Money and Functions MCQ Quiz - Objective Question with Answer for Money and Functions - Download Free PDF

The correct answer is Finance Ministry.

Key Points

• The Ministry of Finance is responsible for producing the one rupee note and coins.
• The Reserve Bank of India has exclusive jurisdiction to issue currency notes of various denominations, with the exception of notes of one rupee, according to Section 22 of the Reserve Bank of India Act.
• The one rupee note and coins, which include the Finance Secretary's signature, are distributed by the Ministry of Finance.

Additional Information

• Imperial Bank Of India:
  • On January 27, 1921, the Imperial Bank of India was founded.
  • Bengal, Bombay, and Madras presidency banks have been combined into this bank.
  • With India's independence, it changed its name to the State Bank of India.
• Industrial Finance Corporation of India:
  • In 1948, IFCI Ltd was established as a Statutory Company with the goal of offering industry medium- and long-term financing.
  • After the Industrial Finance Corporation Act was repealed in 1993, IFCI was incorporated as a public limited company and registered under the Companies Act of 1956.
  • IFCI is listed as a Systemically Important Non-Deposit Taking Non-Banking Financial Corporation with the Reserve Bank of India (RBI). 
• Central Bank of India:
  • An Indian public sector bank with its headquarters in Mumbai is the Central Bank of India.
  • The Banking Companies (Acquisition & Transfer of Undertakings) Act of 1970 founded it.

The correct answer is option 3.

Key Points

Neo Banks:

• A neobank is a kind of digital bank without any branches.
• Rather than being physically present at a specific location, neobanking is entirely online.
• Neobanks are financial institutions that give customers a cheaper alternative to traditional banks.
• They leverage technology and artificial intelligence to offer personalized services to customers while minimizing operating costs.
• Neobanks entered the financial system with the tag of 'challenger banks' because they challenged the complex infrastructure and client onboarding process of traditional banks.
• In India, these firms don't have a bank license of their own but rely on bank partners to offer licensed services.
  • That’s because the RBI doesn’t allow banks to be 100% digital yet.
  • The RBI remains resolute in prioritizing banks’ physical presence and has spoken about the need for digital banking service providers to have some physical presence as well.
• RazorpayX, Jupiter, Niyo, Open, etc are examples of top Neobanks of India.

Operating Models of Neobanks:

• Non-licensed FinTech (Financial Technology) firms that collaborate with conventional banks to have a mobile/Web platform and a wrapper around their partner banks’ products.
• Traditional banks that are undertaking their digital initiatives.
• Licensed neobanks (usually with digital banking licenses in those countries that allow it).

The correct answer is Tobin tax.Key Points

1. The Tobin tax is a tax levied on spot currency conversions, with the intention of disincentivizing short-term currency speculation, named after economist James Tobin. 
2. It is more formally known today as a Financial Transactions Tax (FTT), or less formally a Robin Hood tax.
3. It is more formally known today as a Financial Transactions Tax (FTT), or less formally a Robin Hood tax.
4. The Tobin tax is a duty proposed on spot currency trades to penalize short-term currency trading in order to stabilize markets and disincentive speculation.
5. The Tobin tax can be used to generate revenue streams for countries that see a great deal of short-term currency movement. 

1. The Tobin tax is sometimes referred to as the Robin Hood tax, as many see it as a way for governments to take small amounts of money from the people making large, short-term currency exchanges.
2. When fixed exchange rates under the Breton Woods system were replaced with flexible exchange rates in 1971, there was a massive movement of funds between different currencies that threatened to destabilize the economy.
3. In addition, the rise in short-term currency speculation encouraged by the nature of the free currency market increased the economic costs incurred by countries exchanging currencies.
4. The Tobin tax, proposed by James Tobin in 1972, seeks to mitigate or eliminate these issues. 

1. The currency transactions tax does not impact long-term investments. 
2. It is only imposed on the excessive flow of money that moves regularly between financial markets through the actions of speculators in search of high short-term interest rates.
3. The tax is paid by banks and financial institutions that profit from market volatility by taking excessive short-term speculative positions in the currency markets.
4. According to Tobin, to work effectively such a tax should be adopted internationally and be uniform, and the proceeds donated to developing countries.
5.  Although Tobin suggested a rate of 0.5%, other economists have put forward rates ranging from 0.1% to 1%.

The correct answer is Rs. 200.

Key Points

• Sanchi Stupa has been designed on the page side of Rs. 200 Indian bank notes.
• The Sanchi Stupa motif is a feature in the new Rs 200 note.
  • ​Sanchi is a Buddhist complex, famous for its Great Stupa, on a hilltop at Sanchi Town in Raisen District of the State of Madhya Pradesh.
  • The Great Stupa at Sanchi is one of the oldest stone structures in India and was originally commissioned by the emperor Ashoka in the 3rd century BCE.
  • Sanchi was also her birthplace as well as the venue of her and Ashoka's wedding.

Additional Information

• Rs 50 note is fluorescent blue in colour.
  • The note has geometric patterns on both sides and is comparatively smaller in size.
  • On the reverse Rs, 50 note has the ‘Hampi with Chariot’ motif at the back.
• Rs 500:
  • The new note has shades of green and is smaller in size as compared to the note of the previous series.
  • The figure on the note is written in Devnagri.
  • On the reverse side of Rs 500 note is the image of the historical Red Fort building.
• Rs 2,000:
  • ​The new Rs 2,000 note is pink in colour, is slightly bigger than Rs 500 note.
  • Both the Rs 500 and Rs 2,000 note has the Swachh Bharat logo on the note.
  • The Reverse side of Rs 2000 note has an image of Mangalyaan representing India's first interplanetary space mission.

The correct answer is has no intrinsic value.

 Key Points

• Fiat money is a government-issued currency that is not backed by a commodity such as gold.
• Fiat money gives central banks greater control over the economy because they can control how much money is printed.
• Most modern paper currencies, such as the U.S. dollar, the British Pound, the euro, the Indian Rupee etc., are fiat currencies.
• One danger of fiat money is that governments can print too much of it, resulting in hyperinflation. 

The correct answer is Custom duties.

Important Points

• The tax imposed on the import and export of commodities is called Custom duties.
• This is a form of foreign trade control and a policy that taxes foreign goods to encourage or protect domestic industry.
• Tariffs may be set (a constant sum per unit of imported goods or a percentage of the price) or variable (the amount varies by price). Import taxation means that consumers are less likely to purchase them because they are more costly.
• An excise tax is an indirect tax on the sale of a particular good or service charged by the Government.
• A VAT (Value-added tax) is a consumption tax that is imposed on a product whenever a value is added at each stage of the supply chain, from production to point of sale.
• Goods and Services Tax(GST) is an Indirect tax on the purchase of goods and services used in India.

The correct answer is Ellora Caves.

Key Points

• In April 2019, RBI issued new Rs. 20 currency notes in the Mahatma Gandhi (New) series. 
• The new Rs 20 notes have the signature of the Reserve Bank's Governor.
• The base colour of the new note is Greenish Yellow.
• The new (Rs 20) denomination has the motif of Ellora Caves on the reverse side of the note.
• The dimension of the banknote will be 63 mm x 129 mm.

Additional Information

The correct answer is Sanchi Stupa.

Key Points 

• Rs 200 note
  • The motif of the new denomination Rs. 200 is Sanchi Stupa on the reverse and its colour is Bright Yellow.
  • The dimension of the banknote is 66 mm*146 mm.
  • It is released on 25 August 2017.
  • The obverse design is of Mahatma Gandhi.
• The Reserve Bank of India has the sole authority to issue banknotes in India except for the one-rupee note which is released by the Ministry of Finance.
• The Government of India is the issuing authority of coins and supplies coins to the Reserve Bank on demand.
• Along with new 200 Rs. note Rs. 2000, 500, 200, 100, 50, 20,10 banknotes were also released.

Additional Information 

The correct answer is fluorescent blue. Key Points

• The Rs. 50 banknote of the Mahatma Gandhi (New) series has a base color of fluorescent blue.
• It is part of the new series of Indian currency notes introduced by the Reserve Bank of India (RBI).
• The color fluorescent blue is chosen to enhance the security features of the banknote and make it more difficult to counterfeit.
• The reverse of the new 50 rupee banknote in the Mahatma Gandhi (New) series has a motif of the Hampi with Chariot.
• Hampi is an ancient city located in the state of Karnataka, India. It is a UNESCO World Heritage Site and was once the capital of the Vijayanagara Empire.

Important PointsOther notes of Indian Currency-

The correct answer is FII.

Key Points

• Foreign Institutional Investor (FII) is known as Hot money.
• FII is an investor or investment body that is present outside the country.
• Hot Money refers to funds that are controlled by investors who actively seek short-term returns.

Additional Information 

• Foreign direct investment (FDI): 
  • FDI is an investment in the form of controlling ownership in a business in one country by an entity based in another country. 
• ​American Depositary Receipts (ADR): 
  • ADRs are a type of stock that allows US people to invest in non-US corporations and receive dividends in US dollars.
• Global Depositary Receipts (GDR): 
  • GDRs are like ADRs except for the fact that it is listed on an exchange outside the United States and help the issuer raise funds simultaneously in different markets like Luxembourg or London.

• The question asks about Language Panel and NOT the whole note.

Key Points

• Contemporary Currency notes have 15 languages on the panel which appears on the reverse of the note.
• Source - https://www.rbi.org.in/scripts/ic_languagepanel.aspx
• Languages included on the panel are Assamese, Bengali, Gujarati, Kannada, Kashmiri, Konkani, Malayalam, Marathi, Nepali, Odia, Punjabi, Sanskrit, Tamil, Telugu, and Urdu.
• The Reserve Bank has the sole authority to issue banknotes in India.
• Reserve Bank, like other central banks the world over, changes the design of banknotes from time to time.
• The Reserve Bank has introduced banknotes in the Mahatma Gandhi Series since 1996 and has so far issued notes in the denominations of Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.2000 in this series.
• Source - Here

The correct answer is Mangalayan.

Key Points

• India witnessed the second major monetary reform in November 2016 when it withdrew the legal tender status of ₹ 500 and ₹ 1,000 denominations of banknotes of the Mahatma Gandhi Series.
• It was issued by the Reserve Bank of India on November 8, 2016.
• The new banknotes were introduced in the Mahatma Gandhi (New) Series, highlighting the cultural heritage and scientific achievements of the country.
• Distinct colours were used for the different denominations and size was reduced.
• Two new denominations viz. ₹ 2000 on November 08, 2016, and ₹ 200 on August 23, 2017, were introduced in the Mahatma Gandhi (New) Series.
• Rupees Two Thousand Size: 66 x 166 mm
• Motifs: Mangalayam

Additional Information

The correct answer is Finance Secretary.

• Finance Secretary's signature is on the one rupee note.

Key Points

• Under Section 22 of the Reserve Bank of India Act, RBI has the sole right to issue currency notes of various denominations except one rupee note.
• The One Rupee note is issued by the Ministry of Finance and it bears the signatures of the Finance Secretary.
• While other notes bear the signature of Governor RBI.​

Additional Information

• T. V. Somanathan is a 1987 batch Indian Administrative Service officer belonging to the Tamil Nadu cadre.
  • He is presently the Finance Secretary of India.
• Sanjay Malhotra​ is the current Governor of the Reserve Bank of India.
• The current Finance Minister of India is Nirmala Sitharaman.
• The current Prime Minister is Narendra Modi.

The correct answer is Nepali. 

Important Points

• Nepali is one of the languages in which the denomination is printed on the reverse of a contemporary Indian currency note.
• The currency of Nepal is Nepalese rupee.
• There are 17 languages written on the Currency Note.
• 2 languages (Hindi and English) are written on the front side and 15 on the backside (Assamese, Bengali, Gujarati, Kannada, Kashmiri, Konkani, Malayalam, Marathi, Nepali, Odia, Punjabi, Sanskrit, Tamil, Telugu, Urdu).
• Contemporary Indian currency notes have 15 languages on the panel which appears on the reverse of the note.

The correct answer is M3