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RBI Model test paper for 2020 Banking exam- save your lockdown period by practice sessions

RBI Model test paper (2018)

RBI Grade B, for Finance and Management model test paper is available for the aspirants of Banking exams preparing for 2020 Banking exams.Due to COVID-19, all the exams have either been pushed/extended or their dates have not been released yet. It is a good time for the students aspiring to crack these exams by practicing more and appearing on more mock teats and model papers.

You can refer to the below question paper set for RBI Grade B (Finance and Management Post).

QUESTION 1 (RBI exam pattern)
With reference to ‘Maslow’s Hierarchy of Needs Theory’ the Self-respect, achievement and autonomy
all are examples of:
a. Physiological factors
b. Internal esteem factors
c. Social factors
d. External esteem factors
e. None of the above
Correct Answer – Option b – Internal esteem factors.
Explanation – In the Maslow’s Hierarchy of Needs Theory, esteem need (self respect, achievement,
reputation, recognition and Attention) are classified in two categories, one is internal and other are
external – Internal are those which are related to self-esteem nature like self respect, autonomy etc.

QUESTION 2 (RBI exam pattern)
SIDBI was set up in ___ as a wholly owned subsidiary of_______
a. 1990 – IDBI
b. 1985 – EXlM
c. 1969 – RRBI
d. 1975 – IFCI
e. None of these
Correct answer – Options a – 1990 – IDBI
Explanation – SIDBI – Small Industrial development bank of India, is set-up in year 1990, by IDBI, with objective of aiming at need to Small enterprises.

QUESTION 3 (RBI exam pattern)
What is meant by 360 degree appraisal?
a. line manager rates subordinates simultaneously
b. person himself gives feed back
c. senior manager rates all line managers simultaneously
d. Where every employee rates another employee chosen at random
e. where feedback is obtained from peers, subordinates and supervisors
Correct Answer – Option e – where feedback is obtained from peers, subordinates and supervisors
Explanation – 360 name suggests, all the corners to whom person deals so it is a system if appraisal
where feedback from all the concerned – peers, subordinates and supervisor are obtained.

QUESTION 4 (RBI exam pattern)
Find the Current Account Deficit from the given information:
I) Imports of Visible Items are INR 2000 crore
II) Exports of Visible Items are INR 1000 crore
III) Deficit from Invisible Items are INR 700 crore
a. 1300 Crore
b. 300 Crore
c. 2300 Crore
d. 1700 Crore
e. None of these
Correct answer – Options d – 1700 Crore
Explanation –
Step 1 – Balance of Trade = Imports – Exports of Visible Items
2000 -1000 = INR 1000 Crore
Step 2 – Current Account Deficit = Balance of Trade – Balance of Services
1000-(-700) = INR 1700 Crore.

QUESTION 5 (RBI exam pattern)
Which of the following problems may result due to skill gaps?
a. Delays developing new products.
b. Increased business.
c. Poor customer service.
d. Quality issues.
e. None of these
Correct Answer – Option c – Poor customer service.
Explanation – Delays developing new products require R&D rather skill, Increased business require
resources rather skills, Quality issues are matters of technical conformity to production standard. But
customer service are interpersonal in nature and required certain individual skills hence due skill gap
problem of poor customer service can be arises. Option e not applies.

QUESTION 6 (RBI exam pattern)
Registration under GST is required, if turn over in previous year exceeds INR
a. 12 lakhs
b. 20 lakhs
c. 5 lakhs
d. 50 lakhs
e. 75 lakhs
Correct answer – Options b – 20 lakhs
Explanation – As per section 22(1) limit of INR 20 lakhs is provided for compulsory registration,
However 11 states are specified under article 279A (4) (g), where such limit is 10 lakhs

QUESTION 7 (RBI exam pattern)
Using the rule of 144 in how many years INR 10000 will be 40000 @ 6% p.a.
a. 24
b. 20
c. 28
d. 12
e. 18
Correct answer – Options a – 24 years
Explanation – 144/6=24, it will take 24 years The “Rule of 144” is a simplified way to determine
how long an investment will take to be 4 times, given a fixed annual rate of interest. This is not
exact time, this rule provide only rough estimate.

QUESTION 8 (RBI exam pattern)
Incremental changes are ____________.
a. more dramatic than radical change
b. less dramatic than radical change
c. infrequently encountered
d. usually very expensive
e. None of above.
Correct Answer – Option b – less dramatic than radical change
Explanation – In Incremental changes, changes are launched in step-to-step basis (phased
implementation) rather in one go (big bang or radical change)

QUESTION 9 (RBI exam pattern)
You have opted in a SIP that invests INR500 at the end of first year, INR1000 at the end of
2 year and INR1500 at the end of 3rd year. calculate what amount you will get at the end of
3 year if the rate of return is 6% per annum.
a. 3212.8
b. 3012.8
c. 3112.8
d. 3221.8                                                                                                                                                                    e. 3121.8
Correct answer – Options e – INR 3121.8
Explanation – INR 500 is invested only for 2 years, INR 1000 is invested for one year and INR
1500 is invested for 0 year Therefore, the amount that you will get is
500(1+0.06)2 +1000(1+0.06)1+1500(1+0.06)0561.8+1060+1500
INR 3121.8

QUESTION 10 (RBI exam pattern)
Which of the following are the primary functions of all organizations?
a. operations, marketing, and quality
b. sales, quality control, and operation
c. advertising, human resources, and finance/accounting
d. marketing, operations, and finance/accounting
e. none of the above
Correct Answer – Option d – marketing, operations, and finance/accounting
Explanation – Marketing, Operation/Production and Finance/Accounting are considered as primary
function of all organisations, because without these organisation can’t function, even it is fully
automated, operates in goods or services.

QUESTION 11 (RBI exam pattern)
Financial information related to the year ended 31st march 2018.
Sales Rs. 80,00000
Return on net worth 25%
Rate of income tax 50%
Net Profit to sales ratio 6.25%
Cost of goods sold Rs.20,00,000
Interest on Debentures Rs. 50000

What will be operating expenses and Profit before Interest and Tax for the year 31st march,
a. 51,30,000 & 10,70,000
b. 10,00,000 & 52,40,000
c. 10,50,000 & 49,50,000
d. 10,50,000 & 60,00,000
e. 11,70,000 & 52,30,000
Correct answer – Options e – 13.45%
Net Profit (6.25% of sales) 500000
Add Income tax @ 50% 500000
Profit Before tax 1000000
Interest on debenture 50000
Profit Before Interest and Tax 1050000
Operating Expense = Sale – (Cost of goods sold + Profit Before Interest and Tax)
8000000-(2000000+1050000) = 4950000

QUESTION 12 (RBI exam pattern)
Which of the following is/are the internal stakeholder group
a. Debt holders
b. Customers
c. Shareholder
d. Suppliers
e. a & c only
Correct Answer – Option c – Shareholder
Explanation – Stake holders are those who can make impact over business and business can have
impact upon then. They are classified in three categories namely internal, connected and external.
Shareholders are only internal stakeholder group among given option. Debenture holder are not real
owner, may be consider as connected but not internal.

QUESTION 13 (RBI exam pattern)
Good luck company produce 1 million units of toys. The annual fixed cost is INR 0.5 million. The per
unit variable cost INR 3. Selling price is 50% above unit variable cost.
What is the degree of operating leverage?
a. 1.3
b. 1.4
c. 1.5
d. 1.6
e. 1.7
Correct answer – Options e – All of the above
Explanation – Degree of operating leverage = Contribution/EBIT (risk due to fixed cost – committed
(No. of Units) * (SP – VC)/[(No. of Units)(SP – VC) – FC]
(1000000) * (3 * 1.5-3)/[(1000000) * (3 * 1.5-3) – 5000000] = 1.5 times

QUESTION 14 (RBI exam pattern)
As per RBI benchmark for allocation of bank credit, women beneficiaries should receive at least ____%
of net bank credit.
a. 2
b. 5
c. 10
d. 8
e. 1
Correct answer – Options b – 5%
Explanation – As per RBI benchmark for allocation of bank credit, certain sector or group are
notified to ensure minimum benefits – like minimum credit/advance for primary sector are
reserved. Similar way minimum credit for woman are reserved at 5%

QUESTION 15 (RBI exam pattern)
Which one of the following is a role of board of director?
a. To define vision mission and values of the company and make necessary changes, as and when
b. To ensure effective communication with the stake holders and monitor the relationship with
c. To give ultimate direction to the company.
d. To safe-gaurd asset of company
e. All of the above
Correct Answer – Option e – All of the above
Explanation – Board of directors are responsible for overall management of company with all
respects. They act as agent of shareholder but for all the stakeholders.

QUESTION 16 (RBI exam pattern)
Which is/are solvency ratios out of following
a. Gearing ratio
b. Current ratio
c. Capital Adequacy ratio
d. Interest coverage ratio
e. None of these
Correct answer – Options b – Current Ratio
Explanation – Current ratio measures the Relation between Current asset and Current
Liabilities, (Current Asset/Current Liability = how many times we can meet our current
liabilities) hence tell about cover of current asset over current liabilities means solvency.

QUESTION 17 (RBI exam pattern)
Find the YTM on the bond which pays an annual interest of 12% and has been bought at INR
50 discount. The face value of the bond is INR 1000 and it matures in 5 years.
a. 12.45 %
b. 12.85 %
c. 13.85 %
d. 14.45 %
e. 13.45 %
Correct answer – Options e – 13.45%
F = Face value = 1000
P = Market Price/Discounted Price = 1000 – 50 = 950
I = Annual interest = 12% of 1000 = 120
n = Years to maturity = 5
YTM = [I +(F-P)/n]/[(F+P)/2] = (120+50/5)/(1950/2) = 131/975 = 13.44% say 13.45%

QUESTION 18 (RBI exam pattern)
In ________, bonus paid to a worker is equal to 50% of time saved multiplied by rate per hour.
a. Hasley Plan
b. Bedaux Plan
c. Barth Scheme
d. Rowan Plan
e. None of these
Correct Answer – Option a – Hasley Plan
Explanation – Hasley plan suggest share of benefit of time saved among worker and organisation.
Such share ratio is 50:50.

QUESTION 19 (RBI exam pattern)
What do you understand by the term insider trading?
a. is the voluntary release of non public information , as a moral protest , by a member or former
member of an organization outside the normal channels of communication to an appropriate
audience about illegal and /or immoral conduct in the organization .
b. opinion on the future ability of the issue of a specific fixed income securities to make timely
payments on principles and interest thereon
c. is an illegal practice of buying and selling shares of corporate securities based on fiduciary
information, which known only to small group of persons, such as executive and their friends
d. is trading of shares of company by person who is on roll employee of company
e. none of these
Correct Answer – Option c – is an illegal practice of buying and selling shares of corporate securities
based on fiduciary information, which known only to small group of persons, such as executive and
their friends
Explanation – It is criminal activity under SEBI Act 1992 and Companies Act 2013. Person is insider,
having price sensitive information, dealing in securities of company, either for himself for other, using
such information, for making any kind of gain.

QUESTION 20 (RBI exam pattern)
NABARD has been established on the recommendation of
a. Talwar committee
b. Tandon committee
c. Narasimhan Committee
d. Shivaraman committee
e. None of these
Correct answer – Options d – Shivaraman committee
Explanation – NABARD was established on the recommendations of B. Shivaraman Committee,
on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act
1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell
(RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation

QUESTION 21 (RBI exam pattern)
Which of the following are to be followed by Commercial Banks for risk management?
a. Basel II norms
b. Basel III norms
c. Basel I norms
d. Solvency II norms
e. Solvency I norms
Correct answer – Options a – Basel II norms
Explanation – The Basel II Accord was published initially in June 2004 and was intended to amend
international banking standards that controlled how much capital banks were required to hold to
guard against the financial and operational risks banks face.

QUESTION 22 (RBI exam pattern)
According to Census on Foreign Liabilities and Assets of Indian Direct Investment Companies 2016-17
released by RBI _____________ was the largest source of FDI in India.
a. USA
b. Singapore
c. UK
d. Mauritius
e. None of these
Correct Answer – Option d – Mauritius
Explanation – Mauritius was largest source of FDI in India (21.8% share at market value) followed by
USA, UK, Singapore and Japan.

QUESTION 23 (RBI exam pattern)
‘Veblen effect’ can be defined as practice of giving everyone
a. Random ratings.
b. Average ratings.
c. Low ratings.
d. High ratings.
e. None of these
Correct Answer – Option b – Average ratings.
Explanation – Veblen effect works on the basis of central tendency, means assigning the same
number without considering the individual characteristics of person/article under consideration.

QUESTION 24 (RBI exam pattern)
Contextual leadership ____________.
a. Static approach of leading – believe business environment is not dynamic at all
b. Believe leader and manger are same
c. Assumes decreasing complexity up in the organization
d. Defined plan need to be followed by leader, no need to change their response
e. stresses that, a leader’s responsiveness to the evolving trends
Correct Answer – Option e – stresses that, a leader’s responsiveness to the evolving trends
Explanation – Anthony Mayo and Nitin Nohria explains Contextual Leadership as intelligence to
understand an evolving (changing) environment, and making gain by responding to those evolving

QUESTION 25 (RBI exam pattern)
Which of the following are quantitative control methods
a. Bank rate
b. CRR
c. Statutory Liquidity ratio
d. Open market operations
e. All of the above
Correct answer – Options e – All of the above
Explanation – Quantitative measure are those, which are relates to rate and ratios all the options
are relates to quantitative measures.

QUESTION 26 (RBI exam pattern)
Theory Y given by Douglas McGregor’s rest on the belief that managers would assume that
employees would:
a. Dislike work
b. Need to be controlled
c. Exercise self direction
d. Avoid responsibility
e. It not related to employee at all
Correct Answer – Option c – Exercise self direction.
Explanation – There are two theories given by Douglas McGregor’s, named Theory X and Theory Y for
leader on nature of worker. Theory Y believes that people in the workforce are internally motivated
and self directed and self controlled. Whereas Theory X is based on presumption that typical worker
are pessimistic.

QUESTION 27 (RBI exam pattern)
The National Housing Bank (NHB) was set up in India as a wholly-owned subsidiary of
a. Reserve Bank of India
c. State Bank of India
d. ICICI Bank
e. None of the above
Correct answer – Options a – Reserve Bank of India
Explanation – National Housing Bank, a wholly owned subsidiary of Reserve Bank of India, was set
up on 9 July 1988 under the National Housing Bank Act, 1987.

QUESTION 28 (RBI exam pattern)
Which of the following connect all business functions and become the basis for all managerial
a. Marketing
b. Technology
c. Leadership
d. motivation
e. Information
Correct Answer – Option e – Information
Explanation – Information communicated is the basis of all decisions and bring all business function in
alignment to each other.

QUESTION 29 (RBI exam pattern)
_________________is popular, internet based modern means of communication.
a. Tele-call
b. Fax
c. Electronic mail
d. letter
e. None of these
Correct Answer – Option c – Electronic mail
Explanation – E-mail is most commonly used internet based mode of communication, in rest of option
it is either personnel delivery or telecommunication channel

QUESTION 30 (RBI exam pattern)
Retail Banking means
a. Credit facilities extended to retail traders
b. Providing personal banking services directly to the consumers
c. Collection of large number of dividend/interest warrants
d. Both of a and b
e. All of the above
Correct answer – Options b – Providing personal banking services directly to the consumers
Explanation – Retail banking, also known as consumer banking, is the provision of services by a bank
to the general public, rather than to companies, corporations or other banks, which are often
described as wholesale banking.

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