of India Limited (CCIL)
e) None of these
21. Identify the Basel III norms from following that, recently RBI has extended the
timeline for implementation for banks in India ..........

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a) Minimum regulatory capital requirement

b) Market discipline

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c) Holding the minimum capital to risk weighted assets ratio to 10.25%

d) Leverage ratio to 3%

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e) All the above

22. Identify the odd one out from the following benefits of RTGS.

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a) Settlement is immediate

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b) Suited for only lower value transactions

c) Lowers the settlement risk

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d) Avoids credit risk while settlement

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e) Settled at real time

23. Who all can hire a locker in a bank?

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a) Individuals

b) Limited companies and societies

c) Specified associations

d) Two persons jointly

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e) All the above

24. Expand IFSC ..........

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a) Indian Financial System Code

b) Indian Financial Services Code

c) International Financial Service Code d) Interbank Fund Service Code

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e) Indian Financial Security Code

25. Which among the following is known as pre paid negotiable instrument?
a) Cheque

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c) Bankers cheque/ Pay order

b) Promissory note
d) Fixed deposit

e) None of these

KEY

1-b; 2-e; 3-d; 4-a; 5-c; 6-d; 7-a; 8-d; 9-b; 10-d; 11-c; 12-a; 13-b; 14-d; 15-d;
16-b; 17-c; 18-a; 19-e; 20-c; 21-e; 22-b; 23-e; 24-a; 25-c.
Writer : S. Rudranand

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