Banking Awareness for Upcoming Exams Set 17(Certificate of Deposit)

This set contains banking awareness questions for various upcoming exams like SBI PO, IBPS PO, Clerk and insurance exams. This set contains questions from the topic: Certificates of Deposit(CD)

1. Which of the following cannot issue Certificate of Deposit (CD)?
   (i) Regional Rural Banks
   (ii) Local Area Banks
   (iii) All-India Financial Institutions (FIs)
   A) Only (i)
   B) Only (ii)
   C) Only (iii)
   D) Both (i) and (ii)
   
   View Answer

   Option D
   Explanation: CDs can be issued by (i) scheduled commercial banks {excluding Regional Rural Banks and Local Area Banks}; and (ii) select All-India Financial Institutions (FIs) that have been permitted by RBI
2. What is the minimum deposit under Certificate of Deposit (CD)?
   A) Rs 25,000
   B) Rs 50,000
   C) Rs 1,00,000
   D) Rs 2,00,000
   
   View Answer

   Option C
   Explanation: Minimum amount of a CD should be Rs.1 lakh, i.e., the minimum deposit that could be accepted from a single subscriber should not be less than Rs.1 lakh, and in multiples of Rs. 1 lakh thereafter.
3. What is the minimum maturity period of a CD issued by a bank?
   A) 7 days
   B) 14 days
   C) 30 days
   D) 1 year
   
   View Answer

   Option A
   Explanation: 7 days
4. What is the maximum maturity period of a CD issued by a bank?
   A) 1 year
   B) 2 year
   C) 3 year
   D) 4 year
   
   View Answer

   Option A
   Explanation: 1 year
5. What is the minimum maturity period of a CD issued by a Financial Institution?
   A) 7 days
   B) 14 days
   C) 30 days
   D) 1 year
   
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   Option D
   Explanation: 1 year
6. What is the maximum maturity period of a CD issued by a Financial Institution?
   A) 1 year
   B) 2 year
   C) 3 year
   D) 4 year
   
   View Answer

   Option C
   Explanation: 1-3 year
7. Identify the true statement.
   A) Banks / FIs cannot grant loans against CDs.
   B) CDs may be issued at a discount on face value.
   C) Banks / FIs are also allowed to issue CDs on floating rate basis.
   D) All are correct
   
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   Option D
   Explanation: All of the above three statements are true.
8. What is the maximum amount for which CDs can be issued?
   A) Rs 10,00,000
   B) Rs 15,00,000
   C) Rs 20,00,000
   D) No such limit
   
   View Answer

   Option D
   
9. Find the false statement.
   A) Non-Resident Indians (NRIs) may also subscribe to CDs
   B) A CD issued to NRI can be endorsed to another NRI in the secondary market.
   C) The FIs can issue CDs for a period not less than 1 year
   D) There is no lock-in period for the CDs.
   
   View Answer

   Option B
   Explanation: Such CDs cannot be endorsed to another NRI in the secondary market.
10. Which statement(s) is/are false
    (i) CDs are transferable.
    (ii) CDs issued to NRIs is repatriable
    (iii) Banks have to maintain CRR and SLR on the issue price of the CDs.
    A) Both (i) and (ii)
    B) Both (i) and (iii)
    C) Only (ii)
    D) Only (ii) and (iii)
    
    View Answer

    Option C
    Explanation: Non-Resident Indians (NRIs) may also subscribe to CDs, but only on non-repatriable basis