JAIIB Exam 2025 – IE&IFS Important Questions MCQs Quiz-17

10/02/2025

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JAIIB Exam 2025 IE&IFS Important Questions MCQs Quiz-17

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB IE&IFS MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB IE&IFS quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1. Monetary Policy is a tool used by the Reserve Bank of India (RBI) to control which of the following factors in order to achieve economic growth and stability?
A) Supply of Money
B) Availability of Money
C) Cost of Money or Rate of Interest
D) All of the Above

Q.2. Which of the following statements about Expansionary Monetary Policy is correct?
A) It increases the total money supply.
B) It helps combat unemployment during a recession by lowering interest rates.
C) It is used when the economy is facing high inflation.
D) Both A and B

Q 3 Which of the following statements about Contractionary Monetary Policy is correct?
A) It decreases the total money supply.
B) It involves raising interest rates to combat inflation.
C) It is used to stimulate economic growth during a recession.
D) Both A and B

Q.4 Which of the following statements about the Bank Rate, as per Section 49 of the RBI Act, 1934, is incorrect?
A) It is the rate at which RBI is ready to buy or rediscount bills of exchange or other commercial papers.
B) It is the rate of interest paid by banks to RBI on their longterm borrowings.
C) Changes in the Bank Rate are used by government to control the money supply.
D) All of the Above.

Q.5 Which of the following statements about the Marginal Standing Facility (MSF) is incorrect?
A) It allows banks to borrow overnight from the RBI in case of emergency.
B) The borrowing under MSF requires banks to pledge government securities.
C) The MSF rate is always lower than the repo rate.
D) It helps in managing short-term liquidity mismatches in the banking system.

Q.6 Which of the following statements about the Cash Reserve Ratio (CRR) is correct?
A) The present banking system is called a fractional reserve
banking system, where banks keep only a fraction of deposits as reserves.
B) CRR is a certain percentage of Net Demand and Time Liabilities (NDTL) that commercial banks must maintain with the RBI in cash form.
C) CRR helps ensure liquidity and safety of deposits in the banking system.
D) All of the above.

Q.7 Which of the following is NOT a component of the Statutory Liquidity Ratio (SLR)
A. Loans to the Public
B. Cash
C. Gold
D. Government Securities

Q.8 Which of the following statements about Standing Deposit Facility (SDF) is correct?
A) Deposits under SDF are not considered as balances eligible for the maintenance of CRR under Section 42 of the RBI Act,1934.
B) Deposits under SDF are considered as an eligible asset for the maintenance of SLR under Section 24 of the Banking Regulation Act, 1949.
C) The SDF is an instrument introduced by the RBI to absorb excess liquidity from the banking system without requiring collateral.
D) All of the above.

Q.9 Which of the following statements about the Marginal Cost of Funds based Lending Rate (MCLR), introduced by the RBI in April 2016, is correct?
A) MCLR is an internal benchmark used by banks to set their lending rates based on the marginal cost of borrowings and return on net worth.
B) The negative carry on CRR is accounted for in the MCLR calculation, as the return on CRR balances is nil.
C) Banks must publish their internal benchmark for various maturities like overnight MCLR, one-month MCLR, three-month MCLR, six-month MCLR, and one-year MCLR.
D) All of the above.

Q.10 Which of the following is the correct formula for calculating the Marginal Cost of Funds based Lending Rate (MCLR)?
A) MCLR = Marginal cost of funds + Operating costs + Tenor premium
B) MCLR = Marginal cost of funds + Negative carry on CRR + Operating costs + Tenor premium
C) MCLR = Operating costs + Negative carry on CRR + Tenor premium
D) MCLR = Marginal cost of funds + Negative carry on CRR

Q.11 Which of the following is NOT a feature of the Market Stabilisation Scheme (MSS) introduced by the RBI in 2004?
A) It helps in increasing government borrowing through longterm bonds
B) It was introduced to absorb excess liquidity in the market.
C) It involves issuing Treasury bills and dated securities to manage liquidity.
D) It aims to stabilize the foreign exchange market by controlling the supply of dollars.

Q.12 Which of the following recommendations was made by the Internal Study Group (ISG) to improve the effectiveness of the Marginal Cost of Funds Based Lending Rate (MCLR)
system?
A) Transition from internal benchmarks (like Base Rate/MCLR) to an external benchmark for better transmission of monetary policy.
B) MCLR should remain the sole benchmark for floating rate personal and retail loans.
C) Banks should link loan rates to internal benchmarks based on their own funding costs.
D) The spread above the internal benchmark should be decided by the central bank for consistency.

Q.13 Which of the following is NOT a recommended external benchmark for floating rate loans under the External Benchmark based Lending Rate (EBLR) system as per RBI guidelines?
A) Repo rate
B) 3-Months Treasury Bill yield, published by the FBIL
C) 6-Months Treasury Bill yield, published by the FBIL
D) Base Rate

Q.14 Which of the following statements about the Repo Rate is incorrect?
A) The Repo rate is the rate at which the RBI lends money to commercial banks for a short period, typically up to 90 days.
B) When the Repo rate increases, borrowing from the RBI becomes cheaper for banks.
C) The Repo rate is also known as the Repurchase Offer Rate.
D) The movement of the Repo rate directly influences bank lending rates.

Q.15 Which of the following is a key function of the Clearing Corporation of India Limited (CCIL) in the Tri-Party Repo (TREPS) system?
A) CCIL manages collateral selection, custody, and settlement of transactions in TREPS.
B) CCIL lends money to banks and financial institutions through the TREPS segment.
C) CCIL acts as the borrower and lender in the TREPS contract.
D) CCIL monitors interest rates in the market and adjusts repo rates.

Q.16 Which of the following is the correct statement about the Reverse Repo Rate (RRR)?
A) The Reverse Repo Rate is the rate at which the RBI borrows money from banks when it wants to increase liquidity in the banking system.
B) When the RBI increases the Reverse Repo Rate, it makes borrowing from the RBI more attractive for commercial banks.
C) The Reverse Repo Rate is used by the RBI to absorb excess liquidity from the banking system by encouraging banks to park their short-term excess funds with the RBI.
D) The Reverse Repo Rate is always lower than the Repo Rate.

Q.17 Which of the following is NOT a feature of the Variable Rate Reverse Repo (VRRR) auctions introduced by the RBI?
A) The rate at which banks park their money with the RBI in a VRRR auction is variable and decided based on market conditions.
B) VRRR provides a higher return to banks than the Fixed Reverse Repo Rate.
C) The RBI determines the exact amount of liquidity to be absorbed in a VRRR auction, but the maturity period is fixed.
D) VRRR auctions help the RBI regulate money supply and manage inflation risk in the economy.

Q. 18 What is the primary purpose of the RBI’s Open Market Operations (OMO)?
A) To increase government borrowing by purchasing long-term securities.
B) To inject liquidity into the banking system by purchasing government securities when money supply is low.
C) To set interest rates directly for commercial banks.
D) To ensure that foreign exchange reserves are kept stable by controlling government security prices.

Q.19 Which of the following statements about the Liquidity Adjustment Facility (LAF) is incorrect?
A) The Liquidity Adjustment Facility (LAF) allows commercial banks to borrow money from the RBI using repurchase agreements (repos) or to lend money to the RBI using reverse repo agreements.
B) LAF is a tool used to manage short-term liquidity in the banking system, allowing the RBI to adjust the money supply as needed.
C) In a repo agreement, the commercial banks borrow funds from the RBI by selling securities to the RBI with a promise to repurchase them later at a higher price.
D) The RBI’s primary objective with LAF is to increase the money supply and reduce interest rates in the economy.

Q.20 Which of the following is the primary function of the Monetary Policy Committee (MPC) as constituted under Section 45ZB of the Reserve Bank of India Act, 1934?
A) To determine the policy interest rate to meet the inflation target in the economy.
B) To set the national fiscal policies related to taxation and government spending.
C) To regulate the stock market by deciding interest rates on corporate bonds.
D) To provide government subsidies for specific sectors to boost growth.

Answer:

Q1: D
Q2: D
Q3: D
Q4: C
Q5: C
Q6: D
Q7: A
Q8: D
Q9: D
Q10: B
Q11: A
Q12: A
Q13: D
Q14: B
Q15: A
Q16: C
Q17: C
Q18: B
Q19: D
Q20: A