Q130. Under RBI Prompt Corrective Action provisions, which types of restrictions can be triggered?
[WBCS Mains 2019]
A. Restrictions on dividends, lending and business expansion
B. Only tax exemptions
C. Only subsidy distribution
D. No supervisory restrictions at all
Answer: (A) Restrictions on dividends, lending and business expansion
Explanation: Prompt Corrective Action uses prudential indicators to identify weak banks and impose calibrated supervisory safeguards. These may include limits on dividend payouts, branch expansion, capital-intensive activities or risky lending to protect financial stability.
Q129. Which fundamental purpose is served by changes in the bank rate?
[WBCS Mains 2019]
A. Fixing agricultural procurement prices
B. Managing bank credit conditions
C. Determining road transport fares
D. Approving government budgets
Answer: (B) Managing bank credit conditions
Explanation: The bank rate is an administered central-bank interest rate used in the monetary and regulatory framework. Rate adjustments can influence borrowing costs and credit conditions, although present-day policy signalling principally operates through the repo rate.
Q128. What year marks the commencement of the Reserve Bank of India?
[WBCS Mains 2019]
A. 1949
B. 1935
C. 1955
D. 1920
Answer: (B) 1935
Explanation: The Reserve Bank of India began business on 1 April 1935 under the Reserve Bank of India Act, 1934. Its start of operations should not be confused with nationalisation, which took effect on 1 January 1949.
Q127. Which lending-rate benchmark is set by banks rather than directly fixed by the RBI?
[WBCS Mains 2019]
A. Cash Reserve Ratio
B. Statutory Liquidity Ratio
C. Repo rate
D. Prime Lending Rate
Answer: (D) Prime Lending Rate
Explanation: Prime lending rates historically reflected each bank’s own lending-rate decisions within the regulatory framework. RBI specifies or operates monetary policy and reserve requirements, whereas commercial lending prices are not simply prescribed as a single identical prime rate.
Q126. Who was appointed the Reserve Bank of India’s first Governor?
[WBCS Mains 2019]
A. C. D. Deshmukh
B. Osborne Smith
C. Manmohan Singh
D. Raghuram Rajan
Answer: (B) Osborne Smith
Explanation: Sir Osborne Smith became the first Governor of the Reserve Bank when it began functioning in 1935. C. D. Deshmukh was its first Indian Governor, a distinction frequently tested separately in recruitment examinations.
Q125. To make borrowing from the RBI costlier for commercial banks, which action is appropriate?
[WBCS Mains 2019]
A. Reduce the repo rate
B. Raise the repo rate
C. Lower the cash reserve ratio
D. Reduce import tariffs
Answer: (B) Raise the repo rate
Explanation: An increase in the repo rate raises the cost of funds borrowed through RBI repo operations. Banks may adjust loan and deposit pricing in response, helping monetary tightening pass through to credit demand and spending.
Q124. Which mobile-based banking service enables immediate interbank fund transfers?
[WBCS Mains 2019]
A. RTGS
B. NEFT
C. IMPS
D. A physical demand draft
Answer: (C) IMPS
Explanation: Immediate Payment Service, operated by NPCI, facilitates instant interbank electronic transfers, including through mobile channels. It differs from the broader UPI interface and from large-value RTGS settlement, even though all can support electronic payments.
Q123. How many digits are used in the standard MICR code printed on Indian bank cheques?
[WBCS Mains 2019]
A. Seven
B. Eight
C. Nine
D. Eleven
Answer: (C) Nine
Explanation: The Indian MICR code contains nine digits identifying the city, bank and branch. Magnetic Ink Character Recognition technology was designed to support machine-readable cheque processing and routing during clearing operations.
Q122. What does a central bank generally pursue under a cheap-money monetary policy?
[WBCS Mains 2019]
A. Lower rates and easier credit
B. Higher borrowing rates across all maturities
C. A ban on deposits
D. A complete halt to government security trading
Answer: (A) Lower rates and easier credit
Explanation: A cheap-money policy seeks to reduce borrowing costs and make credit more accessible, often to support activity during weak demand. The policy contrasts with dear money, which attempts to restrain liquidity and spending.
Q121. What does PPI stand for in RBI regulations concerning stored-value payment products?
[WBCS Mains 2019]
A. Primary Payment Instruction
B. Prepaid Payment Instrument
C. Postpaid Price Indicator
D. Payment Protection Insurance
Answer: (B) Prepaid Payment Instrument
Explanation: Prepaid Payment Instruments are products that enable purchases, transfers or other specified transactions up to stored value. Wallets and prepaid cards may fall under this category, subject to permitted purposes, KYC requirements and RBI rules.
