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					                      SIKKIM MANIPAL UNIVERSITY
                           MBA (BANKING)-IV
                        INSTITUTIONAL BANKING
                             SAMPLE PAPER

1. __________ for varying periods is given for purchasing pump sets, tractors and other
agricultural machinery.
    a. Credit loans
    b. Term loans
    c. Commercial loans
    d. Bank loans
Ans: B

 2. The concept of institutional banking originated during the post __________ in many
    a. First world war
    b. Second world war
    c. Industrialization
    d. Colonization
Ans: B

3. Examples of development banks at the International level:
          a. IBRD, International Bank for Reconstruction and Development
          b. IMF, International Monetary Fund
          c. IFCI, Industrial finance Corporation of India
          d. Both a and b
Ans: D

   4. The __________ was initially known as Imperial Bank.
         a. State Bank of India
         b. Punjab National Bank of India
         c. Corporation Bank
         d. Presidency Bank
Ans: A

   5. The Imperial Bank was formed in 1921 by the amalgamation of:
         a. Bank of Bengal
         b. Bank of Bombay
         c. Bank of Madras
         d. All of the above
Ans: D

   6. The State Bank of India came into existence on
         a. May 8, 1955
         b. July 1, 1955
         c. March 23, 1920
           d. None of the above
Ans: B

   7. Banks were allowed to set their own interest rate on post-shipment export credit
       for over ________.
           a. 90 days
           b. 28 days
           c. 75 days
           d. 32 days
Ans: A

   8. The liberalization policy of the Government of India permitted the entry of
       ________ into the Indian Banking Industry.
          a. Public Sector
          b. Private Sector
          c. Industrial Sector
          d. All of the above
Ans: B

   9. Commercial banks are institutions that combine various types of
        a. Transaction services
        b. Financial Intermediation
        c. Both a and b
        d. Imperial banks
Ans: C

   10. In developed economies, commercial banks are the ________ of the electronic
       payment system replacing the paper-based payment system.
           a. Heart
           b. Brain
           c. Blood
           d. Nervous system
Ans: A

   11. The _________ represents the real economy and the financial markets- the
       purchase and sale of goods and services throughout the country.
          a. The top most system
          b. The inter bank payments
          c. The real time system
          d. Transformation services
Ans: A

   12. RTGS systems throughout the world was driven by:
         a. Inter-Bank
         b. Central Bank
         c. Corporate Bank
         d. Commercial Bank
Ans: B
   13. __________ are exploited the highly profitable end of banking business i.e. the
       retail segment.
           a. ICICI Bank
           b. UTI Bank
           c. HDFC Bank
           d. All of the above
Ans: A

   14. RCI was merged with IDBI in
         a. 1987
         b. 1964
         c. 1976
         d. 1935
Ans: B

   15. _________ Acting as the apex institution for co-coordinating their diverse
       financing and promotional activities.
           a. HDFC
           b. HSBC
           c. ICICI
           d. IDBI
Ans: D

   16. State whether the given statement is true or not:
   Conflict of interests was one of the major reasons for introduction of Glass-Steagal
   Act 1934 in United States.
           a. True
           b. False
           c. Cannot say
           d. Not complete
Ans: A

   17. Small Industries Development Bank of India (SIDBI), was established on:
         a. August 21, 1989
         b. April 2, 1990
         c. March 5, 2003
         d. January 7, 1976
Ans: B

   18. IDBI is established with a mission to empower the MSME sector with a view to
       contribute to the process of
          a. Economic growth
          b. Employment generation
          c. Balanced regional development
          d. All of the above
Ans: D

   19. The business domain of _______ consists of small-scale industrial units.
          a. SIDBI
           b. IDBI
           c. APCTT
           d. NEDFI
Ans: A

   20. It was introduced by SFMC as a supplementary tool to judge risk perception.
           a. Term Deposits
           b. CAR (capacity assessment rating)
           c. CRISIL
           d. AFCL
Ans: B

   21. SIDBI foundation __________ select potential MFIs as long-term partners.
          a. Identifies
          b. Nurtures
          c. Develops
          d. All of the above
Ans: D

   22. SFMC would be providing direct credit to _______ of the select MFIs.
         a. SHGs
         b. Solidarity groups
         c. Individual clients
         d. All of the above
Ans: D

   23. IDBI continues to hold a ________ stake in SIDBI.
          a. 49%
          b. 50%
          c. 65%
          d. 70%
Ans: A

24. _________ was the first institution in the financial sector to be converted into a public
limited company.
           a. DFI
           b. IFCI
           c. IVCF
           d. TFCI
Ans: B

   24. The Corporate Advisory Services being offered by ________ began as a part of
       the Merchant Banking and Allied Business Department in ___________.

           a.   IFCI, 1986
           b.   ICICI, 1999
           c.   IDBI, 1876
           d.   TFCI, 1987
Ans: A
   25. IFCI is acting as a _______ for FDI into India.
          a. Hurdle
          b. Obstacle
          c. Catalyst
          d. Problem
Ans: C

   26. The types of loans under CSP are:
          a. General loan
          b. Seasonal loan
          c. Entrepreneurial development loan
          d. All of the above
Ans: D

   27. ICRA launched its services on:
          a. August 31, 1991
          b. September 24, 1987
          c. January 23, 1989
          d. None of the above
Ans: A

   28. _______ is an important instrument that triggers growth in the rural areas.
          a. Debit
          b. Loan
          c. Credit
          d. Both a and c
Ans: C

   29. Non-institutional sources or private sources of farm credit refer to credit supplied
          a. Money-lenders
          b. Landlords
          c. Traders
          d. All of the above
Ans: D

   30. _________ Programmes have, in the recent past, become one of the more
       promising ways to use scarce development funds to achieve the objectives of
       poverty alleviation.
          a. Micro finance
          b. Macro finance
          c. Multi agency finance
          d. None of the above
Ans: A

   31. ________ for varying periods are given for purchasing pump set, tractors and any
       other cultural machinery.
           a. Rural credit
           b. Term loans
           c. Commercial loan
          d. Agricultural loan

Ans. B

   32. State whether is it true or not –
   NABARD act as a coordinator in the operations of rural credits institution
           a. False
           b. Incomplete
           c. True

Ans. C

   33. The_________ Policy of the government of India has opened up gates for foreign
          a. Liberalization
          b. Globalization
          c. Foreign banking
          d. International banking

Ans. A

   34. The first private bank in India to be set up was –
          a. Imperial bank
          b. Induslnd bank
          c. Presidency bank
          d. ING Vysya

Ans. B

   35. IDBI is the _________ largest development in world as private bank in India.
          a. First
          b. Third
          c. Tenth
          d. Sixth

Ans. C

   36. ING Vysya was incorporated in 1930 and __________has the pride having its
       first branch in the year 1934.
            a. Bangalore
            b. Mumbai
            c. Delhi
            d. Patna

Ans. A

   37. The IMF started financial operations is on –
          a. July-1-1974
          b. Mar-1-1947
          c. Oct-5-1966
           d. Jan-2-1954

Ans. B

   38. TFCI was incorporated as a _________ under the companies at, 1956 on 27th
          a. Private ltd company
          b. Public company
          c. Public ltd company
          d. Private company

Ans. C

   39. ________ was one of the first developmental financial institution to be set up and
       came into existence in 1948.
          a. DFI
          b. IFCI
          c. TFCI
          d. I-FIN

Ans. B

   40. In 1988, ________ was converted into a company, Risk capital and technology
       finance corporation ltd (RCTC).
           a. RCF
           b. IVCF
           c. IFCI
           d. I-FIN

Ans. A


   1. The tiers of Banking System in India are:
         a. Commercial banks
         b. Regional rural banks
         c. Co-operative & special purpose rural banks
         d. All of the above
Ans: D

   2. Modern Banking in India started at the end of the 18th century with establishment
       of __________ in ______ and bankers mostly from ___________ managed the
       new banks established during this period.
           a. Bank of Calcutta, 1806 & Scotland
           b. Bank of Punjab, 1970 & USA
           c. Indus Bank of India, 1876 & UK
           d. None of the above
Ans: A
3. The _________ brings together buyers & lenders and reduces market imperfections
through research and dissemination of information, while _________ function enables
issue of claims against the banks themselves.
    a. Transaction Services, Financial intermediation
    b. Brokerage function, Asset transformation
    c. Payment system, settlement system
    d. Both a and b
Ans: B

4. _________ services are flexible, unbiased investment advice customized to meet the
client’s needs & ________ services are important from the point of view of removal of
settlement hassles & efficient follow-up of all corporate actions.
    a. Transaction services, Advisory services
    b. Custodial services, Advisory services
    c. Advisory, Custodial
    d. Technical, Custodial
Ans: C

5. _________ is the apex wholesaler for micro finance in India, launched by the bank in
    a. SFMC, January 1999
    b. MFI, March 1995
    c. FLC, July 2000
    d. FEDAI, January 1998
Ans: A

6. ________ Equity shares of SIDBI held by __________have been transferred to public
sector banks.
    a. 45% and ICICI
    b. 51.1% and IDBI
    c. 58% and HDFC
    d. 63% and HSBC
Ans: B

7. The __________ and _______ determined on the basis of the risk perception about
individual concerns.
    a. Interest, Loan
    b. Debt, Rentals
    c. Interest rate, rentals
    d. Rentals, discounting
Ans: C

8. The Corporate Advisory Services being offered by ________ began as a part of the
Merchant Banking and Allied Business Development in _________.
    a. IFCI, 1986
    b. FLC, 2000
    c. SFMC, 1999
    d. MFI, 1995
Ans: A
9. Ace Ltd. will focus on management of _________ and _________.
a. Performing assets, non-performing assets
b. Non-performing assets, stressed assets
c. Direct finance, direct discount scheme
d. Promotional activities, developmental activities
Ans: B

10. Activities towards which micro credit is provided include:
 1. Agriculture
 2. Livestock
 3. Fishery
 4. Handicrafts
 5. Trading
        a. 1, 2, 3, 4, 5
        b. 2, 3, 4, 5
        c. 1, 3, 4, 5
        d. None of the above
        Ans: A

11. Mc Kinsey suggested that IFCI should be divided into two companies:
    a. Good assets, good funding
    b. Good assets, profit earning
c.     Good assets, Bad assets
d.     Good bank, Universal bank
Ans: C

12. Institutional sources set up by Government to serve the rural areas are:
    a. Co-operatives
    b. Commercial banks
    c. Regional rural banks
    d. All of the above
Ans: D

13. PACSs provide _______ loans and CARDBs provide _________ loans.
    a. Short-term, Long-term
    b. Medium-term, Long-term
    c. Short-term, Medium-term
    d. Both a and c
Ans: D

14. State whether the given statements are true or not:

   1. Nearly 70% of farmers owning less than two hectares of land could not get bank
      credit; only large landowners were found creditworthy and suitable for bank
   2. Micro Finance has become one of the most effective interventions for economic
      empowerment of the poor.
          a. 1-T, 2-T
          b. 1-F, 2-T
          c. 1-F, 2-F
           d. 1-T, 2-F
Ans: A

15. The Indian Bank of India (IBA) was formed on the __________ with _________
    a. 25th October, 1966 & 25
    b. 26th September, 1946 & 22
    c. 12th August, 1978 & 35
    d. 18th January 1989 & 40
Ans: B

16. HDFC was incorporated in __________ , with registered office in Mumbai and
commenced as Scheduled Commercial Bank in ________.
    a. January, 1994 and August, 1995
    b. August, 1994 and January, 1995
    c. October, 1999 and September, 1989
    d. None of the above
Ans: B

17. The guidelines for licensing of new banks in the private sector were issued by the
__________ on __________.
    a. RBI, January 22, 1993
    b. SBI, August 14, 1999
    c. PNB, October 23, 1994
    d. RBI, September 25, 1996
Ans: A

18. The World Bank was formally established on ______, following the rectification of
the Bottom Woods Agreement to rebuild the destroyed __________ after World War II.

a. September 25, 1944 and Britain
b. December 27, 1945 and Europe
c. January 22, 1956 and America
d. None of the above
Ans: B

19. Bank overdrafts, Trade credit are ________ and Bank loans, EU funding are
_________ financing options.
    a. Short term, medium term
    b. Short term, longer term
    c. Medium term, longer term
    d. All of the above
Ans: A

20. Facilities offered by ECGC:
    a. Guarantee cover to the bank
    b. Policy cover to exporters
    c. Export Finance Guarantee
    d. Both a and b
Ans: D

    1. Identify the Objectives of Development banks:

    1. To serve as a medium of development in various sectors, viz. industry,
       agriculture, and international trade.
    2. To develop entrepreneurial skills.
    3. To promote the development of rural areas.
    4. To allocate resources to high priority areas.
    5. To finance housing, small scale industries, infrastructure, and social utilities.

    a. 1, 3, 4, 5
    b. 2, 3, 4, 5
    c. 1, 2, 3, 4, 5
    d. 1, 2, 4, 5
    Ans: C

    2. Select the subsidiaries of State Bank Of India:

    1.   State Bank of Bikaner & Jaipur
    2.   State Bank of Hyderabad
    3.   State Bank of Indore
    4.   State Bank of Patiala
    5.   State Bank of Mysore
    6.   State Bank of Travancore
    7.   State Bank of Saurashtra

    a. 1, 2, 4, 6, 7
    b. 1, 2, 3, 6, 7
    c. 2, 4, 5, 6, 7
    d. All of the above
    Ans: A

    3. Match the following:

    1. Co-operative Sector Banks       i. State co-operative banks
    2. Development Bank                ii. Small Industries Development Bank of India
                                       iii. Land development banks
                                       iv. Industrial Finance Corporation of India

a.1-I, ii and 2- iii, iv
b. 1-I, iii and 2- ii, iv
c. 1-ii, iv and 2- I, iii
d. None of the above
Ans: B

4. Identify the challenges in Banking:

1. Technological revolution
2. Service Proliferation
3. Disintermediation & Securitization
4. Globalization of banking
5. Consolidation & geographic expansion

     a. 1, 2, 3, 4
     b. 1, 3, 4, 5
     c. 1, 2, 4, 5
     d. 1, 2, 3, 4, 5
     Ans: C

     5. SIDBI’s assistance flows to the:

1.   Transport
2.   Health care
3.   Tourism sector
4.   Small-sized professional ventures
5.   Professional & Self-employed persons

a. 2, 4, 5
b. 1, 3, 4
c. 1, 2, 4, 5
d. 1, 2, 3, 4, 5
Ans: D

6. Match the following:

     1. Basic Functions in SIDBI Charter         i. Financing
     2. Issues confronting SSIs                  ii. Promotion
                                                 iii. Development
                                                 iv. Poor Quality
                                                 v. Technology obsolescence
                                                 vi. Incidence of sickness

a.   1-I, ii, iii & 2- iv, v, vi
b.   1- ii, iv, vi & 2- I, iii, v
c.   1- iv, v, vi & 2- I, ii, iii
d.   All of the above

Ans: A

7.   The principal activities of IFCI include:
1.   Project Finance
2.   Capital Services
3.   Financial Services
4.   Non- profit Assistance
5.   Non-project specific assistance
6.   Corporate Advisory Services

a. 1, 3, 4, 6
b. 1, 3, 5, 6
c. 2, 3, 4, 6
d. 1, 3, 4, 5, 6
Ans: B

8.   Match the following:
1.   Advisory services to regulatory agencies      i. Increasing need for sophisticated
2.   Corporate Finance                             advisory services to the corporate
3.   Infrastructure Advisory                       sector at a time when India is
                                                    Opening its door to investments in
                                                    new sectors
4. Project Advisory                                ii. Its specific emphasis on roads,
                                                   Ports, power & urban infrastructure
                                                   iii. Placement of debt & equity,
                                                   Mergers & amalgamations strategy
                                                   iv. Agencies providing consultancy
                                                   Services on key policy related
                                                   Technical & financial matter.

     a. 1-iv, 2-iii, 3-ii, 4-i
     b. 1-I, 2-ii, 3-iii, 4-iv
     c. 1-iii, 2-iv, 3-I, 4-ii
     d. 1-I, 2-iv, 3-ii, 4-iii
     Ans: A

9. Identify the activities of I-FIN:

1.   Stock brokerage
2.   Investment Advisory Services
3.   Portfolio Management Services
4.   Insurance Broking & Advisory Services
5.   Depository Services
6.   Distribution of home loans

     a. 1, 3, 4, 5, 6
     b. 1, 2, 3, 4, 5, 6
     c. 2, 4, 5, 6
     d. 1, 2, 4, 5, 6
     Ans: B

10. Limitations of the Multi-Agency Approach:

1. There was multiple financing, over-financing & under-financing due to lack of co-
2. Agencies failed to formulate & develop meaningful programs.
3. Despite guidelines, different agencies adopted different procedures & policies in the
   matter of providing loans & their recovery.
4. When different agencies had lent loans to the same persons there were some practical
   problems in the recovery of loans.
5. Development paradigm, micro finance evolved as a need-based policy.
a. 1, 2, 3, 4
b. 1, 3, 4, 5
c. 2, 3, 4, 5
d. 1, 2, 4, 5
Ans: A

11. To meet the varying needs of exporters, ECGC has evolved various Guarantees:

1.   Packaging Credit Guarantee
2.   Export Production Finance Guarantee
3.   Post shipment Export Credit Guarantee
4.   Export Finance Guarantee
5.   Export Performance Guarantee

a. 1, 2, 3, 5
b. 1, 2, 3, 4, 5
c. 2, 3, 4, 5
d. 1, 3, 4, 5
Ans: B

12. Foreign exchange risk can be avoided by:
1. Matching the currency for expenses to the currency for revenues
2. Currency futures contracts
3. Matching loan currency to currency of capex
4. Risk-sharing or coverage
5. Materialize the risks
   a. 1, 2, 4, 5
   b. 2, 3, 4, 5
   c. 1, 2, 3
   d. 3, 4, 5
   Ans: C

13. For small investors, the UTI offers the advantages of:

     1. Liquidity
     2. A steady income
     3. Expert management
     4. Large investment
     5. Considerably reduced risk since funds are invested in a balanced & well distribute
     a. 1, 2, 3, 5
     b. 2, 3, 4, 5
     c. 1, 3, 4, 5
     d. 1, 2, 4, 5
     Ans: A

14. State whether the given statements are true or not:
1. No specific benchmarks for group membership leading to inadequate poverty
2. External loaning of group funds was very high resulting in significant waiting time
   for members interested in borrowing.
3. Adequate emphasis on impact assessment is an integral part of the triangle of factors
   necessary for judging microfinance intervention.
4. Investors finance is the funding provided to support the operations of the venture
a. 1-T, 2-T, 3-F, 4-F
b. 1-T, 2-F, 3-T, 4-T
c. 1-F, 2-T, 3-F, 4-T
d. 1-T, 2-T, 3-F, 4-F
Ans: B

15. Asian Development Bank (ADB) strategy focuses on:

1.   Cross- Border Infrastructure
2.   Regional trade & Investment
3.   Money and Finance
4.   Other regional public goods

a.   1, 2, 3
b.   2, 3, 4
c.   1, 2, 3, 4
d.   1, 3, 4

Ans: C

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