IBPS CLERK INTERVIEW PRACTICE -12 : RELATED TO BANKING

1 .What is Subsidy?

A subsidy is a form of financial assistance paid to a business or economic sector. Most subsidies

are made by the government to producers or distributors in an industry to prevent the decline of

that industry or an increase in the prices of its products or to encourage it to hire more labor.

2 What is Open Market operations(OMO)?

The buying and selling of government securities in the open market in order to expand or

contract the amount of money in the banking system by RBI. Open market operations are the

principal tools of monetary policy.

3. What is Micro Credit?

It is a term used to extend small loans to very poor people for self-employment projects that

generate income, allowing them to care for themselves and their families.

4. What is Liquidity Adjustment Facility(LAF)?

A tool used in monetary policy that allows banks to borrow money through repurchase

agreements. This arrangement allows banks to respond to liquidity pressures and is used by

governments to assure basic stability in the financial markets.

 5.What is RTGS System?

The acronym ‘RTGS’ stands for Real Time Gross Settlement. RTGS system is a funds transfer

mechanism where transfer of money takes place from one bank to another on a ‘real time’ and on

‘gross’ basis. This is the fastest possible money transfer system through the banking channel.

Settlement in ‘real time’ means payment transaction is not subjected to any waiting period. The

transactions are settled as soon as they are processed. ‘Gross settlement’ means the transaction is

settled on one to one basis without bunching with any other transaction.

6.What is Wholesale Price Index(WPI)?

The Wholesale Price Index (WPI) is the index used to measure the changes in the average price

level of goods traded in wholesale market. A total of 435 commodity prices make up the index. It

is available on a weekly basis. It is generally taken as an indicator of the inflation rate in the

Indian economy. The Indian Wholesale Price Index (WPI) was first published in 1902, and was

used by policy makers until it was replaced by the Producer Price Index (PPI) in 1978.

7. What is Consumer price Index(CPI)?

It is a measure estimating the average price of consumer goods and services purchased by

households.