IBPS CLERICAL GENERAL QUESTIONS

1. Which of the following statements is true?
a) The licence to open branches of bank is granted by Board of
Directors of that Bank
b) There is no need of licenses to open branch of a bank
c) A licence to open a branch is issued by the Central Government
d) A licence to open a branch is issued by the Reserve Bank of India
under the provisions of Banking Regulation Act, 1949
Ans: D

2. The important condition for granting licence of banking companies is?
a) Banking company need not plan to pay for future depositors
b) Banking company can plan for its capital structure once the licence
is granted
c) The business undertaken by the banking company should not frustrate
the interest of public
d) The banking company can undertake business other than banking with
the permission of annual general body
Ans:C

3. Who of the following is not a party to the IPO?
a) Registrar of Issue
b) Investment Banker
c) Advertisement Agency
d) Registrar of Companies
Ans: D

4. Which of the following is not shown as an asset in the balance
sheet of a Bank?
a) Investments
b) Advances
c) Cash Balances with other banks
d) Borrowings
Ans: D

5. The credit policy of a bank does not consists of?
a) Lending policies
b) Quality control
c) Loan product mix
d) Advertising of loan products
Ans: D

6. Which of the following is a function of the agent bank relating to
flow of money in the process of loan syndication?
a) Receiving notices relating to cancellation of any part of the loan
b) Calling of loans in the event of default
c) Receiving the fee from the borrower and distributing among the
participating banks
d) Receiving notices relating to transfers of banks
Ans: C

7. Which of the following is the parameter to recognize the SSI unit
as sick unit?
a) The erosion in the net-worth due to accumulated losses is up to 25%
of its net worth during the previous account year
b) The erosion in the net-worth due to accumulated losses is up to 50%
of its net worth during the previous account year.
c) The unit should have been in commercial production for at least five years
d) Lack of updations in technological development
Ans: B

8. Which of the following is not the service provided by the Small
Industries Service Institute?
a) Providing entrepreneurship development programs
b) Developmental efforts
c) Export promotion and liaison activities
d) Financial support
Ans:D

9. Service Area Approach (SAA) is associated with?
a) Rural and Semi-urban branches of commercial banks
b) Urban branches of commercial banks
c) Branches of commercial banks situated in metro cities
d) Development banks
Ans: A

10. Which of the following cannot be securitized?
a) Future rentals of a fishing boat
b) Hire purchase receivables
c) Demand drafts received by the banker during clearing
d) Future billings for an airline
Ans: C

11. Which of the following statements is true?
a) The special purpose vehicle (SPV) purchases the assets from the
borrower directly during the securitization
b) The originator and obligor are the same persons in securitization process
c) Administrator collects the payments due from the obligor and passes
it to the SPV and follows with defaulters
d) Mortgage based securitization provides high yields to the investor
Ans: C

12. The important feature of an anticipatory letter of credit is that?
a) The letter of credit can be used as back- to- back letters of credit
b) The beneficiary under the letter of credit may receive payment even
at the pre-shipment stage
c) The beneficiary under the letter of credit may receive payment even
at the post-shipment stage
d) The cash advance is not permitted against such letter of credits
Ans: B

13. The Shipping guarantee is a?
a) Type of a letter of credit
b) Guarantee issued by the ship captain to the purchaser
c) Guarantee issued to the borrower towards the loan granted by the
shipping company
d) Deferred payment guarantee issued by a banker at the request of the
consignee when the documents are not received and goods are received,
for facilitating the delivery of goods.
Ans: D

14. Which of the following statements is true?
a) The charge card is a credit instrument
b) Under this facility the cardholders need to pay amount within ten
installments
c) Cardholder has to pay the 100% of the purchase amount within 30
days of purchase
d) The charge card shall have revolving credit
Ans: C

15. Which of the following is not augmented feature of a credit card?
a) Personal accident insurance
b) Cash withdrawals
c) Add-on facility
d) Issue of deferred guarantee
Ans: D

16. Which of the following is the disadvantage of going for public issue?
a) Liquidity to existing shares
b) Increase in visibility and reputation to the company
c) Better pricing and placement with new investors
d) Need to make continuous disclosures
Ans: D

17. Which of the following is not a criterion to select the Investment Bankers?
a) No professional memberships or incorporations are required
b) General reputation in the market
c) Good rapport with market intermediaries
d) Distribution net work of the organization
Ans: A

18. Which of the following is not an asset of a bank?
a) Notes and small coins
b) Overdue recurring deposits
c) Short term loans
d) Staff advances
Ans: B

19. The banking company has restriction to sanction loan to?
a) Directors of the bank
b) Staff working in the bank
c) Students going abroad
d) Professionals
Ans: A

20. Which of the following is a non-depository institution?
a) Credit unions
b) Commercial banks
c) Mutual funds
d) Regional rural banks
Ans: C

21. The disadvantage associated with leasing company is?
a) Low costs
b) Flexibility in payments
c) Eliminates the risk of obsolescence
d) High competitions because of entry to all financial institutions
Ans:D

22. Which of the following theory is associated with the financial
system in the economic growth?
a) Retributive theory
b) Reformative theory
c) Financial repression theory
d) Jurisdictional theory
Ans: C

23.Which of the following is not a financial intermediary in the
financial markets?
a) Pension funds
b) Credit unions
c) Life insurance companies
d) Small scale service institute.
Ans: D

24 Which of the following is not a function of a commercial bank?
a) Registration of charges and mortgages
b) Transactions services
c) Asset transaction
d) Real-time Gross Settlement
Ans: A

25. Which of the following is one of the three pillars of new Basel
Capital Award?
a) Market competitions
b) Market rapport
c) Market discipline
d) International market relations
Ans: C

26. The interest in savings bank accounts of a bank is calculated on?
a) Minimum amount of balance that is maintained in the account in
between 10th and the last day of month
b) Maximum amount of balance that is maintained in the account in
between 10th and the last of month
c) Minimum amount of balance that is maintained in the account in
between 1st and the last day of month
d) Maximum amount of balance that is maintained in the account in
between 1st and the last of month
Ans: A

27. The credit policy of a bank does not deal with?
a) Credit risk management
b) Documentation standards
c) Review and renewal of advances
d) Outstanding balances in deposit accounts
Ans: D

28. Issuing credit cards is a component of ?
a) Corporate banking
b) Rural banking
c) Retail banking
d) Micro finance
Ans: C

29. The origin of bank instruments can be traced to?
a) The priests and worship places of public deposits
b) Goldsmith receipts
c) Bonds issued by the British Government in India
d) Bank notes issued by Bank of Venice
Ans: B

30. Which of the following is not the function of commercial banks?
a) Providing transaction services
b) Intermediation in financial services
c) Providing transformation services
d) Regulating the issue of bank notes.
Ans: D

31 Which of the following is the most important challenge before the
commercial bank?
a) Maintenance of foreign currency
b) Evaluating the need of the customers
c) Maintenance of SLR and CRR
d) Meet the technological revolution
Ans: D

32. The asset's side of balance sheet consists of ?
a) Cash balances with other banks
b) Fixed deposits of customers
c) Savings deposits
d) Recurring deposits
Ans: A

33. Which of the following is an income for a bank?
a) Depreciation on bank's property
b) Interest on inter bank borrowings
c) Profit on revaluation of investments
d) Provisions made on account of write-offs
Ans: C

34. Saving Bank Account can be opened in the name of ?
a) State text book printing corporations
b) District level housing cooperative societies
c) Communist Party of India
d) Aravind Samuel, Anurag Deepak and Amarish Sugandhi Jointly
Ans: D

35. The interest on recurring deposit is paid on the basis of ?
a) Simple interest calculated monthly basis
b) Simple interest on monthly products basis
c) Quarterly compounding
d) Interest calculated on daily products basis
Ans: C

36. Which of the following statements is true?
i. Term deposits are non-transaction deposits
ii. Cheques can be issued on short-term deposits
iii. All term deposits are interest bearing deposits
a) (i) only
b) (ii) only
c) (iii) only
d) (i) and (iii)
Ans: D

37. The credit policy laid down by the top management of a bank does
not deal with?
a) Credit risk management
b) Pricing of the credit products
c) Appraisal of time and demand deposits
d) Documentation standards.
Ans: C

38. Which of the following factors is not required to be considered to
analyze the repayment capacity of a borrower?
a) Working capital management
b) Personal educational qualifications
c) Financial leverage
d) Interest rate risk management
Ans: B

39. Which of the following is a facilitating service of core loan
products of retail banking services?
a) Current or savings accounts
b) Legal services for documentation
c) Delivery of loan at promised time period
d) Flexibility in prepayment of loan
Ans: A

40. Which of the following is an most important advantage of retail
banking on the resource side?
a) Consumer loans are low risk products
b) Innovative product development and disbursal
c) Increases the subsidiary business of a bank
d) Requires less efforts to market retail loan products
Ans: C

41. Lenders may not provide trade-offs to the borrowers on the basic
term of consumer installment credit relating to?
a) Interest rate
b) Maturity of the loan
c) Maturity of the deposit
d) Quantum of finance
Ans: C

42. Which of the following is the risk associated with the retail banking?
a) Strong recovery strategy
b) Definite lending limits
c) Effective credit process and proposals
d) Inadequate risk pricing
Ans: D

43 The advantage of consortium finance is?
i. Speedy transactions and individual approach
ii. Involvement of huge amounts
iii. Use of expertise of all the banks
a) (i) only
b) (ii) only
c) (iii) only
d) (i), (ii) and (iii)
Ans: D

44 Which of the following is not a function of the agent bank in loan
syndication?
a) Ensuring the compliance of conditions precedent under the loan agreement
b) Determining the LIBOR interest rate for each interest rate
c) Planning for future syndication of loans
d) Receiving notices relating to cancellation of any part of the loan
Ans: C

45. Which of the following is not a phase/step in the formation of
loan syndication?
a) Finalization of supply agreement
b) Identify the needs of the borrower
c) Preparation of information memorandum
d) Invite other banks to participate
Ans: A

46. Which of the following statements is true?
a) SSI is an undertaking in which the investments in fixed assets in
plant and machinery does not exceed one million
b) Small and medium enterprises both in size and shape are not
homogenous in nature
c) The small and medium enterprises contribution towards the GDP is nominal
d) Small and medium enterprises do not support the large industries.
Ans: B

47. The Nayak Committee has suggested the turnover method for
assessing the working capital and pegged it at?
a) 15% of the projected annual turnover, as working capital limit
b) 20% of the projected annual turnover, as working capital limit
c) 25% of the projected annual turnover, as working capital limit
d) 30% of the projected annual turnover, as working capital limit
Ans: B

48. Which of the following is not a part of the rehabilitation package
granted for revival of sick industry?
a) Waiver of penal interests
b) Funding by sanctioning of term loans towards the unpaid installments of loans
c) Grant of additional working capital loans
d) Not demanding the promoters contribution towards the rehabilitation package
Ans: D

49. Service Area Approach is associated with?
a) Industrial finance
b) Microfinance
c) Rural finance
d) Consortium finance
Ans: C

50. Which of the following resources cannot be securitized?
a) Credit balances outstanding in cash credit accounts
b) Credit Card receivables
c) Hire purchase receivable
d) Mortgage in lieu of future payments
Ans: A

51. Which of the following is a type of anticipatory letter of credit?
a) Green clause letter of credit
b) Yellow clause letter of credit
c) Back to back letters of credit
d) Revolving letter of credit
Ans: A

52. Performance guarantee is issued?
a) In lieu of earnest money
b) In lieu of retention money
c) In lieu of indemnity bonds
d) For successful competition of Turnkey projects
Ans: D

53. Which of the following is not a transfer of funds by using the
electronic media?
a) Mail transfer of funds
b) Telegraphic transfer of funds
c) Electronic credit transfers
d) Electronic clearing transfers
Ans: A

54. Which of the following is not an augmenting feature of credit cards?
a) Personal accident insurance
b) Cash withdrawal facility
c) Add-On facility
d) Automatic recovery of interest on term loans
Ans: D

55 Which of the following is a disadvantage of going public issue?
a) Provides liquidity to existing shares
b) Commands better pricing than placement with few investors
c) Increased regulatory norms
d) Enables valuation of the company
Ans: C

56 Which of the following is not a reason for regulating the banking
operations?
a) Banks hold a major portion of the public savings
b) Banks intermediate between the savings and investments
c) Banks hold a large part of the money supply
d) Banks earn profit from non-fund services
Ans: D

57. Which of the following statements is true?
a) Resave Bank of India empowers the banks to open branches according
to their will and pleasure
b) Reserve Bank of India is a central bank which monitors only lending
activities pertaining to export credit
c) Banks have authority to establish the ATMs at their convenience
d) Rural banks of commercial banks do not have freedom to issue credit cards
Ans: C

58. When the customer withdraws cash from ATM, the banker and customer
relation ship is?
a) Debtor and Creditor
b) Creditor and Debtor
c) Lessor and Lessee
d) Agent and principal
Ans: A

59. Which of the following is a public sector Bank?
a) IDBI
b) ICICI
c) AXIS
d) HDFC
Ans: A

60. Trade control in India is regulated by?
a) RBI
b) SEBI
c) EXIM Bank
d) DGFT
Ans: D

61 Which of the following businesses is prohibited as per Sec 8 of B.R
Act 1949?
a) Executing the trusts
b) Leasing
c) Retail trading
d) Underwriting
Ans: C

62. Which of the following is not one of the essential elements of
internal audit?
a) Totality
b) Expertise
c) Independence
d) Subjectivity
Ans: D

63. The letter of credit, which facilitates the exporter to get pre-
shipment finance (from the stage of purchase of raw material until the
warehousing of the finished goods) from advising bank is called?
a) Red Clause LC
b) Lines of credit
c) Packing credit loan
d) Green Clause LC
Ans: D

64. A term loan is classified as a non-performing asset, if interest
or installment is overdue for period exceeding how many days?
a) 90
b) 91
c) 180
d) 182
Ans: A

65. Which of the following is an interest bearing demand deposit?
a) Time Deposit
b) Re-investment deposits
c) Cash Certificates
d) Savings Bank account
Ans: D

66. Debt Recovery Tribunals accept petitions from Banks and financial
institutions, only when the amount of suit is for Rs?
a) 1 00 000 and above
b) 5 00 000 and above
c) 7 50 000 and above
d) 10 00 000 and above
Ans: D

67. An endorsement is deemed as an instruction to?
a) Collecting Bank
b) Paying Bank
c) Drawer
d) Payee
Ans: B

68. Ideal Credit deposit ratio for a bank is?
a) 60%
b) 40%
c) 90%
d) 30%
Ans: A

69. The rate at which RBI rediscounts the bills of commercial banks is
called as?
a) Bank Rate
b) Prime Lending rate
c) Repo rate
d) BPLR
Ans: A

70. Which of the following is not one of the RBI directives on clean
note policy?
a) Currency note packets are not to be stapled and secured with paper bands
b) Soiled notes are to be stapled before they are remitted to Currency Chest.
c) Water mark window of bank notes shall not contain any writings
d) Currency notes are to be sorted in to Issuable and non-issuable notes.
Ans: B

71. Which of the following committees are related to 'Micro financing'?
a) Nayak Committee
b) Tandon committee
c) Vyas Committee
d) Narasimham committee
Ans: C

72. The relation ship between RBI and the Bank maintaining the
currency chest is that of?
a) Debtor and Creditor
b) Principal and Agent
c) Bailor and Bailee
d) Creditor and Debtor
Ans: B

73. Normally, the number of members in a self Help Group shall not exceed?
a) 10
b) 20
c) 50
d) 15
Ans: B

74. Short fall in fulfilling the targets of Priority sector and
agricultural finance by domestic commercial banks shall be deposited
with/in?
a) RIDF
b) SIDBI
c) RBI
d) IDBI
Ans: A

75. The maturity value of a Recurring deposit with a monthly
contribution of Rs 500 kept for a period of 12 months, at 9% interest
rate compounded quarterly would be Rs.?
a) 6, 265
b) 6, 625
c) 7, 255
d) 7, 555
Ans: A

76. Which of the following is not an imperfect note?
a) Washed note
b) Bleached note
c) Mutilated note
d) Oiled note
Ans: C

77. Credit rating helps in measuring the credit risk and facilitates?
a) Considering higher credit limits
b) Making loan provisioning at an early stage
c) Accurately calculate the probable loan losses
d) Pricing of a loan
Ans: D

78. The Reverse Repo has the following characteristic?
a) Borrowing by RBI from banks
b) Borrowing with government security as collateral
c) Short term borrowing
d) All of these
Ans: D

79. Under the Nayak Committee recommendations, the quantum of working
capital limits from the bank is minimum percentage of the projected
annual sales?
a) 5%
b) 15%
c) 20%
d) 25%
Ans: C

80. Banks insist on providing finance for those projects or activities
only which they consider to be viable. What is meant by viability of
project?
a) Capacity to generate cash, adequate to service debt and surplus for
borrower's personal requirement.
b) Generation of cash to meet debt liability
c) Generation of profits.
d) Generation of gross profits
Ans: A

81. Letter of negative lien obtained from borrower by a bank contains?
a) An undertaking that the property mortgaged to the bank is his own
b) A confirmation that the borrower had earlier deposited title deeds
to create mortgage on the property.
c) An undertaking not to create any encumbrance/lien on the property
which he owns but not yet mortgaged to the bank
d) A declaration that he is the joint owner of the property furnishing
the details of his share and valuation thereof.
Ans: C

82. Which of the following statement is CORRECT?
a) Consortium advances to be treated as NPA on the basis of recovery
by individual banks
b) If one facility of a borrower is treated as NPA other facilities to
him also to be treated as NPA even if there are no irregularities in
that account.
c) Consortium must be formed if the total exposure of fund based limit
exceeds Rs 100 crore.
d) Both (a) and (b)
Ans: A

83. If an IPO is under-priced, which of the following can be
considered as consequences/implications of the same?
I. The company looses the opportunity to raise more funds
II. Under pricing would give less returns to the investor
III. Under pricing results in lower net worth on an increased equity.
a) Only (II) above
b) Only (III) above
c) Both (I) and (III) above
d) Both (II) and (III) above all.
Ans: C

84. Corporate Bank files suit for recovery of its loan against the
guarantor only and not the borrower. Guarantor pleads in the court
that before filing suit against him, money should be recovered from
the borrower. In such circumstances, the bank can seek recourse in the
court against?
a) All the liable parties together only
b) Any one of them at a time
c) All separately
d) At its discretion it can proceed against any one
Ans: D

85. A letter of credit (LC) wherein the credit available to the
customer gets reinstated after the bill is paid is known as?
a) Back to back LC
b) Red clause LC
c) Back to front LC
d) Revolving LC
Ans: D

86. Regional Rural Banks are?
a) Private Sector scheduled commercial banks
b) Cooperative banks
c) Foreign banks
d) Public sector scheduled commercial banks
Ans: D

87. Large corporate customers demand?
a) Short term products from their banks irrespective of the cost at
their times of need.
b) Increasingly sophisticated products from their banks at the lowest
possible cost.
c) Disintegrated financial products from their banks at the lowest
possible cost.
d) Basic banking products from their banks but with speed and efficiency.
Ans: B

88. Funded Services under corporate banking does not include?
a) Working Capital Finance
b) Bill Discounting
c) Export Credit
d) Letters of Credit
Ans: D

89. Which of the following is not directly involved in rural lending?
a) Cooperatives
b) RRBs
c) Commercial banks
d) SIDBI
Ans: D

90. PACSs provide?
a) Mainly long term credit
b) Mainly short term credit
c) Both long term and short term credit
d) Do not provide any credit
Ans: B

91. The purpose of which is to make credit of available to essential
sectors of the economy according to national priorities?
a) Selective Credit Control (SCC)
b) Maintenance of cash reserve
c) Reserve fund
d) Comprehensive Credit Control
Ans: A

92. The system of note issue followed by the RBI is?
a) Proportional reserve system
b) Minimum reserve system
c) Minimum fiduciary system
d) Maximum fiduciary system
Ans: B

93. The rate at which the Reserve Bank of India lends to the
commercial banks in very short term against the backing of the
Government securities is known as?
a) Bank rate
b) Repo rate
c) Reverse Repo
d) Discount rate
Ans: B

94. Scheduled banks are those?
a) Includued in the 2nd schedule of the Banking Regulation Act-1949
b) Includued in the 2nd schedule of the Companies Act-1956
c) Includued in the 2nd schedule of the Reserve Bank of India Act -1934
d) Bank Nationalization Act -1969
Ans: C

95. The following is classified as a public sector bank?
a) ICICI Bank
b) IDBI Bank Ltd
c) Axis Bank
d) Local area bank
Ans: B

96. The banker-customer relationship in credit card payment is?
a) Creditor-debtor
b) Debtor-creditor
c) Agent principal
d) Principal-agent
Ans: B

97. The base rate is set by?
a) Individual banks
b) RBI
c) Government of India
d)RBI in consultation with Government
Ans: A

98. State Bank of India's new floating rate of deposit is directly linked to?
a) Inflation Rate
b) BPLR
c) Base Rate
d) BankRate
Ans: C

99. Six private sector banks were nationalised on April 15, 1980,
whose reserves were more than?
a) 100 Crores
b) Rs. 200 crores
c) 300 crores
d) 400 crores
Ans: B

100. Security printing press was established in 1982 at?
a) Kolkata
b) New Delhi
c) Bombay
d) Hyderabad
Ans: D