MCQ on Money, Banking and Insurance
Q1. Which of the following institutions is the central banking authority in India?
a) State Bank of India
b) Securities and Exchange Board of India (SEBI)
c) Reserve Bank of India (RBI)
d) Insurance Regulatory and Development Authority of India (IRDAI)
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Correct Answer: c) Reserve Bank of India (RBI)
Explanation: The Reserve Bank of India (RBI) is the central banking authority in India. It is responsible for formulating and implementing monetary policy, managing foreign exchange reserves, and ensuring the stability of the financial system.
Q2. Which of the following is a primary function of commercial banks in India?
a) Accepting deposits
b) Granting loans
c) Facilitating remittances
d) All of the above
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Correct Answer: d) All of the above
Explanation: Commercial banks in India perform various functions, including accepting deposits, granting loans, and facilitating remittances. They play a crucial role in mobilizing savings and channelling them into productive investments, thereby promoting economic growth.
Q3. Which of the following is a major component of the Indian money market?
a) Treasury bills
b) Commercial papers
c) Certificates of deposit
d) All of the above
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Correct Answer: d) All of the above
Explanation: The Indian money market comprises various short-term financial instruments, including treasury bills, commercial papers, and certificates of deposit. These instruments facilitate the borrowing and lending of funds for short periods, typically up to one year.
Q4. Which of the following is a major component of the Indian capital market?
a) Equity shares
b) Corporate bonds
c) Government securities
d) All of the above
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Correct Answer: d) All of the above
Explanation: The Indian capital market comprises various long-term financial instruments, including equity shares, corporate bonds, and government securities. These instruments facilitate the mobilization of long-term funds for investment in productive assets.
Q5. Which of the following is a major government initiative aimed at promoting financial inclusion in India?
a) Pradhan Mantri Jan Dhan Yojana (PMJDY)
b) Pradhan Mantri Mudra Yojana (PMMY)
c) Atal Pension Yojana (APY)
d) All of the above
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Correct Answer: d) All of the above
Explanation: The Indian government has introduced several initiatives to promote financial inclusion, including the Pradhan Mantri Jan Dhan Yojana (PMJDY), which aims to provide access to banking services to all households; the Pradhan Mantri Mudra Yojana (PMMY), which provides financial assistance to micro and small enterprises; and the Atal Pension Yojana (APY), which provides pension benefits to the unorganized sector.
Q6. Which of the following is a major challenge faced by the Indian economy in terms of financial stability?
a) High levels of non-performing assets (NPAs)
b) Low levels of non-performing assets (NPAs)
c) High levels of public debt
d) Low levels of public debt
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Correct Answer: a) High levels of non-performing assets (NPAs)
Explanation: High levels of non-performing assets (NPAs) in the banking sector are a major challenge faced by the Indian economy in terms of financial stability. High NPAs can affect the stability of the financial sector and hamper the flow of credit to the economy.
Q7. Which of the following is a major government initiative aimed at addressing the issue of non-performing assets (NPAs) in the Indian banking sector?
a) Insolvency and Bankruptcy Code (IBC)
b) Asset Reconstruction Companies (ARCs)
c) Strategic Debt Restructuring (SDR) Scheme
d) All of the above
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Correct Answer: d) All of the above
Explanation: The Indian government has introduced several initiatives to address the issue of non-performing assets (NPAs) in the banking sector, including the Insolvency and Bankruptcy Code (IBC), which provides a framework for the resolution of corporate and individual insolvency; Asset Reconstruction Companies (ARCs), which acquire and manage NPAs; and the Strategic Debt Restructuring (SDR) Scheme, which allows banks to convert their debt into equity and take control of defaulting companies.
Q8. Which of the following is a major component of the Indian insurance market?
a) Life insurance
b) General insurance
c) Health insurance
d) All of the above
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Correct Answer: d) All of the above
Explanation: The Indian insurance market comprises various types of insurance products, including life insurance, general insurance, and health insurance. These products provide financial protection against various risks and uncertainties faced by individuals and businesses.
Q9. Which of the following is a major government initiative aimed at promoting the development of the Indian pension market?
a) National Pension System (NPS)
b) Atal Pension Yojana (APY)
c) Employees’ Provident Fund (EPF)
d) All of the above
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Correct Answer: d) All of the above
Explanation: The Indian government has introduced several initiatives to promote the development of the Indian pension market, including the National Pension System (NPS), which is a voluntary, defined-contribution pension system; the Atal Pension Yojana (APY), which provides pension benefits to the unorganized sector; and the Employees’ Provident Fund (EPF), which is a mandatory savings and retirement scheme for salaried employees.
Q10. Which of the following is a major challenge faced by the Indian economy in terms of access to credit?
a) High levels of access to formal credit
b) Low levels of access to formal credit
c) High levels of access to informal credit
d) Low levels of access to informal credit
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Correct Answer: b) Low levels of access to formal credit
Explanation: Low levels of access to formal credit are a major challenge faced by the Indian economy. Many individuals, particularly those from economically disadvantaged backgrounds, lack access to formal credit sources, forcing them to rely on informal sources of credit, often at high interest rates.
Q11. Which of the following is a major government initiative aimed at increasing access to credit for micro, small, and medium enterprises (MSMEs) in India?
a) Pradhan Mantri Mudra Yojana (PMMY)
b) Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS)
c) Stand-Up India Scheme
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The Indian government has launched several initiatives to increase access to credit for micro, small, and medium enterprises (MSMEs), including the Pradhan Mantri Mudra Yojana (PMMY), which provides financial assistance to micro enterprises; the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS), which offers credit guarantee to financial institutions for loans extended to MSMEs; and the Stand-Up India Scheme, which facilitates bank loans for setting up new enterprises in the manufacturing, services, or trading sectors.
Q12. Which of the following is a major challenge faced by the Indian economy in terms of financial inclusion?
a) High levels of financial inclusion
b) Low levels of financial inclusion
c) High levels of financial literacy
d) Low levels of financial literacy
Show Answer
Correct Answer: b) Low levels of financial inclusion
Explanation: Low levels of financial inclusion are a major challenge faced by the Indian economy. Limited access to financial services, particularly for those from economically disadvantaged backgrounds, can hinder economic growth and contribute to income inequality.
Q13. Which of the following is a major government initiative aimed at promoting financial inclusion in India?
a) Pradhan Mantri Jan Dhan Yojana (PMJDY)
b) Aadhaar-enabled Payment System (AePS)
c) Payments Banks
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The Indian government has introduced several initiatives to promote financial inclusion, including the Pradhan Mantri Jan Dhan Yojana (PMJDY), which aims to provide access to banking services to all households; the Aadhaar-enabled Payment System (AePS), which facilitates basic banking transactions using Aadhaar authentication; and Payments Banks, which offer basic banking services, particularly to the unbanked and underbanked population.
Q14. Which of the following is a major challenge faced by the Indian economy in terms of financial literacy?
a) High levels of financial literacy
b) Low levels of financial literacy
c) High levels of financial education
d) Low levels of financial education
Show Answer
Correct Answer: b) Low levels of financial literacy
Explanation: Low levels of financial literacy are a major challenge faced by the Indian economy. Limited understanding of financial concepts and products can hinder individuals’ ability to make informed financial decisions and manage their personal finances effectively.
Q15. Which of the following is a major government initiative aimed at promoting financial literacy in India?
a) National Strategy for Financial Education (NSFE)
b) Financial Literacy Centers (FLCs)
c) School-based financial education programs
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The Indian government has introduced several initiatives to promote financial literacy, including the National Strategy for Financial Education (NSFE), which provides a framework for financial education efforts in the country; Financial Literacy Centers (FLCs), which offer financial education and counseling services; and school-based financial education programs, which aim to integrate financial education into the school curriculum.
Q16. Which of the following is a major challenge faced by the Indian economy in terms of the development of the insurance market?
a) High levels of insurance penetration
b) Low levels of insurance penetration
c) High levels of insurance awareness
d) Low levels of insurance awareness
Show Answer
Correct Answer: b) Low levels of insurance penetration
Explanation: Low levels of insurance penetration are a major challenge faced by the Indian economy in terms of the development of the insurance market. Limited access to insurance products, particularly for those from economically disadvantaged backgrounds, can hinder risk management and contribute to income inequality.
Q17. Which of the following is a major government initiative aimed at promoting the development of the Indian insurance market?
a) Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
b) Pradhan Mantri Suraksha Bima Yojana (PMSBY)
c) Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The Indian government has introduced several initiatives to promote the development of the Indian insurance market, including the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), which provides life insurance coverage; the Pradhan Mantri Suraksha Bima Yojana (PMSBY), which offers accident insurance coverage; and the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), which provides health insurance coverage to economically disadvantaged families.
Q18. Which of the following is a major challenge faced by the Indian economy in terms of the development of the pension market?
a) High levels of pension coverage
b) Low levels of pension coverage
c) High levels of pension awareness
d) Low levels of pension awareness
Show Answer
Correct Answer: b) Low levels of pension coverage
Explanation: Low levels of pension coverage are a major challenge faced by the Indian economy in terms of the development of the pension market. Limited access to pension products, particularly for those from economically disadvantaged backgrounds and the unorganized sector, can hinder retirement planning and contribute to income inequality in old age.
Q19. Which of the following is a major government initiative aimed at promoting the development of the Indian mutual fund industry?
a) Systematic Investment Plan (SIP)
b) Mutual Fund Utility (MFU)
c) Securities and Exchange Board of India (SEBI) regulations
d) All of the above
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Correct Answer: d) All of the above
Explanation: The Indian government and the Securities and Exchange Board of India (SEBI) have introduced several initiatives to promote the development of the Indian mutual fund industry, including the Systematic Investment Plan (SIP), which allows investors to invest in mutual funds through regular, small investments; the Mutual Fund Utility (MFU), which is a shared services platform for the mutual fund industry; and SEBI regulations, which govern the functioning of mutual funds and protect the interests of investors.
Q20. Which of the following is a major challenge faced by the Indian economy in terms of the development of the corporate bond market?
a) High levels of market liquidity
b) Low levels of market liquidity
c) High levels of market transparency
d) Low levels of market transparency
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Correct Answer: b) Low levels of market liquidity
Explanation: Low levels of market liquidity are a major challenge faced by the Indian economy in terms of the development of the corporate bond market. Limited trading volumes and a lack of secondary market activity can hinder the growth of the corporate bond market and limit its ability to provide an alternative source of financing for businesses.