Tag: instruments of monetary policy and the reserve bank of india

Questions Related to instruments of monetary policy and the reserve bank of india

Project where imported capital goods are required, have automatic clearance if the value of imported capital goods required is ________ of the total valise plant and machinery up to __________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Less than 25% minimum of Rs. 2 crores

  2. Less than 25% maximum of Rs. 2 crores

  3. More than 5% minimum of Rs. 2 cores

  4. More than 25% minimum of Rs. 2 cores

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Correct Option: B
Explanation:

Project where imported capital goods are required automatic clearance if the value of imported capital goods required is less than 25% of the total value of plant and machinery up to maximum of Rs. 2 crores.

Reverse Repo transaction means ________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. sale of securities by the holder to the investor with the agreement to purchase them at a predetermined rate and date

  2. sale of securities by the holder to the investor with the commitment to sell or purchase them at a predetermined rate and date

  3. sale of securities by the holder to the investor with the agreement to purchase them at a prevailing rate and date

  4. sale of securities by the holder to the investor with the agreement to purchase them at market driven rate

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Correct Option: B

Banking Regulation (Amendment) Act, 1962, empowers the RBI to enhance SLR to _______.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. $40\%$

  2. $38\%$

  3. $30\%$

  4. $33\%$

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Correct Option: A

Repo transaction means _________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. sale of securities by the holder to the investor with the agreement to purchase them at a predetermined rate and date

  2. sale of securities by the holder to the investor with the agreement to resell them at a predetermined rate and date

  3. sale of securities by the holder to the investor with the agreement to purchase them at a prevailing rate and date

  4. sale of securities by the holder to the investor with the agreement to purchase them at a market driven rate

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Correct Option: A

As per Banking Regulation (Amendment) Act,1962, minimum SLR to be maintained is _____ $\%$ against the net demand and time liabilities.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. $20\%$

  2. $33\%$

  3. $25\%$

  4. $23\%$

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Correct Option: C

Repo transactions are allowed in ________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Government securities/ Treasury bills of all maturity

  2. State Government securities

  3. PSU bonds/ Private corporate bonds

  4. All the three

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Correct Option: D

Selective credit control method is used to __________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. regulate credit for some specific purpose

  2. redirect credit for some specific purpose

  3. restrict supply of credit to check inflation

  4. restrict credit to some identified companies

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Correct Option: A
Explanation:

Selective credit control method of monetary policy includes those instruments which focus on the selected sectors of the economy and not the size of the total credit in economy as it is a qualitative method used by the central bank to change affected areas only and not the whole economy. It regulates the credit for some specific purpose which can be prices for a specific commodity etc. 

Repo Market means _________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. a money market instrument which helps in collateral short term borrowing and leading through sale and purchase operation in debt instrument

  2. a money market instrument which helps in collateral long term borrowing and leading through sale and purchase operation in debt instrument

  3. a money market instrument which helps in collateral short term leading through sale and purchase operation in debt instrument

  4. a money market instrument which helps in collateral short term borrowing through sale and purchase operation in debt instrument

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Correct Option: A

As per RBI (Amendment) Act 1962, RBI is to determine the CRR for commercial banks between ________ to ________ of aggregate deposits and time liabilities.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. $3\%$, $10\%$

  2. $5\%$, $10\%$

  3. $3\%$, $15\%$

  4. $4\%$, $12\%$

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Correct Option: C

_____  is also called lender of the last resort in India.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. CBI

  2. SBI

  3. RBI

  4. UTI

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Correct Option: C
Explanation:

Central bank is an apex bank that regulates and controls the entire banking system of a country. The central bank lends money to government and the commercial banks when they are facing liquidity crunch or any type of insolvency. The central bank are the last resort to provide loans to the government and commercial banks against any type of collateral. Since Reserve Bank of India(RBI) is the central bank of India, it is also known as the lender of the last resort in India.