About this quiz
20 questions covering every section of the note.
This Lok Sewa practice set has 20 multiple-choice questions (Subject: Banking and Finance · For: Kharidar, Nayab Subba, Section Officer · Level: Easy). Take the quiz above first; after that, use the study list below to revise every question with its correct answer and a short explanation.
Study list: all 20 questions with answers and explanations
Which law governs banks and financial institutions in Nepal?
- A) BAFIA 2073 ✔
- B) Company Act 2063
- C) NRB Act 2012
- D) Cooperative Act 2074
Why: Banks and financial institutions in Nepal are governed by the Bank and Financial Institutions Act (BAFIA), 2073.
Class A institutions are:
- A) Development banks
- B) Commercial banks ✔
- C) Finance companies
- D) Microfinance
Why: Class A institutions are commercial banks.
Class B institutions are:
- A) Commercial banks
- B) Development banks ✔
- C) Microfinance
- D) Insurance
Why: Class B institutions are development banks.
Class C institutions are:
- A) Finance companies ✔
- B) Commercial banks
- C) Cooperatives
- D) Microfinance
Why: Class C institutions are finance companies.
Class D institutions are:
- A) Microfinance financial institutions ✔
- B) Commercial banks
- C) Development banks
- D) Finance companies
Why: Class D institutions are microfinance financial institutions.
The minimum paid-up capital of a national-level commercial bank is:
- A) Rs 2 billion
- B) Rs 5 billion
- C) Rs 8 billion ✔
- D) Rs 10 billion
Why: Nepal Rastra Bank requires a national-level commercial bank to have at least Rs 8 billion paid-up capital.
Which was the first joint-venture commercial bank of Nepal?
- A) Himalayan Bank
- B) Nabil Bank ✔
- C) Standard Chartered
- D) Everest Bank
Why: Nabil Bank (1984, first as Nepal Arab Bank) was Nepal's first joint-venture commercial bank.
Rastriya Banijya Bank was established in:
- A) 1994 BS
- B) 2013 BS
- C) 2022 BS ✔
- D) 2041 BS
Why: Rastriya Banijya Bank was established in 2022 BS (1966 AD) as a fully government-owned commercial bank.
Agricultural Development Bank was established in:
- A) 2016 BS
- B) 2024 BS ✔
- C) 2030 BS
- D) 2041 BS
Why: Agricultural Development Bank was established in 2024 BS (1968 AD) to finance agriculture.
Which account is mainly for businesses with unlimited transactions?
- A) Saving
- B) Current ✔
- C) Fixed
- D) Recurring
Why: A current account is mainly for businesses: it allows unlimited deposits and withdrawals but usually pays no interest.
Which deposit usually gives the highest interest?
- A) Current
- B) Saving
- C) Fixed deposit ✔
- D) Call deposit
Why: A fixed deposit locks money for a set period, so it usually earns the highest interest.
Microfinance mainly lends to:
- A) Large industries
- B) Low-income people, mostly women ✔
- C) Foreign companies
- D) Government
Why: Microfinance gives small loans mainly to low-income people, most of them women, often without collateral.
CRR is the share of deposits banks must keep:
- A) With NRB as cash ✔
- B) In shares
- C) As loans
- D) In gold
Why: The Cash Reserve Ratio (CRR) is the share of deposits banks must keep as cash with Nepal Rastra Bank.
The difference between lending and deposit rates is called:
- A) Base rate
- B) Interest spread ✔
- C) CRR
- D) Inflation
Why: The gap between the lending rate and the deposit rate is the interest spread.
A loan not repaid on time is called:
- A) Collateral
- B) NPL ✔
- C) SLR
- D) Equity
Why: A loan not repaid on time is a non-performing loan (NPL).
Which body blacklists willful loan defaulters?
- A) Credit Information Bureau ✔
- B) NEPSE
- C) SEBON
- D) Insurance Board
Why: The Credit Information Bureau keeps borrowers' credit records and blacklists willful defaulters.
Negotiable instruments in Nepal are governed by the:
- A) Negotiable Instruments Act 2034 ✔
- B) Contract Act 2056
- C) Company Act 2063
- D) Banking Offence Act 2064
Why: Cheques, promissory notes and bills of exchange are governed by the Negotiable Instruments Act, 2034.
A crossed cheque can be:
- A) Paid in cash at the counter
- B) Paid only into a bank account ✔
- C) Used as currency
- D) Never cashed
Why: A crossed cheque can only be paid into a bank account, not as cash at the counter, which makes it safer.
A written promise to pay a sum to a person is a:
- A) Cheque
- B) Promissory note ✔
- C) Bill of exchange
- D) Draft
Why: A promissory note is a written promise by one person to pay a sum to another.
KYC in banking stands for:
- A) Know Your Customer ✔
- B) Keep Your Cash
- C) Key Yield Credit
- D) Know Your Credit
Why: KYC means Know Your Customer: banks must verify customers' identity to prevent fraud and money laundering.