RBI Grade B Finance & Management Quiz for Phase II 2021
RBI Grade B Finance & Management Quiz for Phase II 2021
Finance and Management (FM) Questions with the answer. RBI Grade B Finance and Management Notes PDF. RBI Grade B FM Study Material PDF. RBI Finance and Management (FM) Books, PDF, Previous Papers, Question Set, and study material. As we all know that The Reserve Bank of India (RBI) conducted the RBI Grade B Phase I Exam for the post of Grade B (Grade ‘B’ (DR) – (General) & others). It’s the right time when you should start your RBI Grade B 2021 Phase II preparation with full pace.
If you are preparing for RBI Grade B 2021 (Phase II), you will come across a section on “Finance and Management (FM)” wherein 65 questions will be there carrying 50 marks. Here we are providing you with “Finance and Management (FM) Questions for RBI Grade B” with answers based on the latest pattern of your daily practice.
RBI Grade B Finance & Management Questions with Answer| Set-4
1. Generally banks have to pledge securities (like G-secs) held by the bank over the SLR requirement to avail funds from RBI. In which of the following measures banks can also pledge securities put under SLR requirement?
Explanation: The RBI has deployed a number of liquidity support measures for banks to ensure that there will be enough liquidity in the banking system. Most popular of these measures is the arrangement called repo. Under repo, loan is provided for just one day and hence it is an overnight facility. Another feature of repo is that there should be eligible securities with the bank to avail money from the RBI by pledging them. Eligible securities are first class securities (including government bonds, T Bills etc) held by a bank over the SLR requirement. This means that the securities held by a bank above SLR of its liabilities (deposits) can be pledged by the bank with the RBI to avail funds.
2. X is doing an exceptional business in his area. Since, it was a family owned business, the policies and procedures applied in this organisation were quite old. X tried to apply change to the organisation. She made everyone understand one important management principle that Change is constant. Although certain events and circumstances in an organization can be controlled, others can’t. This theory recognizes that change is inevitable and is rarely controlled. While organizations grow, complexity and the possibility for susceptible events increase. Organizations increase energy to maintain the new level of complexity, and as organizations spend more energy, more structure is needed for stability. The system continues to evolve and change.
Which management theory Ms. X taught the old staff?
Explanation: Chaos theory is a scientific principle describing the unpredictability of systems. Most fully explored and recognized during the mid-to-late 1980s, its premise is that systems sometimes reside in chaos, generating energy but without any predictability or direction. These complex systems may be weather patterns, ecosystems, water flows, anatomical functions, or organizations. While these system’s chaotic behaviour may appear random at first, chaotic systems can be defined by a mathematical formula, and they are not without order or finite boundaries. This theory, in relation to organizational behaviour, was somewhat discounted during the 1990s, giving way to the very similar complexity theory.
3. Company AB issued a perpetual bond 3 years back which pays interest of 10,00,000 Kuwaiti Dinnar. The market discount rate is 8% and the coupon rate is 10%. What is the value of the bond issued by AB (in Kuwaiti Dinar)?
Explanation: As per section 47 of RBI Act 1934, after making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds 2[and for all other matters for which provision is to be made by or under this Act or which] are usually provided for by bankers, the balance of the profits shall be paid to the Central Government.
As per section 48 of RBI Act 1934, Notwithstanding anything contained in 3[the Income-Tax Act, 1961], or any other enactment for the time being in force relating to income-tax or super-tax, the Bank shall not be liable to pay income-tax or super-tax on any of its income, profits or gains.
5. ABC bank is having certain issues. It is unable to decide about its credit risk. It hires forensic auditor Mrs. Singh from EY for knowing the credit issues associated with the bank. The bank puts a list of issues in front of Mrs. Singh and asks her to classify the risks and identify credit risk
The list of risk is as mentioned below
Unwillingness of a customer to meet his commitment relating to a financial transaction with the bank
Inability of the customer to reimburse the bank in case of invocation of a guarantee
Inability of a customer to meet his commitment relating to a transaction with the bank
Inability of a bank to pay salary of its employees
Bank not paying bills of the auditor as bank feels the work has not been done diligently
Explanation: As all the three points relate to credit transactions. First, the customer is unwilling to meet his commitment relating to any financial transaction undertaken with the bank which means that the customer has money but he is unwilling to meet the commitment. Second, the customer stood as a guarantor to a loan transaction and when the guarantee is invoked, the customer fails to reimburse the bank. Third, the customer is unable to meet the commitment due to lack of funds.
6. In this case, the leader totally trusts their employees/team to perform the job themselves. He just concentrates on the intellectual/rational aspect of his work and does not focus on the management aspect of his work. The team/employees are welcomed to share their views and provide suggestions which are best for organizational interests. This leadership style works only when the employees are skilled, loyal, experienced and intellectual. Name the leadership style.
Explanation: Laissez-faire leadership, also known as delegative leadership, is a type of leadership style in which leaders are hands-off and allow group members to make the decisions. Researchers have found that this is generally the leadership style that leads to the lowest productivity among group members.
Characteristics of Laissez-Faire Leadership
Laissez-faire leadership is characterized by:
Very little guidance from leaders
Complete freedom for followers to make decisions
Leaders provide the tools and resources needed
Group members are expected to solve problems on their own
Power is handed over to followers, yet leaders still take responsibility for the groups decisions and actions.
Explanation: Authorized capital: The amount of capital with which a company is registered with the registrar of companies (body responsible for registration of companies). It is the maximum amount of capital which a company can raise through shares i.e. shared capital can be maximum up to the authorized capital and not beyond. Authorized capital is also called Registered capital or Nominal capital.
Subscribed capital: The amount of capital (out of authorized capital) for which company has received applications from the general public who are interested in buying shares.
Issued capital: The amount of capital (out of subscribed capital) which has been issued by the company to the subscribers and thus are now shareholders.
Paid-up capital: The amount of capital against which the company has received the payments from the shareholders so far.
8. Two stocks Bharti Airtel Ltd. and ITC Ltd. have negative correlation of 80% between them. The portfolio consists of 200 units of stock Bharti Airtel Ltd. (market price Rs. 200) and 100 units of stock ITC Ltd. (market price Rs. 400). If price of stock Bharti Airtel Ltd. moves up by 40% what would be the gain/loss on the portfolio?
Explanation: Correlation is 80% = 0.90, which is negative implies, two stock prices are inversely related. If price of Bharti Airtel goes up, then price of ITC Ltd. goes down. Factor is by 0.80.
Here stock price of Bharti Airtel goes up by 40 %. So, current price of Bharti Airtel is Rs. 280
Also, price of ITC Ltd. goes down by 40%*0.32 = 32%
Current price of ITC Ltd.
Will be 400 * (1-.32%) = Rs. 272
Gain in Bharti Airtel
(280 – 200) * 200 = Rs. 16000
Loss in ITC Ltd.
= (400 – 272) * 100 = Rs. 12800
In total,
16000 – 12800
= Gain of Rs. 3200
9. Kanban is a method for managing knowledge work that balances the demand for work to be done with the available capacity to start new work. Who gave the world the concept of Kanban?
Explanation: Kanban is an inventory-control system to control the supply chain. Taiichi Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. Kanban is one method to achieve JIT. Kanban became an effective tool to support running a production system as a whole, and an excellent way to promote improvement. Problem areas are highlighted by reducing the number of kanban in circulation.
10. With respect to Rationalisation of Branch Authorisation Policy guidelines issued by RBI, select the incorrect statements:
A ‘Banking Outlet’ is a fixed point service delivery unit, manned by either bank’s staff or its Business Correspondent where services of acceptance of deposits, encashment of cheques/ cash withdrawal or lending of money are provided for a minimum of 5 hours per day for at least four days a week.
An ‘Unbanked Rural Centre’ (URC) is a rural centre that does not have a CBS-enabled ‘Banking Outlet’ of a Scheduled Commercial Bank, a Small Finance Bank, a Payment Bank or a Regional Rural Bank nor a branch of Local Area Bank or licensed Co-operative Bank for carrying out customer based banking transactions.
ATMs, E- lobbies, Bunch Note Acceptor Machines (BNAM), Cash Deposit Machines (CDM), E- Kiosks and Mobile Branches will be treated as ‘Banking Outlets’.
A ‘Part-time Banking Outlet’, opened in any Centre, will be counted and added to the denominator on pro rata basis for computing the requirement as well as the compliance with the norm of opening 25 per cent Banking Outlets in unbanked rural centres.
Explanation: 1. A ‘Banking Outlet’ is a fixed point service delivery unit, manned by either bank’s staff or its Business Correspondent where services of acceptance of deposits, encashment of cheques/ cash withdrawal or lending of money are provided for a minimum of 4 hours per day for at least five days a week.
An ‘Unbanked Rural Centre’ (URC) is a rural centre that does not have a CBS-enabled ‘Banking Outlet’ of a Scheduled Commercial Bank, a Small Finance Bank, a Payment Bank or a Regional Rural Bank nor a branch of Local Area Bank or licensed Co-operative Bank for carrying out customer based banking transactions.
ATMs, E- lobbies, Bunch Note Acceptor Machines (BNAM), Cash Deposit Machines (CDM), E- Kiosks and Mobile Branches will not be treated as ‘Banking Outlets’.
4. A ‘Part-time Banking Outlet’, opened in any Centre, will be counted and added to the denominator as well as numerator on pro rata basis for computing the requirement as well as the compliance with the norm of opening 25 per cent Banking Outlets in unbanked rural centres.
