IBPS GENERAL AWARENESS PRACTICE QUESTIONS

 

1. Which of the following teams won this season’s Indian Premier League (IPL) cricket cup?

a) Royal Challengers Bengalore          

b) Mumbai Indians

c) Kolkata Knight Riders        

d) Deccan Chargers    

e) Chennai Super Kings 

 

2. In the run-up to the free trade agreement between India and the European Union (EU), which of the following subjects has the EU taken up with the World Trade Organisation (WTO) pressing for its inclusion much to India’s discomfort?

a) Farm goods                         

b) Defence articles      

c) Intellectual Property Rights

d) Visa norms              

e) Industrial goods 

 

3. Which of the following cities has been declared as the costliest city in the world?

a) Kobe           

b) Paris            

c) Zurich          

d) Oslo                        

e) Tokyo 

 

4. What is the Minimum Support Price (MSP) per quintal fixed by the Centre for wheat for the season 2010-11?

 a) Rs. 1,000        

b) Rs.1,100        

c) Rs.1,200         

d) Rs.1,300         

e) Rs.1,250 

5.Who is to take over as non-executive chairman of India’s second larges IT company, Infosys, when the incumbent chairman NR Narayana Murthy retires in August this year?

 a) KV Kamath                        

b) Amit Mitra 

c) Renuka Ramnath    

d) Samidha Sharma

e) Vinita Bali 

 

6 In which of the following countries has Tata Motors launched its Nano cars, touted to be the cheapest car of the world, for the first time outside India?

 A) Sri Lanka   

B) Nepal          

C) Malaysia     

D) Indonesia

a) Only (B)                  

b) Only (A) Indonesia             

c) Only (C)

d) Only (A), (B) and (D)

e) None of these 

7. Which f the following business ownership structure companies has been given green signal by the stock market regulator, SEBI, to get membership of stock exchanges and make brokers?

a) Sole proprietorship companies        

b) Limited liability companies

c) Non-profit organizations                 

d) Cooperative companies

e) None of these 

8.Which of the following teams has won the Santosh Trophy football tournament?

a) Manipur       

b) Delhi           

c) Haryana       

d) West Bengal                      

e) Madhya Pradesh 

 

9.With which of the trading partners do Indian farm goods face market access problems on the grounds of arbitrary SPS (Sanitary and Phyto-Sanitary) standards and CCC (chemical residues)?

a) US               

b) ASEAN      

c) SAARC      

d) EU              

e) Japan 

 

10.Indian Railways is to construct the longest tunnel (11km long) on its network in the under-construction railway segments of

a) Indo-Burma rail project                  

b) West Coast Railways of India

c) Katra-Qazigund Pir Panjal Tunnel 

d) Arunachal railway project

e) Gangtok - Siliguri railway project 

 

11. There has been stalemate in the drafting committee of Lokpal Bill between the civil activists and political leader over the contents of he Bill. Which of the following are the major bones of contention between the two sides?

 I. Inclusion of the office of the Prime Minister under anti-corruption watchdog

II. Bringing higher judiciary under the purview of Lokpal

 III. Bringing the office of the Chief Ministers under Lokpal.

IV. In camera monitoring of the activities of MPs in Parliament.

a) Only I and II                       

b) Only IV      

c) Only I, II and IV    

d) All the above

e) None of these 

 

12. Which of the following teams has recently won the Champions Leagues final at Wembley in London?

 a) Manchester United             

b) Barcelona    

c) Real Madrid                        

d) AC Milan

e) Chelsea FC 

 

13.Which of the following countries has recently decided to phase out all it nuclear power plants by 2022?

  a) Japan           

b) Italy                        

c) Ukraine       

d) Germany     

e) Spain 

 

14.Who has been honoured with the prestigious Jawaharlal Nehru Award for International Understanding for 2009?

a) Angela Merkel                    

b) Hillary Clinton        

c) Aung San Suu Kyi

d) Lula da Silva                                  

e) Sheikh Hasina 

 

15.G-4 is an alliance of four countries for the purpose of supporting each other’s bid for permanent seat in the United Nations Security Council. Apart from India, which are the other three countries constitution G4?

a) Brazil, Germany and Japan                         

b) Brazil, South Africa and Japan

c) Mexico, Brazil and South Africa    

d) Japan, Brazil and Mexico

e) None of these 

 

16.In which of the following international universities has a chair been instituted in the memory of India’s pioneering development economist, Sanjay Lall?

a) Cambridge University         

b) Stanford University            

c) Oxford University

d) Moscow University                        

e) San Carlos University 

 

17.Name the new non-linked health insurance plan of the Life Insurance Corporation (LIC) of India which offers comprehensive hospitalization benefits for the whole family and parents-in-law of the principal insured?

a) Rishtey        

b) Jeevan Sathi            

c) Anmol Jeevan         

d) Health Plus

e) Jeevan Arogya 

 

18.Who has been nominated for the CK Naidu Lifetime Achievement award?

a) Lala Amarnath                    

b) Salim Durrani          

c) Syed Mushtaq Ali

d) KN Prabhu                                     

e) Syed Kirmani 

 

19. British - born Sierra Leonean novelist Aminatta Forma won the 2011 Commonwealth Writers’ Prize for which of the following novels?

a) The Devil that Danced on the Water                      

b) Ancestor Stones

c) The Memory of Love 

d) Ancestor  Love                                          

e) All for Love 

 

20. Which of the following rules has/have not been scrapped by the insurance regulator IRDA?

 a) Commission on the sale of ULIP

b) Profitability clause of three years for floating initial public offer (IPOs)

c) Traditional insurance plans have to make 50% investment in government bonds

d) Only a  and b                      

e) Only a and c

 

21.Small Industries Development Bank of India (SIDBI) has been operating under SWS. What is the full form of SWS?

a) Small Welfare Scheme                    

b) Single Window Scheme

c) Small Window Service                   

d) Single Window Service

e) None of these 

 

22.  Which of the following is the target fixed by the 11^th five-year plan pertaining to increase literacy, level by the 2012 The level should be increased to

a) 50%                         

b) 60%             

c) 70%             

d) 85%                        

e) 90%

 

23.‘Blue Revolution’ is related to

a) Space Research                   

b) Fisheries      

c) Drinking Water       

d) Poultry

e) Milk     

                               

24.Normally two types of factors are responsible for industrial sickness - external and internal. Which of the following is not an internal factor of industrial sickness?

a) Shortage of power              

b) Mismanagement      

c) Diversion of funds

d) Excessive overheads           

e) Overestimation of demand 

 

25.Which of the following is an employment - generating scheme?

a) Ganga Kalyan Yojana                                 

b) IRDA         

c) Swarnjayanti Shahri Rozgar Yojana                       

d) Mid-Day Meal Scheme

e) All of the above. 

 

26.Ethanol - mixed petrol is being sold in various states wef January 1, 2003. The percentage of ethanol in petrol is

a) 10%                         

b) 7%               

c) 6%               

d) 5.5%           

e) 5% 

 

27. Which of the following is the correct sequence in the decreasing order of contribution of different sectors to the Gross Domestic Product of India?

a) Services - Industry - Agriculture    

b) Services - Agriculture - Industry

c) Industry - Services - Agriculture    

d) Industry - Agriculture - Services

e) None of these 

 

28.Which of the following agencies recently laid down guidelines for foreign companies who wish to raise money from the Indian capital markets?

a) RBI                         

b) IRDA          

c) Registrar of companies       

d) SEBI

e) None of these 

 

29. Consider the following statements:

A) The repo rate is the rate at which other banks borrow money from the Reserve Bank of India.

B) A value of one for Gini co-efficient in a country implies that there is perfectly equal income for everyone in its population.

 C) Higher interest rates can make EMIs costly. Which of the statements given above is/are correct?

a) Only A        

b) Only A and C        

c) Only B and C          

d) All the above

e) None of these 

 

30. These days, more and more banks in Indian are setting up their ATMs and discouraging people to visit their branches for transaction. Which of the following is/are the limitations of the ATMs which force people to go to branch for transactions?

A) Lack of human interface                

B) Communication gap

C) Limited cash - dispensing ability  

a) Only A                    

b) Only B       

c) Only C        

d) Both A and B

e) A, B, and C All 

 

31.Which of the following countries has the largest stock of foreign exchange reserves in the world?

a) USA                        

b) China          

c) Japan           

d) India                       

e) None of these 

 

32.Which of the following taxes is exclusively and totally assigned to the state government by the Constitutions?

 a) Estate duty              

b) Sales Tax     

c) Taxes on Railway fares and freights

 d) Corporation tax      

e) Entertainment 

 

33. The tax on import and export is known as

a) Income tax 

b) Trade tax     

c) Customs duty          

d) Commercial tax

e) None of the above 

 

34.Which of the following is not an objective of fiscal policy of Indian government?

a) Full employment     

b) Price stability          

c) Regulation of inter-state trade

d) Equitable distribution of wealth and income         

e) None of these 

 

35. In India, national income is estimated by

a) Planning Commission         

b) Central Statistical Organisation

c) Indian Statistical Institute 

d) National Sample Survey Organisation

e) None of these 

 

36.Bharat Nirman Scheme of the UPA government does not include

a) Rural water supply project 

b) Irrigation  benefit programme        

c) Rural electrification                        

d) Sarva Shiksha Abhiyan      

e) None of these 

 

37. Invisible export means export of

a) Services                               

b) Prohibited goods    

c) Unrecorded goods

d) Goods through smuggling 

e) Illegal export through a third county 

 

38.A labour-intensive industry is one that

 a) requires hard manual labour                       

b) pays adequate wages to the labour

c) employs more hands                                   

d) provides facilities to labour

e) None of these 

 

39.In the law of demand, the statement ‘other things remain constant’ means.

 a) income of consumer should not change     

b) prices of other goods should not change   

c) taste of consumer should not change                      

d) All the above

e) None of these 

 

40.A firm is in equilibrium when its

a) Marginal cost equals the marginal revenue             

b) Total cost is minimum

c) Total revenue is maximum                         

d) Average revenue and marginal revenue are equal              

e) None of these 

 

41.Bhagyam oil fields which are being explored by Carins India, is located in

a) Assam         

b) Gujarat        

c) Rajasthan    

d) Karnataka  

e) None of the above

 

42.In which of the following regions of India has the Archaeological Survey of India (ASI) found evidences of hearths built by cutting natural mountains belonging to periods 3,000 to 4,000 years ago, for the first time?

a) Garo Hills, Meghalaya        

b) Mishmi Hills, Arunachal Pradesh

c) Western Ghats                    

d) Ladakh Valley                   

e) Satpura Range, Madhya Pradesh 

 

43.Which of the following famous tabloids of Britain recently ceased its operations after its 168year - long history of scoops and scandals?

a) The Sun       

b) Daily Mirror            

c) The Morning Star    

d) News of the World

 e) None of these

 

44.Which of the following mobile operators has launched its mobile newspaper, Newswrap, for its customers in Hyderabad?

a) Airtel           

b) Reliance      

c) Idea                        

d) Vodafone   

e) Aircel 

 

45.Which of the following countries has taken over the rotational presidency of the European Union (EU) on July 1, 2011?

a) Denmark                 

b) Britain         

c) Germany     

d) Poland

e) Netherlands 

 

46.Which of the following is the youngest country of the world that has joined the community of nations on July 9, 2011?

a) South Sudan           

b) Maldova      

c) Estonia        

d) East Timor

e) None of these 

 

47. Name the Indian woman athlete who has clinched gold medal in high jump in the Asian Athletic Championship in Kobe, Japan.

a) Shiny Wilson                       

b) Mayookha Johny    

c) Soma Biswas

d) Neelam Jaswant Singh       

e) None of these 

 

48.As on June 30, 2011, which of the following rates stipulated by the Reserve Bank of India (RBI) is the lowest?

a) Bank Rate               

b) Repo Rate               

c) Savings Bank Rate

d) Cash Reserve Ratio            

e) Statutory Liquidity Ratio

 

49.Consider the following statements about the contentious issues in the upcoming India-EU free trade agreement.

A) Intellectual property should be included in the investment chapter

B) Government procurement policy in agriculture should be kept out of the purview of the agreement.

C) Greater mutual market access for products such as automobiles, liquor, textile and liquor.

 Which of the above statements is/are true?

a) Only A        

b) Only A and B                    

c) Only A and C         

d) All the above

e) None of these 

 

50.Which of the following states has unveiled “Vision 2025” containing clear-cut policies for promoting investments in infrastructure such as power, ports, and ship building?

a) Andhra Pradesh                  

b) Tamil Nadu                        

c) Gujarat

 d) Karnataka                          

e) None of these 

 

ANSWERS:

1.e       2.c      3.e       4.b      5.a      6.d      7.b      8.d      9.b      10.c

11.c    12.b    13.d    14.a    15.a    16.c    17.e     18.d    19.c    20.d

21.d    22.d    23.b    24.a    25.c    26.e     27.a    28.d    29.d    30.c

31.b    32.b    33.c    34.c    35.b    36.d    37.a    38.c    39.d    40.a

41.c    42.d    43.d    44.d    45.d    46.a    47.b    48.c    49.d    50.b

IBPS GENERAL AWARENESS MCQs

1. Which among the following is not the nationalized bank?
1) Andhra Bank
 2) Syndicate bank
3) Axis bank
4) Central Bank of India
5) Oriental Bank of Commerce

2. Banks cannot accept ...........
1) Cash
2) Postal Stamps
3) Drafts
4) Bill of exchange
5) pay order

3. Cheque facility is not available in ...........?
1) Savings Account
2) Current Account
3) Recurring Account
4) Savings and Current Account
5) All of above

4. The Demand Draft can be issued to ...........?
1) Farmer
2) Student
3) Government employee
4) Business man
5) All of above

5. Core banking means ...........?
1) Connectivity between all branches and RBI
2) Connectivity between all branches and the branches of other bank
3) Connectivity of branches, ATM and online systems of all branches
4) Connectivity between all RRB's and RBI
5) None

6. Which of the following rate usually not declared by RBI?
1) SLR
2) CRR
3) Base rate
4) Repo Rate
5) Reverse repo Rate

7. In private sector bank, the government may have the stake up to ........... percent?
1) 50
2) 51
3) 100
4) 49
5) 0

8. In public sector bank, the government stake must be least ...........percent?
1) 50
2) 100
3) 90
4) 51
5)1

9. NEFT rules are given. Pick the wrong one?
1) NEFT means National Electronic Fund Transfer
2) Up to 2 lakhs the amount can be transferred
3) Both in Savings and Current Account the funds can be transferred
4) The minimum charge on this type of transfer is Rs.1000
5) Many private and Public Sector banks offer this facility these days

10. RTGS rules are given. Pick the wrong one?
1) RTGS means Real Time Gross Settlement
2) Above 2 lakhs the funds can be transferred
3) RTGS facility not available in current account
4) The charges of RTGS to be paid by the customer
5) All of above

11 All savings bank accounts carry nominee name. A nominee cannot be ...........?
1) Friend
2) Mother
3) Father
4) Son
5) Daughter

12. On 19 October 2011, Pranab Mukarjee said the Union Government inject the funds in to public sector banks to maintain Tier Capital of ...........percent?
1) 5
2) 10
3) 6
4) 7
5) 8

13. The negotiable instrument is ...........?
1) Cheque
2) Demand draft
3) Bill of Exchange
4) Treasury Bills
5) All of above

14. Negotialble instruments rules and regulations mentioned by ...........?
1) Negotiable cheque Act 1901
2) Negotiable instruments Act 1901
3) Negotiable instruments Act 1818
4) Negotiable instruments Act 1881
5) None

15. Usually there are three parties in the case of Cheque. The drawer is ...........?
1) One who writes cheque
2) One who receives cheque
3) One who mediates cheque
4) 1 & 3
5) None

16. In the cheques, the drawee is...........
1) One who writes cheque
2) One who mediates cheque
3) RBI
4) Bank
5) All of above

17. Drawing two or three lines on the left head of cheque is called ...........?
1) Nullity
2) Paid
3) Offering
4) Crossing
5) Nothing

18. Crossing means the bank should ...........?
1) Make the payment stop
2) Make the payment late
3) Make the payment to payee through account only
4) Pay the amount to anybody
5) None

19. The cheque bounce due to ...........?
1) If the correct date written
2) If the Sunday date written
3) If the public holiday date written
4) If the date is the 30th of any month
5) Post date written

20. Cheque bounce due to ...........?
1) More funds
2) Funds not excessive at least Rs.1000
3) Lack of funds
4) If the amount has paise denomination
5) In all above cases

21. Cheque bounce due to ...........?
1) If the cheque is given with signature
2) If the cheque issued to government employee
3) Alteration made without signature
4) If the cheque value is more than 50 lakhs
5) In all above cases

22. On 20th October 2011, State Bank of India declared it earned 3.5 NIM in the second quarter. NIM stands for ...........?
1) Net Interest Minimum
2) Not Interest Margin
3) Net Internal Margin
4) Net Interest Module
5) Net Interest Margin

23. ETF stands for ...........(In these days the people are buying GOLD ETF bonds)
1) Extra Trade Forum
2) Exchange Trade Finance
3) Eternal Trade Fund
4) Exchange Trade Forum
5) Exchange Traded Fund

24. Chairman of the National Advisory Committee on Accounting Standards is ...........?
1) D.Subba Rao
2) Y.V.Reddy
3) Y.H.Malegam
4) K.C.Chakravarthy
5) Montek Singh Ahluwalia

25. Which financial institute declared October month as Social Security Month?
1) SBI
2) Religare
3) LIC
4) India First
5) GIC

26. FAO conference on East Africa famine concluded in ...........?
1) Rome
2) Vienna
3) Newyork
4) Washington
5) Canberaa

27. UN AIDS ambassador ...........participated in International AIDS conference on 7 Oct 2011 at Moscow?
1) Preity Zinta
2) Sharmila Tagore
3) Leela Samson
4) Mamatha Sharma
5) Shantha Sinha

28. Two public sector enterprises applied for the status of Maharatna recently. They are ...........?
1) CIL,HCL
2) ONGC,SBI
3) IOC,NTPC
4) SAIL,BEL
5) BHEL,GAIL

29. H- 1 (2011-2012)tax collection increased by ........... percent leading the collection to Rs.4,25,712 crores?
1) 14.5
2) 20.6
3) 22.1
4)18.9
5) 25.6

30. The global economic growth in 2011 will be nearer to ........... percent only, compare to 4 percent in 2010?
1) Eight
2) Ten
3) Six
4) Seven
5) Three

31. ...........has introduced the nation's first petrol pump with self service refuelling facility in New Delhi?
1) ONGC
2) HP
3) IOC
4) BP
 5) None

32. The second highest test Century (35) maker is Dravid. He is the cricketer from ...........?
1) Andhra Pradesh
2) Mumbai
3) Delhi
4) West Bengal
5) Karnataka

33. Baichiung Bhutia retired from international events. He is the former Indian ........... captain?
1) Volley ball
2) Foot Ball
3) Cricket
4) Kho Kho
5) Kabbaddi

34. The term gully used in ...........?
1) Foot ball
2) Volley ball
3) Hand ball
4) Hockey
 5) Cricket

35. The FIFA(Federation of International Football Association) world cup venues given. Pick the correct one?
1) 2010-South Africa
2) 2014-Brazil
3) 2018-Russia
4) 2022-Qatar
5) All of above

36. ...........released $ 1.5 billion aid to Libya on 27 August 2011?
1) USA
2) Russia
3) UNO
4) IBRD
5) IMF

37. Union government sanctioned Rs............crores for tracking cyclones in coastal states?
1) 1500
2) 2500
3) 2000
4) 1700
5) 900

38. Fast attack warship ........... commissioned in Indian Navy on 26 August 2011?
1) Kaurava
2) Pandava
3) Karna
4) Salya
5) None

39. The Prime Minister announced the free import of 61 items from Bangladesh. The currency of Bangladesh is...........?
1) Dollar
2) Rupee
3) Ngultrum
4) Pound
5) Taka

40. Among 28 states in India, 17 states have Lokayukta. The first Lokayukta established in 1970 is ...........
1) Odisha
2) Andhra Pradesh
3) Assom
4) Tamilnadu
5) Sikkim

41. The Lokayukta who inducted Yedurappa, the chief minister of Karnataka is ...........?
1) Justice Rey
2) Justice Kania
3) Justice Panduranga
4) Justice Sudha Misra
5) Justice Santosh Hegdey

42. The Lokayukta who resigned in Karnataka on the allegations of Land Scam?
1) Justice Nanavathi
2) Justice Bhagavathi
3) Justice Chandra Chud
4) Justice Mukarjee
5) Justice Sivaraj Patil

43. Recently the inventor of iPad died. He is ...........?
1) Edwin H. Armstrong
2) Charles Babbage
3) Steve Jobs
4) William Seward Burroughs
5) George Eastman

44. On 17th August 2011, ...........topped as most valuable firm crossing RIL ( Reliance Industries Limited) in market capitalization?
1) BHEL
2) ISRO
3) Bharati Cement
4) Coco-Cola
5) Coal India Limited

45. Top three destinations of Indian exports as per e-Bay site?
1) Eurpoe,USA and UK
2) USA,UK and Germany
3) USA, Indonesia and China
4) USA,UK and Europe
5) USA,UK and Australia

46. The export promotion scheme 'Focus: LAC' applies to ...........?
1) European Union
2) North America
3) South East Asia
4) Africa
5) South America

47. 100th International Labour Organization summit held in ...........on 13 June 2011?
1) Geneva
2) Paris
3) New York
4) Washington
5) Rome

48. National convention of Parliamentarians, Legislators, zilla parishad chairpersons and mayors on HIV/ AIDS held in...........on 4, 5 July 2011?
1) Mumbai
2) Hyderabad
3) Chennai
4) New Delhi
5) Pune

49. World Investors summit will be held in ..........
1) Hyderabad
2) New Delhi
3) Bengaluru
4) Chennai
5) Kolkata

ANSWERS:

1)3 2)2 3)3 4)5 5)3 6)3 7)4 8)4 9)4 10)3 11)1 12)5 13)5 14)4 15)1 16)4 17)4
18)3 19)5 20)3 21)3 22)5 23)5 24)3 25)3 26)1 27)1 28)5 29)3 30)5 31)3 32)5 33)2
34)5 35)5 36)3 37)1 38)1 39)5 40)1 41)5 42)5 43)3 44)5 45)5 46)5 47)1 48)4 49)3.

BANKING & FINANCIAL TERMS

• Accrued interest: Interest due from issue date or from the last coupon payment date to the settlement date. Accrued interest on bonds must be added to their purchase price.
• Arbitrage: Buying a financial instrument in one market in order to sell the same instrument at a higher price in another market.
• Ask Price: The lowest price at which a dealer is willing to sell a given security.
• Asset-Backed Securities (ABS): A type of security that is backed by a pool of bank loans, leases, and other assets. Most ABS are backed by auto loans and credit cards – these issues are very similar to mortgage-backed securities.
• At-the-money: The exercise price of a derivative that is closest to the market price of the underlying instrument.
• Basis Point: One hundredth of 1%. A measure normally used in the statement of interest rate e.g., a change from 5.75% to 5.81% is a change of 6 basis points.
• Bear Markets: Unfavorable markets associated with falling prices and investor pessimism.
• Bid-ask Spread: The difference between a dealer’s bid and ask price.
• Bid Price: The highest price offered by a dealer to purchase a given security.
• Blue Chips: Blue chips are unsurpassed in quality and have a long and stable record of earnings and dividends. They are issued by large and well-established firms that have impeccable financial credentials.
• Bond: Publicly traded long-term debt securities, issued by corporations and governments, whereby the issuer agrees to pay a fixed amount of interest over a specified period of time and to repay a fixed amount of principal at maturity.
• Book Value: The amount of stockholders’ equity in a firm equals the amount of the firm’s assets minus the firm’s liabilities and preferred stock. /p>
• Broker: Individuals licensed by stock exchanges to enable investors to buy and sell securities.
• Brokerage Fee: The commission charged by a broker.
• Bull Markets: Favorable markets associated with rising prices and investor optimism.
• Call Option: The right to buy the underlying securities at a specified exercise price on or before a specified expiration date.
• Callable Bonds: Bonds that give the issuer the right to redeem the bonds before their stated maturity.
• Capital Gain: The amount by which the proceeds from the sale of a capital asset exceed its original purchase price.
• Capital Markets: The market in which long-term securities such as stocks and bonds are bought and sold.
• Certificate of Deposits (CDs): Savings instrument in which funds must remain on deposit for a specified period, and premature withdrawals incur interest penalties.
• Closed-end (Mutual) Fund: A fund with a fixed number of shares issued, and all trading is done between investors in the open market. The share prices are determined by market prices instead of their net asset value.
• Collateral: A specific asset pledged against possible default on a bond. Mortgage bonds are backed by claims on property. Collateral trusts bonds are backed by claims on other securities. Equipment obligation bonds are backed by claims on equipment.
• Commercial Paper: Short-term and unsecured promissory notes issued by corporations with very high credit standings.
• Common Stock: Equity investment representing ownership in a corporation; each share represents a fractional ownership interest in the firm.
• Compound Interest: Interest paid not only on the initial deposit but also on any interest accumulated from one period to the next.
• Contract Note: A note which must accompany every security transaction which contains information such as the dealer’s name (whether he is acting as principal or agent) and the date of contract.
• Controlling Shareholder: Any person who is, or group of persons who together are, entitled to exercise or control the exercise of a certain amount of shares in a company at a level (which differs by jurisdiction) that triggers a mandatory general offer, or more of the voting power at general meetings of the issuer, or who is or are in a position to control the composition of a majority of the board of directors of the issuer.
• Convertible Bond: A bond with an option, allowing the bondholder to exchange the bond for a specified number of shares of common stock in the firm. A conversion price is the specified value of the shares for which the bond may be exchanged. The conversion premium is the excess of the bond’s value over the conversion price.
• Corporate Bond: Long-term debt issued by private corporations.
• Coupon: The feature on a bond that defines the amount of annual interest income.
• Coupon Frequency: The number of coupon payments per year.
• Coupon Rate: The annual rate of interest on the bond’s face value that a bond’s issuer promises to pay the bondholder. It is the bond’s interest payment per dollar of par value.
• Covered Warrants: Derivative call warrants on shares which have been separately deposited by the issuer so that they are available for delivery upon exercise.
• Credit Rating: An assessment of the likelihood of an individual or business being able to meet its financial obligations. Credit ratings are provided by credit agencies or rating agencies to verify the financial strength of the issuer for investors.
• Currency Board: A monetary system in which the monetary base is fully backed by foreign reserves. Any changes in the size of the monetary base has to be fully matched by corresponding changes in the foreign reserves.
• Current Yield: A return measure that indicates the amount of current income a bond provides relative to its market price. It is shown as: Coupon Rate divided by Price multiplied by 100%.
• Custody of Securities: Registration of securities in the name of the person to whom a bank is accountable, or in the name of the bank’s nominee; plus deposition of securities in a designated account with the bank’s bankers or with any other institution providing custodial services.
• Default Risk: The possibility that a bond issuer will default ie, fail to repay principal and interest in a timely manner.
• Derivative Call (Put) Warrants: Warrants issued by a third party which grant the holder the right to buy (sell) the shares of a listed company at a specified price.
• Derivative Instrument: Financial instrument whose value depends on the value of another asset.
• Discount Bond: A bond selling below par, as interest in-lieu to the bondholders.
• Diversification: The inclusion of a number of different investment vehicles in a portfolio in order to increase returns or be exposed to less risk.
• Duration: A measure of bond price volatility, it captures both price and reinvestment risks to indicate how a bond will react to different interest rate environments.
• Earnings: The total profits of a company after taxation and interest.
• Earnings per Share (EPS): The amount of annual earnings available to common stockholders as stated on a per share basis.
• Earnings Yield: The ratio of earnings to price (E/P). The reciprocal is price earnings ratio (P/E).
• Equity: Ownership of the company in the form of shares of common stock.
• Equity Call Warrants: Warrants issued by a company which give the holder the right to acquire new shares in that company at a specified price and for a specified period of time.
• Ex-dividend (XD): A security which no longer carries the right to the most recently declared dividend or the period of time between the announcement of the dividend and the payment (usually two days before the record date). For transactions during the ex-dividend period, the seller will receive the dividend, not the buyer. Ex-dividend status is usually indicated in newspapers with an (x) next to the stock’s or unit trust’s name.
• Face Value/ Nominal Value: The value of a financial instrument as stated on the instrument. Interest is calculated on face/nominal value.
• Fixed-income Securities: Investment vehicles that offer a fixed periodic return.
• Fixed Rate Bonds: Bonds bearing fixed interest payments until maturity date.
• Floating Rate Bonds: Bonds bearing interest payments that are tied to current interest rates.
• Fundamental Analysis: Research to predict stock value that focuses on such determinants as earnings and dividends prospects, expectations for future interest rates and risk evaluation of the firm.
• Future Value: The amount to which a current deposit will grow over a period of time when it is placed in an account paying compound interest.
• Future Value of an Annuity: The amount to which a stream of equal cash flows that occur in equal intervals will grow over a period of time when it is placed in an account paying compound interest.
• Futures Contract: A commitment to deliver a certain amount of some specified item at some specified date in the future.
• Hedge: A combination of two or more securities into a single investment position for the purpose of reducing or eliminating risk.
• Income: The amount of money an individual receives in a particular time period.
• Index Fund: A mutual fund that holds shares in proportion to their representation in a market index, such as the S&P 500.
• Initial Public Offering (IPO): An event where a company sells its shares to the public for the first time. The company can be referred to as an IPO for a period of time after the event.
• Inside Information: Non-public knowledge about a company possessed by its officers, major owners, or other individuals with privileged access to information.
• Insider Trading: The illegal use of non-public information about a company to make profitable securities transactions
• Intrinsic Value: The difference of the exercise price over the market price of the underlying asset.
• Investment: A vehicle for funds expected to increase its value and/or generate positive returns.
• Investment Adviser: A person who carries on a business which provides investment advice with respect to securities and is registered with the relevant regulator as an investment adviser.
• IPO price: The price of share set before being traded on the stock exchange. Once the company has gone Initial Public Offering, the stock price is determined by supply and demand.
• Junk Bond: High-risk securities that have received low ratings (i.e. Standard & Poor’s BBB rating or below; or Moody’s BBB rating or below) and as such, produce high yields, so long as they do not go into default.
• Leverage Ratio: Financial ratios that measure the amount of debt being used to support operations and the ability of the firm to service its debt.
• Libor: The London Interbank Offered Rate (or LIBOR) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). The LIBOR rate is published daily by the British Banker’s Association and will be slightly higher than the London Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.
• Limit Order: An order to buy (sell) securities which specifies the highest (lowest) price at which the order is to be transacted.
• Limited Company: The passive investors in a partnership, who supply most of the capital and have liability limited to the amount of their capital contributions.
• Liquidity: The ability to convert an investment into cash quickly and with little or no loss in value.
• Listing: Quotation of the Initial Public Offering company’s shares on the stock exchange for public trading.
• Listing Date: The date on which Initial Public Offering stocks are first traded on the stock exchange by the public
• Margin Call: A notice to a client that it must provide money to satisfy a minimum margin requirement set by an Exchange or by a bank / broking firm.
• Market Capitalization: The product of the number of the company’s outstanding ordinary shares and the market price of each share.
• Market Maker: A dealer who maintains an inventory in one or more stocks and undertakes to make continuous two-sided quotes.
• Market Order: An order to buy or an order to sell securities which is to be executed at the prevailing market price.
• Money Market: Market in which short-term securities are bought and sold.
• Mutual Fund: A company that invests in and professionally manages a diversified portfolio of securities and sells shares of the portfolio to investors.
• Net Asset Value: The underlying value of a share of stock in a particular mutual fund; also used with preferred stock.
• Offer for Sale: An offer to the public by, or on behalf of, the holders of securities already in issue.
• Offer for Subscription: The offer of new securities to the public by the issuer or by someone on behalf of the issuer.
• Open-end (Mutual) Fund: There is no limit to the number of shares the fund can issue. The fund issues new shares of stock and fills the purchase order with those new shares. Investors buy their shares from, and sell them back to, the mutual fund itself. The share prices are determined by their net asset value.
• Open Offer: An offer to current holders of securities to subscribe for securities whether or not in proportion to their existing holdings.
• Option: A security that gives the holder the right to buy or sell a certain amount of an underlying financial asset at a specified price for a specified period of time.
• Oversubscribed: When an Initial Public Offering has more applications than actual shares available. Investors will often apply for more shares than required in anticipation of only receiving a fraction of the requested number. Investors and underwriters will often look to see if an IPO is oversubscribed as an indication of the public’s perception of the business potential of the IPO company.
• Par Bond: A bond selling at par (i.e. at its face value).
• Par Value: The face value of a security.
• Perpetual Bonds: Bonds which have no maturity date.
• Placing: Obtaining subscriptions for, or the sale of, primary market, where the new securities of issuing companies are initially sold.
• Portfolio: A collection of investment vehicles assembled to meet one or more investment goals.
• Preference Shares: A corporate security that pays a fixed dividend each period. It is senior to ordinary shares but junior to bonds in its claims on corporate income and assets in case of bankruptcy.
• Premium (Warrants): The difference of the market price of a warrant over its intrinsic value.
• Premium Bond: Bond selling above par.
• Present Value: The amount to which a future deposit will discount back to present when it is depreciated in an account paying compound interest.
• Present Value of an Annuity: The amount to which a stream of equal cash flows that occur in equal intervals will discount back to present when it is depreciated in an account paying compound interest.
• Price/Earnings Ratio (P/E): The measure to determine how the market is pricing the company’s common stock. The price/earnings (P/E) ratio relates the company’s earnings per share (EPS) to the market price of its stock.
• Privatization: The sale of government-owned equity in nationalized industry or other commercial enterprises to private investors.
• Prospectus: A detailed report published by the Initial Public Offering company, which includes all terms and conditions, application procedures, IPO prices etc, for the IPO
• Put Option: The right to sell the underlying securities at a specified exercise price on of before a specified expiration date.
• Rate of Return: A percentage showing the amount of investment gain or loss against the initial investment.
• Real Interest Rate: The net interest rate over the inflation rate. The growth rate of purchasing power derived from an investment.
• Redemption Value: The value of a bond when redeemed.
• Reinvestment Value: The rate at which an investor assumes interest payments made on a bond which can be reinvested over the life of that security.
• Relative Strength Index (RSI): A stock’s price that changes over a period of time relative to that of a market index such as the Standard & Poor’s 500, usually measured on a scale from 1 to 100, 1 being the worst and 100 being the best.
• Repurchase Agreement: An arrangement in which a security is sold and later bought back at an agreed price and time.
• Resistance Level: A price at which sellers consistently outnumber buyers, preventing further price rises.
• Return: Amount of investment gain or loss.
• Rights Issue: An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.
• Risk-Averse, Risk-Neutral, Risk-Taking:
  Risk-averse describes an investor who requires greater return in exchange for greater risk.
  Risk-neutral describes an investor who does not require greater return in exchange for greater risk.
  Risk-taking describes an investor who will accept a lower return in exchange for greater risk.
• Senior Bond: A bond that has priority over other bonds in claiming assets and dividends.
• Short Hedge: A transaction that protects the value of an asset held by taking a short position in a futures contract.
• Settlement: Conclusion of a securities transaction when a customer pays a broker/dealer for securities purchased or delivered, securities sold, and receives from the broker the proceeds of a sale.
• Short Position: Investors sell securities in the hope that they will decrease in value and can be bought at a later date for profit.
• Short Selling: The sale of borrowed securities, their eventual repurchase by the short seller at a lower price and their return to the lender.
• Speculation: The process of buying investment vehicles in which the future value and level of expected earnings are highly uncertain.
• Stock Splits: Wholesale changes in the number of shares. For example, a two for one split doubles the number of shares but does not change the share capital.
• Subordinated Bond: An issue that ranks after secured debt, debenture, and other bonds, and after some general creditors in its claim on assets and earnings. Owners of this kind of bond stand last in line among creditors, but before equity holders, when an issuer fails financially.
• Substantial Shareholder: A person acquires an interest in relevant share capital equal to, or exceeding, 10% of the share capital.
• Support Level: A price at which buyers consistently outnumber sellers, preventing further price falls.
• Technical Analysis: A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. Contrasted with fundamental analysis which involves the study of financial accounts and other information about the company. (It is an attempt to predict movements in security prices from their trading volume history.)
• Time Horizon: The duration of time an investment is intended for.
• Trading Rules: Stipulation of parameters for opening and intra-day quotations, permissible spreads according to the prices of securities available for trading and board lot sizes for each security.
• Trust Deed: A formal document that creates a trust. It states the purpose and terms of the name of the trustees and beneficiaries.
• Underlying Security: The security subject to being purchased or sold upon exercise of the option contract.
• Valuation: Process by which an investor determines the worth of a security using risk and return concept.
• Warrant: An option for a longer period of time giving the buyer the right to buy a number of shares of common stock in company at a specified price for a specified period of time.
• Window Dressing: Financial adjustments made solely for the purpose of accounting presentation, normally at the time of auditing of company accounts.
• Yield (Internal rate of Return): The compound annual rate of return earned by an investment
• Yield to Maturity: The rate of return yield by a bond held to maturity when both compound interest payments and the investor’s capital gain or loss on the security are taken into account.
• Zero Coupon Bond: A bond with no coupon that is sold at a deep discount from par value.

BANKING TERMINOLOGY

Anytime Banking : With introduction of ATMs, Tele-Banking and internet banking, customers can conduct their business anytime of the day and night. The 'Banking Hours' is not a constraint for transacting banking business.

Anywhere Banking : Refers to banking not only by ATMs, Tele-Banking and internet banking, but also to core banking solutions brought in by banks where customer can deposit his money, cheques and also withdraw money from any branch connected with the system. All major banks in India have brought in core banking in their operations to make banking truly anywhere banking.

ATM : ATMs are Automatic Teller Machines, which do the job of a teller in a bank through Computer Network. ATMs are located on the branch premises or off branch premises. ATMs are useful to dispense cash, receive cash, accept cheques, give balances in the accounts and also give mini-statements to the customers.

Bank Ombudsman : Bank Ombudsman is the authority to look into complaints against Banks in the main areas of collection of cheque / bills, issue of demand drafts, non-adherence to prescribed hours of working, failure to honour guarantee / letter of credit commitments, operations in deposit accounts and also in the areas of loans and advances where banks flout directions / instructions of RBI. This Scheme was announced in 1995 and is functioning with new guidelines from 2007. This scheme covers all scheduled banks, the RRBs and co-operative banks.

Bancassurance : Bancassurance refers to the distribution of insurance products and the insurance policies of insurance companies which may be life policies or non-life policies like home insurance - car insurance, medi-policies and others, by banks as corporate agents through their branches located in different parts of the country by charging a fee.

Banker's Lien : Bankers lien is a special right of lien exercised by the bankers, who can retain goods bailed to them as a security for general balance of account. Bankers can have this right in the absence of a contract to the contrary.

Banking : Accepting for the purpose of lending or investment of deposits of money from Public, Repayable on demand or otherwise and withdrawable by cheques, drafts, order, etc.

Basel-II : The Committee on Banking Regulations and Supervisory Practices, popularity known as Basel Committee, submitted its revised version of norms in June, 2004. Under the revised accord the capital requirement is to be calculated for credit, market and operational risks. The minimum requirement continues to be 8% of capital fund (Tier I & II Capital) Tier II shall continue to be not more than 100% of Tier I Capital.

Brick & Mortar Banking : Brick and Mortar Banking refers to traditional system of banking done only in a fixed branch premises made of brick and mortar. Now there are banking channels like ATM, Internet Banking,tele banking etc.

Business of Banking : Accepting deposits, borrowing money, lending money, investing, dealing in bills, dealing in Foreign Exchange, Hiring Lockers, Opening Safe Custody Accounts, Issuing Letters of Credit, Traveller's Cheques, doing Mutual Fund business, Insurance Business, acting as Trustee or doing any other business which Central Government may notify in the official Gazette.

Bouncing of a cheque : Where an account does not have sufficient balance to honour the cheque issued by the customer , the cheque is returned by the bank with the reason "funds insufficient" or "Exceeds arrangement".This is known as 'Bouncing of a cheque' .

Certificate of Deposit :. Certificate of Deposits are negotiable receipts in bearer form which can be freely traded among investors. This is also a money market instrument,issued for a period ranging from 7 days to f one year .The minimum deposit amount is Rs. 1 lakh and they are transferable by endorsement and delivery.

Cheque : Cheque is a Bill of Exchange drawn on a specified banker ordering the banker to pay a certain sum of money to the drawer of cheque or another person. Money is generally withdrawn by clients by cheques. Cheque is always payable on demand.

Cheque Truncation : Cheque truncation, truncates or stops the flow of cheques through the banking system. Generally truncation takes place at the collecting branch, which sends the electronic image of the cheques to the paying branch through the clearing house and stores the paper cheques with it.

Collecting Banker : Also called receiving banker, who collects on instruments like a cheque, draft or bill of exchange, lodged with himself for the credit of his customer's account.

Consumer Protection Act : It is implemented from 1987 to enforce consumer rights through a simple legal procedure. Banks also are covered under the Act. A consumer can file complaint for deficiency of service with Consumer District Forum for amounts upto Rs.20 Lacs in District Court, and for amounts above Rs.20 Lacs to Rs.1 Crore in State Commission and for amounts above Rs.1 Crore in National Commission.

Co-operative Bank : An association of persons who collectively own and operate a bank for the benefit of consumers / customers, like Saraswat Co-operative Bank or Abhyudaya Co-operative Bank and other such banks.

Co-operative Society : When an association of persons collectively own and operate a unit for the benefit of those using its services like Apna Bazar Co-operative Society or Sahakar Bhandar or a Co-operative Housing Society.

Core Banking Solutions (CBS) : Core Banking Solutions is a buzz word in Indian banking at present, where branches of the bank are connected to a central host and the customers of connected branches can do banking at any breach with core banking facility.

Creditworthiness : It is the capacity of a borrower to repay the loan / advance in time alongwith interest as per agreed terms.

Crossing of Cheques : Crossing refers to drawing two parallel lines across the face of the cheque.A crossed cheque cannot be paid in cash across the counter, and is to be paid through a bank either by transfer, collection or clearing.A general crossing means that cheque can be paid through any bank and a special crossing, where the name of a bank is indicated on the cheque, can be paid only through the named bank.

Current Account : Current account with a bank can be opened generally for business purpose. There are no restrictions on withdrawals in this type of account. No interest is paid in this type of account.

Customer : A person who maintains any type of account with a bank is a bank customer. Consumer Protection Act has a wider definition for consumer as the one who purchases any service for a fee like purchasing a demand draft or a pay order. The term customer is defined differently by Laws, softwares and countries.

Debit Card : A plastic card issued by banks to customers to withdraw money electronically from their accounts. When you purchase things on the basis of Debit Card the amount due is debited immediately to the account . Many banks issue Debit-Cum-ATM Cards.

Debtor : A person who takes some money on loan from another person.

Demand Deposits : Deposits which are withdrawn on demand by customers.E.g. savings bank and current account deposits.

Demat Account : Demat Account concept has revolutionized the capital market of India. When a depository company takes paper shares from an investor and converts them in electronic form through the concerned company, it is called Dematerialization of Shares. These converted Share Certificates in Electronic form are kept in a Demat Account by the Depository Company, like a bank keeps money in a deposit account. Investor can withdraw the shares or purchase more shares through this demat Account.

Dishonour of Cheque : Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment.

Debit Card : A plastic card issued by banks to customers to withdraw money electronically from their accounts. When you purchase things on the basis of Debit Card the amount due is debited immediately to the account . Many banks issue Debit-Cum-ATM Cards.

Debtor : A person who takes some money on loan from another person.

Demand Deposits : Deposits which are withdrawn on demand by customers.E.g. savings bank and current account deposits.

Demat Account : Demat Account concept has revolutionized the capital market of India. When a depository company takes paper shares from an investor and converts them in electronic form through the concerned company, it is called Dematerialization of Shares. These converted Share Certificates in Electronic form are kept in a Demat Account by the Depository Company, like a bank keeps money in a deposit account. Investor can withdraw the shares or purchase more shares through this demat Account.

Dishonour of Cheque : Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment. 

E-Banking : E-Banking or electronic banking is a form of banking where funds are transferred through exchange of electronic signals between banks and financial institution and customers ATMs, Credit Cards, Debit Cards, International Cards, Internet Banking and new fund transfer devices like SWIFT, RTGS belong to this category.

EFT - (Electronic Fund Transfer) : EFT is a device to facilitate automatic transmission and processing of messages as well as funds from one bank branch to another bank branch and even from one branch of a bank to a branch of another bank. EFT allows transfer of funds electronically with debit and credit to relative accounts.

Either or Survivor : 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.

Electronic Commerce (E-Commerce): E-Commerce is the paperless commerce where the exchange of business takes place by Electronic means.

Endorsement : When a Negotiable Instrument contains, on the back of the instrument an endorsement, signed by the holder or payee of an order instrument, transferring the title to the other person, it is called endorsement.

Endorsement in Blank : Where the name of the endorsee or transferee is not mentioned on the instrument.

Endorsement in Full : Where the name of the endorsee or transferee appears on the instrument while making endorsement.

Execution of Documents : Execution of documents is done by putting signature of the person, or affixing his thumb impression or putting signature with stamp or affixing common seal of the company on the documents with or without signatures of directors as per articles of association of the company.

Factoring : Business of buying trade debts at a discount and making a profit when debt is realized and also taking over collection of trade debts at agreed prices.

Foreign Banks : Banks incorporated outside India but operating in India and regulated by the Reserve Bank of India (RBI),. e..g., Barclays Bank, HSBC, Citibank, Standard Chartered Bank, etc.

Forfaiting : In International Trade when an exporter finds it difficult to realize money from the importer, he sells the right to receive money at a discount to a forfaiter, who undertakes inherent political and commercial risks to finance the exporter, of course with assumption of a profit in the venture.

Forgery : when a material alteration is made on a document or a Negotiable Instrument like a cheque, to change the mandate of the drawer, with intention to defraud. 

Garnishee Order : When a Court directs a bank to attach the funds to the credit of customer's account under provisions of Section 60 of the Code of Civil Procedure, 1908.

General Lien : A right of the creditors to retain possession of all goods given in security to him by the debtor for any outstanding debt.

Guarantee : A contract between guarantor and beneficiary to ensure performance of a promise or discharge the liability of a third person. If promise is broken or not performed, the guarantor pays contracted amount to the beneficiary.

Holder : Holder means any person entitled in his own name to the possession of the cheque, bill of exchange or promissory note and who is entitled to receive or recover the amount due on it from the parties. For example, if I give a cheque to my friend to withdraw money from my bank,he becomes holder of that cheque. Even if he loses the cheque, he continues to be holder. Finder cannot become the holder.

Holder in due course : A person who receives a Negotiable Instrument for value, before it was due and in good faith, without notice of any defect in it, he is called holder in due course as per Negotiable Instrument Act. In the earlier example if my friend lends some money to me on the basis of the cheque, which I have given to him for encashment, he becomes holder-in-due course.

Hypothecation : Charge against property for an amount of debt where neither ownership nor possession is passed to the creditor. In pledge, possession of property is passed on to the lender but in hypothecation, the property remains with the borrower in trust for the lender. 

Identification : When a person provides a document to a bank or is being identified by a person, who is known to the bank, it is called identification. Banks ask for identification before paying an order cheque or a demand draft across the counter.

Indemnifier : When a person indemnifies or guarantees to make good any loss caused to the lender from his actions or others' actions.

Indemnity : Indemnity is a bond where the indemnifier undertakes to reimburse the beneficiary from any loss arising due to his actions or third party actions.

Insolvent : Insolvent is a person who is unable to pay his debts as they mature, as his liabilities are more than the assets . Civil Courts declare such persons insolvent. Banks do not open accounts of insolvent persons as they cannot enter into contract as per law.

Interest Warrant : When cheque is given by a company or an organization in payment of interest on deposit , it is called interest warrant. Interest warrant has all the characteristics of a cheque.

International Banking : involves more than two nations or countries. If an Indian Bank has branches in different countries like State Bank of India, it is said to do International Banking.

Introduction : Banks are careful in opening any account for a customer as the prospective customer has to be introduced by an existing account holder or a staff member or by any other person known to the bank for opening of account. If bank does not take introduction, it will amount to negligence and will not get protection under law.

JHF Account : Joint Hindu Family Account is account of a firm whose business is carried out by Karta of the Joint family, acting for all the family members.. The family members have common ancestor and generally maintain a common residence and are subject to common social, economic and religious regulations.

Joint Account : When two or more individuals jointly open an account with a bank. 

Karta : Manager of a Hindu Undivided Family (HUF) who handles the family business. He is usually the eldest male member of the undivided family.

Kiosk Banking : Doing banking from a cubicle from which food, newspapers, tickets etc. are also sold.

KYC Norms : Know your customer norms are imposed by R.B.I. on banks and other financial institutions to ensure that they know their customers and to ensure that customers deal only in legitimate banking operations and not in money laundering or frauds.

Law of Limitation : Limitation Act of 1963 fixes the limitation period of debts and obligations including banks loans and advances. If the period fixed for particular debt or loan expires, one can not file a suit for is recovery, but the fact of the debt or loan is not denied. It is said that law of limitation bars the remedy but does not extinguish the right.

Lease Financing : Financing for the business of renting houses or lands for a specified period of time and also hiring out of an asset for the duration of its economic life. Leasing of a car or heavy machinery for a specific period at specific price is an example.

Letter of Credit : A document issued by importers bank to its branch or agent abroad authorizing the payment of a specified sum to a person named in Letter of Credit (usually exporter from abroad). Letters of Credit are covered by rules framed under Uniform Customs and Practices of Documentary Credits framed by International Chamber of Commerce in Paris.

Limited Companies Accounts : Accounts of companies incorporated under the Companies Act, 1956 . A company may be private or public. Liability of the shareholders of a company is generally limited to the face value of shares held by them. 

Mandate : Written authority issued by a customer to another person to act on his behalf, to sign cheques or to operate a bank account.

Material Alteration : Alteration in an instrument so as to alter the character of an instrument for example when date, amount, name of the payee are altered or making a cheque payable to bearer from an order one or opening the crossing on a cheque.

Merchant Banking : When a bank provides to a customer various types of financial services like accepting bills arising out of trade, arranging and providing underwriting, new issues, providing advice, information or assistance on starting new business, acquisitions, mergers and foreign exchange.

Micro Finance: Micro Finance aims at alleviation of poverty and empowerment of weaker sections in India. In micro finance, very small amounts are given as credit to poor in rural, semi-urban and urban areas to enable them to raise their income levels and improve living standards.

Minor Accounts : A minor is a person who has not attained legal age of 18 years. As per Contract Act a minor cannot enter into a contract but as per Negotiable Instrument Act, a minor can draw, negotiate, endorse, receive payment on a Negotiable Instrument so as to bind all the persons, except himself. In order to boost their deposits many banks open minor accounts with some restrictions.

Mobile Banking : With the help of M-Banking or mobile banking customer can check his bank balance, order a demand draft, stop payment of a cheque, request for a cheque book and have information about latest interest rates.

Money Laundering : When a customer uses banking channels to cover up his suspicious and unlawful financial activities, it is called money laundering.

Money Market : Money market is not an organized market like Bombay Stock Exchange but is an informal network of banks, financial institutions who deal in money market instruments of short term like CP, CD and Treasury bills of Government.

Moratorium : R.B.I. imposes moratorium on operations of a bank; if the affairs of the bank are not conducted as per banking norms. After moratorium R.B.I. and Government explore the options of safeguarding the interests of depositors by way of change in management, amalgamation or take over or by other means.

Mortgage : Transfer of an interest in specific immovable property for the purpose of offering a security for taking a loan or advance from another. It may be existing or future debt or performance of an agreement which may create monetary obligation for the transferor (mortgagor).

NABARD : National Bank for Agriculture & Rural Development was setup in 1982 under the Act of 1981. NABARD finances and regulates rural financing and also is responsible for development agriculture and rural industries.

Negotiation : In the context of banking, negotiation means an act of transferring or assigning a money instrument from one person to another person in the course of business.

Non-Fund Based Limits : Non-Fund Based Limits are those type of limits where banker does not part with the funds but may have to part with funds in case of default by the borrowers, like guarantees, letter of credit and acceptance facility.

Non-Resident : A person who is not a resident of India is a non-resident.

Non-Resident Accounts : Accounts of non-resident Indian citizens opened and maintained as per R.B.I. Rules.

Notary Public : A Lawyer who is authorized by Government to certify copies of documents .

NPA Account : If interest and instalments and other bank dues are not paid in any loan account within a specified time limit, it is being treated as non-performing assets of a bank. 

Off Balance Sheet Items : Those items which affect the financial position of a business concern, but do not appear in the Balance Sheet E,g guarantees, letters of credit . The mention "off Balance Sheet items" is often found in Auditors Reports or Directors Reports.

Online Banking : Banking through internet site of the bank which is made interactive.

Pass Book : A record of all debit and credit entries in a customer's account. Generally all banks issue pass books to Savings Bank/Current Account Holders.

Personal Identification Number (PIN) : Personal Identification Number is a number which an ATM card holder has to key in before he is authorized to do any banking transaction in a ATM .

Plastic Money : Credit Cards, Debit Cards, ATM Cards and International Cards are considered plastic money as like money they can enable us to get goods and services.

Pledge : A bailment of goods as security for payment of a debt or performance of a promise, e.g pledge of stock by a borrower to a banker for a credit limit. Pledge can be made in movable goods only.

Post-Dated Cheque : A Cheque which bears the date which is subsequent to the date when it is drawn. For example, a cheque drawn on 8th of February, 2007 bears the date of 12th February, 2007.

Power of Attorney : It is a document executed by one person - Donor or Principal, in favour of another person , Donee or Agent - to act on behalf of the former, strictly as per authority given in the document.

Premature Withdrawals : Term deposits like Fixed Deposits, Call Deposits, Short Deposits and Recurring Deposits have to mature on a particular day. When these deposits are sought to be withdrawn before maturity , it is premature withdrawal.

Prime Lending Rate (PLR) : The rate at which banks lend to their best (prime) customers.

Priority Sector Advances : consist of loans and advances to Agriculture, Small Scale Industry, Small Road and Water Transport Operators, Retail Trade, Small Business with limits on investment in equipments, professional and self employed persons, state sponsored organisations for lending to SC/ST, Educational Loans, Housing Finance up to certain limits, self-help groups and consumption loans.

Promissory Note : Promissory Note is a promise / undertaking given by one person in writing to another person, to pay to that person , a certain sum of money on demand or on a future day.

Provisioning : Provisioning is made for the likely loss in the profit and loss account while finalizing accounts of banks. All banks are supposed to make assets classification . and make appropriate provisions for likely losses in their balance sheets.

Public Sector Bank : A bank fully or partly owned by the Government. 

Rescheduling of Payment : Rearranging the repayment of a debt over a longer period than originally agreed upon due to financial difficulties of the borrower.

Restrictive Endorsement : Where endorser desires that instrument is to be paid to particular person only, he restricts further negotiation or transfer by such words as "Pay to Ashok only". Now Ashok cannot negotiate the instrument further.

Right of Appropriation : As per Section 59 of the Indian Contract Act, 1972 while making the payment, a debtor has the right to direct his creditor to appropriate such amount against discharge of some particular debt. If the debtor does not do so, the banker can appropriate the payment to any debt of his customer.

Right of Set-Off : When a banker combines two accounts in the name of the same customer and adjusts the debit balance in one account with the credit balance in other account, it is called right of set-off. For example, debit balance of Rs.50,000/- in overdraft account can be set off against credit balance of Rs.75,000/- in the Savings Bank Account of the same customer, leaving a balance of Rs.25,000/- credit in the savings account.

Safe Custody : When articles of value like jewellery, boxes, shares, debentures, Government bonds, Wills or other documents or articles are given to a bank for safe keeping in its safe vault,it is called safe custody.. Bank charges a fee from its clients for such safe custody.

Savings Bank Account : All banks in India are having the facility of opening savings bank account with a nominal balance. This account is used for personal purposes and not for business purpose and there are certain restrictions on withdrawals from this type of account. Account holder gets nominal interest in this account. 

Teller : Teller is a staff member of a bank who accepts deposits, cashes cheques and performs other banking services for the public.

Underwriting : is an agreement by the underwriter to buy on a fixed date and at a fixed rate, the unsubscribed portion of shares or debentures or other issues. Underwriter gets commission for this agreement.

Universal Banking : When Banks and Financial Institutions are allowed to undertake all types of activities related to banking like acceptance of deposits, granting of advances, investment, issue of credit cards, project finance, venture capital finance, foreign exchange business, insurance etc. it is called Universal Banking. 

Virtual Banking : Virtual banking is also called internet banking, through which financial and banking services are accessed via internet's world wide web. It is called virtual banking because an internet bank has no boundaries of brick and mortar and it exists only on the internet.

Wholesale Banking : Wholesale banking is different from Retail Banking as its focus is on providing for financial needs of industry and institutional clients. 

FINANCIAL & BANKING AWARENESS MCQs

1) At present number of public sector banks inIndia:
a) 26    
b) 27   
c) 28    
d) 29      
e) None of these

2) At present number of private sector banks inIndia:
a) 21     
b) 22  
c) 23   
d) 24       
e) None of these

3) Nationalisation of 14 major banks in…………………..
a) 1949             
b) 1955             
c) 1959              
d) 1969                
  e) None of these

4) Nationalisation of six banks in…………………………..
a) ) 1949            
b) 1955             
c) 1959              
d) 1969               
e) 1980

5)The largest commercial bank inIndia:
a) SBI      
b) ICICI Bank    
c) PNB     
d) HDFC Bank     
e) None of these

6) The Second largest public sector commercial bank inIndia:
a) Punjab National Bank    
b) Bank of Baroda    
c) Bank of India    
d) IDBI Bank    
e) Corporation Bank

7) The Largest private sector commercial bank inIndia:
a) AXIS Bank   
b) HDFC Bank      
c) ICICI Bank     
d) Federal Bank     
e) None of these

 8) The second largest private sector commercial bank inIndia:
a) IDBI Bank    
b) AXIS Bank   
c) HDFC Bank   
d) ICICI Bank    
e) None of these

9) The first Indian bank to open a branch outsideIndiainLondonin 1946:
a) State Bank of India     
b) Punjab National Bank     
c) Bank of Baroda    
d) Canara Bank    
e) Bank of India

10) Latest Public Sector Bank inIndia:
a) SBI             
b) ICICI Bank   
c) HDFC Bank    
d) IDBI Bank    
e) None of these

11) Latest Private Sector Bank inIndia:
a) Federal Bank  
b) South Indian Bank  
c) YES Bank   
d) Kotak Mahindra Bank     
e) None of these

12) The Largest foreign bank operating inIndia:
a) Citi Bank     
b) HSBC        
c) Barclays Bank      
d) ABN Amro Bank  
e) Standard Chartered Bank

13) Which bank is the largest issuer of credit cards inIndia?
a) SBI           
b) ICICI Bank         
c) HDFC Bank     
d) IDBI Bank    
e) None of these

14) Who is the current MD & CEO of ICICI Bank?
a) Shyamala Gopinath   
b) Shikha Sharma    
c) Chanda Kochhar  
d) Renu Challu   
e) Sushma Nath

15) The Chairman of Indian Banks Association(IBA) (For 2011-12):
a) M.D.Mallya   
b) Pratip Chaudhuri     
c) D.Subbarao     
d) Subir Gokarn      
e) U.K.Sinha

16) The largest bank inChina:
a) Industrial and Commercial Bank of China Ltd. (ICBC)   
b) Hongkong and Shanghai Banking Corporation(HSBC)
c) Deutsche Bank AG          
d) BNP Paribas        
e) DBS Bank

17) Bad loans in banking terminology are generally known as…………………
a) CBS    
b) PLR    
c) NPAs   
d) CRR        
e) None of these

18) In Financial Term NPA, P stands for………..
 a) Potential        
b) Peforming   
c) Prodiction     
d) Professional        
e) None of these

19) Which of the following pairings is wrong? (Bank & Country)
a) Citi Bank :  USA                 
b) ABN AMRO Bank : TheNetherlands                         
c) BNP Paribas :Russia
d) Hongkong and Shanghai Banking Corporation(HSBC) :United Kingdom     
e) Deutsche Bank AG :Germany

20) Which of the following pairings is wrong? (Bank & Country)
a) Barclays Bank : United Kingdom                    
b) J P Morgan Chase Bank :USA      
c) Societe Generale :France
d) Standard Chartered Bank :South Africa        
e) Sonali Bank :Bangladesh

21) The New Capital Adequacy Framework prescribed for the banks is commonly  known as ………….
a)KYC norms       
b)Credit Policy  
c)Basel Accord  
d)Fiscal Policy       
e) None of these

22) The central bank of theUnited States:
a) Citi Group  
b) Bank ofAmerica    
c) JP Morgan Chase   
d) Federal Reserve
e) Bank for International Settlements

23) Which of the following pairings is wrong? (Bank & Tagline)
a) State Bank ofIndia: With you all the way
b) Punjab National Bank : The name you can BANK upon!
c) Bank ofBaroda:India’s International Bank
d) Oriental Bank of Commerce : Where every individual committed
e) Bank of India : The World’s local bank

24) Axis Bank previously called as……….
a) IDBI Bank      
b) HDFC Bank      
c) YES Bank      
d) ICICI Bank   
e) UTI Bank

25) Which of the following is not a commercial bank?
a) IDBI Bank    
b) HDFC Bank       
c) ICICI Bank       
d) EXIM Bank  
e) AXIS Bank

26) Which of the following pairings is wrong?(Bank/Financial Institution & Establishment Year)
a) RBI : April 1, 1935
b) SBI : July 1, 1955 
c) NABARD : July 12, 1982 
d) NHB : July 9, 1988  
e) SIDBI : April 1, 1990

27) The largest bank inPakistan:
a) State Bank of Pakistan      
b) Habib Bank Limited       
c) Sonali Bank     
d) DBS Bank    
e) None of these

28) Consider the following  sentences:
A. Non Performing Asset (NPA) is an asset, including a leased asset, becomes non performing when it ceases to generate income for the bank.
B. Core banking is a general term used to describe the services provided by a group of networked bank
branches. The platform where communication technology and information technology are merged to suit
core needs of banking is known as Core Banking Solutions.
C. Banking Ombudsman is an independent dispute resolution authority provided by RBI to deal with disputes
that bank customers have with their respective banks.
D. Base Rate is the minimum rate of interest that a bank is allowed to charge from its customers. Unless
mandated by the government, RBI rule stipulates that no bank can offer loans at a rate lower than  base
Rate to any of its customers.
E. NBFC or Non Banking Financial Companies is a company inIndia, which is registered under the
Companies Act, 1956, and which provides banking  services without meeting the legal definition of a bank.
Which of the statements given above is/are correct?
a) Only A & B    
b) Only B & C    
c) Only C & D     
d) Only D & E     
e) All are correct

29) Which of the following is the Apex level institution  for housing?
a) EXIM Bank 
b) NABARD 
c) NHB  
d) SIDBI  
e) None of these

30) Which of the following is not a nationalized bank?
a) PNB               
b) Indian Bank     
c) Bank of India      
d) Karnataka Bank    
e) Canara Bank

31) Which of the following banks was merged with ICICI Bank in 2010?
a) Bank of Rajasthan     
b) Bank of Maharashtra   
c) Karnataka Bank    
d) State Bank ofIndore
e) Global Trust Bank

32) Which of the following banks was merged with SBI in 2010?
a) State Bank of Travancore    
b) State Bank of Mysore  
c) State Bank of Indore   
d) State Bank of Saurashtra
e) State Bank of Hyderabad

ANSWERS

1) a         2) b          3) d          4) e          5)a        6)a          7) c         8) c        9) e        10) d
11) c        12) e       13) b         14) c        15) a     16) a       17) c      18) b     19) c        20) d
21) c       22) d        23) e         24) e       25) d     26) e        27) b     28) e     29) c         30) d
31) a       32)c

BANKING AWARENESS QUESTIONS

1. Which of the following organization provides credit history of the borrowers?
(A) CIBIL
(B) SEBI
(C) RBI
(D) CRISIL
(E) IBA
Ans: (D)


2. Which of the following terms is not used in Economics?
(A) Balance of Payment
(B) Call Money
(C) National Debt
(D) Elasticity of Demand
(E) Cardiac Index
Ans: (E)


3. What is the full form formog the term SHGs used in financial news-papers ?
(A) Small Help Groups
(B) Self Help Groups
(C) Small Hope in Growth
(D) Self Hope Groups
(E) Small Help for Growth
Ans: (B)


4. Which of the following nations is considered the originator of the concept of Micro Finance?
(A) Bangladesh
(B) India
(C) South Africa
(D) Greece
(E)Brazil
Ans: (A)


5. Which of the following carries out ‘Open Market Operations'?
(A) Stock Exchanges in India
(B) Indian Banks' Association
(C) Securities and Exchange Board of India
(D) Planning Commission
(E) Reserve Bank of India

Ans: (C)

6. The price at which the Govt. Purchases food grain for maintaining the public distribution system is known as:
(A) Ceiling prices
(B) Procurement price
(C) Minimum Price
(D) Issue Price
(E) Distribution price


Ans: (B)

7. Union Government on 26 September 2011 announced the reconstitution of the National Manufacturing Competitiveness Council (NMCC) under whose chairmanship to energise and sustain the growth of manufacturing industries and help in the implementation of strategies by the government?
(A) V. Krishnamurthy
(B) Pranab Mukherjee
(C) U K Sinha
(D) Dr D Subbarao
(E) Narayan Murthy
Ans: A


8. Government panel headed by Planning Commission member Arun Maira in its report presented on 27 September 2011 suggested giving more powers to which of the following bodies with respect to mergers and acquisitions in the pharmaceutical sector?
(A) Competition Commission of India
(B) Finance Ministry
(C) Reserve Bank of India
(D) Federation of Indian Chambers of Commerce and Industry
(E) Ministry of Health
Ans: (A)

9.  Coal Ministry on 21 September 2011 during the Round table conference on Coal approved, in principle, the allotment of five coal blocks to which of the following PSU power generators?
(A)  BHEL
(B)  NTPC
(C)  Power Grid Corporation of India
(D)  Gujarat State Energy Generation
(E)  ONGC

Ans: (B)

10. The Cabinet Committee on Economic Affairs on 30 August 2011 approved disinvestment of 5 per cent of its stake in which of the following Central Public Service Enterprises (CPSE)?
(A) NTPC
(B) HPCL
(C) BHEL
(D) SAIL
(E) ONGC
Ans: (C)

IBPS BANKING AWARENESS MCQs

1. To start a Private Sector bank Rs.......... crores must be needed as initial capital as per the recent proposal of RBI?
1) 100
2) 200
3)1000
4)1800
5) 500

2. Private Sector banks controlled by ..........?
1) RBI
2) Finance Minister
3) NABARD
4) IDBI
5) Indian Banks Association

3. On 6 September 2011, RBI said the pre-payment fee on floating loans must not collect on..........?
1) Vehicle Loans
2) Commercial Loans
3) Teaser Loans
4) White goods
5) Housing Loans

4. In the last 33 years, the pioneer in the granting of housing loans is ..........?
1) ICICI
2) Canara Bank
3) Corporation Bank
4) HDFC
5) Axis Bank

5. Which committee suggested that to initiate new Non-Banking Finance Company (NBFC) Rs. 50 crore must be needed?
1) K.J.Udeshi
2) Shyamala Gopinath
3) Usha Thorat
4) Ghosh
5) Omkar Goswami

6. Which bank sought Rs. 990 crores capital infusion from the Government to fund its business growth?
1) State Bank of India
2) Punjab National Bank
3) Punjab & Sind Bank
4) Oriental Bank of Commerce
5) HDFC

7. Most liquid form among the following one is .......... ?
1) Cheque
2) Draft
3) Cash
4) Debit Card
5) Credit Card

8. Most Liquid form among the following one is ..........?
1) money in the Fixed Deposit account
2) money in the Recurring account
3) money in Savings account
4) money in the Bank Bonds
5) money in blue chip shares

9. The most non-liquid form of money is ..........?
1) Bank Share
2) Bank Savings Account
3) Post office savings and certificates
4) Fixed deposit
5) Land and Buildings

10. The Associate bank of SBI do not include ..........?
1) SBH
2) SBP
3) SBM
4) SBT
5) SBC

11. On 1st September 2011, RBI said the total value of fake notes in India is approximately ..........?
1) 5000 cr
2) 150 cr
3) 1000 cr
4) 8000 cr
5) 3200 cr

12. On 6th September 2011, RBI said the unclaimed amounts in Indian banks approximately ..........cr?
1) 100
2) 5000
3) 6000
4) 1500
5) 1700

13.The utmost advantage of plastic money is ..........?
1) Style
2) Printing very cheap
3) Circulation very easy
4) Occupy less space
5) Shelf life will be longer

14. Paid up capital means ..........
1) Amount of share capital actually contributed by share holders
2) Amount of share capital actually contributed by promoters on ad-hoc basis
3) Capital borrowed from the public
4) Loan given by the banks on the first day of establishment
5) Capital paid but asked to return by share holders

15. Extending bank credit includes ..........?
1) Cash Credit
2) Over Draft
3) Demand Loans
4) Term Loans
5) All of above

16. To stop the growth of NPAs Credit Information Bureau Limited (CIBIL) was established in ..........?
1)1991
2) 1998
3) 1956
4) 2010
5) 2001

17. .......... give the short term and medium term loans to Regional Rural banks?
1) RBI
2) NABARD
3) SBI
4) HDFC
5) CBI

18. In the re distribution of incomes, inflation favours ..........?
1) poor people
2) BPL families
3) engineers
4) rich people
5) poor and rich people

19. A loan allows the person to pursue higher studies is..........?
1) Education Loan
2) Housing Loan
3) Admission Loan
4) Passing Loan
5) Purse and Mess Loan

20. Village people take more loans from non-institutional sources (informal route). It includes?
1) Scheduled banks
2) Money Lenders
3) Co-operative banks
4) Rural banks
5) Public Sector banks

21. The paper currency cannot be minted by Reserve Bank of India?
1) Ten rupee
2) Hundred rupee
3) Fifty rupee
4) Twenty rupee
5) One rupee

22. Asia's largest bank is ..........?
1) ICBC
2) SCB
3) SBI
4) BOT
5) Indian Bank

23. Term not used in banking?
1) Tied Loan
2) Soft Loan
3) Crossing
4) Bounce
5) Multiplier

24. By 2015,..........crosses USA to become world's largest banking industry?
1) India
2) China
3) Japan
4)Australia
5) Canada

25. On 25 August 2011,India and Georgia signed Double Taxation Avoidance Agreement (DTAA). Georgia capital is ..........
1) Mascow
2) Tashkent
3) Bejing
4) Baku
5) Tbilisi

26. As per TRAI instructions daily ..........SMS can be send only through one SIM card?
1) 100
2) 200
3) 300
4) 400
5) 1000

27. Expand SIM?
1) subscriber identification mode
2) subscriber identification model
3) sim identification mode
4) subscriber identification memory
5) subscriber identification module

28. Typoon Talas struck ..........?
1) China
2) Australia
3) Nepal
4) Hongkong
5) Japan

29. On 4th September 2011, the union government agreed the ..........master plan for back water tourism?
1) Tamilnadu
2) Odisha
3) Andhra Pradesh
4) Maharastra
5) Kerala

30. Prime Minister of Bangladesh is ..........?
1) Sheikh Husina
2) Zillur Rahman
3) Asif Zardari
4) Yousaf Gillani
5) Hina Rabbani Khar

31. Union Cabinet approved release of additional installment of Dearness Allowance (DA) at the rate of ...........percent?
1) 7
2) 5
3) 6
4) 8
5) 10

32. I am visiting Japan. So I need .........., which is a local currency?
1) Yuan
2) Rubel
3) Rupee
4) Yen
5) Lira

33. Tropical storm Lee struck ..........?
1) China
2) India
3) New Zealand
4) Canada
5) USA

34. ..........is the present Ambassador of USA to India?
1) Alexander Kadakin
2) Ajai Malhotra
3) Niripama Rao
4) Peter Burleigh
5) None

35. Expand VAMBAY?
1) Valmiki Ambedkar Awas Yantra
2) Vendee Ambedkar Awas Yojana
3) Valmiki Ambedkar Area Yojana
4) Valmiki Awas Area Yojana
5) Valmiki Ambedkar Awas Yojana

36. Urdu poet and academician ..........was presented Jnanpith Award 2008?
1) Akhlaq Mohammad Khan Shahryar
2) Chandrashekhara Kambara
3) Mirza Galib
4) Rahi Masoom Raza
5) None

37. Who did 12 day fasting against corruption ending 28th August 2011?
1) Baba Ramdev
2) Kiran Bedi
3) Anna Hazare
4) Jayaprakash Narayan
5) Narender Modi

ANSWERS:

1)5 2)1 3)5 4)4 5)3 6)3 7)3 8)3 9)5 10)5 11)5 12)5 13)5 14)1 15)5 16)5 17)2
18)4 19)1 20)2 21)5 22)1 23)5 24)2 25)5 26)1 27)5 28)5 29)5 30)1 31)1 32)4 33)5
34)4 35)5 36)1 37)3.

Sustainable Competitiveness Report 2011

Punjab, Himachal Pradesh and Haryana rank among the top 10 States in a report titled Sustainable Competitiveness Report 2011 for Indian States, released by Marcus Potter, executive director, developing markets, RICS. The report shows the ranking of Indian States in terms of the sustainability of their growth story.

The States have been divided into three categories based on the density of population and Delhi tops the sustainable competitiveness index in the high density States. Goa and Sikkim top the list for the medium and low population density States, respectively.

When seen as an overall ranking, the top three winners are Goa, Delhi and Sikkim, followed by Punjab, Himachal Pradesh, Haryana, Mizoram, Kerala, Gujarat and Arunachal Pradesh.

Among the laggards, West Bengal, Bihar and Jharkhand fared the worst. Heavyweight States such as Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra and Uttar Pradesh showed disappointing results.

The States sustainability competitiveness is accessed on four basic pillars, which include social inclusion, environment and climate change, economic development and resource availability and utilisation.

When seen against individual ranking parameters or categories, Delhi and Goa top the national rankings across the economic development and resource availability and utilisation categories, respectively.

On environment and climate change, it is Arunachal Pradesh that tops the national rankings, though overall the State ranks number 10. Mizoram ranks as the number one State nationally on social inclusion.

The IFC-RICS Sustainability Competitiveness Report seeks to raise awareness and promote inclusive growth amongst cities.

Growth prospects for 2011-12 subdued: RBI

While retaining economic growth estimates for 2011-12 at eight per cent, the Reserve Bank of India (RBI) has cautioned about emerging downward risks emanating from the uncertain global environment and domestic inflationary pressures. The central bank also said global commodity prices would shape its monetary policy stance in the future.

In its annual report for 2010-11, RBI had retained its growth projection at eight per cent for 2011-12 in its first quarter review in July. Overall growth in 2010-11 is estimated at 8.5 per cent, and is likely to be higher after factoring in the new index of industrial production series.

“Downside risks to growth have increased since our assessment in July. The decline in global commodity prices has not been significant, and despite all the financial market turbulence, oil prices are back to earlier levels,” RBI Deputy Governor Subir Gokarn said.

On global factors, RBI said high oil and commodity prices, even after some correction, remains high and could adversely impact growth. The central bank also painted an uncertain picture of the industrial sector, where it saw downside risks outweighing upside ones. According to RBI, the downside risks arise from falling business confidence in the wake of global uncertainties, political factors and firm commodity prices amidst high inflation and a weak response of supply side factors.

On inflation, the central bank has maintained its earlier stance that a moderation in prices can only be expected by the end of 2011-12.  RBI expects inflation to come down to seven per cent by March 2012.

Draft guidelines for new bank licences

On August 29, 2011, the Reserve Bank of India released its much-awaited draft guidelines for new banking licences, with the basic message that it is looking for companies with diversified ownership and less exposure to risky business such as broking and real estate.

The guidelines had been under discussion for more than a year. These allow business houses with successful track record and a minimum capital of Rs 500 crore to set up commercial banks. The draft also spelt out the framework for converting non-banking financial companies into banks.

The RBI has suggested a 49% limit on foreign shareholding and a two-year deadline to list shares for new banks.

According to the draft, new banks’ total exposure to their founding groups should be limited to 20%, with the exposure to a single entity capped at 10%.

Activities such as real-estate and broking, “apart from being inherently riskier, represent a business model and business culture which are quiet misaligned with a banking model,” said the central bank, which has historically been cautious about opening up the sector to more players due its apprehensions on controlling bad loans.

These conditions may make it difficult for keen aspirants such as Religare Enterprises Ltd., Indiabulls Financial Services Ltd. and Reliance Capital Ltd. to qualify, analysts said.

Companies like Larsen & Toubro Ltd., Mahindra & Mahindra Financial Services Ltd., with a reasonably diversified shareholding, have a fair chance to gain banking licenses.

The last time India issued a banking license was in 2004, to Yes Bank Ltd.