Unit 2: Bank deposit accounts - Practice Quiz

1 A bank deposit is best described as money placed with a bank by a customer for which the bank is:

2 In a bank deposit relationship, the bank is the __ and the customer is the __.

3 Deposits are a major source of __ for a commercial bank.

4 Which type of deposit account is primarily meant for frequent business transactions and generally earns no interest?

5 A deposit account where a fixed sum is invested for a specific period at a fixed interest rate is called a:

6 In which account does a customer deposit a fixed amount every month for a set period?

7 Savings and current accounts together are commonly classified as:

8 Fixed deposits and recurring deposits are examples of:

9 Which of the following is a common strategy used by banks to mobilize deposits?

10 Expanding branch networks and ATMs helps a bank to:

11 Running special deposit campaigns and schemes during festivals is a strategy aimed at:

12 Which process must a bank complete to verify a customer's identity before opening a deposit account?

13 Which document is commonly accepted as proof of identity when opening a deposit account in India?

14 A customer who introduces another person to open an account is generally referred to as the:

15 The facility that allows a depositor to name a person to receive the deposit amount after the depositor's death is called:

16 Which of the following is a deposit-related service offered by banks?

17 A sweep-in facility links a savings account to a fixed deposit mainly to:

18 An NRE account held by a Non-Resident Indian is maintained in:

19 The NRE account for Non-Resident Indians stands for:

20 In India, deposit insurance for bank depositors is provided by:

21 A bank accepts deposits from the public and uses a large portion of these funds to lend to borrowers. From the bank's balance sheet perspective, how are customer deposits classified?

22 Which characteristic best explains why deposits are the primary source of funds for a commercial bank?

23 A customer wants an account that pays higher interest but allows withdrawals only after a fixed period, forfeiting some interest for premature withdrawal. Which account suits this need?

24 A business firm expects numerous daily transactions and does not require interest on its balance. Which account is most appropriate?

25 A salaried person deposits a fixed sum every month to build a lump sum over time while earning term-deposit-like interest. This describes which account?

26 Both current accounts and savings accounts allow withdrawal on demand. What is the key difference between them?

27 A bank launches an advertising campaign and offers attractive interest rates on a new deposit scheme during a festival. This is an example of which deposit mobilization strategy?

28 A bank opens branches in rural and semi-urban areas and introduces mobile banking vans. Which deposit mobilization objective does this primarily serve?

29 Which of the following is a service-quality based strategy for mobilizing deposits rather than a price-based one?

30 Before opening any deposit account, a bank must verify the identity and address of the customer. This requirement is governed by which norm?

31 A customer wants to ensure that on their death, the account proceeds pass directly to a specified person without legal complications. Which facility should the customer use?

32 A joint account is opened with the operating instruction "Either or Survivor". What does this mean during the lifetime of both holders?

33 A minor aged 8 years wishes to have a bank account. Under common guidelines, how is this typically handled?

34 A customer instructs the bank to automatically transfer a fixed amount to a loan account on the 5th of every month. This facility is called a:

35 A customer has lost a cheque already issued to a payee and wants the bank to refuse its payment. Which service should the customer invoke?

36 An auto-sweep facility linked to a savings account primarily benefits the customer by:

37 An NRI wants to maintain earnings from abroad in a rupee account that is fully repatriable, including both principal and interest. Which account is appropriate?

38 An NRI earns rent and dividends within India and needs an account to manage this local income. Which account is designed for this purpose?

39 An NRI wishes to hold a term deposit in foreign currency to avoid exchange-rate risk on the deposit. Which account should be chosen?

40 In India, deposit insurance for bank depositors is provided by which institution?

41 A customer holds the following deposits in a single bank: in a sole savings account, as the first holder in a joint account with a spouse, and held as a partner in a partnership firm. Under DICGC rules, what is the maximum insured amount?

42 DICGC coverage of per depositor per bank includes which combination?

43 A depositor places in a recurring deposit of per month for 20 months. Comparing this to a lump-sum fixed deposit of for the same tenure at the same rate, which statement is most accurate?

44 An NRI wants a rupee account where the principal and interest are fully repatriable and the interest is exempt from Indian income tax. Which account meets both conditions?

45 An NRI holds an FCNR(B) deposit in USD. Upon maturity, if the rupee has depreciated significantly against the dollar, what is the key implication?

46 Under KYC norms, a bank classifies a customer as 'high risk'. What is the most appropriate operational consequence?

47 A savings account remains without any customer-induced transaction for 24 months. Which classification and consequence applies under RBI guidelines?

48 A bank facing a high cost of funds wants to shift its deposit mix toward a higher CASA ratio. Which strategy most directly supports this objective?

49 Which approach best illustrates a relationship-based (rather than price-based) deposit mobilization strategy?

50 A customer sets up a standing instruction to sweep surplus funds from savings into a fixed deposit above a threshold, with automatic reverse-sweep when the balance falls short. This arrangement is known as:

51 A premature withdrawal is made from a fixed deposit. The bank applies a penalty by reducing the applicable interest rate. Which rate is typically applied?

52 A current account typically differs from a savings account primarily because:

53 From an accounting standpoint, why are customer deposits recorded as liabilities on a bank's balance sheet?

54 In the context of a bank's funding, 'demand deposits' are considered the cheapest yet most volatile source. Why volatile?

55 Which of the following deposits is excluded from DICGC insurance coverage?

56 A joint savings account is opened with the mandate 'Either or Survivor'. One holder dies. What is the correct consequence?

57 A certificate of deposit (CD) issued by a bank differs from a regular fixed deposit mainly because a CD:

58 A returning NRI becomes a resident. What must happen to the existing NRE term deposit?

59 A bank launches a 'financial inclusion' deposit drive in rural areas using business correspondents and zero-balance accounts. The primary strategic rationale is to:

60 A nomination facility on a deposit account primarily serves to: