Q270. Identify the false statement concerning banking and securities regulation.
[SSC CHSL Tier I, 2 Aug Shift 4 2023]
A. RBI fixes India’s bank rate
B. SEBI carries out open-market operations to regulate money supply
C. RBI is responsible for issuing ₹100 banknotes
D. Government issues ₹1 coins
Answer: (B) SEBI carries out open-market operations to regulate money supply
Explanation: Open-market operations are executed by RBI through buying and selling government securities to influence liquidity. SEBI supervises securities-market conduct and intermediaries rather than deciding monetary operations.
Q269. What were the Banks Board Bureau’s duties?
(1) RBI Governor chaired it.
(2) It recommended public-sector bank leadership.
(3) It advised on bank strategies and raising capital.
[UPSC CSE Prelims 2022]
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: (B) 2 and 3 only
Explanation: The Banks Board Bureau recommended senior appointments and advised public-sector banks on governance, strategy and capital. It was not chaired by the RBI Governor. In 2022 its role was taken over by the Financial Services Institutions Bureau.
Q268. Which authority is primarily responsible for price stability through monetary policy in India?
[UPSC CSE Prelims 2022]
A. Department of Consumer Affairs
B. Expenditure Management Commission
C. Financial Stability and Development Council
D. Reserve Bank of India
Answer: (D) Reserve Bank of India
Explanation: The RBI’s monetary policy framework pursues price stability while considering growth. Its Monetary Policy Committee adjusts the policy rate against the notified inflation target. The other bodies address consumer protection, public expenditure or wider financial coordination, not monetary-policy rate decisions.
Q267. During a rapid rupee depreciation, which RBI foreign-exchange intervention is most consistent with stabilising the currency?
[UPSC CSE Prelims 2022]
A. Buying dollars while selling rupees
B. Selling dollars while buying rupees
C. Printing additional rupees without reserve action
D. Increasing government subsidies
Answer: (B) Selling dollars while buying rupees
Explanation: Selling foreign-currency reserves increases dollar supply in the domestic market and draws in rupees. This can reduce sudden depreciation pressure. A central bank may combine foreign-exchange operations with securities-market transactions to control the accompanying change in liquidity.
Q266. Are credit-rating agencies such as ICRA and Brickwork generally overseen by RBI or SEBI?
[UPSC CSE Prelims 2022]
A. RBI regulates all such agencies
B. SEBI regulates them under securities rules
C. Only the Finance Ministry regulates them
D. Only stock exchanges regulate them
Answer: (B) SEBI regulates them under securities rules
Explanation: Credit-rating agencies participate in the securities market by assessing credit risk in issuers and financial instruments. SEBI supervises their registration and conduct. Banking regulation and monetary policy performed by the RBI involve a different institutional responsibility.
Q265. Which change does not fit an expansionary monetary policy: a lower SLR, a higher MSF rate, or lower policy lending rates?
[UPSC CSE Prelims 2022]
A. Lowering SLR
B. Raising MSF rate
C. Lowering repo rate
D. Lowering bank rate
Answer: (B) Raising MSF rate
Explanation: Expansionary policy attempts to make bank credit more plentiful or cheaper. Cutting reserve requirements and lending rates helps achieve that purpose. Raising the Marginal Standing Facility rate makes emergency central-bank borrowing costlier and therefore works in the opposite direction.
Q264. Which advantages were identified for inflation-indexed bonds?
(1) They can permit lower coupon rates on government borrowing.
(2) They protect investors from inflation uncertainty.
(3) Their interest and capital gains are automatically tax-free.
[UPSC CSE Prelims 2022]
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: (A) 1 and 2 only
Explanation: Inflation-indexed bonds adjust returns in relation to inflation, protecting investors from erosion of purchasing power. That protection can enable the issuer to offer a lower fixed coupon. It does not, by itself, make interest earnings or capital gains exempt from taxation.
Q263. In which year was the Reserve Bank of India nationalised?
[MPPSC Prelims 2022]
A. 1949
B. 1935
C. 1955
D. 1969
Answer: (A) 1949
Explanation: The RBI commenced operations in April 1935 under the Reserve Bank of India Act, 1934. It was nationalised on 1 January 1949, transferring ownership to the government. The nationalisation of fourteen major commercial banks followed much later, in 1969.
Q262. Under the Taylor principle, by how much should a policy interest rate rise after a one-percentage-point increase in inflation, all else equal?
[WBCS Mains 2022]
A. Less than a percentage point
B. Exactly a percentage point
C. More than one percentage point
D. It must fall by a point
Answer: (C) More than one percentage point
Explanation: The Taylor principle suggests a greater-than-one-for-one increase in the nominal policy rate when inflation rises. This raises the real rate and provides a stabilising restraint on demand instead of allowing inflation to lower real borrowing costs.
Q261. Which of the following is a selective rather than a quantitative credit-control instrument?
[WBCS Mains 2022]
A. Open-market operation
B. Repo rate
C. Variable CRR
D. Margin requirement
Answer: (D) Margin requirement
Explanation: Margin requirements affect credit extended against specific assets or commodities, and therefore represent qualitative or selective control. Open-market operations, reserve ratios and central policy rates act more broadly on aggregate liquidity and borrowing conditions.
