Q60. Which of the following runs contrary to the objectives of financial inclusion?
[UPPSC Civil Services Paper 1 2016]
A. Reaching lower-income customers with financial services
B. Opening growth opportunities for weaker sections
C. Reducing the availability of bank branches and access points
D. Extending banking into underserved rural communities
Answer: (C) Reducing the availability of bank branches and access points
Explanation: Financial inclusion is the effort to improve affordable access to suitable financial services. Excluding communities or contracting accessible banking infrastructure works against the objective of reaching low-income and underserved populations.
Q59. What is the central purpose of Pradhan Mantri Jan-Dhan Yojana?
[UPSC CSE Prelims 2015]
A. Concessional home loans alone
B. Support only women’s self-help groups
C. Expansion of access to financial services
D. Only a corporate-tax exemption
Answer: (C) Expansion of access to financial services
Explanation: Jan-Dhan Yojana promotes financial inclusion through basic bank accounts and links to remittances, insurance and other financial services for the previously unbanked. It is not limited to housing finance, a single group or tax incentives.
Q58. If RBI reduces its policy repo rate, which banking effect becomes more likely?
[UPSC CSE Prelims 2015]
A. Banks may reduce lending interest rates
B. Banks must increase the CRR immediately
C. Retail loans are legally prohibited
D. Currency in circulation becomes zero
Answer: (A) Banks may reduce lending interest rates
Explanation: A cut in the repo rate lowers the marginal price of some RBI funding and signals easier monetary conditions. As funding costs adjust, banks may transmit the change into loan rates, although competition and balance-sheet conditions affect the timing.
Q57. What is the principal goal of the Basel III banking standards?
[UPSC CSE Prelims 2015]
A. Reducing capital buffers
B. Strengthening bank capital, liquidity and risk management
C. Removing deposit supervision
D. Fixing agriculture procurement prices
Answer: (B) Strengthening bank capital, liquidity and risk management
Explanation: Basel III sets international prudential standards following the global financial crisis. It strengthens capital quality, risk coverage, leverage discipline and liquidity arrangements so banks are better able to withstand losses and funding strains.
Q56. Which claim is generally inappropriate about conventional credit ratings?
[WBCS Mains 2015]
A. They assess borrower creditworthiness
B. They can cover sovereign issuers
C. They are the same as forecasting equity returns
D. They help investors assess debt risk
Answer: (C) They are the same as forecasting equity returns
Explanation: Credit ratings primarily address the ability and willingness of issuers to meet financial obligations. They are not predictions that a company’s equity share price will rise or fall, and cannot substitute for independent investment analysis.
Q55. Which instrument is not a customary long-term industrial financing channel for private firms?
[WBCS Mains 2015]
A. Equity shares
B. Debentures
C. Development bank loans
D. Regional Rural Bank loans
Answer: (D) Regional Rural Bank loans
Explanation: Regional Rural Banks focus on rural financial inclusion, agriculture and specified rural enterprises. Shares, debentures and development-bank funding are more familiar channels for long-term private industrial finance.
Q54. Which of these transactions is short-term credit connected with business bills?
[WBCS Mains 2015]
A. A permanent equity investment
B. Discounting trade bills
C. A long-duration government capital loan
D. An outright gold purchase
Answer: (B) Discounting trade bills
Explanation: Bill discounting lets a holder receive money before a trade bill matures, less a discount charge. This advances short-term liquidity against trade receivables and is a standard commercial money-market financing method.
Q53. When government deficits are monetised through Treasury-bill finance, what tends to happen to money supply?
[WBCS Mains 2015]
A. It can increase
B. It must fall to zero
C. Foreign reserves automatically double
D. There can never be a monetary effect
Answer: (A) It can increase
Explanation: Direct monetary financing of government borrowing can expand the monetary base when the central bank creates reserves to acquire government paper. The inflation effect depends on subsequent policy responses and the economy’s productive conditions.
Q52. High-street banking generally places emphasis on which banking activity?
[WBCS Mains 2015]
A. Retail customer services and lending
B. Undersea mineral extraction
C. Intergovernmental borrowing alone
D. Trading government land parcels
Answer: (A) Retail customer services and lending
Explanation: High-street banking denotes ordinary customer-facing bank branches and activities, including savings, payments and retail credit. It contrasts with specialised wholesale or investment banking that primarily serves larger institutional clients.
Q51. Which institution commonly owns and manages a white-label ATM in India?
[WBCS Mains 2015]
A. A licensed non-bank ATM operator
B. Only the customer’s own bank
C. Only RBI headquarters
D. The stock market clearing corporation
Answer: (A) A licensed non-bank ATM operator
Explanation: White-label automated teller machines are deployed and operated by authorised non-bank entities. They serve customers of different banks and were designed to increase ATM access, especially where conventional networks were limited.
