40 Common Bank Interview Questions with solutions Basic - Part 4 LAF-Repo-CRR-SLR-Deposite-Fiscal-Bicoin-Bank-PLR
For respective questions with solutions 1-10 , 11-20, 21-30, 31-40, 41-50 and 51-60 go through respect link.
31. What is LAF?
Liquidity Adjustment Facility (LAF) was introduced by RBI.
To ensure a smooth transition and keeping pace with technological up gradation.
32. What is a Repo Rate?
Repo rate is the rate at which our banks borrow rupees from RBI.
Whenever the banks have any shortage of funds they can borrow it from RBI.
A reduction in the repo rate will help banks to get money at a cheaper rate.
When the repo rate increases, borrowing from RBI becomes more expensive
33. What is Reverse Repo Rate?
This is the exact opposite of Repo rate.
Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks.
RBI uses this tool when it feels there is too much money floating in the banking system.
Banks are always happy to lend money to RBI since their money is in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive interest rates.
34. What is CRR Rate?
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method ( an increase of CRR rate), to drain out the excessive money from the banks.
35. What is Bank Rate?
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the bank rate are often used by central banks to control the money supply.
36. What is PLR?
The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). The rate is almost always the same amongst major banks. Adjustments to the prime rate are made by banks at the same time; although, the prime rate does not adjust on any regular basis. The Prime Rate is usually adjusted at the same time and in correlation to the adjustments of the Fed Funds Rate. The rates reported below are based upon the prime rates on the first day of each respective month. Some banks use the name "Reference Rate" or "Base Lending Rate" to refer to their Prime Lending Rate.
37. What is Bitcoin?
Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.
38. What is SLR Rate?
SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit. SLR is determined as the percentage of total demand and percentage of time liabilities. Time Liabilities are the liabilities a commercial bank liable to pay to the customers on their anytime demand. SLR is used to control inflation and propel growth.
Through SLR rate tuning, the money supply in the system can be controlled efficiently.
39. What is Deposit Rate?
Interest Rates paid by a depository institution on the cash on deposit.
40. What is Fiscal Policy?
Fiscal policy is the use of government spending and revenue collection to influence the economy. These policies affect tax rates, interest rates and government spending, in an effort to control the economy. Fiscal policy is an additional method to determine public revenue and public expenditure.