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DEMONETISATION-- RBI -- DEMAND DEPOSIT --INTERVIEW QUESTIONS

Q: What is demonetization?
A : Demonetization is the act of stripping a currency unit of its status as legal tender
Q ; What is legal tender ?
A : Denomination of a country's currency that, by law, must be accepted as a medium for commercial exchange and payment for a money debt. While usually all denominations of the circulating paper money are legal tenders, the denomination and amount in coins acceptable as legal tender varies from country to country. Checks and postal orders are not legal tenders and are accepted only at the option of the creditor, lender, or seller. Also called lawful money.

Q:What are features of 2000 and 500 rupee new notes?
A:
The new INR 2000 banknotes and their features
- The new notes are expected to have motifs of Mangalyaan on their reverse sides. Mangalyaan is the first effort India has made in the domain of interplanetary space.
- The note’s base colour is going to be magenta.
- The note also has other geometric patterns and designs that align with the notes’ entire colour scheme. This is applicable for both the sides.
- The new note is going to be 66mm X 166 mm.
- The obverse or facing side of the new notes will have a transparent register that will indicate the denomination 2000 when it is held against light. It shall also have a latent image of the denominational numeral. This will be visible when the note is held at an angle of 45o at one’s eye level.
- The numeral will be written in Devanagari script and the portrait of Mahatma Gandhi will be at the centre of the notes.
- The notes will also have the micro letters 2000 and RBI and a windowed security thread with Bharat, 2000, and RBI inscribed on it. The thread shall change colour to blue from green when it is tilted.
Things such as guarantee clause, emblem of RBI, Ashoka Pillar emblem, and signature of respective governors with promise clause will be on the right side of the notes. The watermarks will be portraits of electrotype (2000) and Mahatma Gandhi. On the bottom right side as well as the top left side, there will be number panels where numerals will grow from small to big.
The notes are also meant to have some special features that have been designed keeping the visually-impaired individuals in mind.
- The portraits of Mahatma Gandhi, the identification mark, and the Ashoka Pillar emblem will be printed in a raised manner.
- There would also be a horizontal rectangle on the right that will have Rs. 2000 printed in a raised manner.
- The notes would also have seven angular bleed lines on each side – they will be in raised print.
On the reverse side, these notes will have the year when a respective note has been printed. They shall also have the logo and slogan of Swachh Bharat. The language panel will be located in the centre.
The new INR 500 banknotes and their features
The new notes will differ from the existing ones in terms of factors such as colour, presence of security components, size, elements of design, and themes.
- Their size is going to be 63mm x 150mm.
- These notes will be stone grey in colour and the new theme is predominantly going to be the Red Fort, one of the top tourist destinations of the country and an integral part of its heritage, alongwith the national flag.
- Its obverse side is expected to have a transparent register that will show the denominational numeral. The said numeral will have a latent image as well and will be printed in Devanagari.
- The orientation, as well as relative position of the image of Mahatma Gandhi, will be different in the new note.
- The windowed security thread feature will change to blue from green when it is tilted and the notes’ right sides will be where guarantee clause, emblem of RBI, Ashoka Pillar emblem, and signature of respective governors with promise clause are placed.
- The new note will also have electrotype and portrait watermarks.
- The number panels will be placed on the same position as the INR 2000 notes with numbers growing to big from small.
On the bottom right side of the notes the denomination will be mentioned in numeric form and it will change ink to blue from green. The emblem of Ashoka Pillar will be on the right. These notes, too, shall have special features for the visually-challenged people with the portrait of Mahatma Gandhi, identification mark, and Ashoka Pillar emblem in raised print. There will be a circle on the right side with Rs. 500 written in raised print. Each side will have five bleed lines in raised print.
The reverse sides of these notes will have the year of printing mentioned on the left. It shall also have the slogan and the logo of the Swachh Bharat programme. The language panel is expected to be in the centre. The denominational numeral will be printed on right in Devanagari.




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Q:Present Bank Rate is.........
A: 6.75%

Q: Present REPO Rate is........
A:6.25%

Q: Present REVERSE REPO Rate is..........
A:5.75%

Q: Present MSF Rate is..............
A:6.75%

Q:Present CRR is......
A: 4%

Q:Present SLR IS........
A: 20.50%.
 (AS ON 20 JANUARY 2017)

Q:What is OMO.
A: 'Open Market Operations - OMO' is the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Purchases inject money into the banking system and stimulate growth while sales of securities do the opposite.
Q:What is REPO.
A:Repo rate is the rate at which the central bank of a country (RBI in case of India) lends money to commercial banks in the event of any shortfall of funds.
Definition: Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation.
Description: In the event of inflation, central banks increase repo rate as this acts as a disincentive for banks to borrow from the central bank. This ultimately reduces the money supply in the economy and thus helps in arresting inflation.
The central bank takes the contrary position in the event of a fall in inflationary pressures. Repo and reverse repo rates form a part of the liquidity adjustment facility.
Full form of REPO is repurchase options.
Q:What is Reverse REPO.
A:Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country. This is reverse process of REPO.
Q:What is MSF.
A:Marginal Standing Facility (MSF) is a scheme announced by the Reserve Bank of India (RBI) in its Monetary Policy (2011-12) and refers to the penal rate at which banks can borrow money from the central bank over and above what is available to them through the LAF window.At present MSF rate is half% higher than REPO rate.
Q:What is Bank Rate.
A:The interest rate at which a nation's central bank lends money to domestic banks. Often these loans are very short in duration. Managing the bank rate is a preferred method by which central banks can regulate the level of economic activity.At present Bank rate is half% higher than REPO rate.


Q:Why Credit control is treated as most important function of Reserve Bank of India.
A:Credit control in the economy is required for the smooth functioning of the economy.
By using credit control methods RBI tries to maintain monetary stability.
Q;Name types of methods.
A:There are two types of methods:
1. Quantitative control to regulates the volume of total credit.
2. Qualitative Control to regulates the flow of credit.
Q: List type of Quantitative methods.
A:
1. Management of Bank Rate :By increasing or reducing Bank rate, RBI works on pricing of funds. It is assumed as and when funds becomes costly, it would result in lower demand of fund, conversely
it is assumed as and when funds becomes cheaper, it would result in higher demand of fund.
2. Open market operations :
The term open market operation refers to purchase or sale of government securities by the central bank.Purchase of securities by the central bank in open market provides money to market/banks whereas sale of securities sucks money from market/banks .OMO is now very frequently used by RBI.
3. Management of Cash reserve ratio : Increase in CRR means Banks to keep more money with RBI , hence they will left with lower funds for lending.this affect supply of money in market,adversely.
4. Repo & Reverse Repo :By increasing or reducing REPO rate, RBI works on pricing of funds. It is assumed as and when funds becomes costly, it would result in lower demand of fund, conversely
it is assumed as and when funds becomes cheaper, it would result in higher demand of fund. It also affects the pricing of credit in market.
5. Altering Statutory Liquidity Ratio:Increase in SLR means Banks to invest more money SLR securities , hence they will left with lower funds for lending.this affect supply of money in market,adversely.
6. MSF:By increasing or reducing MSF rate, RBI works on pricing of funds. It is assumed as and when funds becomes costly, it would result in lower demand of fund, conversely
it is assumed as and when funds becomes cheaper, it would result in higher demand of fund. It also affects the pricing of credit in market.
Q: List Qualitative Methods:
A:
1. Selective Qualitative Credit controls
By making changes in margin and rate of interest, RBI regulates credit in specific areas. normally this is used for sensitive items.
2. Moral persuasion and direct action :
RBI uses this technique to regulate flow of credit to specific sectors of economy. by imposing ban or by allowing higher flow of funds this is achieved.
 


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Q: Define BANK.
A:Bank is an organisation which accepts deposits from public repayable on demand or otherwise for the purpose of lending and investment.
What is a Banking Company ?
Any company, which transacts the business of banking defined above is termed as Banking company and in INDIA these are regulated by BANKING REGULATION ACT AND RBI ACT.
Q: Define CUSTOMER.
A: A customer is a person who maintains a regular account with the bank without taking into consideration the duration and frequency of operation of his account.
To be a customer for any bank the individual should have an account with the bank. The relationship between banker and customer is of utmost importance.

Q: Define Demand Deposit.
A:Demand deposits are those deposits, which can be withdrawn on demand. Saving bank, current account and overdue deposits fall under this category. Customers having these accounts can withdraw their deposit s from the account at any time they desire.
Q: Define Term Deposit.
A:Deposits, which are not payable on demand, are known as term or time deposits. "Term Deposits" or “Fixed Deposits” are deposits, where the depositor makes a lump sum deposit at one time for a fixed term and receives payment in future after the period for which the deposits have been kept. Rate of interest is contracted at the time of opening the account. Such deposits generally carry comparatively higher rate of interest depending on the time span In case a depositor wants prepayment i.e. payment before the due date, the amount is paid after leaving penalty.

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Q:Define Either or Survivor .
A:Refers to operation of the account opened in two names with a bank. It means that any one of the account holders have powers to withdraw money from the account, issue cheques, give stop payment instructions etc. In the event of death of one of the account holder, the surviving account holder gets all the powers of operation.
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Q: Who can open a saving account in bank.
A:1. Saving account Can be opened by Resident Individuals (either singly or jointly), Associations, Trusts, Hindu Undivided Families (HUFs), Clubs, Societies etc. Institutions specially permitted by RBI. for the purpose of saving a part of their income.
Q:What is purpose of opening this account.
A:The main purpose of opening a saving account is to save an amount.
Q: Who can operate this account.
A:Saving account is operated by Resident Individuals (either singly or jointly), Associations, Trusts, Hindu Undivided Families (HUFs), Clubs, Societies etc. Institutions specially permitted by RBI.
Q:What interest is payable by banks on these accounts.
A:The saving account earns a nominal rate of interest. At present, it is about 4% p.a. (in India).(VARIES FROM BANK TO BANK). Some banks are paying higher interest also. there is complete freedom to banks to decide their interest rates.
Q:What min balance requirement.
A: The saving account can be operated with lesser amount.(may be Rs 500/= or even Zero ).
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Q: Who can open a Current account in bank.
A:Current account is opened by Individuals,joint account, sole proprietary concerns,partnership concerns,HUFs, COMPANIES,Association of persons,society,trusts,body co-operatives,charitable and other institutions. for business transactions.
Q:What is purpose of opening this account.
A:The main purpose of opening a current account is to facilitate regular business transactions.
Q: Who can operate this account.
A:Current account is operated by Individuals,joint account, sole proprietary concerns,partnership concerns,HUFs, COMPANIES,Association of persons,society,trusts,body co-operatives,charitable and other institutions.
Q:What interest is payable by banks on these accounts.
A:Normally, banks do not pay interest on current account.
Q:What min balance requirement.
A:To open current account more amount is required.(may be Rs 1000/=)
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