Every Book Back multiple-choice question from Banking (12th Standard Economics, Samacheer Kalvi) — each with the correct option highlighted and a clear, worked explanation. Free to read in English and Tamil.
Q1
A Bank is a
- A. Financial institutionCorrect
- B. Corporate
- C. An Industry
- D. Service institutions
Explanation. A bank is a financial institution that provides fundamental services to the public, primarily accepting deposits and lending loans.
Q2
A Commercial Bank is an institution that provides services
- A. Accepting deposits
- B. Providing loans
- C. Both a and bCorrect
- D. None of the above
Explanation. Commercial banks accept public deposits and grant loans for investment purposes to conduct business with a profit motive.
Q3
The Functions of commercial banks are broadly classified into
- A. Primary Functions
- B. Secondary functions
- C. Other functions
- D. a, b, and cCorrect
Explanation. Functions of commercial banks are categorized into primary functions, secondary functions, and other modern banking functions.
Q4
Bank credit refers to
- A. Bank Loans
- B. Advances
- C. Bank loans and advancesCorrect
- D. Borrowings
Explanation. Bank credit is the total funds created by commercial banks through granting loans and advances to individuals and businesses.
Q5
Credit creation means.
- A. Multiplication of loans and advancesCorrect
- B. Revenue
- C. Expenditure
- D. Debt
Explanation. Credit creation refers to the multiplication of bank loans and advances, expanding the overall money supply without printing cash.
Q6
NBFI does not have.
- A. Banking licenseCorrect
- B. government approval
- C. Money market approval
- D. Finance ministry approval
Explanation. A Non-Banking Financial Institution conducts borrowing and lending activities but lacks a full banking license.
Q7
Central bank is --------------- authority of any country.
- A. MonetaryCorrect
- B. Fiscal
- C. Wage
- D. National Income
Explanation. The central bank regulates a state's currency, money supply, interest rates, and oversees the commercial banking system.
Q8
Who will act as the banker to the Government of India?
- A. RBI
- B. NABARD
- C. ICICI
- D. RBICorrect
Explanation. The Reserve Bank of India is the central banking institution that acts as the banker both to central and state governments.
Q9
Lender of the last resort is one of the functions of.
- A. Central BankCorrect
- B. Commercial banks
- C. Land Development Banks
- D. Co-operative banks
Explanation. The central bank acts as the lender of last resort, providing emergency financial assistance to commercial banks during crises.
Q10
Bank Rate means.
- A. Re-discounting the first class securitiesCorrect
- B. Interest rate
- C. Exchange rate
- D. Growth rate
Explanation. The bank rate is the rate at which the central bank is prepared to re-discount first-class eligible securities.
Q11
Repo Rate means the
- A. Rate at which the Commercial Banks are willing to lend to RBI
- B. Rate at which the RBI is willing to lend to commercial banksCorrect
- C. Exchange rate of the foreign bank
- D. Growth rate of the economy
Explanation. The repo rate is the rate at which the Reserve Bank of India lends money to commercial banks against collateral.
Q12
Moral suasion refers.
- A. Optimization
- B. Maximization
- C. PersuasionCorrect
- D. Minimization
Explanation. Moral suasion is a qualitative credit control method where the central bank persuades commercial banks to follow its policy directives.
Q13
ARDC started functioning from
- A. June 3, 1963
- B. July 3, 1963
- C. June 1, 1963
- D. July 1, 1963Correct
Explanation. The Agricultural Refinance Development Corporation (ARDC) was set up by Parliament and started functioning on July 1, 1963.
Q14
NABARD was set up in.
- A. July 1962
- B. July 1972
- C. July 1982Correct
- D. July 1992
Explanation. NABARD was set up in July 1982 by an Act of Parliament to oversee and fund rural and agricultural credit.
Q15
EXIM bank was established in.
- A. June 1982
- B. April 1982
- C. May 1982
- D. March 1982Correct
Explanation. The Export-Import (EXIM) Bank of India was established in March 1982 to coordinate and finance international trade transactions.
Q16
The State Financial Corporation Act was passed by
- A. Government of IndiaCorrect
- B. Government of Tamilnadu
- C. Government of Union Territories
- D. Local Government
Explanation. The State Financial Corporations Act was passed by the Government of India in 1951 to establish state-level financial corporations to support small and medium enterprises.
Q17
Monetary policy is formulated by
- A. Co-operative banks
- B. Commercial banks
- C. Central BankCorrect
- D. Foreign banks
Explanation. Monetary policy is the macroeconomic framework laid down and managed by the central bank of a country to control the money supply and interest rates.
Q18
Online Banking is also known as
- A. E-Banking
- B. Internet BankingCorrect
- C. RTGS
- D. NEFT
Explanation. Online banking enables bank customers to conduct a wide range of financial transactions through the bank website and is also called internet banking.
Q19
Expansions of ATM
- A. Automated Teller MachineCorrect
- B. Adjustment Teller Machine
- C. Automatic Teller mechanism
- D. Any Time Money
Explanation. ATM stands for Automated Teller Machine, which revolutionized banking services by providing a self-service terminal for cash transactions.
Q20
2016 Demonetization of currency includes denominations of
- A. ₹500 and ₹1000Correct
- B. ₹1000 and ₹2000
- C. ₹200 and ₹500
- D. All the above
Explanation. On November 8, 2016, the Government of India stripped the five hundred and one thousand rupee banknotes of their legal tender status.
About these Banking questions
These are the Book Back multiple-choice questions for Banking from the Tamil Nadu State Board (Samacheer Kalvi) 12th Standard Economics syllabus. Each question shows the correct option and an original, step-by-step explanation so you understand the method, not just the answer. Use the answer key above to jump to any question, then take the practice test to check yourself under exam-like conditions.
Frequently asked questions
How many MCQs are there in Banking?
This chapter has 20 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.
