Chapter 42: Essentials of Bank Computerisation (JAIIB – Paper 2)

1. What was the primary objective behind computerisation of banks in India?

• A. Improve efficiency and customer service
• B. Reduce staff strength
• C. Eliminate physical branches
• D. Increase foreign investment

The main purpose of bank computerisation was to improve efficiency, accuracy, speed of transactions, and provide better customer service.

2. Which committee first recommended computerisation of banks in India?

• A. Narasimham Committee
• B. Malegam Committee
• C. Kelkar Committee
• D. Rangarajan Committee

The Rangarajan Committee (1984, later 1988) recommended phased computerisation of Indian banks to enhance operational efficiency and meet growing banking needs.

3. In Core Banking Solutions (CBS), which facility enables a customer to operate their account from any branch of the bank?

• A. Internet Banking
• B. ATM facility
• C. Anywhere Banking
• D. Digital Wallet

CBS enables "Anywhere Banking" where customer accounts are centralised and can be accessed from any branch of the bank.

4. A bank officer needs to generate a MIS (Management Information System) report instantly. Which feature of computerisation supports this?

• A. Manual record keeping
• B. Real-time processing of data
• C. Batch processing at month-end
• D. Filing physical ledgers

Real-time data processing in computerised systems allows instant generation of MIS reports, helping in decision making and monitoring.

5. Which of the following was the first stage of bank computerisation in India?

• A. Core Banking Solutions (CBS)
• B. Internet Banking
• C. Digital Payment Systems
• D. Stand-alone branch automation

Initially, bank branches used stand-alone computers for automation of ledgers and basic transactions before moving to networking and CBS.

6. Which type of network is commonly used within a single bank branch for connecting computers?

• A. WAN
• B. MAN
• C. LAN
• D. VPN

A Local Area Network (LAN) is used within a branch to connect computers, printers, and servers for internal operations.

7. Core Banking Solutions (CBS) across different branches of a bank are typically connected through:

• A. Wide Area Network (WAN)
• B. Local Area Network (LAN)
• C. Metropolitan Area Network (MAN)
• D. Personal Area Network (PAN)

CBS requires interconnection of branches across cities and countries, which is achieved through Wide Area Networks (WAN).

8. A bank wants to allow employees to securely connect to its CBS while working from home. Which technology will be most suitable?

• A. LAN
• B. MAN
• C. Intranet
• D. VPN

A Virtual Private Network (VPN) creates a secure encrypted tunnel over the internet, allowing safe remote access to bank systems.

9. Which of the following is an advantage of networking technologies in banks?

• A. Increased paperwork
• B. Faster inter-branch fund transfers
• C. Higher manual reconciliation
• D. Restricted customer service

Networking enables real-time fund transfers and customer access across branches, reducing paperwork and delays.

10. A bank branch is facing frequent disconnections from its data center, affecting CBS operations. This is most likely a failure of:

• A. Network connectivity
• B. Customer authentication
• C. Application software
• D. Core accounting process

CBS heavily depends on reliable network connectivity with the data center. Disconnection issues usually arise due to network failures.

11. What is the main purpose of an Uninterrupted Power System (UPS) in banks?

• A. Reduce electricity bills
• B. Increase network bandwidth
• C. Provide backup power during outages
• D. Speed up transaction processing

A UPS ensures continuous power supply to critical systems like servers and CBS terminals during power cuts or fluctuations.

12. In banking operations, which system is most critically dependent on UPS support?

• A. Core Banking Servers
• B. Employee Attendance Machines
• C. Canteen Billing System
• D. Air Conditioning Units

Core Banking Servers and related IT infrastructure are mission-critical and must remain operational even during power failures, making UPS support vital.

13. Which type of UPS provides the highest level of protection against power surges and fluctuations?

• A. Offline UPS
• B. Standby UPS
• C. Line-interactive UPS
• D. Online UPS

Online UPS continuously supplies power through its inverter, providing the highest level of protection from voltage fluctuations and surges.

14. A branch experiences data corruption in its CBS during a sudden power failure. Which preventive measure could have avoided this?

• A. Using only surge protectors
• B. Installing a reliable UPS system
• C. Shutting down CBS at lunch breaks
• D. Manual data backup every hour

A UPS provides immediate power backup, preventing abrupt shutdowns and avoiding risks like data corruption in banking software.

15. In large bank data centers, UPS systems are often combined with which other facility for long-duration backup?

• A. Diesel Generator (DG) sets
• B. Solar panels
• C. Inverters with car batteries
• D. Wind energy turbines

In large data centers, UPS provides instant backup, while DG sets supply long-duration power in case of extended outages.

16. What is the primary advantage of Core Banking Solutions (CBS) for customers?

• A. Cheaper loan rates
• B. Anywhere, anytime banking
• C. More manual paperwork
• D. Limited access to accounts

CBS allows customers to operate their accounts from any branch or digital channel, ensuring "Anywhere, Anytime Banking".

17. In Core Banking, all customer data is stored in a:

• A. Standalone branch server
• B. Customer’s local branch
• C. Multiple physical ledgers
• D. Centralised database

CBS uses a centralised database where all customer records are maintained, ensuring consistency and real-time updates across branches.

18. Which of the following best describes Data Warehousing in banks?

• A. A central repository that stores historical and current data for analysis
• B. A vault for storing customer documents
• C. A system for inter-branch fund transfers
• D. A backup server for CBS operations

Data Warehousing refers to collecting and storing structured data from multiple sources into a central repository for reporting and analysis.

19. Data Mining in banks is mainly used for:

• A. Storing customer records
• B. Issuing cheque books
• C. Identifying patterns and customer behavior
• D. Filing regulatory returns

Data Mining involves analyzing large sets of customer and transaction data to find patterns, trends, and useful insights for decision-making.

20. A bank analyses transaction history of customers to detect unusual activities like sudden large fund transfers. This is an application of:

• A. Core Banking
• B. Data Warehousing
• C. Ledger reconciliation
• D. Data Mining

Data Mining helps in fraud detection, customer profiling, and risk management by analyzing transaction patterns for anomalies.