Q380. For India’s Digital Rupee, which statements hold?
(1) It is RBI-issued sovereign currency.
(2) It appears as an RBI liability.
(3) Its design prevents inflation.
(4) It is exchangeable with bank deposits and cash.
[UPSC CSE Prelims 2024]
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 4 only
D. 1, 2 and 4
Answer: (D) 1, 2 and 4
Explanation: Central bank digital currency is issued by the RBI and appears as its liability. It is convertible into ordinary rupees. Its digital design does not eliminate loss of purchasing power from inflation, making the anti-inflation claim incorrect.
Q379. Regarding the RBI rules for wholly-owned subsidiaries of foreign banks, which is correct?
(1) There is no minimum capital.
(2) At least half the board must strictly be Indian nationals.
[UPSC CSE Prelims 2024]
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer: (D) Neither 1 nor 2
Explanation: The foreign-bank subsidiary framework prescribes minimum capital, historically ₹500 crore. Board-composition rules cover Indian nationals, non-resident Indians and persons of Indian origin in specified proportions. Neither an absence of capital requirements nor the narrower board claim is correct.
Q378. Who may trade in Indian corporate bonds and government securities: insurers, pension funds and retail investors?
[UPSC CSE Prelims 2024]
A. Insurers and pension funds only
B. Pension funds and retail investors only
C. Insurers and retail investors only
D. All three categories
Answer: (D) All three categories
Explanation: Debt securities are accessible to institutional investors such as insurance companies and pension funds and also to individual investors through permitted channels. Participation is subject to the relevant investment regulations, intermediary arrangements and market-specific trading requirements.
Q377. Which are financial instruments: exchange-traded funds, motor vehicles and currency swaps?
[UPSC CSE Prelims 2024]
A. Exchange-traded funds only
B. Motor vehicles and currency swaps only
C. All three
D. Exchange-traded funds and currency swaps only
Answer: (D) Exchange-traded funds and currency swaps only
Explanation: Exchange-traded funds represent pooled financial claims, and currency swaps are derivative contracts exchanging currency cash flows. A motor vehicle is a tangible asset rather than a financial instrument, so it is excluded from the classification.
Q376. A microcredit facility available to borrowers who lack access to ordinary banking is usually called what?
[SSC CGL Tier I 2024]
A. Microfinance
B. Sovereign borrowing
C. Open market operation
D. Venture capital
Answer: (A) Microfinance
Explanation: Microfinance provides small loans and related financial services to people often excluded from conventional banking. Unlike central-bank operations or venture-capital investments, it focuses on households and small earners with modest borrowing needs.
Q375. How should money supply be classified in macroeconomics?
[SSC CGL Tier I 2024]
A. A flow variable
B. A stock variable
C. A depreciation measure
D. A marginal tax measure
Answer: (B) A stock variable
Explanation: Money supply denotes the amount of money existing at a specific point in time and is therefore a stock. A flow, such as income or spending, is measured over a period. This distinction is fundamental to the analysis of monetary aggregates.
Q374. With other conditions unchanged, what is the usual relationship between interest rates and demand for money?
[SSC CGL Tier I 2024]
A. Positive
B. Inverse
C. Always constant
D. No theoretical relationship
Answer: (B) Inverse
Explanation: Holding liquid money involves a foregone interest return. When interest rates rise, interest-bearing assets become relatively attractive and desired money balances typically decrease. Lower interest rates reduce that opportunity cost and ordinarily increase money demand.
Q373. Which listed rates help assess transmission of RBI monetary policy to the banking system:
(1) weighted average lending rate,
(2) weighted average domestic term-deposit rate,
(3) one-year median MCLR,
(4) standing deposit facility rate?
[UPSC CDS (I) 2024]
A. 1 and 2 only
B. 1, 2 and 3 only
C. 3 and 4 only
D. 4 only
Answer: (B) 1, 2 and 3 only
Explanation: The effects of policy decisions on banks are tracked through weighted average lending and term-deposit rates and the one-year median marginal cost of funds-based lending rate. The SDF is a policy corridor rate, rather than a measure of passing changes to customers.
Q372. Regarding the Standing Deposit Facility (SDF), introduced in April 2022, which statements are true?
(1) It started in April 2022.
(2) It replaced the fixed reverse repo rate as the LAF corridor floor.
[UPSC CDS (I) 2024]
A. Statement 1 only
B. Statement 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer: (C) Both 1 and 2
Explanation: The RBI operationalised the SDF in April 2022 to absorb overnight liquidity without collateral. It then replaced the fixed-rate reverse repo as the floor of the Liquidity Adjustment Facility corridor, strengthening the central bank’s instruments for managing short-term liquidity.
Q371. Which minimum floor on the Statutory Liquidity Ratio was eliminated by the Banking Regulation (Amendment) Act of 2007?
[MPPSC Prelims 2024]
A. 15 per cent
B. 20 per cent
C. 25 per cent
D. 30 per cent
Answer: (C) 25 per cent
Explanation: Before the 2007 amendment, the statutory framework prescribed a minimum 25 per cent liquidity holding. Parliament removed that legal minimum so the RBI could prescribe an appropriate SLR. The effective SLR was nevertheless maintained at 25 per cent immediately afterward.
