15 extra multiple-choice questions for Banking (12th Standard Economics, Samacheer Kalvi), beyond the ones printed in the textbook — each with the correct option highlighted and a clear, worked explanation. Free to read in English and Tamil.
Q1
Which bank is considered the world's first finance-lending bank, established in 1157?
- A. The Bank of England
- B. The Bank of VeniceCorrect
- C. The Ricks Bank of Sweden
- D. The Bank of Hindustan
Explanation. The Bank of Venice, established in 1157, is noted as the world's first finance-lending bank.
Q2
Which is the oldest central bank in the world, springing from a private bank established in 1656?
- A. The Bank of England
- B. The Ricks Bank of SwedenCorrect
- C. The Federal Reserve Bank
- D. The South African Reserve Bank
Explanation. The Ricks Bank of Sweden is the oldest central bank in the world, originating from a private bank established in 1656.
Q3
In India, the three Presidency Banks of Bengal, Bombay, and Madras were merged in which year to form the Imperial Bank of India?
- A. 1806
- B. 1921Correct
- C. 1935
- D. 1955
Explanation. In 1921, the three Presidency Banks of Bengal, Bombay, and Madras were merged to establish the Imperial Bank of India.
Q4
The Imperial Bank of India was transformed into which of the following banks in 1955?
- A. Reserve Bank of India
- B. State Bank of IndiaCorrect
- C. Bank of Hindustan
- D. Indian Bank
Explanation. In 1955, the Imperial Bank of India was nationalised and transformed into the State Bank of India.
Q5
Why do commercial banks generally avoid providing long-term credit options?
- A. Because of low interest profit rates
- B. To maintain the liquidity of their assetsCorrect
- C. To adhere to central bank printing limits
- D. Due to high statutory reserve requirements
Explanation. Commercial banks do not provide long-term credit because they must maintain the liquidity of their assets.
Q6
Which of the following is classified as a primary function of commercial banks?
- A. Providing safe locker facilities
- B. Underwriting corporate securities
- C. Accepting public depositsCorrect
- D. Dealing in foreign exchange
Explanation. Accepting public deposits is a primary function of commercial banks, whereas utility services and agency services represent secondary functions.
Q7
When a bank creates a deposit in favor of a borrower without any prior payment of equivalent cash by the customer, it is known as a:
- A. Primary deposit
- B. Passive deposit
- C. Derived depositCorrect
- D. Time deposit
Explanation. A derived deposit is created when a bank grants a loan and opens a deposit account without receiving cash.
Q8
If all commercial banks are obliged to keep a minimum cash-to-deposit ratio of 20 percent, what is the value of the money multiplier?
- A. 2
- B. 4
- C. 5Correct
- D. 10
Explanation. The money multiplier is calculated as the reciprocal of the reserve ratio, which is one divided by twenty percent, equaling five.
Q9
Non-Banking Financial Institutions (NBFIs) are broadly classified into which two categories?
- A. Commercial Banks and Co-operative Banks
- B. Stock Exchange and Other Financial InstitutionsCorrect
- C. Primary Societies and Central Co-operative Banks
- D. Central Bank and Sponsoring Banks
Explanation. Non-Banking Financial Institutions can be classified into Stock Exchanges and other financial institutions like insurance companies.
Q10
In which years did the Reserve Bank of India (RBI) commence its operations and get nationalised respectively?
- A. Commenced in 1935, nationalised in 1949Correct
- B. Commenced in 1934, nationalised in 1947
- C. Commenced in 1947, nationalised in 1955
- D. Commenced in 1935, nationalised in 1969
Explanation. The Reserve Bank of India commenced its operations on 1 April 1935 and was later nationalised on 1 January 1949.
Q11
Who was appointed as the first Governor of the Reserve Bank of India in 1935?
- A. C.D. Deshmukh
- B. Osborne SmithCorrect
- C. James Braid Taylor
- D. Sir Benegal Rama Rau
Explanation. Osborne Smith was appointed as the first Governor of the Reserve Bank of India when it was established.
Q12
Which of the following statements is true regarding the relationship between the Repo Rate (RR) and the Reverse Repo Rate (RRR) in India?
- A. The Repo Rate is always equal to the Reverse Repo Rate.
- B. The Repo Rate is always greater than the Reverse Repo Rate.Correct
- C. The Repo Rate is always less than the Reverse Repo Rate.
- D. The Repo Rate is always exactly half of the Reverse Repo Rate.
Explanation. According to the textbook, the Repo Rate is always greater than the Reverse Repo Rate in India.
Q13
Regional Rural Banks (RRBs) were set up in India in which year to liquidate rural indebtedness and provide institutional credit?
- A. 1963
- B. 1975Correct
- C. 1982
- D. 1995
Explanation. Regional Rural Banks were set up in 1975 to liquidate rural indebtedness and provide institutional credit in rural areas.
Q14
What is the share capital subscription ratio in Regional Rural Banks (RRBs) among the Central Government, State Government, and sponsoring commercial bank respectively?
- A. 50%, 15%, 35%Correct
- B. 50%, 35%, 15%
- C. 35%, 15%, 50%
- D. 15%, 35%, 50%
Explanation. The share capital of Regional Rural Banks is subscribed by the Central Government, State Government, and sponsor bank in a 50:15:35 ratio.
Q15
In July 1982, which institution was set up to take over the refinancing functions of the RBI and the ARDC in relation to co-operative banks and RRBs?
- A. IFCI
- B. SIDCO
- C. NABARDCorrect
- D. EXIM Bank
Explanation. NABARD was set up in July 1982 to take over the refinancing functions of the RBI and the ARDC.
Frequently asked questions
How many MCQs are there in Banking?
This chapter has 15 book-back multiple-choice questions, each with the correct answer and a step-by-step explanation.
Are these 12th Standard Economics MCQs free to practise online?
Yes. Every question, answer and explanation here is free, and you can also take them as a timed practice test.
Where can I find the Banking book-back answers?
The correct option for each question is highlighted on this page with a worked explanation, plus a quick answer-key summary at the top.
