1. If a person does not have any of the proofs for completing KYC, then he can get his bank account open as a ______.
A. Small account
B. BSBDA account
C. Recurring deposit account
D. Nostro account
E. Vostro account
2. Which among the following is false regarding reverse repo rate?
A. During high levels of inflation, the RBI decreases the reverse repo
B. Reverse repo rate is lower than the repo rate
C. It is used as a measure to manage cash flow
D. It involves the transfer of money from one account to another
E. It is the rate at which the RBI borrows from the commercial banks
3. “123456789” is the MICR (Magnetic Ink Character Recognition) code in a cheque. What does ‘456’ represents in the given MICR code?
A. City Code
B. Bank Code
C. Branch Code
D. Account holder code
E. Country Code
4. What is the minimum investment amount for post office time deposit?
5. Which among the following is associated only with the concept of current account & capital accounts?
A. Balance of trade
B. Balance of revenue
C. Balance of access
D. Balance of funds
E. None of the above
Answers and Explanations
1. Answer - Option A
If a person does not have any of the proofs, then also he can get his account open as a ‘small account’. Balance in a small account at any point of time should not exceed Rs.50,000.
Small accounts remain operational initially for a period of twelve months and thereafter, for a further period of twelve months if the holder of such an account provides evidence to the bank of having applied for any of the officially valid documents within twelve months of the opening of such account.
When someone transfers his bank account from one branch to another branch of the same bank, there is no need for going to KYC procedure again. However, if address is changed then the KYC procedure needs to be done again.
2. Answer - Option A
A Reverse Repo Rate is a rate that RBI offers to banks when they deposit their surplus cash with RBI for shorter periods.
In other words, it is the rate at which the RBI borrows from the commercial banks. During high levels of inflation in the economy, the RBI increases the reverse repo. It encourages the banks to park more funds with the RBI to earn higher returns on idle cash.
As a result, every excess rupee is put to use in the banking system. Banks are left with lesser funds to extend loans, curbing the purchasing power of individuals.
3. Answer - Option B
MICR code is a code printed on cheques using MICR (Magnetic Ink Character Recognition) technology. This enables identification of the cheques and which in turns means faster processing. An MICR code is a 9-digit code that uniquely identifies the bank and branch participating in an Electronic Clearing System (ECS). It comprises of 3 parts:
The first three digits represent the city (City Code). They are aligned with the PIN code we use for postal addresses in India. The next 3 digits represent the bank (Bank Code). The last 3 digits represent the branch (Branch Code).
4. Answer - Option B
The Post Office Time Deposits are a saving scheme offered by the Indian Postal Service on which a fixed interest is paid. The minimum investment for post office time deposits is Rs 200 and there is no cap.
5. Answer - Option E
Balance of Payments is defined as the total volume of transactions undertaken by a country in the international account over a financial year. It is mainly categorized under two heads and they are current account and capital account.
It summarizes all transactions that a country’s individuals, companies and government bodies complete with individuals, companies and government bodies outside the country. These transactions consist of imports and exports of goods, services and capital, as well as transfer payments such as foreign aid and remittances.