Q400. Which statement about UPI and the Digital Rupee is incorrect?
[UPSC CSE Prelims 2026]
A. UPI enables real-time payments while the digital rupee represents sovereign money
B. UPI shifts bank deposits whereas e-rupee moves digital cash between wallets
C. UPI debits appear in bank statements whereas wallet-to-wallet e-rupee transfers generally do not
D. In both UPI and digital-rupee transactions, liability rests with users and their banks
Answer: (D) In both UPI and digital-rupee transactions, liability rests with users and their banks
Explanation: A UPI payment transfers a claim on commercial banks. Digital rupees are liabilities of the Reserve Bank of India itself, like currency notes. Their risk and accounting treatment consequently differ, even though both may facilitate rapid retail payments.
Q399. For Non-Banking Financial Companies in India, which of the following are correct?
(1) They cannot accept demand deposits.
(2) Every NBFC must register with RBI.
(3) They may draw cheques on themselves.
(4) DICGC does not insure deposits in deposit-taking NBFCs.
[UPSC CSE Prelims 2026]
A. 1 and 4 only
B. 1, 2 and 3 only
C. 4 only
D. 2, 3 and 4 only
Answer: (A) 1 and 4 only
Explanation: NBFCs differ from banks in their access to deposits and settlement infrastructure. They cannot accept demand deposits or issue their own cheques. Insurance through DICGC protects eligible bank deposits, not NBFC deposits; some financial entities are regulated by authorities other than RBI.
Q398. What are the three dimensions of the RBI Financial Inclusion Index?
[UPSC CSE Prelims 2026]
A. Credit, insurance and pension
B. Banking, output and literacy
C. Access, usage and quality
D. Affordability, transparency and inclusion
Answer: (C) Access, usage and quality
Explanation: The RBI designed its Financial Inclusion Index around access to financial services, actual use of those services and their quality. The distinction is important: possessing an account is not equivalent to actively using reliable, affordable and suitably protected financial services.
Q397. What was the RBI Financial Inclusion Index reading for March 2024?
[MPPSC Prelims 2026]
A. 64.2
B. 62.4
C. 53.9
D. 59.3
Answer: (A) 64.2
Explanation: The RBI Financial Inclusion Index for March 2024 was 64.2, up from 60.1 in March 2023. The composite index combines access, usage and quality of financial services. Its improvement was particularly associated with greater usage of financial products and services.
Q396. In a postgraduate economics recruitment examination, what was identified as the foremost practical constraint on commercial-bank credit creation?
[UP PGT Economics, 10 May 2026]
A. Demand for loans
B. Government fiscal deficit alone
C. Volume of foreign reserves
D. Reserve ratios as the sole factor
Answer: (A) Demand for loans
Explanation: In practice, banks cannot indefinitely expand lending without creditworthy borrowers willing to borrow. Reserve requirements, capital adequacy and liquidity rules also constrain lending capacity, but the examination emphasised loan demand as the primary operational constraint.
Q395. In the context of RTGS and NEFT, which statement is correct?
(1) RTGS settles transactions individually in real time, whereas NEFT settles in batches.
(2) Inward RTGS transfers attract charges.
(3) RTGS is unavailable during certain holidays.
[UPSC CSE Prelims 2025]
A. Statement 1 only
B. Statements 1 and 2 only
C. Statements 1 and 3 only
D. Statement 3 only
Answer: (A) Statement 1 only
Explanation: RTGS handles transfers one by one in real time, while NEFT operates in settlement batches. Both RBI-operated systems now function throughout the year. Receiving banks do not levy charges on inward RTGS or NEFT transfers, making only the first statement valid.
Q394. Which regulator requires eligible listed companies to submit a Business Responsibility and Sustainability Report?
[UPSC CSE Prelims 2025]
A. Reserve Bank of India
B. Securities and Exchange Board of India
C. Insurance Regulatory and Development Authority of India
D. Pension Fund Regulatory and Development Authority
Answer: (B) Securities and Exchange Board of India
Explanation: BRSR disclosures concern environmental, social and governance performance of listed companies. SEBI, the securities-market regulator, sets this disclosure framework. RBI supervises banks and manages monetary policy but does not impose general listed-company sustainability-reporting requirements.
Q393. Which of these count as Alternative Investment Funds under Indian regulation: bonds, hedge funds, stocks and venture-capital funds?
[UPSC CSE Prelims 2025]
A. Only bonds and stocks
B. Only hedge funds and venture-capital funds
C. Bonds, stocks and hedge funds
D. All four
Answer: (B) Only hedge funds and venture-capital funds
Explanation: An Alternative Investment Fund is a pooled investment vehicle registered under SEBI rules. Hedge funds and venture-capital funds fall within its categories. Ordinary bonds and shares are instruments that investors may hold, but are not themselves alternative investment funds.
Q392. Why are bondholders generally exposed to less repayment risk than shareholders in a company?
[UPSC CSE Prelims 2025]
A. Bondholders lend to the company and generally have repayment priority
B. Bondholders are the principal owners of the company
C. Equity owners receive mandatory fixed interest
D. Shareholders legally rank ahead of creditors in liquidation
Answer: (A) Bondholders lend to the company and generally have repayment priority
Explanation: Bonds establish a creditor relationship; shares establish ownership. Contractual interest and the priority enjoyed by creditors in insolvency usually make bond claims less risky than equity claims. Shareholders bear residual losses and receive any remaining value only after creditors.
Q391. When did the RBI introduce the Lead Bank Scheme?
[SSC CGL Tier I 2025]
A. 1969
B. 1975
C. 1980
D. 1990
Answer: (A) 1969
Explanation: The Lead Bank Scheme was introduced in 1969 to coordinate district-level credit planning and expand banking services. A designated lead bank helps other financial institutions prepare and monitor credit plans, particularly for underserved districts and priority sectors.
Q390. Consider the money multiplier:
(1) Currency held by the public reduces deposit creation.
(2) Larger cash reserves increase the multiplier.
(3) A higher CRR restricts bank credit creation.
Which statements are correct?
[SSC CGL Tier I 2025]
A. 1 and 3 only
B. 2 and 3 only
C. 1 and 2 only
D. 1, 2 and 3
Answer: (A) 1 and 3 only
Explanation: Holding cash outside banks interrupts the deposit-lending cycle. Higher required reserves also leave less of each deposit available for loans, reducing the banking multiplier. It is therefore wrong to suggest that accumulating additional cash reserves expands the multiplier.
Q389. Which public institution provides financial services through postal staff and Gramin Dak Sevaks?
[SSC CGL Tier I 2025]
A. National Social Assistance Programme
B. India Post Payments Bank
C. Pradhan Mantri Jan Arogya Yojana
D. PRAGATI
Answer: (B) India Post Payments Bank
Explanation: India Post Payments Bank uses the postal network for doorstep banking and basic financial inclusion. Postmen and Gramin Dak Sevaks assist with accounts, payments and related services; the other choices concern social assistance, healthcare assurance or governance monitoring.
Q388. What is the principal objective of monetary policy in India?
[MPPSC Prelims 2025]
A. Promoting stock-market turnover
B. Maintaining price stability while keeping growth in mind
C. Fixing every commercial-bank lending rate
D. Eliminating all government borrowing
Answer: (B) Maintaining price stability while keeping growth in mind
Explanation: Under the amended RBI Act, monetary policy gives priority to price stability while keeping economic growth in mind. The Monetary Policy Committee sets the policy repo rate to meet the inflation target; it does not directly administer every loan interest rate.
Q387. Which item is not normally considered a component of the financial-sector reform programme initiated after 1991?
[RPSC RAS Prelims (2024 cycle, held 2025) 2025]
A. Capital-adequacy requirements
B. Recognition and resolution of non-performing assets
C. Fiscal Responsibility and Budget Management Act
D. SARFAESI legislation
Answer: (C) Fiscal Responsibility and Budget Management Act
Explanation: Capital adequacy, prudential treatment of non-performing assets and SARFAESI provisions concern banking and credit-market reform. The FRBM Act primarily disciplines public borrowing and budget deficits, making it a measure of fiscal governance rather than a banking-sector reform.
Q386. Which authority received recognition in March 2025 for the digital initiatives PRAVAAH and SAARTHI?
[RRB Group D, 15 Dec, Shift 3 2025]
A. Reserve Bank of India
B. NPCI
C. NABARD
D. SEBI
Answer: (A) Reserve Bank of India
Explanation: The Reserve Bank of India’s initiatives included PRAVAAH, a platform supporting regulatory applications, and SAARTHI, an internal workflow system. This railway examination tested the associated institution rather than a generic digital-payment brand.
Q385. Who assumed office as SEBI Chairperson in March 2025?
[RRB Group D, 1 Dec, Shift 3 2025]
A. Madhabi Puri Buch
B. Shaktikanta Das
C. Tuhin Kanta Pandey
D. Arvind Panagariya
Answer: (C) Tuhin Kanta Pandey
Explanation: Tuhin Kanta Pandey became Chairperson of the Securities and Exchange Board of India in March 2025. He succeeded Madhabi Puri Buch. The answer is tied to the historical appointment asked in this paper.
Q384. Which individual took over the chairmanship of SEBI on 1 March 2025?
[RRB Group D, 23 Dec, Shift 3 2025]
A. Ananth Narayan G
B. Tuhin Kanta Pandey
C. Madhabi Puri Buch
D. Ashwani Bhatia
Answer: (B) Tuhin Kanta Pandey
Explanation: The regulatory leadership changed when Tuhin Kanta Pandey took charge of SEBI on 1 March 2025. The date and individual are the subject of this second, separately held railway paper.
Q383. In what year did the National Stock Exchange commence actual trading operations?
[SSC CHSL Tier I, 29 Nov, Shift 1 2025]
A. 1994
B. 1998
C. 2002
D. 1996
Answer: (A) 1994
Explanation: NSE began wholesale-debt trading in June 1994 and equity trading in November of that year. Its incorporation occurred earlier, in 1992, making these two separate financial-market chronology facts.
Q382. When did NSE launch trading in Nifty-based index options?
[SSC CHSL Tier I, 21 Nov, Shift 3 2025]
A. 2006
B. 2001
C. 2003
D. 2005
Answer: (B) 2001
Explanation: Index options trading on Nifty commenced on 4 June 2001 at the National Stock Exchange. Index options are derivatives that give holders contractual rights linked to the level of a specified market index.
Q381. Collateralised Borrowing and Lending Obligations (CBLO) belong to which segment?
[UPSC CSE Prelims 2024]
A. Bond market
B. Foreign-exchange market
C. Money market
D. Equity market
Answer: (C) Money market
Explanation: CBLO was a collateral-backed short-term borrowing and lending instrument. Such instruments address temporary funding and liquidity needs among eligible financial institutions, which is characteristic of the money market rather than long-term securities or foreign-exchange trading.
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.
Q370. Who founded the Grameen Bank model associated with modern microfinance in Bangladesh?
[SSC CGL Tier I, 26 Sep, Shift 1 2024]
A. Adam Smith
B. Muhammad Yunus
C. David Ricardo
D. Jeremy Bentham
Answer: (B) Muhammad Yunus
Explanation: Muhammad Yunus initiated Grameen-style microcredit efforts in Bangladesh, leading to an institutional model offering small loans to underserved borrowers. The approach became globally influential, although microfinance outcomes depend heavily on responsible lending practices.
Q369. Under the original 2024 MUDRA scheme bands, which programme offered eligible collateral-free microenterprise loans up to ₹10 lakh?
[SSC CGL Tier I, 24 Sep, Shift 2 2024]
A. Stand-Up India
B. Jan Dhan Yojana
C. National Strategy for Financial Inclusion
D. Pradhan Mantri MUDRA Yojana
Answer: (D) Pradhan Mantri MUDRA Yojana
Explanation: Pradhan Mantri MUDRA Yojana provided access to collateral-free loans for eligible microenterprises through member lending institutions. The ceiling in this 2024 exam item reflects the scheme’s then-standard bands and should be interpreted historically.
Q368. In which year did the statutory amendment establishing India’s flexible inflation-targeting framework occur?
[SSC CGL Tier I, 23 Sep, Shift 1 2024]
A. 2010
B. 2014
C. 2016
D. 2020
Answer: (C) 2016
Explanation: The RBI Act was amended in 2016 to create a formal inflation-targeting framework and statutory Monetary Policy Committee. The framework sets a notified inflation objective for RBI policy decisions.
Q367. Which statement best distinguishes community SHGs from formal microfinance institutions?
[SSC CGL Tier I, 23 Sep, Shift 3 2024]
A. SHGs are normally small community groups; MFIs are formal financing organisations
B. All SHGs must be listed companies
C. MFIs cannot have borrowers
D. SHGs must operate national clearing houses
Answer: (A) SHGs are normally small community groups; MFIs are formal financing organisations
Explanation: Self-help groups are generally small membership-based collectives built around savings and mutual support. Microfinance institutions are organised providers of financial services, often operating across multiple communities and subject to relevant registration and regulation.
Q366. Which term refers to provision of small-scale finance to people with limited access to ordinary banks?
[SSC CGL Tier I, 19 Sep, Shift 2 2024]
A. Sovereign wealth management
B. Microfinance
C. Large-cap investing
D. International balance-sheet netting
Answer: (B) Microfinance
Explanation: Microfinance provides small loans and potentially other financial services to clients with limited access to conventional banks. It often supports livelihood activities but requires transparent terms and reasonable repayment practices.
Q365. According to the 2024 SSC paper, the money supply at a specific instant is classified as what?
[SSC CGL Tier I, 18 Sep, Shift 1 2024]
A. A flow variable
B. A stock variable
C. An immeasurable concept
D. A rate of inflation
Answer: (B) A stock variable
Explanation: Money supply is measured as the quantity of money outstanding at a particular point in time, making it a stock concept. Spending and income over a period are instead flows.
Q364. Which of the following is not generally a principal global vehicle currency: euro, yen or pound, where the US dollar is absent?
[WBCS Prelims 2024]
A. Euro
B. Japanese yen
C. Pound sterling
D. None of these is the leading US-dollar vehicle currency
Answer: (D) None of these is the leading US-dollar vehicle currency
Explanation: A vehicle currency acts as an intermediary in foreign exchange dealings. The US dollar is the most widely used global vehicle currency, so the examination selected none of the listed alternatives as the principal answer.
Q363. Arrange these banking milestones chronologically:
I. First major nationalisation,
II. Second major nationalisation,
III. RRB establishment,
IV. NABARD establishment.
[UPPSC RO/ARO, 11 Feb 2024]
A. IV–II–III–I
B. III–II–I–IV
C. I–III–II–IV
D. I–II–IV–III
Answer: (C) I–III–II–IV
Explanation: Fourteen banks were nationalised in 1969; regional rural banks began in 1975; six additional banks were nationalised in 1980; and NABARD was set up in 1982. This yields the order I, III, II, IV.
Q362. What is PIN short for when used to authenticate banking transactions?
[UPPSC RO/ARO, 11 Feb 2024]
A. Postal Index Number
B. Permanent Identification Number
C. Personal Identification Number
D. None of these
Answer: (C) Personal Identification Number
Explanation: A personal identification number is a confidential numeric credential that helps authenticate the user of a payment card or banking channel. It should not be disclosed because it protects access to transactional services.
Q361. Which of the following is not a commercial bank?
[SSC MTS, 11 Nov Shift 1 2024]
A. State Bank of India
B. ICICI Bank
C. DBS Bank
D. NABARD
Answer: (D) NABARD
Explanation: NABARD is a specialised development financial institution supporting agriculture and rural credit. The other named institutions provide commercial banking services. Its central functions include refinance, development initiatives and certain supervisory roles.
Q360. Which institution played a leading role in expanding microfinance and self-help-group bank linkages?
[SSC MTS, 21 Oct Shift 2 2024]
A. State Bank of India
B. Reserve Bank of India
C. Central Bank of India
D. NABARD
Answer: (D) NABARD
Explanation: NABARD pioneered the Self-Help Group–Bank Linkage Programme, encouraging collective savings and bank borrowing among underserved groups. Its developmental focus complements RBI supervision and commercial banks’ actual delivery of loans.
Q359. Which organisation launched the Self-Help Group–Bank Linkage Programme in 1992?
[SSC MTS, 22 Oct Shift 2 2024]
A. SEBI
B. NABARD
C. SBI
D. RBI
Answer: (B) NABARD
Explanation: NABARD introduced the programme to build formal links between community self-help groups and banks. The approach supports thrift, group-based financial discipline and access to institutional credit for underserved rural households.
Q358. Why did many central banks raise interest rates after the pandemic?
(I) Many raised policy rates.
(II) Central banks believe monetary tightening can reduce inflation.
[UPSC CSE Prelims 2023]
A. Both statements are true, and II explains I
B. Both true, but II does not explain I
C. I true and II false
D. I false and II true
Answer: (A) Both statements are true, and II explains I
Explanation: Following the pandemic, many economies faced elevated consumer-price inflation. Higher policy interest rates restrain borrowing and aggregate demand, potentially easing inflation. That transmission explains why central banks adopted tighter policies, although supply disruptions also contributed to rising prices.
Q357. Which RBI action is associated with sterilisation?
[UPSC CSE Prelims 2023]
A. Open market operations
B. Supervision of payment systems
C. Cash management for governments
D. Regulation of non-banking lenders
Answer: (A) Open market operations
Explanation: Sterilisation neutralises the liquidity impact of foreign-exchange intervention. If buying foreign currency puts additional rupees into circulation, the RBI can sell government securities to absorb them. Such offsetting operations belong to monetary management rather than routine bank supervision.
Q356. With reference to Central Bank Digital Currencies, can payments avoid dollar/SWIFT channels and can transfers carry programmed spending conditions?
[UPSC CSE Prelims 2023]
A. Only the first is possible
B. Only the second is possible
C. Both are possible
D. Neither is possible
Answer: (C) Both are possible
Explanation: CBDC systems can enable direct cross-border value transfers without necessarily using conventional correspondent-bank messaging. Digital units may also be programmable to restrict their permitted use or spending period. Technological design and legal permission determine practical implementations.
Q355. Under priority-sector norms, do qualifying bank loans to micro, small and medium enterprises count towards priority-sector lending?
[UPSC CSE Prelims 2023]
A. No MSME loans qualify
B. Qualifying MSME loans are included
C. Only loans to large corporations qualify
D. MSME lending is regulated solely by SEBI
Answer: (B) Qualifying MSME loans are included
Explanation: The RBI priority-sector framework recognises eligible credit to micro, small and medium enterprises. This encourages institutional finance for productive firms that may otherwise encounter financing constraints. It is a banking-credit classification, not a securities-regulation programme.
Q354. In India, which institution regulates credit-rating agencies such as ICRA?
[UPSC CSE Prelims 2023]
A. Reserve Bank of India
B. Securities and Exchange Board of India
C. NABARD
D. Competition Commission of India
Answer: (B) Securities and Exchange Board of India
Explanation: Credit-rating agencies evaluate debt issuers and instruments for investors and are registered under SEBI regulations. RBI separately regulates banks and several lending institutions. The distinction matters because a rating agency assesses credit quality without itself becoming the banking supervisor.
Q353. The SHG–Bank Linkage Programme was initiated primarily through which institution?
[UPSC CSE Prelims 2023]
A. State Bank of India
B. NABARD
C. SEBI
D. National Housing Bank
Answer: (B) NABARD
Explanation: NABARD began the SHG–Bank Linkage Programme in 1992, linking small community savings groups with formal credit. Regional rural banks and commercial banks subsequently expanded outreach. It is inaccurate to attribute the programme’s establishment to one commercial bank alone.
Q352. What does the abbreviation BFSI stand for?
[SSC CGL Tier I 2023]
A. Banking, Financial Services and Inflation
B. Banking, Financial Services and Investment
C. Banking, Financial Services and Insurance
D. Banking, Fiscal Services and Index Funds
Answer: (C) Banking, Financial Services and Insurance
Explanation: BFSI collectively refers to banking firms, non-bank financial service providers and insurance businesses. It is used as an industry grouping for products, employment and regulation, rather than an economic measure of inflation or a particular investment instrument.
Q351. Which is a scheduled private-sector bank rather than a public-sector bank?
[SSC CGL Tier I 2023]
A. Canara Bank
B. UCO Bank
C. Indian Overseas Bank
D. Bandhan Bank
Answer: (D) Bandhan Bank
Explanation: Canara Bank, UCO Bank and Indian Overseas Bank are public-sector banks. Bandhan Bank operates in the private sector. Scheduled status indicates inclusion in the Second Schedule of the RBI Act; it does not imply government ownership.
Q350. What does MUDRA stand for in the context of Indian micro-enterprise finance?
[SSC CGL Tier I 2023]
A. Micro Units Development and Refinance Agency
B. Monetary Utility Development and Reserve Agency
C. Micro Universal Deposit and Revenue Authority
D. Market Units Development and Regulatory Authority
Answer: (A) Micro Units Development and Refinance Agency
Explanation: MUDRA was set up to support funding of micro enterprises, including by refinancing financial institutions serving them. The expanded name is Micro Units Development and Refinance Agency. Its role differs from RBI monetary policy and SEBI securities oversight.
Q349. Which agency is the principal regulator of microfinance institutions in India?
[SSC CGL Tier I 2023]
A. Securities and Exchange Board of India
B. Reserve Bank of India
C. Ministry of Corporate Affairs alone
D. Comptroller and Auditor General
Answer: (B) Reserve Bank of India
Explanation: The RBI regulates non-banking microfinance institutions and issues lending rules for the regulated microfinance sector. Microfinance generally involves small, often collateral-free loans to low-income households; prudential oversight seeks to protect borrowers and financial-system stability.
Q348. How many among the government bond market, call money market, treasury bill market and stock market belong to capital markets?
[UPSC CSE Prelims 2023]
A. Only one
B. Only two
C. Only three
D. All four
Answer: (B) Only two
Explanation: Long-maturity government bonds and corporate shares are capital-market instruments. Call money and treasury bills provide short-term funds and belong to the money market. Consequently two of the four specified markets are classified as capital markets.
Q347. In equity investing, what does the term beta measure?
[UPSC CSE Prelims 2023]
A. Simultaneous arbitrage across two markets
B. A stock’s return sensitivity to movements in the overall market
C. The absolute guaranteed return on a share
D. The cost of foreign-exchange conversion
Answer: (B) A stock’s return sensitivity to movements in the overall market
Explanation: Beta measures sensitivity of a stock’s returns to market returns, identifying its exposure to systematic market risk. A beta greater than one generally denotes amplified movements relative to the market, whereas a figure below one usually suggests smaller movements.
Q346. Which institution established the UDGAM online portal for tracing unclaimed bank deposits?
[RPSC RAS Prelims 2023]
A. University Grants Commission
B. National Highways Authority of India
C. Indian Space Research Organisation
D. Reserve Bank of India
Answer: (D) Reserve Bank of India
Explanation: The RBI launched UDGAM in August 2023 as a centralised search facility for unclaimed deposits across participating banks. The portal helps depositors and their families identify possible deposits without separately searching the websites of multiple institutions.
Q345. Which of these is not a selective credit-control measure?
[RPSC RAS Prelims 2023]
A. Change in lending margins
B. Sale of government securities
C. Credit rationing
D. Moral suasion
Answer: (B) Sale of government securities
Explanation: Selective credit controls target particular uses and types of lending through moral suasion, margin requirements or rationing. The sale of government securities is instead an open-market operation, a general quantitative instrument used to withdraw liquidity from the banking system.
Q344. In what year was the National Bank for Agriculture and Rural Development established?
[MPPSC Prelims 2023]
A. 1969
B. 1975
C. 1982
D. 1990
Answer: (C) 1982
Explanation: NABARD began operations in 1982 as India’s apex development financial institution for agriculture and rural development. It supports refinancing, institutional development, supervision of certain cooperative banks and rural financial systems. Its formation followed the recommendations of the CRAFICARD committee.
Q343. In which year did the Small Industries Development Bank of India commence operations?
[MPPSC Prelims 2023]
A. 1990
B. 1982
C. 1969
D. 2000
Answer: (A) 1990
Explanation: SIDBI was established in 1990 as the principal institution for promotion, financing and development of micro, small and medium enterprises. It assists through direct and indirect finance, refinancing and development programmes, while coordinating institutions working with smaller businesses.
Q342. How many additional banks were nationalised by the Government of India in 1980?
[MPPSC Prelims 2023]
A. Four
B. Six
C. Eight
D. Ten
Answer: (B) Six
Explanation: In April 1980, six more commercial banks were nationalised in a second major round of bank nationalisation. Fourteen banks had been nationalised in 1969. Both measures expanded public-sector banking and were associated with greater attention to credit access.
Q341. When is RBI monetary restraint least able, on its own, to bring inflation under control?
[WBCS Mains 2023]
A. When inflation stems from deficit finance, shortages and non-bank credit
B. Only when imports are zero
C. Only when bank deposits decline
D. Whenever fiscal revenue exceeds expenditure
Answer: (A) When inflation stems from deficit finance, shortages and non-bank credit
Explanation: Monetary restrictions chiefly affect aggregate demand and liquidity. Supply shortages, fiscal deficits and non-bank financing can sustain price pressures through different channels. Consequently credit tightening may not quickly neutralise every source of inflation without accompanying fiscal and supply-side measures.
Q340. Which of the following best expresses a principal responsibility of the Reserve Bank of India?
[WBCS Mains 2023]
A. Determining farm procurement quotas
B. Maintaining financial stability
C. Building regional highways
D. Setting industrial wage rates
Answer: (B) Maintaining financial stability
Explanation: Financial stability is a principal central-bank responsibility. RBI supervises regulated financial entities, oversees payment systems and manages monetary conditions. Agricultural production targets, public works and industrial wages generally fall within other governmental and regulatory mandates.
Q339. Which RBI decision would usually increase the banking system’s ability to create credit?
[WBCS Mains 2023]
A. Raising the statutory liquidity ratio
B. Raising the repo rate
C. Lowering the cash reserve ratio
D. Imposing more selective restrictions
Answer: (C) Lowering the cash reserve ratio
Explanation: A CRR reduction releases funds that banks otherwise keep as mandatory balances with RBI. This raises deployable liquidity and can permit credit growth. A higher SLR or repo rate and tighter sectoral restrictions instead usually restrain lending.
Q338. Which Indian Prime Minister had earlier served as Governor of the Reserve Bank of India?
[WBCS Mains 2023]
A. P. V. Narasimha Rao
B. Manmohan Singh
C. Indira Gandhi
D. Jawaharlal Nehru
Answer: (B) Manmohan Singh
Explanation: Manmohan Singh headed the Reserve Bank of India from 1982 to 1985 and subsequently served as Prime Minister between 2004 and 2014. His career also included economic policymaking at the Ministry of Finance and other national institutions.
Q337. What is the main target of the RBI’s selective credit control measures?
[WBCS Mains 2023]
A. Loans for public transportation
B. Credit used to hoard scarce commodities and speculate in them
C. All export-credit facilities
D. Borrowing for authorised industrial machinery
Answer: (B) Credit used to hoard scarce commodities and speculate in them
Explanation: Selective controls seek to change credit availability for particular commodities, borrowers or purposes rather than overall liquidity. They have traditionally discouraged speculative accumulation of scarce goods by adjusting margins, rationing credit or prescribing lending restrictions.
Q336. Which combination reflects developmental functions historically undertaken by RBI?
[WBCS Mains 2023]
A. Promotion of banking habits only
B. Setting up specialised financing institutions only
C. Expansion of banking into rural areas only
D. All three activities
Answer: (D) All three activities
Explanation: Alongside currency, regulation and monetary policy, RBI historically promoted wider banking usage, helped establish development-finance institutions and supported rural banking access. These institution-building efforts sought to extend formal financial services beyond established urban centres.
Q335. Under India’s currency arrangements, who issues banknotes of denominations above one rupee?
[WBCS Mains 2023]
A. Finance Ministry
B. Reserve Bank of India
C. State Bank of India
D. Ministry of Commerce
Answer: (B) Reserve Bank of India
Explanation: The RBI has the statutory authority to issue banknotes in India, apart from the one-rupee note, which is issued by the Government of India. The distinction reflects the legal division between central-bank notes and government-issued currency.
Q334. On what reserve basis does RBI issue banknotes under the minimum-reserve system?
[WBCS Mains 2023]
A. Only promissory notes
B. Only rupee coins
C. Minimum holdings of gold and foreign securities
D. An equal amount of silver against each rupee
Answer: (C) Minimum holdings of gold and foreign securities
Explanation: India follows a minimum reserve system of note issue, under which RBI maintains prescribed gold and foreign-security reserves. The system does not require backing every note by an equivalent weight or value of precious metal.
Q333. Commercial banks chiefly create deposit money through which activity?
[WBCS Mains 2023]
A. Printing legal-tender notes
B. Lending against their deposit resources
C. Issuing debit cards without deposits
D. Collecting tax on securities
Answer: (B) Lending against their deposit resources
Explanation: When commercial banks extend loans, deposits and spending balances expand within the banking system. The process operates within regulatory, capital and liquidity constraints. Legal-tender banknote printing, by contrast, is a central-bank function.
Q332. In the expression repo transaction, the term REPO refers to which arrangement?
[WBCS Mains 2023]
A. A repurchase arrangement
B. A reverse payment order
C. A rupee purchase obligation
D. A regional payment option
Answer: (A) A repurchase arrangement
Explanation: A repurchase transaction involves selling eligible securities with an agreement to buy them back, generally after a short period. The arrangement supplies secured short-term funds, with securities acting as collateral for the borrowing.
Q331. What is the usual immediate effect on banks’ cash reserves when RBI sells securities in the open market?
[WBCS Mains 2023]
A. Reserves increase
B. Reserves decrease
C. Reserves are legally frozen
D. Reserves automatically double
Answer: (B) Reserves decrease
Explanation: Banks and other purchasers pay RBI for the securities. That payment withdraws rupee liquidity from the financial system and tends to reduce reserves. Selling securities is therefore generally a contractionary open-market operation.
Q330. The bank rate conventionally denotes the rate at which which institution lends to banks?
[WBCS Mains 2023]
A. Commercial banks lend to firms
B. NABARD lends to households
C. Reserve Bank lends to commercial banks
D. Foreign banks quote exchange transactions
Answer: (C) Reserve Bank lends to commercial banks
Explanation: Bank rate refers to a central-bank lending or discount-rate benchmark, not the retail rate charged on ordinary corporate loans. It is one of the conventional monetary-policy concepts used to influence the cost and availability of bank credit.
Q329. Which bank-rate change is conventionally used to restrain inflation?
[WBCS Mains 2023]
A. A bank-rate reduction
B. A bank-rate increase
C. A currency devaluation only
D. A permanent zero bank rate
Answer: (B) A bank-rate increase
Explanation: An increase in the bank rate signals tighter financing conditions and can raise the cost of credit. By discouraging borrowing and expenditure, it can help moderate excessive demand-driven inflation, though inflation also depends on supply and fiscal factors.
Q328. What does the abbreviation CRR expand to in Indian banking?
[WBCS Mains 2023]
A. Central Revenue Reserve
B. Cash Reserve Ratio
C. Current Repurchase Rate
D. Credit Rating Requirement
Answer: (B) Cash Reserve Ratio
Explanation: The Cash Reserve Ratio is a prescribed fraction of banks’ net demand and time liabilities maintained as cash balances with RBI. Changes in this requirement alter deployable liquidity and influence the credit-creation capacity of banks.
Q327. Which action is outside the RBI’s responsibility for managing monetary policy?
[WBCS Mains 2023]
A. Modifying bank rate
B. Performing open-market operations
C. Serving as lender of last resort
D. Choosing the government’s fiscal deficit to balance its budget
Answer: (D) Choosing the government’s fiscal deficit to balance its budget
Explanation: Monetary operations and emergency bank liquidity are central-bank functions. The size and financing of the fiscal deficit emerge from government budgeting and parliamentary authorisation, not an RBI decision to determine expenditure and revenue policy.
Q326. Which objective lies outside the direct remit of RBI monetary policy?
[WBCS Mains 2023]
A. Stable prices
B. Financial stability
C. Regulation of credit growth
D. Ensuring that government revenue exactly matches its expenditure
Answer: (D) Ensuring that government revenue exactly matches its expenditure
Explanation: Monetary policy addresses liquidity, policy interest rates and inflation while taking growth into account. Balancing government receipts against expenditure is fiscal policy. RBI may manage government borrowing but does not set the budget balance.
Q325. In what year was the Reserve Bank of India nationalised?
[WBCS Mains 2023]
A. 1935
B. 1956
C. 1949
D. 1961
Answer: (C) 1949
Explanation: The Reserve Bank began operating on 1 April 1935 and was originally privately owned. Ownership passed to the Government of India on 1 January 1949 under the RBI Transfer to Public Ownership legislation.
Q324. Which authority administers RBI repo and reverse-repo operations in India?
[WBCS Mains 2023]
A. Finance Ministry
B. Reserve Bank of India
C. Comptroller and Auditor General
D. State Bank of India
Answer: (B) Reserve Bank of India
Explanation: Repo and reverse-repo instruments belong to central-bank liquidity operations. RBI undertakes these transactions under its monetary operating framework, with monetary-policy benchmarks determined through the statutory Monetary Policy Committee arrangement.
Q323. In which Indian city was the country’s first organised stock exchange established?
[WBCS Mains 2023]
A. Kolkata
B. Bombay (Mumbai)
C. Ahmedabad
D. Chennai
Answer: (B) Bombay (Mumbai)
Explanation: The Bombay Stock Exchange traces its origins to organised trading by brokers in Bombay during the nineteenth century. The exchange became a foundational institution for formal securities trading, price discovery and capital mobilisation in India.
Q322. On which date was SEBI originally established as a non-statutory body?
[WBCS Mains 2023]
A. 12 July 1982
B. 12 April 1988
C. 9 July 1988
D. 5 April 1995
Answer: (B) 12 April 1988
Explanation: The Securities and Exchange Board of India was initially constituted on 12 April 1988. Statutory powers followed through the SEBI Act, 1992, enabling it to supervise securities-market intermediaries and protect investors.
Q321. Within a self-help group, who takes collective decisions on saving and obtaining loans?
[SSC CGL Tier I, 24 Jul, Shift 4 2023]
A. Outside NGO alone
B. Group members
C. The local commercial bank exclusively
D. Only government authorities
Answer: (B) Group members
Explanation: Self-help groups rely on their members for collective thrift, internal lending and borrowing choices. A bank or NGO may support the process, but the group’s governing decisions belong to its participating members.
Q320. Which condition is inconsistent with the RBI regulatory meaning of a microfinance loan?
[SSC CGL Tier I, 24 Jul, Shift 3 2023]
A. The loan is collateral-free
B. It is made to an eligible low-income household
C. Its repayment is compulsorily secured by a lien on deposits
D. It has appropriate income-based eligibility
Answer: (C) Its repayment is compulsorily secured by a lien on deposits
Explanation: A qualifying microfinance loan is unsecured and collateral-free, directed to eligible low-income households. Making it dependent on a lien over a borrower’s deposits conflicts with the intended protection for low-income microfinance clients.
Q319. To discourage overall credit expansion, a central bank may take which step?
[SSC CGL Tier I, 24 Jul, Shift 1 2023]
A. Lower CRR
B. Buy bonds to add liquidity
C. Reduce SLR
D. Increase the bank rate
Answer: (D) Increase the bank rate
Explanation: Increasing the bank rate is associated with tighter financing conditions and higher borrowing costs. By comparison, lower reserve requirements or market purchases of securities generally release liquidity and can promote lending.
Q318. Which institution is normally called the lender of last resort to India’s banking system?
[SSC CGL Tier I, 21 Jul, Shift 3 2023]
A. SEBI
B. Regional Rural Banks
C. Reserve Bank of India
D. State Bank of India
Answer: (C) Reserve Bank of India
Explanation: The RBI may supply emergency liquidity to eligible financial institutions in exceptional circumstances under its central-banking framework. This lender-of-last-resort role helps contain otherwise disorderly shortages of cash within the banking system.
Q317. What is aggregate monetary resources M3 in India principally equal to?
[SSC CGL Tier I, 20 Jul, Shift 4 2023]
A. M1 plus net time deposits of commercial banks
B. Only coins in circulation
C. M1 minus demand deposits
D. Postal savings alone
Answer: (A) M1 plus net time deposits of commercial banks
Explanation: M3 is conventionally termed broad money and consists of narrow money M1 plus net time deposits with banks. It captures major bank deposits beyond immediately spendable cash and demand balances.
Q316. According to liquidity preference, what ordinarily happens to the demand for money when interest rates rise?
[SSC CGL Tier I, 20 Jul, Shift 2 2023]
A. It invariably triples
B. It tends to decline
C. It cannot change
D. It becomes exactly zero
Answer: (B) It tends to decline
Explanation: A rise in interest rates increases the opportunity cost of holding non-interest-bearing money instead of earning returns. This can lower desired speculative cash balances, though transactions demand also depends on income and payments.
Q315. Microcredit delivered through which community structure was tested in a 19 July SSC CGL paper?
[SSC CGL Tier I, 19 Jul, Shift 4 2023]
A. Customs tribunals
B. Self-help groups
C. Election committees
D. Local export councils
Answer: (B) Self-help groups
Explanation: Self-help groups consolidate small savings and facilitate access to credit for members who may lack conventional collateral or financial records. Bank-linkage models often support the group’s access to formal lending.
Q314. Which body was established following recommendations of the Hilton Young Commission?
[SSC CGL Tier I, 19 Jul, Shift 3 2023]
A. Securities and Exchange Board of India
B. Reserve Bank of India
C. State Bank of India
D. NABARD
Answer: (B) Reserve Bank of India
Explanation: The Royal Commission on Indian Currency and Finance, often called the Hilton Young Commission, recommended creation of a central bank. The RBI was later constituted under the 1934 Act and started operations in 1935.
Q313. Which is a formal institutional source of credit in the Indian economy?
[SSC CGL Tier I, 18 Jul, Shift 2 2023]
A. Unregistered moneylender
B. A village trader lending privately
C. An informal commission agent
D. Commercial bank
Answer: (D) Commercial bank
Explanation: Commercial banks supply institutional credit within a regulated system, unlike informal lenders or traders who may extend personal credit. Formal banking enables documented terms, supervision and access to payment and deposit services.
Q312. What does the third letter of BFSI stand for?
[SSC CGL Tier I, 17 Jul, Shift 4 2023]
A. Inflation
B. Investment
C. Insurance
D. Index
Answer: (C) Insurance
Explanation: BFSI means Banking, Financial Services and Insurance. The umbrella label encompasses banking, lending, securities and insurance operations and is commonly used to describe India’s broader financial-services industry.
Q311. Under India’s conventional monetary aggregates, M2 adds what to M1?
[SSC CGL Tier I, 18 Jul, Shift 1 2023]
A. Post-office savings-bank deposits
B. National Savings Certificates only
C. Equity-market holdings
D. All corporate bonds
Answer: (A) Post-office savings-bank deposits
Explanation: The conventional M2 monetary measure adds post-office savings-bank deposits to M1. It should be distinguished from M3, which adds net time deposits of banks to the narrow-money aggregate.
Q310. Which option represents a difficulty of barter rather than a function fulfilled by money?
[SSC CGL Tier I, 17 Jul, Shift 3 2023]
A. Medium of exchange
B. Store of value
C. Difficulty in storing goods
D. Unit of account
Answer: (C) Difficulty in storing goods
Explanation: Money overcomes practical problems of barter by acting as a medium of exchange, store of value, unit of account and means of deferred payment. Difficulty in storage is a problem money can alleviate, not its economic function.
Q309. Which regulator oversees eligible microfinance NBFCs in India?
[SSC CGL Tier I, 14 Jul, Shift 4 2023]
A. SEBI
B. Reserve Bank of India
C. Election Commission
D. NSE
Answer: (B) Reserve Bank of India
Explanation: NBFC-MFIs operate within the RBI regulatory framework, including applicable rules on qualifying microfinance loans, customer conduct, income assessment and disclosures. SEBI primarily regulates securities markets, not NBFC micro-lending.
Q308. Place the establishment of IFCI, ICICI and IDBI in correct chronological order.
[SSC CGL Tier I, 14 Jul, Shift 3 2023]
A. ICICI → IFCI → IDBI
B. IFCI → ICICI → IDBI
C. IDBI → ICICI → IFCI
D. ICICI → IDBI → IFCI
Answer: (B) IFCI → ICICI → IDBI
Explanation: IFCI was established in 1948, ICICI in 1955 and IDBI in 1964. Their successive creation reflects the post-Independence development of specialised institutions to support industrial finance in India.
Q307. What is the full expansion of the abbreviation MUDRA in Indian micro-enterprise finance?
[SSC CGL Tier I, 14 Jul, Shift 3 2023]
A. Micro Units Development and Refinance Agency
B. Micro Urban Deposits and Reserves Authority
C. Medium Units Development and Regulatory Agency
D. Money Users Development and Risk Association
Answer: (A) Micro Units Development and Refinance Agency
Explanation: MUDRA stands for Micro Units Development and Refinance Agency. It was introduced to support the financing ecosystem for small and micro businesses, primarily through lending partners under the applicable government programme.
Q306. Which equation is Irving Fisher’s familiar equation of exchange?
[SSC CGL Tier I, 14 Jul, Shift 2 2023]
A. MP = VT
B. MV = PT
C. MV = P + T
D. M = V + P + T
Answer: (B) MV = PT
Explanation: In Fisher’s identity, M denotes money supply, V its velocity of circulation, P the price level and T the volume of transactions. MV = PT links nominal spending with prices and transactions under the accounting interpretation.
Q305. Which committee proposed a separate NBFC–microfinance institution category?
[SSC CGL Tier I, 27 Jul, Shift 2 2023]
A. Shah Committee
B. Malegam Committee
C. Sarkaria Commission
D. Kelkar Committee
Answer: (B) Malegam Committee
Explanation: The Y. H. Malegam committee reviewed microfinance after a sector crisis and made recommendations that informed RBI’s NBFC-MFI regulatory classification. Its work emphasised conduct, borrower safeguards and supervision.
Q304. Which organisation began the Self Help Group–Bank Linkage Programme in 1992–93?
[SSC CGL Tier I, 27 Jul, Shift 1 2023]
A. SIDBI
B. NABARD
C. SEBI
D. IDBI
Answer: (B) NABARD
Explanation: NABARD pioneered and supported the SHG–Bank Linkage Programme, linking community savings groups with formal banking credit. The model expanded financial access and collective financing options, particularly among rural and low-income households.
Q303. Under SLR rules, banks maintain prescribed liquid assets against which broad liability base?
[SSC CGL Tier I, 26 Jul, Shift 2 2023]
A. Only fixed deposits
B. Net demand and time liabilities
C. Only savings balances
D. The bank’s authorised share capital
Answer: (B) Net demand and time liabilities
Explanation: The statutory liquidity ratio is calculated on net demand and time liabilities. Eligible cash, gold and government-approved securities can meet the requirement, providing a mandatory liquidity buffer within the regulated banking system.
Q302. Which institution formed in 1982 is dedicated to agriculture and rural development finance?
[SSC CGL Tier I, 26 Jul, Shift 2 2023]
A. IFCI
B. NABARD
C. National Stock Exchange
D. PFRDA
Answer: (B) NABARD
Explanation: NABARD was established in 1982 as the apex development bank for agriculture and rural development. It supports rural credit through refinancing, institution-building and developmental programmes involving banks and other eligible agencies.
Q301. Which among Canara Bank, UCO Bank, Indian Overseas Bank and Bandhan Bank is not a public-sector bank?
[SSC CGL Tier I, 26 Jul, Shift 1 2023]
A. Canara Bank
B. UCO Bank
C. Indian Overseas Bank
D. Bandhan Bank
Answer: (D) Bandhan Bank
Explanation: Bandhan Bank is a private-sector bank, unlike the three named public-sector banks. The ownership classification matters because scheduled commercial banks can be public-sector, private-sector, foreign and other specialised categories.
Q300. Who is the Nobel laureate widely associated with the development of modern microfinance?
[SSC CGL Tier I, 25 Jul, Shift 2 2023]
A. Amartya Sen
B. Raghuram Rajan
C. Muhammad Yunus
D. Milton Friedman
Answer: (C) Muhammad Yunus
Explanation: Muhammad Yunus is closely associated with Grameen Bank and the spread of microcredit for low-income borrowers. He and Grameen Bank received the Nobel Peace Prize in 2006 for their work with grassroots economic development.
Q299. Which 2010 RBI committee studied concerns in India’s microfinance sector?
[SSC CGL Tier I, 25 Jul, Shift 1 2023]
A. Malegam Committee
B. Sivaraman Committee
C. Sarkaria Commission
D. Ashok Mehta Committee
Answer: (A) Malegam Committee
Explanation: The Y. H. Malegam committee was constituted in 2010 to examine microfinance sector issues, including borrower protection and institutional conduct. Its recommendations informed subsequent regulatory changes involving NBFC microfinance institutions.
Q298. Which is the false statement about monetary regulation by RBI and securities regulation by SEBI?
[SSC CHSL Tier I, 2 Aug, Shift 4 2023]
A. RBI determines bank rate
B. SEBI conducts RBI open-market operations
C. RBI is the currency issuer
D. The government issues ₹1 coins
Answer: (B) SEBI conducts RBI open-market operations
Explanation: Open-market purchases and sales of government securities for monetary liquidity management are undertaken by RBI, not SEBI. SEBI’s statutory mandate focuses on securities-market oversight and investor protection.
Q297. Which of these exchanges is India’s oldest organised stock exchange?
[SSC CHSL Tier I, 15 Mar, Shift 1 2023]
A. Multi Commodity Exchange
B. NCDEX
C. Bombay Stock Exchange
D. National Stock Exchange
Answer: (C) Bombay Stock Exchange
Explanation: The Bombay Stock Exchange traces its origins to the nineteenth century, with its establishment conventionally dated to 1875. It is older than India’s modern nationwide electronic stock exchanges and derivatives platforms.
Q296. What type of account does an Indian bank maintain with a foreign bank in the latter’s local currency?
[SSC CHSL Tier I, 9 Mar, Shift 3 2023]
A. Nostro account
B. Vostro account
C. LIBOR contract
D. MIBOR facility
Answer: (A) Nostro account
Explanation: A nostro account is a bank’s own account held with another bank abroad, commonly denominated in a foreign currency. It facilitates settlement of international payments and cross-border banking transactions.
Q295. Which national financial-inclusion programme was launched in 2014?
[MPSC Rajyaseva GS I 2023]
A. Disclosure of property scheme
B. General currency demonetisation
C. Pradhan Mantri Jan Dhan Yojana
D. All three
Answer: (C) Pradhan Mantri Jan Dhan Yojana
Explanation: Pradhan Mantri Jan Dhan Yojana was launched in August 2014 to expand access to banking, savings and related financial services. The programme is a national financial-inclusion mission rather than a demonetisation or property-disclosure initiative.
Q294. What category of bond dedicates its proceeds to environmentally sustainable investment?
[WBCS Prelims 2023]
A. Green bond
B. A currency note
C. An overdraft
D. A treasury deposit receipt
Answer: (A) Green bond
Explanation: A green bond is a debt instrument whose proceeds are designated for eligible environmentally beneficial projects. Issuers must ordinarily disclose and report the use of proceeds under relevant green-finance frameworks.
Q293. Which combination is treated as external financial-account flows rather than inward remittances in a balance-of-payments question?
[WBCS Prelims 2023]
A. Foreign loans, FDI and portfolio investments
B. Only workers’ remittances
C. Only tourism receipts
D. Only goods exports
Answer: (A) Foreign loans, FDI and portfolio investments
Explanation: Foreign borrowing, foreign direct investment and portfolio capital represent financing flows across borders. Workers’ remittances are normally current transfers and therefore enter the current account, not the financial-account investment category.
Q292. Which statutory body supervises and regulates microfinance institutions in India?
[SSC MTS, 11 Sep Shift 1 2023]
A. SEBI
B. SIDBI
C. Reserve Bank of India
D. NABARD
Answer: (C) Reserve Bank of India
Explanation: The RBI regulates microfinance lending within its legal framework and has issued rules on credit assessment, pricing disclosure, recovery practices and borrowers’ protection. NABARD supports rural development, while SEBI primarily regulates securities markets.
Q291. Which institution has authority to issue currency notes in India, apart from the government-issued one-rupee note?
[SSC MTS (2022 cycle), 15 May Shift 2 2023]
A. Industrial Finance Corporation
B. National Payments Corporation
C. Reserve Bank of India
D. State Bank of India
Answer: (C) Reserve Bank of India
Explanation: The RBI has the statutory responsibility for issuing most Indian banknotes under the RBI Act. One-rupee notes are issued by the Government of India. Printing and issuance are different functions, though the central bank coordinates the supply.
Q290. Which organisation decides the bank rate used in India?
[SSC MTS (2022 cycle), 12 May Shift 3 2023]
A. State Bank of India
B. Reserve Bank of India
C. Union Ministry of Finance
D. SEBI
Answer: (B) Reserve Bank of India
Explanation: The RBI establishes the bank rate as a central-bank policy instrument. Commercial banks set their own customer-lending rates within regulation, but they do not individually determine the country’s bank rate.
Q289. Who serves as chairperson of India’s statutory Monetary Policy Committee?
[SSC MTS, 14 Jun Shift 3 2023]
A. Governor of the RBI
B. Comptroller and Auditor General
C. Deputy Governor of RBI
D. Union Finance Minister
Answer: (A) Governor of the RBI
Explanation: The RBI Governor is ex officio chair of the six-member Monetary Policy Committee, constituted under the amended Reserve Bank of India Act. The committee votes on the policy repo rate to meet inflation objectives.
Q288. Which RBI report released in June 2022 outlined the payment systems agenda to 2025?
[SSC MTS (2022 cycle), 2 May Shift 3 2023]
A. Digital Currency Vision 2030
B. Payments Vision 2025
C. Digital Currency Vision 2025
D. Payments Vision 2030
Answer: (B) Payments Vision 2025
Explanation: Payments Vision 2025 sets out RBI’s strategic ambitions for secure, accessible and efficient digital payment systems. The initiative emphasises innovation and customer protection while developing the payment ecosystem.
Q287. Which organisation led the Self-Help Group–Bank Linkage movement with RBI backing?
[SSC MTS, 4 Sep Shift 3 2023]
A. SEBI
B. Indian Bank
C. NABARD
D. Any individual cooperative bank
Answer: (C) NABARD
Explanation: NABARD played the pioneering development role in connecting self-help groups with the formal banking network. The programme channels savings and credit to underserved households, using collective groups to strengthen access and financial inclusion.
Q286. An SSC exam asked which RBI scheme enabled the revival of outward travel and family remittances during the first quarter of FY2022–23. Which scheme was it?
[SSC MTS, 14 Sep Shift 3 2023]
A. Liberalised Remittance Scheme
B. Regular Remittance Scheme
C. Liquid Remittances Scheme
D. Foreign Remittances Scheme
Answer: (A) Liberalised Remittance Scheme
Explanation: The Liberalised Remittance Scheme permits eligible resident individuals to remit funds abroad for prescribed current and capital account purposes, within applicable limits. Foreign travel, support for relatives and gifts are examples of permitted remittance categories.
Q285. What is the banking term for RBI purchases or sales of government securities in the open market?
[SSC MTS (2022 cycle), 19 Jun Shift 3 2023]
A. Marginal Standing Facility
B. Credit Ceiling
C. Open Market Operations
D. Liquidity Adjustment Facility
Answer: (C) Open Market Operations
Explanation: Open market operations involve RBI trading government securities to adjust monetary liquidity. Buying securities generally adds bank reserves; selling them generally absorbs liquidity. Such operations differ from standing funding windows and interbank market rates.
Q284. Which activity best describes the contribution of commercial banks to economic development?
[SSC MTS, 5 Sep Shift 2 2023]
A. Mobilising savings and financing economic activity
B. Regulating trading on stock exchanges
C. Personally setting the national inflation target
D. Holding all government forex reserves
Answer: (A) Mobilising savings and financing economic activity
Explanation: Commercial banks collect deposits and extend loans for consumption, trade and investment. Their payment and financial-intermediation services facilitate production and growth. Securities oversight and official reserve management belong to separate public financial authorities.
Q283. What is the core business of a commercial bank?
[SSC MTS, 12 Sep Shift 1 2023]
A. Minting coins
B. Determining monetary policy
C. Receiving deposits and lending funds
D. Issuing every type of legal tender
Answer: (C) Receiving deposits and lending funds
Explanation: Commercial banks provide deposit accounts and credit to households and firms. Their ordinary activities differ from a central bank’s roles in monetary policy, monetary stability and regulation of the financial system.
Q282. Which revenue stream is ordinarily the main earnings source for a commercial bank?
[SSC MTS, 12 Sep Shift 3 2023]
A. Customer donations
B. Equity trading profits alone
C. Government grants
D. Interest charged on loans and advances
Answer: (D) Interest charged on loans and advances
Explanation: Loans and advances generate interest income for banks. The interest rate spread after deposit and funding costs helps cover operating expenses and risk. Banks may also earn fee income and investment returns.
Q281. What is the primary informational value of a bank statement to an account holder?
[SSC MTS, 14 Sep Shift 2 2023]
A. Tracking transactions, income and spending
B. Moving money automatically to a different bank
C. Advertising financial products
D. Providing a bank locker
Answer: (A) Tracking transactions, income and spending
Explanation: A bank statement lists account transactions over a period, normally including credits, debits and applicable charges. Reviewing it helps reconcile balances, budget expenses and identify discrepancies or possible unauthorised transactions.
Q280. In secured lending, what is meant by collateral?
[SSC MTS, 8 Sep Shift 3 2023]
A. A portfolio managed on behalf of the lender
B. A type of credit card
C. An electronic payments platform
D. An asset given as security against repayment
Answer: (D) An asset given as security against repayment
Explanation: Collateral is property or another acceptable asset pledged to support a loan. When repayment fails, the lender may enforce the security through lawful procedures, reducing credit losses compared with an otherwise unsecured exposure.
Q279. What does an overdraft facility offer a bank customer?
[SSC MTS, 13 Sep Shift 2 2023]
A. A compulsory account-to-account transfer
B. An increased cash withdrawal cap at all ATMs
C. Short-term borrowing beyond the positive account balance
D. A waiver of all loan interest
Answer: (C) Short-term borrowing beyond the positive account balance
Explanation: An overdraft is a sanctioned facility permitting a customer to draw more than the available account balance, up to an agreed limit. It helps meet temporary liquidity needs and usually attracts interest on utilisation.
Q278. In banking terminology, what does ATM stand for?
[SSC MTS, 5 Sep Shift 3 2023]
A. Automated Teller Machine
B. Automated Transaction Management
C. Account Tracking Module
D. All-Time Money
Answer: (A) Automated Teller Machine
Explanation: An automated teller machine provides electronic access to services such as cash withdrawal and balance inquiry without an ordinary branch counter. Many machines use card and PIN authentication, though newer technologies may also support other methods.
Q277. Which comparison between debit and credit cards is correct?
[SSC MTS, 1 Sep Shift 1 2023]
A. Debit cards work only online
B. Credit cards always use a signature while debit cards always use a PIN
C. Debit cards access account funds while credit cards permit borrowing up to a limit
D. Debit cards always have a higher interest rate
Answer: (C) Debit cards access account funds while credit cards permit borrowing up to a limit
Explanation: A debit card normally draws on the cardholder’s deposit-account funds. A credit card provides a revolving credit line with repayment obligations. Both can be used across many physical and online channels.
Q276. The requirement that a bank hold prescribed liquid assets for itself is known as which ratio?
[SSC MTS (2022 cycle), 16 May Shift 3 2023]
A. Marginal stability scheme
B. Statutory Liquidity Ratio
C. Open Market Operations
D. Legal Deposit Ratio
Answer: (B) Statutory Liquidity Ratio
Explanation: The Statutory Liquidity Ratio prescribes a holding of qualifying liquid assets, such as approved government securities, against a defined deposit-liability base. It is distinct from the cash reserves maintained with RBI under CRR.
Q275. Which balance-sheet item is ordinarily the main liability of a commercial bank?
[SSC MTS (2022 cycle), 2 May Shift 3 2023]
A. Deposits accepted from customers
B. Economic rent
C. Loans disbursed
D. Securities owned by the bank
Answer: (A) Deposits accepted from customers
Explanation: A customer deposit represents money owed by the bank to the depositor and is therefore a bank liability. Loans and most investment holdings are assets because they generate contractual claims for the bank.
Q274. Which qualitative credit-control method relies on the central bank persuading commercial banks to act in the public interest?
[SSC MTS (2022 cycle), 17 May Shift 3 2023]
A. Marginal Standing Facility
B. Credit Rationing
C. Moral Suasion
D. Margin Requirements
Answer: (C) Moral Suasion
Explanation: Moral suasion uses guidance and persuasion by a central bank rather than a legally binding change in quantitative reserve requirements or interest rates. It may encourage banks to adjust lending behaviour voluntarily.
Q273. Which assertion about reserve ratios and liquidity is incorrect?
[SSC MTS (2022 cycle), 18 May Shift 1 2023]
A. A higher bank rate can restrain money creation
B. Reducing the CRR necessarily reduces liquidity
C. Increasing the CRR may reduce lendable funds
D. A lower SLR can free liquid resources
Answer: (B) Reducing the CRR necessarily reduces liquidity
Explanation: A reduction in CRR releases funds that banks would otherwise hold at RBI; it normally increases, rather than decreases, banking-system liquidity. Conversely, higher CRR reduces the pool available for loans or investments.
Q272. What was the benchmark minimum lending rate called under an RBI pricing system introduced in 2010?
[SSC MTS (2022 cycle), 13 Jun Shift 3 2023]
A. Base rate
B. Reverse repo rate
C. Repo rate
D. Cash rate
Answer: (A) Base rate
Explanation: The base rate was introduced for banks from July 2010 as a transparent benchmark for domestic lending. Subsequent floating-rate frameworks included MCLR and external benchmarks, so the correct concept is historical to the examination context.
Q271. Which financial institution is particularly associated with assistance to microfinance institutions in India?
[SSC MTS, 12 Sep Shift 3 2023]
A. Department of Economic Affairs
B. Ministry of Corporate Affairs
C. Indian Banks’ Association
D. SIDBI
Answer: (D) SIDBI
Explanation: SIDBI promotes financing and development of MSMEs and has supported the microfinance sector through institutional funding and capacity development. It is separate from RBI’s role as the regulatory authority.
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.
Q260. Which combination is associated with the traditional money-supply measure M4?
[WBCS Mains 2022]
A. M3 plus specified post-office deposits
B. Only bank time deposits
C. Only notes and coins
D. Only post-office certificates
Answer: (A) M3 plus specified post-office deposits
Explanation: Under older monetary classifications, M4 extends broad money by including eligible post-office deposits, excluding certain savings instruments. A question framed using historical M4 should be interpreted against definitions used when the examination occurred.
Q259. Which is NOT generally recognised as a named monetary-policy framework?
[WBCS Mains 2022]
A. Exchange-rate anchoring
B. Monetary-aggregate targeting
C. Inflation targeting
D. Sterilisation rate control
Answer: (D) Sterilisation rate control
Explanation: Exchange-rate, money-supply and inflation targeting are recognised approaches for setting monetary policy. Sterilisation is an operation used to offset liquidity changes, particularly those arising from foreign-exchange intervention, rather than a distinct formal targeting framework.
Q258. Which components enter the definition of reserve money or high-powered money?
[WBCS Mains 2022]
A. Only bank loans
B. Notes circulating plus banker deposits and other deposits with RBI
C. All bank time deposits
D. Only foreign-exchange reserves
Answer: (B) Notes circulating plus banker deposits and other deposits with RBI
Explanation: Reserve money comprises currency in circulation and specified deposits held with RBI, including bankers’ deposits and other deposits. It is the monetary base on which deposit multiplication can operate through the banking system.
Q257. Which alternative name is used for high-powered money?
[WBCS Mains 2022]
A. Broad money
B. Reserve money
C. Quasi money
D. Credit money only
Answer: (B) Reserve money
Explanation: The monetary base is often called reserve money or high-powered money because banks can expand deposits on the foundation of reserves and currency. It differs from M3, which includes much larger banking-system deposits.
Q256. RBI’s statutory authority to require commercial banks to maintain CRR arises under which legislation?
[WBCS Mains 2022]
A. Companies Act
B. Income-tax Act
C. Reserve Bank of India Act
D. SEBI Act
Answer: (C) Reserve Bank of India Act
Explanation: Section 42 of the RBI Act provides the framework for required cash reserves of scheduled banks. Maintaining specified balances at RBI influences systemic liquidity and underpins the central bank’s use of reserve requirements.
Q255. How many commercial banks were nationalised in the second round in 1980?
[WBCS Mains 2022]
A. Eight
B. Six
C. Five
D. Four
Answer: (B) Six
Explanation: The government nationalised fourteen major commercial banks in 1969 and another six banks in 1980. The two rounds expanded the state-owned share of bank deposits, credit delivery and rural branch networks.
Q254. What is the capital adequacy ratio for a commercial bank?
[WBCS Mains 2022]
A. Available regulatory capital divided by risk-weighted assets
B. Capital divided by term deposits only
C. Capital divided by NPAs only
D. Capital divided by staff salaries
Answer: (A) Available regulatory capital divided by risk-weighted assets
Explanation: Capital adequacy compares a bank’s eligible regulatory capital with risk-weighted exposures. It gauges its ability to absorb losses relative to the risks undertaken, rather than merely measuring capital against deposits or outstanding bad loans.
Q253. Which central-bank technique is an example of qualitative credit control?
[WBCS Mains 2022]
A. Open-market purchases
B. Variable CRR
C. Repo rate adjustment
D. Moral suasion
Answer: (D) Moral suasion
Explanation: Moral suasion involves influencing lending behaviour through guidance, persuasion and communication rather than changing a general reserve or policy rate. This is a selective or qualitative instrument because it addresses banks’ conduct and credit choices.
Q252. In classical banking terminology, a central bank’s lending rate to commercial banks is called what?
[WBCS Mains 2022]
A. Open-market operation
B. Statutory liquidity ratio
C. Discount rate
D. Customs tariff
Answer: (C) Discount rate
Explanation: The discount rate is the rate at which eligible paper can be discounted or liquidity provided by the central bank. This mechanism is separate from open-market trading, liquidity-reserve requirements and government customs taxation.
Q251. What does demonetisation of a currency denomination mean?
[WBCS Mains 2022]
A. Making it legal tender for the first time
B. Removing its legal-tender status
C. Increasing banks’ capital
D. Issuing a new sovereign bond
Answer: (B) Removing its legal-tender status
Explanation: Demonetisation withdraws the legal-tender character of specified currency units. It is often associated with exchange or withdrawal programmes, but the legal change should not be equated mechanically with every possible eventual change in total money supply.
Q250. Under the conventional interest-rate corridor, how is the repo rate normally positioned relative to reverse repo?
[WBCS Mains 2022]
A. Generally above the reverse-repo rate
B. Always below it
C. Always identical
D. Equal to bond yields by law
Answer: (A) Generally above the reverse-repo rate
Explanation: In the conventional liquidity-adjustment corridor, banks borrow from RBI at a rate above the rate received for placing surplus liquidity with it. The precise framework and corridor instruments may be changed through monetary-policy decisions.
Q249. What effect does an RBI announcement increasing CRR normally have on loanable resources?
[WBCS Mains 2022]
A. It increases government lending capacity
B. It increases RBI foreign assets
C. It reduces resources available for commercial-bank lending
D. It eliminates bank deposits
Answer: (C) It reduces resources available for commercial-bank lending
Explanation: A larger share of bank liabilities must be maintained as mandatory reserves with RBI. Consequently less liquidity remains available to support loans, putting downward pressure on the potential credit multiplier.
Q248. What was the central focus of the Sukhamoy Chakravarty Committee?
[WBCS Mains 2022]
A. Agricultural land ceilings
B. Tariff protection
C. Direct-tax slabs
D. Reform of the monetary system
Answer: (D) Reform of the monetary system
Explanation: The Chakravarty Committee reviewed the operation of India’s monetary system and recommended strengthening monetary management, including attention to monetary targets and price stability. It was not principally a committee on farmland, tariffs or income taxation.
Q247. What does RBI mean by open-market operations in government securities?
[WBCS Mains 2022]
A. Changing cash-counter hours
B. Directing all bank loans
C. Purchases and sales of government securities
D. Discontinuing foreign-currency trade
Answer: (C) Purchases and sales of government securities
Explanation: Open-market operations are central-bank transactions in government securities. Purchases normally add rupee liquidity and sales absorb it. Their monetary effect distinguishes them from bank inspections, branch administration or direct lending instructions.
Q246. Which of the following is primarily a trade-policy issue, not a principal objective of monetary policy?
[WBCS Mains 2022]
A. Economic stability
B. Price stability
C. Direct regulation of foreign trade
D. Orderly monetary conditions
Answer: (C) Direct regulation of foreign trade
Explanation: Monetary authorities address inflation, liquidity and aspects of financial and exchange-rate stability. Import-export rules and direct trade restrictions are largely set through commerce and fiscal policy, outside monetary policy’s primary mandate.
Q245. What reform direction did banking-sector reform committees recommend for statutory liquidity requirements?
[WBCS Mains 2022]
A. Gradually reducing excessive statutory pre-emptions
B. Increasing SLR without limit
C. Removing deposit insurance
D. Banning interbank settlement
Answer: (A) Gradually reducing excessive statutory pre-emptions
Explanation: Banking reforms aimed to reduce high mandatory pre-emption of bank resources through reserve and liquidity requirements. Easing these burdens was intended to improve credit allocation and allow more market-based financial intermediation.
Q244. Which approach to bank interest rates is associated with post-1991 financial liberalisation?
[WBCS Mains 2022]
A. Permanent government fixation of every rate
B. Progressive deregulation of interest rates
C. Compulsory zero interest on all loans
D. Prohibiting savings deposits
Answer: (B) Progressive deregulation of interest rates
Explanation: Interest-rate deregulation reduced administrative control over deposit and lending rates. The reform sought to improve market allocation of credit, pricing transparency and banking competition while RBI retained important regulatory and monetary-policy functions.
Q243. How do open-market operations compare with direct controls on bank lending?
[WBCS Mains 2022]
A. They are indirect market transactions
B. They are a tax on household income
C. They involve issuing bank licences only
D. They are compulsory agricultural loans
Answer: (A) They are indirect market transactions
Explanation: RBI conducts open-market transactions in eligible securities to influence system-wide liquidity indirectly. Their effect runs through bank reserves and market rates rather than through individually ordered loans or direct sector-by-sector credit quotas.
Q242. In a liquidity-injecting repo operation, RBI generally performs what role?
[WBCS Mains 2022]
A. It borrows cash from banks without collateral
B. It lends cash against eligible securities
C. It cancels deposits
D. It issues equity to investors
Answer: (B) It lends cash against eligible securities
Explanation: A repo injects short-term rupee funds to counterparties against eligible securities, coupled with an agreement to reverse the transaction. The borrowing institution obtains liquidity while securities provide protection to RBI.
Q241. Which of these institutions manages India’s foreign-exchange reserves?
[WBCS Mains 2022]
A. State governments exclusively
B. District commercial banks
C. Reserve Bank of India
D. Only stock exchanges
Answer: (C) Reserve Bank of India
Explanation: RBI manages India’s official foreign-exchange reserves under the prevailing policy and legal framework. The reserves support external liquidity and orderly market conditions; they are distinct from the private foreign assets owned by individuals or companies.
Q240. Which statutory regulator principally oversees Indian mutual funds?
[WBCS Mains 2022]
A. Reserve Bank of India
B. SEBI
C. Individual stock exchanges alone
D. Only commercial banks
Answer: (B) SEBI
Explanation: SEBI establishes registration, conduct and disclosure requirements for mutual funds and their asset-management arrangements. RBI regulates banking and monetary policy, although banking institutions may distribute mutual fund products under applicable rules.
Q239. The 2020 amendment to which core law strengthened RBI oversight of cooperative banking institutions?
[RRB Group D, 14 Sep, Shift 3 2022]
A. Companies Act 1956
B. Securities Contracts Regulation Act
C. Banking Regulation Act 1949
D. Indian Stamp Act
Answer: (C) Banking Regulation Act 1949
Explanation: The Banking Regulation (Amendment) Act, 2020 modified the 1949 banking law and strengthened regulatory provisions for certain cooperative banks. The changes concerned governance and supervision while retaining specified statutory exclusions.
Q238. Under Indian banking regulations, who sets the Cash Reserve Ratio?
[RRB Group D, 9 Sep, Shift 1 2022]
A. The RBI
B. SEBI
C. The Ministry of Commerce
D. Stock exchange clearing members
Answer: (A) The RBI
Explanation: The central bank prescribes CRR under the monetary and banking framework. CRR requires banks to maintain a designated share of qualifying liabilities as cash balances with RBI, affecting deployable liquidity.
Q237. Which combination of long-term policies can address supply-driven inflation?
[MPSC Rajyaseva GS I 2022]
A. Changing production patterns, calibrated imports, transport and storage infrastructure
B. Only reducing warehouse capacity
C. Only extending short-term consumer loans
D. Only increasing customs documentation
Answer: (A) Changing production patterns, calibrated imports, transport and storage infrastructure
Explanation: Supply-side inflation may be eased by improving production, transport and storage and adjusting import policy. Unlike demand suppression alone, these structural measures can increase availability and reduce distribution bottlenecks in essential commodities.
Q236. Which Indian bank first established an office in Australia’s Victoria state, according to the MPSC paper?
[MPSC Rajyaseva GS I 2022]
A. Dena Bank
B. State Bank of India
C. Bank of Baroda
D. Punjab National Bank
Answer: (B) State Bank of India
Explanation: State Bank of India developed an overseas presence in Australia and was identified in the paper as the first Indian bank with an office in Victoria. Overseas branches support international transactions and banking services for clients.
Q235. What is the full form of the principal securities-market regulator SEBI?
[WBCS Prelims 2022]
A. State Earnings Board of India
B. Securities and Exchange Bank of India
C. Securities and Exchange Board of India
D. State Exchange Banking Institution
Answer: (C) Securities and Exchange Board of India
Explanation: SEBI is the Securities and Exchange Board of India. It became a statutory authority in 1992 after being established in 1988 and oversees market intermediaries and investor-protection requirements.
Q234. Under RBI microfinance rules introduced in March 2022, what maximum annual household income was used for eligibility?
[RRB Group D, 19 Sep Shift 3 2022]
A. ₹4 lakh
B. ₹3 lakh
C. ₹3.5 lakh
D. ₹3.25 lakh
Answer: (B) ₹3 lakh
Explanation: The harmonised RBI microfinance regulations issued in March 2022 used an annual household income ceiling of three lakh rupees to define a microfinance loan. The rules also strengthened transparent pricing and assessment of repayment obligations.
Q233. Which institution performs central credit-control functions in India?
[RRB Group D, 12 Sep Shift 3 2022]
A. NITI Aayog
B. Ministry of Finance
C. Reserve Bank of India
D. Ministry of Education
Answer: (C) Reserve Bank of India
Explanation: RBI influences credit supply and banking liquidity through monetary-policy and regulatory instruments, including policy rates, reserve requirements and market operations. Other public authorities do not perform the central bank’s ordinary credit-control function.
Q232. Which functions belong to RBI:
A. issuing banknotes,
B. using monetary-policy instruments,
C. banking for government,
D. taking ordinary retail deposits and making household loans?
[RRB Group D, 19 Sep Shift 2 2022]
A. A, B and C
B. B, C and D
C. A, C and D
D. A, B and D
Answer: (A) A, B and C
Explanation: RBI issues banknotes, conducts monetary policy and acts as banker to government. Providing standard retail savings accounts and lending to ordinary customers are principally functions of commercial banks, not its central-bank role.
Q231. How many Deputy Governors were envisaged in the standard RBI leadership structure as of June 2022?
[RRB Group D, 20 Sep Shift 3 2022]
A. Four
B. One
C. Three
D. Two
Answer: (A) Four
Explanation: The Reserve Bank of India Act provides a Governor supported by up to four Deputy Governors. These senior executives oversee major functional areas and assist in governance and operations of the central bank.
Q230. To counter inflation, should RBI raise the CRR, raise the repo rate, or both?
[RRB Group D, 5 Sep Shift 3 2022]
A. Both measures
B. Raise CRR only
C. Raise repo rate only
D. Neither measure
Answer: (A) Both measures
Explanation: Raising CRR reduces funds banks can deploy, while raising the policy repo rate tends to make borrowing costlier. Both are generally contractionary approaches capable of moderating credit demand and inflationary pressure.
Q229. What does Cash Reserve Ratio require commercial banks to maintain?
[RRB Group D, 15 Sep Shift 2 2022]
A. A fixed fraction invested in shares
B. The minimum balance in each customer’s account
C. Prescribed cash balances with RBI
D. Only reserves against loans already disbursed
Answer: (C) Prescribed cash balances with RBI
Explanation: CRR is the RBI-prescribed proportion of net demand and time liabilities that banks maintain as cash balances with the central bank. The requirement influences system liquidity and the lending capacity of banks.
Q228. Under the principal-business test applied to NBFCs in April 2022, financial assets had to exceed which share of adjusted total assets?
[RRB Group D, 29 Sep Shift 2 2022]
A. 70%
B. 60%
C. 80%
D. 50%
Answer: (D) 50%
Explanation: RBI’s principal-business test historically used a threshold of more than 50 percent for financial assets, together with a corresponding criterion for income from financial assets. The question concerns the rules at the specified historical date.
Q227. Which formula correctly expresses India’s broad-money aggregate M3?
[RRB Group D, 20 Sep Shift 2 2022]
A. M1 plus all post-office deposits
B. M1 plus only post-office savings deposits
C. Currency held by public plus demand deposits plus net time deposits of commercial banks
D. M2 plus postal savings accounts
Answer: (C) Currency held by public plus demand deposits plus net time deposits of commercial banks
Explanation: M3 is commonly expressed as M1 plus net time deposits with the banking system. M1 includes currency held by the public and net demand deposits, with other deposits with RBI included in complete official definitions.
Q226. What theme did RBI choose for Financial Literacy Week in 2022?
[RRB Group D, 25 Aug Shift 2 2022]
A. Credit Discipline and Formal Credit
B. Farmers
C. Micro, Small and Medium Enterprises
D. Go Digital, Go Secure
Answer: (D) Go Digital, Go Secure
Explanation: RBI organised its 2022 Financial Literacy Week around the theme Go Digital, Go Secure, focusing on awareness of safe digital transactions and banking access. Earlier annual themes addressed farmers, MSMEs and formal borrowing.
Q225. Which statements regarding the RBI Governor are correct?
(1) The Union Government appoints the Governor.
(2) The Constitution gives the Union direct power to direct RBI.
(3) The Governor derives powers from the RBI Act.
[UPSC CSE Prelims 2021]
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. All three
Answer: (C) 1 and 3 only
Explanation: The RBI Act, 1934 provides for appointment and powers of the Governor. Section 7 of that Act also addresses directions in public interest. The Constitution does not itself contain the claimed RBI-direction provision, making the second statement incorrect.
Q224. Regarding Urban Cooperative Banks, which statements are correct?
(1) State-appointed local boards alone regulate them.
(2) They may issue equity and preference shares.
(3) The 1966 amendment extended banking law to them.
[UPSC CSE Prelims 2021]
A. 1 only
B. 2 and 3 only
C. 1 and 3 only
D. All three
Answer: (B) 2 and 3 only
Explanation: Urban cooperative banks face banking supervision by RBI alongside cooperative-law administration by relevant registrars. They are not solely controlled by state-appointed local boards. The 1966 legislation extended banking regulation; later reforms also enabled capital instruments subject to conditions.
Q223. Which method of financing a fiscal deficit is usually most inflationary?
[UPSC CSE Prelims 2021]
A. Repayment of public debt
B. Borrowing from the public
C. Borrowing from banks
D. Creating new money
Answer: (D) Creating new money
Explanation: Creating new money to finance government expenditure increases purchasing power without necessarily increasing current output. This raises inflationary pressure more directly than borrowing existing money from savers. The size of the effect still depends on demand, productive capacity and policy responses.
Q222. Which factor generally raises the money multiplier?
[UPSC CSE Prelims 2021]
A. Higher bank CRR
B. Higher bank SLR
C. Greater use of bank accounts instead of cash
D. A larger population regardless of banking practices
Answer: (C) Greater use of bank accounts instead of cash
Explanation: When people deposit more funds in banks and hold less currency, the same monetary base can support a larger volume of deposits and credit. Raising mandatory cash or liquid-asset ratios restricts this process rather than strengthening it.
Q221. When does the RBI act as the lender of last resort?
[UPSC CSE Prelims 2021]
A. When lending directly to industrial associations
B. When providing emergency liquidity to banks
C. When financing all government deficits
D. When purchasing ordinary shares in private firms
Answer: (B) When providing emergency liquidity to banks
Explanation: A central bank protects financial stability by supplying liquidity to eligible banks facing exceptional funding shortages. This emergency banking role differs from long-term industry lending or routine fiscal-deficit financing and helps prevent bank runs from spreading.
Q220. Which rate represents a benchmark below which banks were generally not permitted to price lending under the earlier base-rate framework?
[WBCS Mains 2021]
A. Reserve Rate
B. Base Rate
C. Bankruptcy Rate
D. Zero Coupon Rate
Answer: (B) Base Rate
Explanation: The base rate system prescribed a minimum benchmark for most bank lending before later MCLR-linked and external-benchmark frameworks developed. Its purpose was greater transparency in loan pricing and stronger transmission of monetary-policy changes.
Q219. Which action would not normally form part of an anti-inflationary monetary policy?
[WBCS Mains 2021]
A. Increasing the bank rate
B. Increasing reserve requirements
C. Buying government securities from the market
D. Rationing credit
Answer: (C) Buying government securities from the market
Explanation: RBI purchases of government securities inject money into the banking system and usually ease liquidity. Higher reserve requirements, rate increases and restrictive credit allocations tend to tighten financial conditions and suppress excessive demand.
Q218. Which is a qualitative credit-control method?
[WBCS Mains 2021]
A. Bank rate
B. Cash reserve ratio
C. Credit rationing
D. Broad-money aggregate publication
Answer: (C) Credit rationing
Explanation: Credit rationing selectively limits loans to borrowers or activities. It differs from quantitative tools such as reserve requirements and central policy rates, which change aggregate banking liquidity or financing costs more generally.
Q217. Which institution issues Indian banknotes apart from the government-issued one-rupee note?
[WBCS Mains 2021]
A. All branches of SBI
B. Reserve Bank of India
C. Parliament Secretariat
D. Insurance regulator
Answer: (B) Reserve Bank of India
Explanation: The Reserve Bank is the statutory issuer of banknotes; the one-rupee note is issued by the Union Government. In India, the issue of currency is distinct from banks creating deposits through lending.
Q216. Repo and reverse-repo rates mainly belong to which area of public policy?
[WBCS Mains 2021]
A. Customs duty administration
B. Agricultural procurement
C. Monetary and credit policy
D. Election expenditure monitoring
Answer: (C) Monetary and credit policy
Explanation: These rates feature in RBI short-term liquidity management and help transmit monetary policy to money markets and commercial banks. They do not directly set customs tariffs, farm procurement prices or election expenditure rules.
Q215. Which body’s recommendation was instrumental in setting up RBI?
[WBCS Mains 2021]
A. Simon Commission
B. Hilton Young Royal Commission
C. First Finance Commission
D. Narasimham Committee
Answer: (B) Hilton Young Royal Commission
Explanation: The Royal Commission on Indian Currency and Finance, commonly called the Hilton Young Commission, recommended creating a central bank. RBI was eventually established under the 1934 Act and began operations in April 1935.
Q214. Which authority is responsible for managing monetary policy in India?
[WBCS Mains 2021]
A. Moneylenders
B. Reserve Bank of India
C. Private industry associations
D. Election Commission
Answer: (B) Reserve Bank of India
Explanation: India’s central bank implements monetary policy within the statutory framework. The Monetary Policy Committee decides the policy repo rate, while RBI departments undertake supporting liquidity, reserve management and market operations.
Q213. Which combination contains the quantitative credit-control tools traditionally used by RBI?
[WBCS Mains 2021]
A. CRR, bank rate and open-market operations
B. CRR and moral suasion only
C. Margin requirements alone
D. Interest subsidies and import duties
Answer: (A) CRR, bank rate and open-market operations
Explanation: Reserve ratios, central-bank rate instruments and open-market transactions work on the overall availability or price of credit. Margin requirements and moral suasion, by contrast, are commonly treated as selective or qualitative controls.
Q212. What happens to potential commercial-bank credit creation when RBI lowers CRR?
[WBCS Mains 2021]
A. It generally increases
B. It must become zero
C. It invariably decreases
D. It becomes unrelated to deposits
Answer: (A) It generally increases
Explanation: Reducing CRR releases mandatory cash balances that banks otherwise must maintain with RBI. Subject to capital constraints and credit demand, banks can use the resulting additional liquidity to make more loans.
Q211. What policy change accompanied Narasimham Committee recommendations regarding Indian banking competition?
[WBCS Mains 2021]
A. Allowing entry of new private-sector banks
B. Permanently prohibiting private banks
C. Ending bank supervision
D. Replacing all banks with credit cooperatives
Answer: (A) Allowing entry of new private-sector banks
Explanation: The early 1990s banking reform agenda recommended more competitive and efficient intermediation. RBI developed licensing rules permitting a new generation of private-sector banks while retaining prudential norms, deposit safeguards and regulatory oversight.
Q210. Which money aggregate is commonly referred to as broad money in Indian monetary statistics?
[WBCS Mains 2021]
A. M1
B. M2
C. M3
D. Currency supply only
Answer: (C) M3
Explanation: M3 encompasses currency with the public along with demand and time deposits and specified other deposits with RBI. Because it includes time deposits, it is broader than immediately spendable money balances in M1.
Q209. Which of the following was associated with the original fourteen-bank nationalisation?
[WBCS Mains 2021]
A. 1921
B. 1949
C. 1969
D. 1991
Answer: (C) 1969
Explanation: Fourteen large Indian commercial banks were nationalised in July 1969. A second nationalisation in 1980 brought six more banks into public ownership. These changes aimed to expand banking access and redirect credit priorities.
Q208. What term denotes the rate of a bank’s minimum lending benchmark under the older benchmark system?
[WBCS Mains 2021]
A. Prime money ratio
B. Base rate
C. Fiscal spread
D. Real effective exchange rate
Answer: (B) Base rate
Explanation: The base-rate framework required banks to transparently publish a minimum benchmark for their loans, subject to specified exceptions. It was introduced to improve interest-rate transmission and borrower awareness before subsequent reforms.
Q207. In which city is the National Stock Exchange based?
[WBCS Mains 2021]
A. New Delhi
B. Mumbai
C. Nagpur
D. Kolkata
Answer: (B) Mumbai
Explanation: The National Stock Exchange is headquartered in Mumbai. It is an important electronic trading venue for equities and other permitted instruments, operating subject to regulatory oversight by the Securities and Exchange Board of India.
Q206. A person who owns a company’s debentures is legally regarded primarily as its what?
[WBCS Mains 2021]
A. Equity shareholder
B. Creditor
C. Debtor
D. Director
Answer: (B) Creditor
Explanation: Debentures are debt instruments, so their holders lend funds to the issuing company and acquire a contractual claim for interest and repayment. They do not thereby become shareholders or receive normal equity voting rights.
Q205. What is traded in the gilt-edged securities market?
[WBCS Mains 2021]
A. Gold ornaments
B. Government debt securities
C. Firearms
D. Unrefined metals
Answer: (B) Government debt securities
Explanation: The gilt-edged market deals in government securities, traditionally regarded as having low sovereign default risk. It is not a bullion market; its function is raising government debt finance and providing liquid debt instruments.
Q204. The expressions bull market and bear market are used mainly in which market?
[WBCS Mains 2021]
A. Foreign-trade shipping
B. Retail banking
C. Share market
D. Industrial manufacturing
Answer: (C) Share market
Explanation: Bull markets denote sustained optimism and rising prices, while bear markets denote prolonged pessimism and declining prices. These terms describe securities-market trends rather than routine banking operations or physical-goods production.
Q203. Which claim correctly characterises an equity-oriented mutual fund?
[WBCS Mains 2021]
A. It guarantees a predetermined return
B. It invests predominantly in shares
C. It contains no market risk
D. It must invest only in government bonds
Answer: (B) It invests predominantly in shares
Explanation: Equity mutual funds allocate most of their assets to company shares and consequently fluctuate with market performance. They generally do not guarantee fixed returns, unlike the contractual interest claims offered by many bonds.
Q202. Which statement incorrectly describes the Reserve Bank of India?
[RRB NTPC CBT I, 8 Feb, Shift 1 2021]
A. It serves as the central bank
B. It manages currency and monetary policy
C. It is privately owned as of 2021
D. It supervises banks
Answer: (C) It is privately owned as of 2021
Explanation: Although the RBI began as a privately held institution, it was nationalised in 1949. By the time of this examination it was wholly government-owned, functioning as India’s monetary authority and banking regulator.
Q201. Who has responsibility for regulating the supply of money in India?
[RRB NTPC CBT I, 11 Feb, Shift 2 2021]
A. SBI
B. Reserve Bank of India
C. SEBI
D. IRDAI
Answer: (B) Reserve Bank of India
Explanation: The RBI manages the monetary framework and influences money and credit conditions using tools such as policy interest rates, reserve requirements and market operations. Other named institutions serve commercial or sector-specific regulatory roles.
Q200. Which month and year marked the beginning of RBI operations?
[RRB NTPC CBT I, 4 Jan, Shift 2 2021]
A. April 1948
B. April 1935
C. April 1945
D. April 1936
Answer: (B) April 1935
Explanation: The Reserve Bank of India began operations on 1 April 1935 after its establishment under the 1934 Act. Government ownership followed only in 1949, so the operational date must not be confused with nationalisation.
Q199. An RBI-appointed official who handled complaints about deficiencies in banking services was traditionally called what?
[RRB NTPC CBT I, 8 Apr, Shift 1 2021]
A. Banking Ombudsman
B. Central Vigilance Officer
C. Banking Commissioner
D. Banking Lokayukta
Answer: (A) Banking Ombudsman
Explanation: The Banking Ombudsman mechanism offered customers a channel for complaints about specified deficiencies in bank services. Its historical arrangement was subsequently integrated into the RBI Integrated Ombudsman Scheme launched in 2021.
Q198. The RBI was established in 1935 with approximately what initial share capital?
[RRB NTPC CBT I, 13 Jan, Shift 1 2021]
A. ₹5 crore
B. ₹5 lakh
C. ₹50 crore
D. ₹50 lakh
Answer: (A) ₹5 crore
Explanation: The Reserve Bank began with share capital of five crore rupees and initially had private shareholders. Nationalisation in 1949 changed ownership, while the statutory foundations continued under the 1934 Act.
Q197. Which two features appear in the emblem of the Reserve Bank of India?
[RRB NTPC CBT I, 15 Feb, Shift 1 2021]
A. A pyramid and eagle
B. An Ashoka pillar and wheel
C. A tiger and palm tree
D. Two lions and a lotus
Answer: (C) A tiger and palm tree
Explanation: The RBI emblem depicts a tiger alongside a palm tree. Its distinctive imagery comes from the institution’s historical insignia and is used on central-bank publications and official documents.
Q196. Which is not a usual function of the Reserve Bank of India?
[RRB NTPC CBT I, 27 Feb, Shift 2 2021]
A. Serving as banker to government
B. Maintaining routine accounts for every member of the general public
C. Issuing banknotes
D. Providing last-resort liquidity to eligible banks
Answer: (B) Maintaining routine accounts for every member of the general public
Explanation: RBI is the central bank, not a retail bank serving the general public with ordinary current accounts. Its responsibilities include government banking, currency issuance, monetary management and lender-of-last-resort functions.
Q195. Which institution is the principal statutory regulator of securities-market participants?
[RRB NTPC CBT I, 10 Jan, Shift 2 2021]
A. SEBI
B. RBI
C. IRDAI
D. NABARD
Answer: (A) SEBI
Explanation: The Securities and Exchange Board of India regulates securities markets and market intermediaries while seeking investor protection and orderly development. RBI regulates monetary and banking activities, whereas IRDAI and NABARD have different mandates.
Q194. What was the terminal year of the RBI document Payment and Settlement Systems Vision 2019–2021?
[RRB NTPC CBT I, 8 Jan, Shift 1 2021]
A. 2022
B. 2020
C. 2021
D. 2019
Answer: (C) 2021
Explanation: RBI’s Payment and Settlement Systems Vision 2019–2021 described priorities for secure, accessible and affordable electronic payments. It was a dated policy vision and should not be mistaken for the later payments vision extending through 2025.
Q193. Who was appointed NSE Chairperson in December 2019?
[SSC CHSL, 9 Aug, Shift 3 2021]
A. Ashok Chawla
B. Ashishkumar Chauhan
C. Girish Chandra Chaturvedi
D. Vikramajit Sen
Answer: (C) Girish Chandra Chaturvedi
Explanation: Girish Chandra Chaturvedi was appointed chairperson of the National Stock Exchange in December 2019. This is a historical office-holder question; market leadership can change and should not be interpreted as a current appointment.
Q192. With mild inflation, which statements can hold: it may encourage growth and may benefit debtors?
[MPSC Rajyaseva GS I 2021]
A. Both may hold
B. Neither can hold
C. Only inflation always raises purchasing power
D. Only inflation invariably eliminates inequality
Answer: (A) Both may hold
Explanation: Moderate price rises can coincide with expanding activity, while borrowers repaying fixed nominal debts may benefit as the real value of those debts falls. Inflation ordinarily erodes, rather than raises, money’s purchasing power.
Q191. Which historical slogan pairing was recognised in the MPSC paper on banks?
[MPSC Rajyaseva GS I 2021]
A. PNB—The Name You Can Bank Upon
B. Union Bank—The World’s Local Bank
C. HSBC—Good People to Bank With
D. Bank of Maharashtra—Do More With Less
Answer: (A) PNB—The Name You Can Bank Upon
Explanation: Punjab National Bank used the slogan The Name You Can Bank Upon. The full MPSC matching exercise also included the historical slogans of Union Bank of India, HSBC and Bank of Maharashtra.
Q190. Which institution has responsibility for issuing India’s ordinary banknotes, other than the one-rupee note?
[WBCS Prelims 2021]
A. Ministry of Corporate Affairs
B. Prime Minister’s Office
C. Reserve Bank of India
D. Election Commission
Answer: (C) Reserve Bank of India
Explanation: The RBI has the statutory banknote-issue role, with an exception for the one-rupee government-issued note. Physical printing is carried out at authorised presses, distinguishing currency issuance responsibility from printing operations.
Q189. Which chronological order of RBI Governors is correct:
I. C. Rangarajan,
II. I. G. Patel,
III. D. Subbarao,
IV. Manmohan Singh?
[UPPSC RO/ARO, 5 Dec 2021]
A. IV–II–III–I
B. II–IV–I–III
C. IV–I–II–III
D. II–I–IV–III
Answer: (B) II–IV–I–III
Explanation: I. G. Patel served from 1977 to 1982, followed by Manmohan Singh from 1982 to 1985. C. Rangarajan later served from 1992 to 1997, while D. Subbarao assumed office in 2008.
Q188. Which Union ministry publishes India’s Wholesale Price Index rather than the RBI?
[UPPSC Civil Services Paper 1, 24 Oct 2021]
A. Reserve Bank of India
B. Ministry of Commerce and Industry
C. Ministry of Finance
D. Ministry of Consumer Affairs
Answer: (B) Ministry of Commerce and Industry
Explanation: The Office of Economic Adviser in the Ministry of Commerce and Industry compiles and releases the Wholesale Price Index. RBI uses various price indicators for economic analysis but does not itself publish the official WPI series.
Q187. What is the oldest stock exchange in India?
[SSC MTS (2020 cycle), 8 Oct Shift 1 2021]
A. Calcutta Stock Exchange
B. National Stock Exchange
C. Delhi Stock Exchange
D. Bombay Stock Exchange
Answer: (D) Bombay Stock Exchange
Explanation: The Bombay Stock Exchange traces its origin to 1875, making it the oldest recognised stock exchange in India and Asia. The National Stock Exchange commenced operations much later, in the 1990s.
Q186. Among Asian stock exchanges, where does the Bombay Stock Exchange rank historically by date of establishment?
[SSC MTS (2020 cycle), 2 Nov Shift 1 2021]
A. First
B. Second
C. Fourth
D. Third
Answer: (A) First
Explanation: The Bombay Stock Exchange is historically the oldest stock exchange in Asia. It grew out of organised securities brokerage in nineteenth-century Bombay and now operates regulated trading and market infrastructure.
Q185. In which year did the Reserve Bank of India commence its operations?
[SSC MTS (2020 cycle), 11 Oct Shift 2 2021]
A. 1935
B. 1947
C. 1932
D. 1942
Answer: (A) 1935
Explanation: RBI began functioning on 1 April 1935 under the Reserve Bank of India Act, 1934. It was initially privately owned and became a government-owned central bank in January 1949.
Q184. Which statement about the RBI’s establishment is historically incorrect?
[SSC MTS (2020 cycle), 5 Oct Shift 1 2021]
A. The RBI started operations in 1935
B. The Central Banking Enquiry Committee examined the central-bank proposal in 1931
C. The Hilton Young Commission recommended RBI establishment in 1929
D. The RBI Act was enacted in 1934
Answer: (C) The Hilton Young Commission recommended RBI establishment in 1929
Explanation: The Hilton Young Commission recommended establishing a central bank in 1926, not 1929. The Reserve Bank of India Act followed in 1934 and the institution commenced operations in 1935.
Q183. When did the RBI become a nationalised central bank?
[SSC MTS (2020 cycle), 2 Nov Shift 3 2021]
A. 1935
B. 1949
C. 1927
D. 1965
Answer: (B) 1949
Explanation: The RBI was nationalised with effect from 1 January 1949 under the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. Before this conversion it had originally been constituted with private ownership.
Q182. Until April 1947, India’s Reserve Bank also acted as the central bank of which territory?
[SSC MTS (2020 cycle), 22 Oct Shift 1 2021]
A. Burma
B. Nepal
C. Bhutan
D. Sri Lanka
Answer: (A) Burma
Explanation: RBI performed central-banking functions for Burma, now Myanmar, for a period after Burma separated from British India. That historical arrangement ended in April 1947; it is distinct from RBI service to Pakistan after Partition.
Q181. Which item is not an instrument in the RBI monetary-policy toolkit?
[SSC MTS (2020 cycle), 20 Oct Shift 3 2021]
A. Goods and Services Tax
B. Liquidity Adjustment Facility
C. Cash Reserve Ratio
D. Repo rate
Answer: (A) Goods and Services Tax
Explanation: GST is an indirect tax and part of fiscal legislation, not an RBI monetary instrument. In contrast, central-bank liquidity operations, reserve requirements and policy interest rates affect money and credit conditions.
Q180. In which year did the RBI announce the Clean Note Policy?
[SSC MTS (2020 cycle), 7 Oct Shift 3 2021]
A. 1995
B. 1999
C. 1992
D. 1997
Answer: (B) 1999
Explanation: RBI initiated the Clean Note Policy in 1999 to improve the physical quality of circulating currency. Its measures included discouraging issue of soiled banknotes and reducing practices that damage banknotes in handling.
Q179. What is the prescribed term of a nominated RBI Central Board director under the ordinary framework?
[SSC MTS (2020 cycle), 13 Oct Shift 3 2021]
A. Five years
B. Six years
C. Three years
D. Four years
Answer: (D) Four years
Explanation: Government-nominated members of RBI’s Central Board generally serve a four-year term, subject to the relevant statutory arrangements. The board provides overall direction, while the Governor and Deputy Governors perform executive central-banking functions.
Q178. Who was serving as the RBI Governor in August 2020?
[SSC MTS (2020 cycle), 27 Oct Shift 2 2021]
A. Shaktikanta Das
B. Manish Sabharwal
C. Natarajan Chandrasekaran
D. Mahesh Kumar Jain
Answer: (A) Shaktikanta Das
Explanation: Shaktikanta Das became the twenty-fifth Governor of the Reserve Bank of India in December 2018 and remained in office in August 2020. The correct response concerns the historical date, not the current incumbent.
Q177. Which banking function is associated with a customer pledging collateral?
[SSC MTS (2020 cycle), 14 Oct Shift 3 2021]
A. Accepting deposits
B. Portfolio management
C. Collection of cheques
D. Granting loans and advances
Answer: (D) Granting loans and advances
Explanation: Collateral is pledged against a bank loan or credit facility. It gives the lender security if contractual repayment fails, and therefore relates principally to lending rather than cash deposits or cheque collection.
Q176. What is the written instruction by which a customer directs a bank to pay a stated amount to a named payee?
[SSC MTS (2020 cycle), 11 Oct Shift 1 2021]
A. Cash
B. Cheque
C. Passbook
D. Currency note
Answer: (B) Cheque
Explanation: A cheque is a negotiable instrument drawing on an account with a bank and directing payment. The drawer issues it, the drawee bank pays on valid presentation, and the named person is the payee.
Q175. What is the IMF–World Bank programme that assesses financial-system soundness and development issues called?
[SSC MTS (2020 cycle), 11 Oct Shift 2 2021]
A. Financial Sector Assessment Program
B. Developing Economies Financial Audit Scheme
C. Finance and Socioeconomic Audit Scheme
D. Evaluation and Monitoring of Financial Sector
Answer: (A) Financial Sector Assessment Program
Explanation: The Financial Sector Assessment Program, jointly developed by IMF and World Bank, examines financial-sector strengths, vulnerabilities and development needs. It supports assessments of systemic resilience and the policy and supervisory environment.
Q174. In which year was NABARD established?
[SSC MTS (2020 cycle), 26 Oct Shift 3 2021]
A. 1972
B. 1952
C. 1962
D. 1982
Answer: (D) 1982
Explanation: The National Bank for Agriculture and Rural Development began operating on 12 July 1982 under legislation enacted in 1981. It promotes rural credit, development and refinancing for agriculture and associated activities.
Q173. If ₹1,00,000 is withdrawn in cash from a demand-deposit bank account, what is the immediate impact on aggregate money supply?
[UPSC CSE Prelims 2020]
A. It falls by ₹1,00,000
B. It rises by ₹1,00,000
C. It rises by more than ₹1,00,000
D. It remains unchanged
Answer: (D) It remains unchanged
Explanation: The cash withdrawal increases currency with the public while reducing demand deposits by the same amount. Because both items belong to relevant money aggregates, the immediate aggregate does not change; only the composition of money holdings changes.
Q172. What does a higher interest-coverage ratio normally signal to a lender?
[UPSC CSE Prelims 2020]
A. Greater capacity to pay interest
B. Automatically greater insolvency risk
C. No information about the borrower
D. A compulsory rise in tax payments
Answer: (A) Greater capacity to pay interest
Explanation: Interest coverage compares earnings available before interest and taxes with interest expense. A higher ratio normally suggests a stronger cushion for debt-servicing obligations. Banks can examine its level and trend to judge both present and emerging credit risk.
Q171. Which policy choice helps shield a country from a global financial shock: avoiding short-term foreign borrowing, greater foreign-bank exposure, or unrestricted capital convertibility?
[UPSC CSE Prelims 2020]
A. Reducing reliance on short-term foreign debt only
B. All three together
C. Unrestricted convertibility only
D. Greater foreign-bank exposure only
Answer: (A) Reducing reliance on short-term foreign debt only
Explanation: Heavy short-term external borrowing makes an economy vulnerable when lenders abruptly refuse to roll over loans. Lower dependence reduces sudden capital-flight risk. More external financial linkages and unrestricted capital-account flows may increase, rather than remove, such exposure.
Q170. Which statement about agricultural credit is correct?
(1) District cooperative banks disburse more short-term farm credit than commercial banks.
(2) They provide funds to primary agricultural credit societies.
[UPSC CSE Prelims 2020]
A. 1 only
B. 2 only
C. Both
D. Neither
Answer: (B) 2 only
Explanation: Scheduled commercial banks account for a greater share of agricultural lending than district cooperative banks. District Central Cooperative Banks nonetheless occupy an important position in the cooperative-credit chain, providing resources and support to Primary Agricultural Credit Societies.
Q169. Which measure of money is generally known as narrow money?
[WBCS Mains 2020]
A. M1
B. M2
C. M3
D. M4
Answer: (A) M1
Explanation: Narrow money, M1, consists of currency with the public, demand deposits with banking institutions and specified other RBI deposits. It focuses on highly liquid balances rather than longer-maturity savings deposits included in broader aggregates.
Q168. Which measure includes currency, bank demand deposits, RBI other deposits and bank time deposits?
[WBCS Mains 2020]
A. M1
B. M2
C. M3
D. M4 excluding currency
Answer: (C) M3
Explanation: M3 adds time deposits to narrow-money components. Because time deposits typically constitute a substantial part of savings intermediated by commercial banks, M3 is used as the standard broad-money aggregate in India.
Q167. What did committees on Indian financial reform propose regarding excessive statutory liquidity holdings?
[WBCS Mains 2020]
A. Phased reduction in SLR
B. Unending increases in SLR
C. A ban on treasury bills
D. Elimination of central-bank regulation
Answer: (A) Phased reduction in SLR
Explanation: Financial reform proposals sought to reduce the amount of bank resources tied up under high statutory pre-emptions. Gradual SLR reduction could free credit for productive uses while ensuring that banks retained sufficient liquidity discipline.
Q166. Rediscounting bills is mainly a means of obtaining which kind of finance?
[WBCS Mains 2020]
A. Long-term equity finance
B. Short-term trade finance
C. Real-estate investment capital
D. Government tax receipts
Answer: (B) Short-term trade finance
Explanation: Bills generated in commercial trade can be discounted for immediate funds and later rediscounted. The technique finances short-term working capital and trade flows, rather than long-lived capital projects or fiscal receipts.
Q165. Which were objectives of bank nationalisation in India?
[WBCS Mains 2020]
A. Wider branch network
B. Priority-sector credit
C. Greater security of deposits
D. All of these
Answer: (D) All of these
Explanation: Nationalisation was associated with enlarging bank outreach, promoting credit to previously neglected sectors and strengthening public confidence. Its implementation altered ownership and branch-expansion priorities across the commercial banking system.
Q164. What RBI action is conventionally associated with controlling excess inflationary demand?
[WBCS Mains 2020]
A. Reducing the policy rate
B. Buying government securities
C. Increasing CRR
D. Reducing SLR
Answer: (C) Increasing CRR
Explanation: Increasing CRR immobilises a greater share of bank resources at RBI and can moderate credit growth. Securities purchases, lower reserves and rate reductions generally release liquidity instead, which is not the usual anti-inflationary direction.
Q163. What term describes the turnover frequency of negotiable trade bills in a well-developed bill market?
[WBCS Mains 2020]
A. High frequency of transfer
B. No resale of bills
C. Permanently fixed ownership
D. Only annual transfers
Answer: (A) High frequency of transfer
Explanation: A mature bill market has active discounting and rediscounting channels, allowing bills to pass between holders before maturity. Liquidity makes trade receivables more useful as short-term financing instruments for businesses and financial intermediaries.
Q162. In which year were fourteen major commercial banks nationalised?
[WBCS Mains 2020]
A. 1965
B. 1969
C. 1971
D. 1973
Answer: (B) 1969
Explanation: The nationalisation of fourteen leading private commercial banks occurred in 1969. Ownership then passed to the public sector as part of a drive for branch expansion, rural outreach and a greater share of lending to priority areas.
Q161. In what year did RBI formally begin its operations?
[WBCS Mains 2020]
A. 1921
B. 1935
C. 1947
D. 1949
Answer: (B) 1935
Explanation: The Reserve Bank of India commenced functioning on 1 April 1935 under legislation passed the previous year. This is different from 1949, when the existing central bank was brought into government ownership.
Q160. What interest-rate reform was recommended in India’s financial-sector liberalisation?
[WBCS Mains 2020]
A. Strictly administered lending rates forever
B. Deregulated lending and deposit interest rates
C. Mandatory identical loan rates for every customer
D. Elimination of ordinary savings accounts
Answer: (B) Deregulated lending and deposit interest rates
Explanation: Market-oriented reform reduced direct administrative rate controls, permitting banks greater discretion in pricing loans and deposits. Prudential rules and monetary-policy benchmarks nevertheless continued to shape the operating environment.
Q159. How are RBI open-market securities transactions commonly classified among monetary-control techniques?
[WBCS Mains 2020]
A. Direct sector-specific credit rationing
B. Indirect liquidity control
C. An import quota
D. Government subsidy
Answer: (B) Indirect liquidity control
Explanation: Purchasing and selling government securities alters reserves and short-term rates through financial-market transactions. It influences system-wide conditions indirectly, rather than ordering particular banks to lend specified amounts to identified sectors.
Q158. When RBI undertakes a liquidity-injecting repurchase operation, what does it do?
[WBCS Mains 2020]
A. Lend rupees against securities
B. Permanently extinguish currency
C. Sell goods to commercial banks
D. Increase customs tariffs
Answer: (A) Lend rupees against securities
Explanation: In a repo, RBI provides secured short-term funds to eligible counterparties and receives collateral securities under a repurchase arrangement. The operation supplies cash to the banking system, subject to the policy rate and market framework.
Q157. What is the outcome when RBI purchases government bonds from the market?
[WBCS Mains 2020]
A. Bank liquidity is generally absorbed
B. Rupee liquidity is generally injected
C. Every bank deposit is cancelled
D. Money supply cannot be affected
Answer: (B) Rupee liquidity is generally injected
Explanation: A securities purchase pays rupees to the market, increasing balances available in the financial system. Open-market purchases tend to be expansionary, while sales drain liquidity. Other factors can alter the eventual change in broad-money aggregates.
Q156. Which institution manages the country’s official exchange reserves?
[WBCS Mains 2020]
A. Reserve Bank of India
B. Only the Finance Commission
C. All insurers jointly
D. National Stock Exchange
Answer: (A) Reserve Bank of India
Explanation: RBI manages India’s official foreign-currency assets and related reserve holdings. These reserves help meet external-payment needs and can be deployed to moderate disorderly currency movements without guaranteeing a fixed rupee value.
Q155. On which balances is RBI required to pay interest to commercial banks for their mandatory cash reserves?
[WBCS Mains 2020]
A. Full market interest automatically
B. A fixed 12 percent rate
C. No interest on required CRR balances
D. Equity dividends
Answer: (C) No interest on required CRR balances
Explanation: Mandatory CRR balances generally do not earn interest. This opportunity cost is one reason changes in reserve requirements influence the bank lending business and the amount of liquidity freely deployable by institutions.
Q154. Treasury bills are primarily issued by the Central Government for what duration of finance?
[WBCS Mains 2020]
A. Long-term
B. Perpetual
C. Short-term
D. Very long-term
Answer: (C) Short-term
Explanation: Treasury bills are short-maturity government borrowing instruments sold at a discount and redeemed at face value. They are important money-market securities, distinct from longer-maturity dated government bonds.
Q153. Which segment is primarily associated with obtaining longer-term funds for corporate enterprises?
[WBCS Mains 2020]
A. Overnight call-money market
B. Rural deposit counters
C. Trade bill rediscount market
D. Capital market
Answer: (D) Capital market
Explanation: The capital market brings together issuers and investors in long-term instruments such as equity and debentures. Call money and trade bills serve short-run liquidity and working-capital requirements rather than permanent enterprise financing.
Q152. In what year was the National Stock Exchange of India incorporated?
[SSC CHSL, 26 Oct, Shift 3 2020]
A. 1991
B. 1994
C. 1993
D. 1992
Answer: (D) 1992
Explanation: The National Stock Exchange was incorporated in 1992 and later began trading operations in 1994. The distinction between its incorporation and trading start is important for accurately answering date-based market-history questions.
Q151. Which three objectives were linked with PM Jan Dhan Yojana in the 2020 Rajyaseva paper?
[MPSC Rajyaseva GS I 2020]
A. Financial inclusion, financial literacy and insurance cover
B. Crop insurance alone
C. Issuing only commodity futures
D. Restricting savings accounts to government employees
Answer: (A) Financial inclusion, financial literacy and insurance cover
Explanation: PMJDY was designed to bring unbanked households into formal finance, complement account access with financial literacy and link eligible beneficiaries to specified insurance protections. Separate schemes address agricultural crop-insurance risks.
Q150. Which RBI measures tend to counter inflation:
1. Higher bank rate,
2. Higher CRR,
3. Higher SLR,
4. Purchasing government securities?
[UPPSC RO/ARO, 20 Sep 2020]
A. 1 and 2 only
B. 1, 2 and 3 only
C. 2, 3 and 4 only
D. 1, 3 and 4 only
Answer: (B) 1, 2 and 3 only
Explanation: Higher reserve ratios or bank rates tend to restrain credit and liquidity, all else equal. RBI purchases of government securities normally inject liquidity, so they do not belong among the contractionary measures in this combination.
Q149. The Service Area Approach in rural banking was introduced under which programme?
[UPSC CSE Prelims 2019]
A. Integrated Rural Development Programme
B. Lead Bank Scheme
C. MGNREGA
D. National Skill Development Mission
Answer: (B) Lead Bank Scheme
Explanation: The Service Area Approach operated within the Lead Bank Scheme, assigning rural branches defined local service areas. This encouraged coordinated credit planning, better knowledge of village needs and accountability for extending loans into inadequately banked places.
Q148. Under the RBI directions on storage of payment-system data, which requirement was made?
[UPSC CSE Prelims 2019]
A. Relevant payment data must be stored in India
B. All systems must be operated by public companies
C. Audit reports must go only to the CAG
D. Foreign providers were exempt
Answer: (A) Relevant payment data must be stored in India
Explanation: The RBI required payment-system providers to store complete relevant payment data in India. The direction concerned data localisation, not mandatory public ownership. Compliance audits were to be reported through prescribed RBI processes, rather than solely to the CAG.
Q147. Why was an Inter-Creditor Agreement promoted among Indian lenders?
[UPSC CSE Prelims 2019]
A. To fund state welfare budgets
B. To regulate small consumer deposits
C. To abolish commercial-bank lending
D. To speed resolution of large stressed consortium loans
Answer: (D) To speed resolution of large stressed consortium loans
Explanation: Banks and financial institutions used the Inter-Creditor Agreement to coordinate decisions on stressed assets involving multiple lenders. A shared framework limits delays from individual creditors and encourages timely resolution rather than leaving each lender to act independently.
Q146. Which institution recommended appointments of chairpersons and heads of public-sector banks at that time?
[UPSC CSE Prelims 2019]
A. Banks Board Bureau
B. RBI alone
C. Union Cabinet Secretariat alone
D. Concerned bank customers
Answer: (A) Banks Board Bureau
Explanation: The Banks Board Bureau was entrusted with recommending leadership appointments in public-sector banks and supporting governance improvements. The body was part of the Indradhanush bank-reform initiative, and a successor institution subsequently assumed its responsibilities.
Q145. A Participatory Note is most closely associated with what?
[UPSC CSE Prelims 2019]
A. Buying bank fixed deposits
B. Indirect investment in Indian securities via registered foreign investors
C. RBI currency printing
D. Direct sovereign borrowing by individuals
Answer: (B) Indirect investment in Indian securities via registered foreign investors
Explanation: Participatory Notes are offshore derivative instruments linked to Indian securities and issued by registered foreign portfolio investors to eligible overseas clients. They provide market exposure without the client necessarily registering as a direct foreign investor in India.
Q144. Which policy would be least likely to arrest sharp rupee depreciation?
[UPSC CSE Prelims 2019]
A. Reducing unnecessary imports and promoting exports
B. Encouraging rupee-denominated overseas bonds
C. Easing selected external borrowing arrangements
D. Following an expansionary monetary policy
Answer: (D) Following an expansionary monetary policy
Explanation: Expansionary monetary policy can weaken interest-rate support for the rupee and potentially intensify capital outflows or inflation. The other measures seek to reduce demand for foreign currency or support its availability, which can moderate depreciation pressure.
Q143. Why is the Banks Board Bureau different from the RBI?
[UPSC CSE Prelims 2019]
A. It recommends leadership and strategy for public banks
B. It issues the national currency
C. It fixes the monetary-policy rate
D. It sets nationwide cash reserve ratios
Answer: (A) It recommends leadership and strategy for public banks
Explanation: The Bureau’s remit concerned public-sector bank appointments and strategic governance. Currency issuance, monetary-policy decisions and cash-reserve rules are RBI responsibilities. Separating the institutional functions prevents confusing bank ownership and management with prudential supervision.
Q142. What was the name of the NSE electronic, screen-based trading system?
[WBCS Mains 2019]
A. BOLT
B. NEAT
C. ALBM
D. BLISS
Answer: (B) NEAT
Explanation: NEAT stands for National Exchange for Automated Trading, the electronic order-matching system introduced by NSE. Its automated trading represented a major advance over traditional floor-based stock-trading practices.
Q141. What financing label is associated with venture support after a project begins earning but has not yet matured fully?
[WBCS Mains 2019]
A. Start-up capital
B. Bridge capital
C. Mezzanine capital
D. Seed capital
Answer: (C) Mezzanine capital
Explanation: Mezzanine finance commonly supports firms that have progressed beyond the earliest stages but still need growth capital. It often mixes debt-like and equity-like features, with terms reflecting greater risk than senior lending.
Q140. Which list comprises examples of derivative or derivative-linked financial contracts?
[WBCS Mains 2019]
A. Warrants only
B. Swaptions only
C. Baskets only
D. Warrants, swaptions and baskets
Answer: (D) Warrants, swaptions and baskets
Explanation: Derivatives derive value from an underlying security, index, interest rate or other reference. Swaptions are options on swaps; warrants confer an option-like right; basket instruments may reference a specified group of assets.
Q139. What are the customary tenors of India’s main Treasury-bill series?
[WBCS Mains 2019]
A. 91, 182 and 364 days
B. 92, 183 and 365 days
C. 93, 184 and 366 days
D. 31, 62 and 124 days
Answer: (A) 91, 182 and 364 days
Explanation: The principal regular Treasury-bill maturities are 91, 182 and 364 days. These discount securities finance short-term central-government requirements and are widely held and traded by institutions managing cash and liquidity.
Q138. What term describes a scheme using money from new investors to pay returns promised to existing investors?
[WBCS Mains 2019]
A. Underwriting
B. Ponzi scheme
C. Regulated index mutual fund
D. Para-banking
Answer: (B) Ponzi scheme
Explanation: A Ponzi arrangement meets promised payouts using later investors’ contributions rather than sufficient genuine investment profit. Its apparent success depends on continuing inflows and becomes unsustainable when withdrawals exceed fresh funds.
Q137. Which year saw the Securities and Exchange Board of India acquire statutory status?
[WBCS Mains 2019]
A. 1982
B. 1988
C. 1992
D. 2000
Answer: (C) 1992
Explanation: SEBI began as a non-statutory body in 1988 and gained legislative authority under the SEBI Act in 1992. Statutory status provided stronger enforcement powers over market conduct, investor protection and intermediaries.
Q136. What offence occurs when securities are traded using confidential price-sensitive information not publicly available?
[WBCS Mains 2019]
A. Ordinary bull trading
B. Bear-market hedging
C. Insider trading
D. Initial public offering
Answer: (C) Insider trading
Explanation: Insider trading involves dealing in securities while possessing material unpublished price-sensitive information. Securities regulations prohibit such conduct to protect market integrity and equal access to information for investors.
Q135. What are the offshore instruments through which registered foreign portfolio intermediaries historically offered indirect access to Indian shares?
[WBCS Mains 2019]
A. Certificates of deposit
B. Participatory notes
C. Sovereign currency reserves
D. Ordinary promissory notes
Answer: (B) Participatory notes
Explanation: Participatory notes are offshore derivative instruments linked to Indian securities, issued by eligible registered foreign investors to overseas clients. They allow economic exposure without each final investor holding the underlying domestic securities directly.
Q134. Which exchange was a major founding promoter of National Securities Depository Limited?
[WBCS Mains 2019]
A. NABARD
B. Securities clearing corporation only
C. National Stock Exchange
D. Regional Rural Banks
Answer: (C) National Stock Exchange
Explanation: NSDL helped introduce depository and dematerialised securities infrastructure in India. National Stock Exchange was a principal promoter, together with major institutional participants, supporting electronic holding and settlement of securities.
Q133. Which mutual-fund structure normally has a fixed corpus and specified maturity?
[WBCS Mains 2019]
A. Open-ended fund
B. Close-ended fund
C. All overnight funds
D. Every index fund
Answer: (B) Close-ended fund
Explanation: Close-ended funds issue units for a defined subscription period and generally have a stipulated maturity. Open-ended schemes normally permit continuing purchase or redemption, subject to their scheme documents and applicable market rules.
Q132. In what year did the SARFAESI law become an Act?
[WBCS Mains 2019]
A. 1992
B. 2005
C. 2002
D. 2000
Answer: (C) 2002
Explanation: The SARFAESI Act was enacted in 2002 to facilitate enforcement of security interests and recovery of secured debts by eligible lenders. It also sets out mechanisms involving asset reconstruction and securitisation, subject to legal safeguards.
Q131. Which banking exposures are covered by the broad expression stressed assets?
[WBCS Mains 2019]
A. Only performing loans
B. Only collateral held in trust
C. Only cash reserves
D. Non-performing loans, restructured exposures and write-offs
Answer: (D) Non-performing loans, restructured exposures and write-offs
Explanation: Stressed assets are wider than headline non-performing loans because financial distress can also be represented by restructuring and write-offs. The categories differ in accounting treatment, but together help analyse underlying asset-quality problems.
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.
Q120. What is a loan supplied jointly by multiple banks or financial institutions to one borrower called?
[WBCS Mains 2019]
A. Syndicated loan
B. A demand deposit
C. A letter of credit
D. A Treasury bill
Answer: (A) Syndicated loan
Explanation: In syndicated lending, several lenders provide a financing facility to a borrower under coordinated terms, often with a lead arranger. The arrangement shares credit exposure and allows large funding requirements to be met collectively.
Q119. In a bank-led financial inclusion model, what does the abbreviation BC stand for?
[WBCS Mains 2019]
A. Business Correspondent
B. Banking Capital
C. Budget Committee
D. Bond Custodian
Answer: (A) Business Correspondent
Explanation: Business Correspondents provide authorised basic banking services beyond conventional branches, often using technology and local agents. Their functions can include account facilitation, cash deposits and withdrawals, and remittance services under bank oversight.
Q118. Does an RBI reverse-repo operation conventionally inject or absorb banking liquidity?
[WBCS Mains 2019]
A. Always inject liquidity
B. Absorb liquidity
C. Issue equity shares
D. Reduce government debt automatically
Answer: (B) Absorb liquidity
Explanation: When banks place surplus funds with the RBI through reverse repos, liquidity is absorbed from the banking system for the operation’s duration. The precise framework has evolved, including the standing deposit facility.
Q117. What are the major groups included in India’s Wholesale Price Index?
[MPSC Rajyaseva GS I 2019]
A. Only consumer services
B. Primary articles, fuel and power, and manufactured goods
C. Only imported wheat
D. Banking deposits and share prices
Answer: (B) Primary articles, fuel and power, and manufactured goods
Explanation: The WPI groups covered primary articles, fuel and power, and manufactured products. It measures changes in prices at the wholesale producer level rather than returns on financial assets or consumer service prices.
Q116. On what date was demonetisation of the old ₹500 and ₹1,000 banknote series announced?
[WBCS Prelims 2019]
A. 8 November 2016
B. 1 January 2017
C. 15 August 2016
D. 31 March 2017
Answer: (A) 8 November 2016
Explanation: The Government announced withdrawal of legal-tender status of specified old five-hundred and one-thousand-rupee notes on 8 November 2016, effective under prescribed conditions from the next day. New denominations were subsequently issued.
Q115. In a banking examination, what is a non-performing asset usually understood to be?
[WBCS Prelims 2019]
A. A branch building
B. A loan with prolonged overdue payment
C. A government security held for statutory liquidity
D. Cash at a branch
Answer: (B) A loan with prolonged overdue payment
Explanation: A non-performing asset is a credit exposure failing prescribed income-recognition or repayment conditions. For many term loans, overdue interest or principal beyond ninety days is a standard threshold, subject to applicable RBI norms.
Q114. Who signs ₹100 banknotes issued by India’s central bank?
[WBCS Prelims 2019]
A. The Governor of the RBI
B. The Finance Secretary
C. The President of India
D. The Chief Election Commissioner
Answer: (A) The Governor of the RBI
Explanation: Rupee banknotes such as the ₹100 denomination carry the signature of the RBI Governor. The one-rupee note is the notable exception, bearing the signature of the Finance Secretary.
Q113. Which organisation runs the network linking ATMs across India?
[UPSC CSE Prelims 2018]
A. Indian Banks’ Association
B. National Securities Depository
C. National Payments Corporation of India
D. Reserve Bank of India
Answer: (C) National Payments Corporation of India
Explanation: NPCI operates the National Financial Switch, which supports interoperability among participating ATM networks. Its role in retail payment infrastructure is distinct from the RBI’s functions as central bank and from securities depositories that maintain records of financial securities.
Q112. What is the Merchant Discount Rate in card payments?
[UPSC CSE Prelims 2018]
A. A bank reward paid to merchants
B. A refund paid to card users
C. A fee charged to merchants for accepting customer card payments
D. A government grant for online merchants
Answer: (C) A fee charged to merchants for accepting customer card payments
Explanation: The Merchant Discount Rate is a processing charge borne by merchants for acceptance of eligible card transactions. It remunerates the payment-acceptance system and is not a cashback, direct public subsidy or reward automatically given to shopkeepers.
Q111. Which description best defines legal-tender money?
[UPSC CSE Prelims 2018]
A. Money only used to pay court fees
B. Money which a creditor must accept in discharge of a debt under the law
C. Every bank cheque and bill
D. Only coins made from precious metals
Answer: (B) Money which a creditor must accept in discharge of a debt under the law
Explanation: Legal tender has recognition under law for settling monetary obligations within applicable limits. It is different from instruments such as cheques that generally require acceptance by agreement. The concept does not refer exclusively to legal proceedings or to metal content.
Q110. Regarding Treasury Bills, which statements are correct?
(1) RBI manages central but not state securities.
(2) Treasury Bills are issued by the Union Government, not states.
(3) They are ordinarily sold at a discount.
[UPSC CSE Prelims 2018]
A. 1 and 2 only
B. 3 only
C. 2 and 3 only
D. All three
Answer: (C) 2 and 3 only
Explanation: RBI manages debt for both Union and state governments, while Treasury Bills are short-term securities of the Union Government. They are normally issued below face value and redeemed at par. State borrowing instead commonly uses State Development Loans.
Q109. Is BHIM able to send funds to UPI-linked accounts and does it require fewer authentication factors than chip-and-PIN cards?
[UPSC CSE Prelims 2018]
A. It supports UPI transfers; both normally use two factors
B. Neither assertion is correct
C. Both systems use four factors
D. BHIM is a securities trading application
Answer: (A) It supports UPI transfers; both normally use two factors
Explanation: BHIM supports bank-to-bank payments through UPI identifiers. Card-and-PIN and app-and-UPI-PIN arrangements both ordinarily use possession and knowledge factors. The assertion that chip-and-PIN cards necessarily demand four authentication factors is incorrect.
Q108. For government public-bank reforms, which of these occurred: merger of SBI associate banks into SBI?
[UPSC CSE Prelims 2018]
A. No consolidation took place
B. Associate banks merged into State Bank of India
C. All banks were made wholly private
D. All banks were absorbed into RBI
Answer: (B) Associate banks merged into State Bank of India
Explanation: The merger of SBI associate banks with the parent State Bank of India took effect in 2017. The move consolidated operations, scale and networks, without placing ordinary commercial banking inside the central bank or privatising the sector.
Q107. Under the historical CBLO framework, which financial-market segment included collateralised borrowing and lending obligations?
[WBCS Mains 2018]
A. Money market
B. Foreign-exchange spot market
C. Equity capital market
D. Long-term project finance
Answer: (A) Money market
Explanation: The CBLO arrangement was designed for short-term secured borrowing and lending against eligible collateral. Its maturity and liquidity-management function made it a money-market instrument rather than a long-term capital-market security.
Q106. Who is the primary securities regulator for Indian exchanges and mutual funds?
[WBCS Mains 2018]
A. Reserve Bank of India
B. Ministry of Housing
C. SEBI
D. Financial Services Institutions Bureau
Answer: (C) SEBI
Explanation: SEBI regulates the conduct of securities exchanges, brokers, mutual funds and many capital-market intermediaries. RBI has a separate central-banking mandate, although regulation of particular financial products can involve coordination between authorities.
Q105. Which regulator reviewed the advisory panel concerned with alternative-investment arrangements?
[WBCS Mains 2018]
A. Reserve Bank of India
B. Insurance regulator
C. SEBI
D. Pension regulator
Answer: (C) SEBI
Explanation: Alternative Investment Funds are governed by regulations issued by SEBI. The securities regulator reviews expert recommendations concerning these investment vehicles, including their registration, investment permissions and investor safeguards.
Q104. Which Indian exchange is historically the oldest organised stock exchange?
[WBCS Mains 2018]
A. Bombay Stock Exchange
B. Ahmedabad Stock Exchange
C. Bengaluru Stock Exchange
D. Hyderabad Stock Exchange
Answer: (A) Bombay Stock Exchange
Explanation: BSE developed from the oldest organised share-broking association in India. It became a key institution for securities trading, and its history predates the launch of the modern electronic National Stock Exchange.
Q103. Collateralised Borrowing and Lending Obligation (CBLO) was associated with which financial-market segment?
[WBCS Mains 2018]
A. Capital-market equity issues
B. Money market
C. Overseas property market
D. Commodity spot market only
Answer: (B) Money market
Explanation: CBLO was a collateral-backed short-term money-market borrowing and lending arrangement. It facilitated secured overnight and term liquidity management before being replaced in practice by the tri-party repo framework.
Q102. Which official committee is associated with the development of universal banking in India?
[WBCS Mains 2018]
A. H. R. Khan Committee
B. Abid Hussain Committee
C. M. S. Swaminathan Committee
D. Shah Commission
Answer: (A) H. R. Khan Committee
Explanation: Recommendations associated with H. R. Khan helped shape discussion and transition toward universal banking, which combines a broader range of banking and financial services within an institution subject to applicable safeguards.
Q101. The recommendations of the Narasimham committees mainly addressed reforms in which sector?
[WBCS Mains 2018]
A. Banking and the financial system
B. Civil aviation
C. Public education
D. Food processing
Answer: (A) Banking and the financial system
Explanation: The Narasimham reports examined Indian banking and financial-system reforms. Their recommendations covered prudential norms, capital adequacy, competition, asset quality and institutional restructuring, helping guide the post-1991 reform agenda.
Q100. How many major commercial banks were nationalised in India in July 1969?
[WBCS Mains 2018]
A. Twelve
B. Fourteen
C. Eighteen
D. Six
Answer: (B) Fourteen
Explanation: The Government of India nationalised fourteen major commercial banks in July 1969. Six additional banks were nationalised in 1980, although later mergers changed the structure and number of public-sector banks.
Q99. Which group correctly describes liabilities recorded on a commercial bank balance sheet?
[WBCS Mains 2018]
A. Loans advanced, cash and securities
B. Only gold bullion
C. Demand deposits, time deposits and borrowing from the central bank
D. Investment holdings and buildings only
Answer: (C) Demand deposits, time deposits and borrowing from the central bank
Explanation: Deposits owed to customers and borrowings from RBI are liabilities because they represent the bank’s obligations. Loans granted and investments held are assets. Correct classification helps explain banking balance-sheet risks and liquidity.
Q98. Which account of Indian Regional Rural Banks is correct?
[WBCS Mains 2018]
A. They are sponsored by banks, serve defined regions and support rural development
B. They operate only outside India
C. They are wholly private insurance firms
D. They have no rural mandate
Answer: (A) They are sponsored by banks, serve defined regions and support rural development
Explanation: Regional Rural Banks were created to expand credit and banking access in specific rural areas. Sponsored by commercial banks, they combine a regional operational focus with development objectives and regulation under the applicable RRB framework.
Q97. Where a Reserve Bank office is absent, which institution has traditionally performed agent functions on its behalf?
[WBCS Mains 2018]
A. National Stock Exchange
B. State Bank of India
C. SEBI
D. NITI Aayog
Answer: (B) State Bank of India
Explanation: State Bank of India has historically undertaken authorised agency banking duties for RBI, including government banking functions at specified locations. These roles reflect RBI’s responsibility as banker to government and its agency arrangements.
Q96. A movement of ten basis points is equal to which percentage-point change?
[WBCS Mains 2018]
A. 0.10 percentage point
B. 1 percentage point
C. 10 percentage points
D. 0.01 percentage point
Answer: (A) 0.10 percentage point
Explanation: One basis point is one hundredth of a percentage point. Ten basis points therefore equals 0.10 percentage point. This convention enables financial markets to describe small changes in yields and interest rates precisely.
Q95. In an open-market purchase of government bonds, how would RBI generally change banks’ reserves?
[WBCS Mains 2018]
A. Reduce bank reserves immediately
B. Increase banking reserves
C. Eliminate currency deposits
D. Leave money balances necessarily unchanged
Answer: (B) Increase banking reserves
Explanation: When RBI purchases eligible securities it pays the seller and generally creates additional settlement liquidity. Such purchases can add reserves to the banking system, whereas open-market sales usually withdraw them.
Q94. As of January 2018, how many Regional Rural Banks did the cited WBCS paper identify as operating?
[WBCS Mains 2018]
A. 56
B. 59
C. 61
D. 43
Answer: (C) 61
Explanation: The 2018 historical count given in this past-paper item was sixty-one. The number of Regional Rural Banks changes following consolidation and amalgamation, so it must be read as a dated fact rather than a current tally.
Q93. Which category of cooperative banks became eligible under RBI criteria for possible conversion to small finance banks?
[WBCS Mains 2018]
A. Urban cooperative banks
B. State cooperative marketing federations
C. All foreign banks
D. Agricultural warehouse societies
Answer: (A) Urban cooperative banks
Explanation: RBI has allowed eligible urban cooperative banks to pursue a transition into small finance banks subject to prescribed eligibility and licensing conditions. The arrangement aims to strengthen regulatory structure while preserving financial inclusion goals.
Q92. The Base Rate framework historically indicated which benchmark in bank loan pricing?
[WBCS Mains 2018]
A. An obligatory equity market index
B. A minimum internal lending benchmark
C. The foreign exchange conversion price
D. The average rate of income tax
Answer: (B) A minimum internal lending benchmark
Explanation: The Base Rate system was designed to establish transparent minimum pricing for bank loans, subject to specified exceptions. It preceded wider implementation of marginal-cost-based and external benchmark lending rates.
Q91. Which connection did RBI require banks to improve SWIFT transaction controls?
[RRB Group D, 4 Dec, Shift 2 2018]
A. Connecting SWIFT with core banking systems
B. Connecting RTGS with a shipping terminal
C. Connecting NEFT with commodity warehouses
D. Connecting cheque ink readers to taxation portals
Answer: (A) Connecting SWIFT with core banking systems
Explanation: Integrating SWIFT financial messaging with core banking systems strengthens reconciliation and internal controls by reducing unrecorded trade-finance messages. The 2018 direction followed concerns about weaknesses in interbank messaging oversight.
Q90. As recorded in the SSC CHSL paper held in March 2018, how many recognised exchange entities were cited under SEBI?
[SSC CHSL, 25 Mar, Shift 3 2018]
A. 20
B. 10
C. 9
D. 15
Answer: (C) 9
Explanation: The answer recorded for this historical examination was nine. Counts of recognised stock and commodity exchanges can change with mergers, permissions and closures; this figure should not be applied automatically to later years.
Q89. Which among export growth, stockpiling, credit expansion and drought is mainly a demand-side inflation factor?
[MPSC Rajyaseva GS I 2018]
A. Drought
B. Expanded bank credit
C. Supply stockpiling
D. An adverse harvest
Answer: (B) Expanded bank credit
Explanation: Credit expansion can increase spending power and exert demand-pull price pressure. A drought or goods stockpiling typically constrains supply, creating a different pathway through which commodity prices can rise.
Q88. In a 2018 commerce examination, which authority was identified as the body regulating the sanction of foreign exchange for importing goods?
[UPPSC LT Grade Commerce, 29 Jul 2018]
A. Exchange banks alone
B. Reserve Bank of India
C. External Affairs Ministry
D. None of these
Answer: (B) Reserve Bank of India
Explanation: The RBI administers central aspects of India’s foreign-exchange regulatory framework under FEMA, though authorised dealers implement much routine trade settlement. The historically worded examination attributed the principal regulatory role to RBI.
Q87. What was the principal objective of establishing Small Finance Banks?
[UPSC CSE Prelims 2017]
A. Improving credit access for small firms and small farmers
B. Financing only multinational firms
C. Restricting rural lending
D. Replacing the monetary-policy committee
Answer: (A) Improving credit access for small firms and small farmers
Explanation: Small Finance Banks were licensed to extend basic banking services and small-value credit to underserved borrowers, including micro-enterprises and small farmers. Their purpose is greater inclusion, not exclusive large-corporate finance or replacement of monetary policymaking.
Q86. Which statement about the Monetary Policy Committee is correct?
[UPSC CSE Prelims 2017]
A. It fixes the policy repo rate and is chaired by the RBI Governor
B. It is chaired by the Finance Minister
C. It consists only of external government nominees
D. It publishes corporate equity ratings
Answer: (A) It fixes the policy repo rate and is chaired by the RBI Governor
Explanation: India’s MPC is a six-member body chaired by the RBI Governor. It decides the policy repo rate to pursue the inflation target. Three members are from RBI and three are appointed externally by government under the statutory framework.
Q85. Why was the Scheme for Sustainable Structuring of Stressed Assets (S4A) introduced?
[UPSC CSE Prelims 2017]
A. To promote household savings
B. To restructure difficult corporate loans
C. To regulate public-sector disinvestment
D. To create a new currency unit
Answer: (B) To restructure difficult corporate loans
Explanation: S4A was an RBI framework for dividing large stressed corporate debt into sustainable and unsustainable portions to enable restructuring. It concerned borrower debt resolution, not fiscal privatisation programmes, currency issue or management of ordinary retail savings.
Q84. What is a likely effect of the Unified Payments Interface?
[UPSC CSE Prelims 2017]
A. Direct bank payments can reduce reliance on separate mobile wallets
B. It guarantees total elimination of cash
C. It automatically doubles foreign direct investment
D. It replaces all welfare programmes
Answer: (A) Direct bank payments can reduce reliance on separate mobile wallets
Explanation: UPI connects bank accounts for payments without necessarily loading funds into a separate wallet. Its adoption made interoperable instant transfers convenient. It does not logically imply the end of cash or guarantee specific investment and welfare outcomes.
Q83. State Financial Corporations in India were created principally to support which enterprises?
[WBCS Mains 2017]
A. Large multinational enterprises alone
B. Farming co-operatives exclusively
C. Foreign governments
D. Small and medium industrial concerns
Answer: (D) Small and medium industrial concerns
Explanation: State Financial Corporations were set up to provide term finance and financial assistance to industrial units, especially smaller enterprises that could lack access to capital markets. They were part of the institutional development-finance network.
Q82. What types of securities does RBI buy and sell in open market operations?
[WBCS Mains 2017]
A. Government securities
B. Farm commodities
C. Private insurance contracts
D. Direct tax receipts
Answer: (A) Government securities
Explanation: Open market operations involve RBI buying or selling government securities to influence monetary liquidity. Purchases inject funds into the system while sales remove them, making these operations a key market-based monetary instrument.
Q81. Which two years are associated with the two major Narasimham financial-sector reform committee reports?
[WBCS Mains 2017]
A. 1991 and 1998
B. 1980 and 1985
C. 2001 and 2010
D. 1994 and 2004
Answer: (A) 1991 and 1998
Explanation: The first Narasimham Committee report appeared in 1991 and the second in 1998. Together they shaped banking reform debates about competition, prudential supervision, non-performing assets and the restructuring of financial institutions.
Q80. Which monetary aggregate is commonly called broad money in India?
[WBCS Mains 2017]
A. M0
B. M1
C. M2
D. M3
Answer: (D) M3
Explanation: Broad money in the conventional Indian monetary-aggregate classification is M3. It consists of M1 plus net time deposits with the banking system, capturing a much larger share of deposit-based purchasing power than narrow money alone.
Q79. Which institution had proposed the option of Islamic windows at conventional banks as a financial-inclusion idea?
[MPSC Rajyaseva GS I 2017]
A. World Bank
B. Reserve Bank of India
C. International Monetary Fund
D. NABARD
Answer: (B) Reserve Bank of India
Explanation: RBI examined a proposal to permit interest-free banking arrangements through conventional banks to broaden inclusion. This dated question concerns a discussion or recommendation, not a claim that a comprehensive Islamic banking framework was ultimately introduced.
Q78. Which institution announces the Indian repo policy rate?
[WBCS Prelims 2017]
A. Finance Ministry directly
B. Prime Minister’s Office
C. Reserve Bank of India
D. The President’s Secretariat
Answer: (C) Reserve Bank of India
Explanation: The RBI announces monetary policy decisions, including the policy repo rate; within the statutory framework the Monetary Policy Committee sets that key rate. The rate affects short-term funding costs and monetary transmission.
Q77. Which statements about payments banks are correct?
(1) Eligible resident-controlled telecom firms may promote them.
(2) They may issue credit cards.
(3) They cannot lend.
[UPSC CSE Prelims 2016]
A. 1 and 2 only
B. 1 and 3 only
C. 2 only
D. All three
Answer: (B) 1 and 3 only
Explanation: Payments banks were designed for deposits and remittances, with eligible promoters including certain telecom operators. They cannot undertake ordinary lending or issue credit cards, although debit-card and payment services are permitted within the regulatory framework.
Q76. What does Core Banking Solution mean?
[UPSC CSE Prelims 2016]
A. A branch network sharing a central system so customers can operate accounts across branches
B. A legal takeover process for insolvent banks
C. An RBI-owned insurance programme
D. A system restricted to headquarters cash vaults
Answer: (A) A branch network sharing a central system so customers can operate accounts across branches
Explanation: Core Banking Solution links a bank’s branches to centralised account records and transaction processing. Customers can access the same account through connected branches and channels. It is an information system, not a statutory bank-resolution or insurance mechanism.
Q75. What objectives did RBI set for Marginal Cost of Funds Based Lending Rate (MCLR)?
[UPSC CSE Prelims 2016]
A. Greater rate-setting transparency only
B. Fair lending rates only
C. Both transparency and fairness
D. Neither
Answer: (C) Both transparency and fairness
Explanation: MCLR replaced the earlier base-rate benchmark for new eligible loans in April 2016. It sought to make loan-pricing methodology more transparent and improve transmission of banks’ funding costs into rates charged to borrowers.
Q74. How many constituent companies were traditionally represented in the benchmark BSE Sensex index?
[WBCS Mains 2016]
A. 40
B. 30
C. 50
D. 60
Answer: (B) 30
Explanation: Sensex is the S&P BSE 30 index, comprising thirty selected liquid and representative listed companies. It is widely used as a barometer of Indian large-cap equity performance and is not the same as the broader Nifty 50.
Q73. What is the conventional name of the government-securities trading market?
[WBCS Mains 2016]
A. Gilt-edged market
B. Industrial goods market
C. Call-money market only
D. Agricultural commodity market
Answer: (A) Gilt-edged market
Explanation: Government bonds and related sovereign instruments trade in the gilt-edged market. Because sovereign securities often have lower credit risk than corporate borrowing, they also play an important role in collateral and liquidity management.
Q72. Which among RBI, commercial banks and SEBI is not itself a money-market participant in the usual classification?
[WBCS Mains 2016]
A. RBI
B. Commercial banks
C. SEBI
D. All three are identical participants
Answer: (C) SEBI
Explanation: RBI operates in the money market and commercial banks regularly use short-term funding instruments. SEBI is the capital-market regulator; oversight of securities does not make it a typical cash-funding market participant.
Q71. Which policy interest rate is linked most directly to RBI short-term repo funding to banks?
[WBCS Mains 2016]
A. Reverse repo rate
B. Repo rate
C. Dividend yield
D. Treasury revenue ratio
Answer: (B) Repo rate
Explanation: Repo transactions allow eligible financial institutions to obtain short-term liquidity from the RBI against specified securities. The policy repo rate is a key benchmark influencing market rates and monetary transmission.
Q70. Which Indian authority introduced credit planning in the organised banking sector?
[WBCS Mains 2016]
A. Reserve Bank of India
B. National Stock Exchange
C. Competition Commission
D. Ministry of External Affairs
Answer: (A) Reserve Bank of India
Explanation: Credit planning was pursued through RBI’s credit and banking policies to allocate finance in support of national development priorities. This historical approach became less direct as Indian monetary management and banking markets evolved.
Q69. Which combination of measures can generally support demand during a downturn?
[WBCS Mains 2016]
A. Cutting repo rates and easing reserve restrictions
B. Raising all reserve ratios and policy rates
C. Selling securities to remove every reserve
D. Banning all deposits
Answer: (A) Cutting repo rates and easing reserve restrictions
Explanation: Lower policy rates and relaxed liquidity requirements generally aim to make credit less costly and more available. The eventual impact depends on banking health, borrowers’ demand and wider economic conditions, so stimulus is not automatic.
Q68. Which bank was not among the original fourteen banks nationalised in 1969?
[WBCS Mains 2016]
A. Vijaya Bank
B. Canara Bank
C. Bank of India
D. Central Bank of India
Answer: (A) Vijaya Bank
Explanation: Vijaya Bank was among the six banks nationalised in 1980, rather than the fourteen taken over in 1969. The two nationalisation waves are historically distinct and appear frequently in banking examinations.
Q67. Which of the following is an important historical weakness of nationalised banks?
[WBCS Mains 2016]
A. Rising stressed loans and weak capital ratios
B. Excessively high net profits in every year
C. The absence of deposit accounts
D. No requirement to disclose financial data
Answer: (A) Rising stressed loans and weak capital ratios
Explanation: Weak asset quality and pressure on capital adequacy have periodically troubled public-sector banks. Non-performing loans consume earnings and capital, while a thin capital buffer can constrain expansion and heighten supervisory concerns.
Q66. In central-bank operations, what is meant by sterilisation of a foreign-exchange intervention?
[WBCS Mains 2016]
A. Offsetting the intervention’s effect on domestic liquidity
B. Purifying old currency notes
C. Closing every external bank account
D. Writing off every non-performing asset
Answer: (A) Offsetting the intervention’s effect on domestic liquidity
Explanation: Sterilised intervention counterbalances domestic liquidity changes caused by currency-market operations, for example with securities transactions. It attempts to limit unintended monetary expansion or contraction while exchange-market objectives are pursued.
Q65. On which date did RBI become government-owned?
[WBCS Mains 2016]
A. 1 January 1949
B. 15 August 1947
C. 1 April 1935
D. 26 January 1950
Answer: (A) 1 January 1949
Explanation: The Reserve Bank began operations as a shareholder-owned institution in 1935. Nationalisation took effect from 1 January 1949, when ownership was transferred to the Government of India under relevant legislation.
Q64. To increase liquidity through securities transactions, which action can RBI undertake?
[WBCS Mains 2016]
A. Purchase government bonds from the market
B. Sell government bonds to withdraw cash
C. Raise every reserve requirement
D. Collect direct personal income tax
Answer: (A) Purchase government bonds from the market
Explanation: An open-market purchase of government securities generally injects funds into the banking system. Sellers receive payment and banks obtain additional settlement balances, enabling money-market liquidity to expand in the short term.
Q63. Following the Narasimham reform recommendations, what change supported greater banking competition?
[WBCS Mains 2016]
A. Providing guidelines for new private-sector bank entry
B. Banning private ownership of all banks
C. Mandating only one nationwide bank
D. Replacing bank regulation with stock-market regulation
Answer: (A) Providing guidelines for new private-sector bank entry
Explanation: Banking reform in the 1990s enabled licensing of new private-sector banks under RBI rules. The measure was intended to increase competition, operational efficiency and service quality within a stronger prudential regulatory environment.
Q62. Which is the accurate order in which IFCI, ICICI, IDBI and IIBI were established?
[MPSC Rajyaseva GS I 2016]
A. IFCI → ICICI → IDBI → IIBI
B. IDBI → IFCI → ICICI → IIBI
C. IIBI → IFCI → IDBI → ICICI
D. ICICI → IIBI → IFCI → IDBI
Answer: (A) IFCI → ICICI → IDBI → IIBI
Explanation: IFCI dates to 1948, ICICI to 1955, IDBI to 1964 and the later IIBI form to 1997. The sequence charts phases in India’s developmental and industrial finance architecture.
Q61. Which objective was not among RBI short-term priorities highlighted in its 2014–15 Annual Report?
[WBCS Prelims 2016]
A. Reducing inflation
B. Helping resolve distressed projects
C. Supporting new lending
D. Ensuring credit exclusively to public sector undertakings
Answer: (D) Ensuring credit exclusively to public sector undertakings
Explanation: The cited report emphasised inflation reduction, addressing stressed projects and supporting lending conditions. A mandate to guarantee preferential credit to all public-sector enterprises was not listed as that short-term policy priority.
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.
Q50. Which label is incorrect as a direct synonym for the policy repo rate?
[WBCS Mains 2015]
A. Repurchase agreement rate
B. Repo rate
C. Rate of discount
D. Interest rate for collateralised repo borrowing
Answer: (C) Rate of discount
Explanation: The repo rate concerns repurchase-agreement lending against collateral. The discount or bank rate is a distinct concept with a different legal and operational history, so the two should not automatically be treated as synonyms.
Q49. Which direction of SLR adjustment formed part of financial-sector reform in India?
[WBCS Mains 2015]
A. Progressively reducing statutory liquidity requirements
B. Increasing SLR permanently to 100%
C. Eliminating every government bond
D. Giving SLR powers to municipalities
Answer: (A) Progressively reducing statutory liquidity requirements
Explanation: Indian financial reforms sought to reduce excessively high statutory pre-emptions of bank funds through CRR and SLR. The changes permitted greater flexibility in commercial lending while retaining prudential liquidity safeguards.
Q48. Why is the RBI not best described as an agent of the Government of India at the World Bank?
[WBCS Mains 2015]
A. Its statutory banking and currency roles are different
B. It has no capacity to manage reserves
C. It issues no monetary policy
D. It is owned by foreign shareholders
Answer: (A) Its statutory banking and currency roles are different
Explanation: RBI acts as India’s central bank, government banker and foreign-exchange reserve manager, while India’s representation and engagement with the World Bank are arranged through governmental and institutional channels rather than that asserted RBI agency role.
Q47. Which measure of RBI monetary restraint is usually associated with curbing inflation?
[WBCS Mains 2015]
A. Increasing the bank rate
B. Lowering the bank rate
C. Reducing CRR
D. Buying government bonds to add reserves
Answer: (A) Increasing the bank rate
Explanation: An increase in the bank rate is a tightening action that can raise financing costs. Higher borrowing costs tend to limit credit demand and spending, although effectiveness depends on transmission and the inflation’s causes.
Q46. How can additional deposit money arise when commercial banks increase loans?
[WBCS Mains 2015]
A. Through loan-created deposits
B. Only through new coin minting
C. Only through central government tax collections
D. Only by changing share certificates
Answer: (A) Through loan-created deposits
Explanation: Bank lending typically credits the borrower’s deposit account, creating a corresponding deposit liability. This expands bank money, subject to capital, liquidity, regulation, credit risk and the demand for borrowing.
Q45. Are scheduled commercial banks ordinarily a source of long-term industrial credit?
[WBCS Mains 2015]
A. Yes, among several financing channels
B. No, they may only make overnight loans
C. No, they cannot lend to firms
D. Only when RBI purchases shares
Answer: (A) Yes, among several financing channels
Explanation: Commercial banks provide both working capital and, within prudential guidelines, term loans to industry. They are therefore one source of longer-term business finance alongside equity, debt securities and development institutions.
Q44. Before market-based reforms, which two mandatory ratios were major banking liquidity controls?
[WBCS Mains 2015]
A. CRR and SLR
B. GST and VAT
C. CPI and WPI
D. Repo and equity P/E ratio
Answer: (A) CRR and SLR
Explanation: Cash Reserve Ratio and Statutory Liquidity Ratio imposed significant pre-emptions on banks’ funds in the pre-reform period. Their historical settings affected how much deposit funding banks could allocate to other credit activities.
Q43. In a conventional classification, open-market operations are which kind of credit control?
[WBCS Mains 2015]
A. An indirect market-based method
B. A retail loan waiver
C. An indirect tax on deposits
D. An automatic government salary increase
Answer: (A) An indirect market-based method
Explanation: Open-market bond purchases and sales affect market liquidity and bank reserves rather than targeting each individual loan. For this reason, they are commonly classified as indirect, quantitative instruments of monetary control.
Q42. A central bank conducts a repo transaction principally to achieve what immediate effect?
[WBCS Mains 2015]
A. Inject funds against eligible collateral
B. Permanently close commercial banks
C. Increase equity dividends
D. Collect import tariffs
Answer: (A) Inject funds against eligible collateral
Explanation: Under a repo, the central bank lends cash against eligible securities with an agreement for repurchase. The borrowing bank receives temporary liquidity, while the corresponding reverse repo arrangement absorbs liquidity from placing banks.
Q41. Discounting a commercial bill is generally an example of which financing arrangement?
[WBCS Mains 2015]
A. Trade credit and short-term finance
B. Issuing new share capital
C. Long-term pension payouts
D. Collection of customs duty
Answer: (A) Trade credit and short-term finance
Explanation: A financial institution discounts a bill by advancing money to its holder before maturity, less the discount. It is linked to underlying trade and converts a future receivable into present business liquidity.
Q40. Which monetary authority manages India’s official foreign-exchange reserves?
[WBCS Mains 2015]
A. Reserve Bank of India
B. NITI Aayog
C. Income Tax Department
D. Election Commission
Answer: (A) Reserve Bank of India
Explanation: RBI manages India’s foreign-exchange reserves under its statutory functions and policy framework. Reserves support external stability, provide buffers against shocks and can be deployed for authorised intervention in currency markets.
Q39. Which claimed outcome was not a recognised benefit of commercial-bank nationalisation?
[WBCS Mains 2015]
A. Reduced depositor safety
B. More branch expansion
C. Greater priority-sector lending
D. Increased mobilisation of bank deposits
Answer: (A) Reduced depositor safety
Explanation: Bank nationalisation expanded geographic reach and directed more lending toward priority groups. A claim that it inherently made depositors’ funds less secure does not correspond to the standard historical benefits cited for the policy.
Q38. Was reverse-repo liquidity absorption included in RBI’s traditional monetary framework?
[WBCS Mains 2015]
A. Yes
B. No, it always adds cash to banks
C. No, it is an agricultural tax
D. Only by direct issue of equity
Answer: (A) Yes
Explanation: Conventional reverse repos allow banks to place surplus funds with the central bank against securities, absorbing available liquidity for the term. The toolkit has since evolved, but the basic absorption logic remains.
Q37. Under RBI’s historical minimum reserve system, what minimum value of gold was specified?
[MPSC Rajyaseva GS I 2015]
A. ₹85 crore
B. ₹115 crore
C. ₹200 crore
D. ₹500 crore
Answer: (B) ₹115 crore
Explanation: Under the traditional minimum-reserve arrangement, gold of at least ₹115 crore formed part of a combined minimum reserve of ₹200 crore in gold and foreign securities. These figures relate to the system tested historically.
Q36. What services can Business Correspondents provide in bankless villages?
[UPSC CSE Prelims 2014]
A. Withdrawal of welfare benefits only
B. Cash deposits and withdrawals only
C. Both welfare access and basic deposit/withdrawal services
D. Neither
Answer: (C) Both welfare access and basic deposit/withdrawal services
Explanation: Business Correspondents extend banks’ reach through authorised local service points. They assist with small withdrawals, deposits and receipt of government benefits, reducing the need for rural customers to travel to a distant full-service branch.
Q35. What do the terms Marginal Standing Facility and Net Demand and Time Liabilities relate to?
[UPSC CSE Prelims 2014]
A. Banking operations
B. Telecommunications
C. Military planning
D. Crop production
Answer: (A) Banking operations
Explanation: The MSF is a central-bank liquidity window for eligible banks, while Net Demand and Time Liabilities form an important base for computing reserve requirements. Both concepts are specific to monetary and banking operations.
Q34. Which monetary policy instruments involve bank rate and RBI open-market operations?
[UPSC CSE Prelims 2014]
A. Neither is monetary
B. Only tax receipts are monetary
C. Both are monetary instruments
D. Both relate exclusively to public procurement
Answer: (C) Both are monetary instruments
Explanation: The bank rate is a central-bank interest-rate instrument, and open-market operations change liquidity through government-security transactions. Fiscal measures such as taxes and ordinary government spending are different from these monetary-policy tools.
Q33. Which among AMFI, SEBI, IRDA and PFRDA is not a statutory financial regulator?
[WBCS Mains 2014]
A. IRDA
B. AMFI
C. PFRDA
D. SEBI
Answer: (B) AMFI
Explanation: AMFI is an industry association representing mutual funds, not a statutory regulator. SEBI supervises securities, IRDAI insurance and PFRDA pension products under their respective legislative frameworks.
Q32. Which Indian city contains Dalal Street, associated with the stock exchange?
[WBCS Mains 2014]
A. Amritsar
B. New Delhi
C. Mumbai
D. Chandigarh
Answer: (C) Mumbai
Explanation: Dalal Street is in Mumbai and is closely associated with the Bombay Stock Exchange. It functions as a geographical shorthand for India’s securities market, much as Wall Street does in the United States.
Q31. What does the housing index RESIDEX principally monitor?
[WBCS Mains 2014]
A. Exchange-traded share prices
B. Mutual-fund net asset values
C. General inflation only
D. Residential property prices
Answer: (D) Residential property prices
Explanation: RESIDEX is a residential-property price index developed by the National Housing Bank. Its purpose is to help assess house-price movements in selected urban markets, not changes in equity values or mutual-fund units.
Q30. Why is a bank unable to recognise normal interest income from a non-performing loan?
[WBCS Mains 2014]
A. The loan fails asset-performance recognition criteria
B. The government mandates a universal zero interest rate
C. All bank deposits are cancelled
D. The loan becomes a share automatically
Answer: (A) The loan fails asset-performance recognition criteria
Explanation: When a loan becomes non-performing, interest recognition is normally suspended on an accrual basis and requires appropriate income treatment. This prevents banks from reporting income that has not been realised on distressed credit exposures.
Q29. When was the ₹1,000 banknote reintroduced in the modern series after its earlier withdrawal?
[WBCS Mains 2014]
A. October 2000
B. July 1991
C. August 1996
D. November 2005
Answer: (A) October 2000
Explanation: The high-denomination one-thousand-rupee banknote was reintroduced in October 2000 after an earlier demonetisation in 1978. Notes of that denomination were again withdrawn from legal-tender status in November 2016.
Q28. Which wider banking operation includes issuance and servicing of credit cards?
[WBCS Mains 2014]
A. Para-banking service
B. Only a currency printing function
C. Only government treasury collection
D. Not a financial service
Answer: (A) Para-banking service
Explanation: Credit cards are among fee-earning and ancillary services offered by banks, commonly described historically as para-banking activities. They provide payment convenience and revolving credit within agreed limits and relevant consumer-protection rules.
Q27. In which bank nationalisation wave was Punjab National Bank included?
[WBCS Mains 2014]
A. 1969
B. 1980
C. 1991
D. 2000
Answer: (A) 1969
Explanation: Punjab National Bank was one of fourteen major commercial banks nationalised in July 1969. This policy increased public ownership and reshaped financial intermediation, especially in rural and previously underserved areas.
Q26. A committee headed by Bimal Jalan assisted the RBI with which task relating to banking expansion?
[UPPSC Civil Services Paper 1 2014]
A. Reducing existing bad loans
B. Assessing new bank-licence applications
C. Framing microcredit rules
D. Studying mobile wallet use
Answer: (B) Assessing new bank-licence applications
Explanation: A Bimal Jalan-led external committee was associated with scrutinising applicants for new private-sector banking licences in 2013–14. This licence-screening task is distinct from the later committee on RBI economic capital arrangements.
Q25. If the demand for money rises while its supply is fixed, what usually happens to interest rates?
[UPSC CSE Prelims 2013]
A. They fall
B. They rise
C. They become zero
D. They cannot change
Answer: (B) They rise
Explanation: In a conventional liquidity-preference framework, higher desired money balances with an unchanged money stock exert upward pressure on the equilibrium interest rate. A higher interest rate encourages people to economise on non-interest-bearing cash balances.
Q24. In RBI terminology, what are open market operations?
[UPSC CSE Prelims 2013]
A. Banks borrowing overnight from RBI
B. Commercial-bank advances to industry
C. RBI purchases and sales of government securities
D. Any foreign trade transaction
Answer: (C) RBI purchases and sales of government securities
Explanation: Through open market operations, the RBI buys securities to supply funds to the market or sells securities to absorb liquidity. These transactions influence short-term monetary conditions and differ from commercial bank lending to firms.
Q23. Which sectors can fall within priority-sector lending?
[UPSC CSE Prelims 2013]
A. Agriculture only
B. Micro and small enterprises only
C. Weaker sections only
D. All three
Answer: (D) All three
Explanation: Priority-sector lending targets sectors that might otherwise receive inadequate institutional credit. Eligible categories include agriculture, smaller enterprises and weaker sections, among others. RBI prescribes the framework and applicable targets for banks.
Q22. Which method of financing economic development can create inflationary pressure through money creation?
[MPSC Rajyaseva GS I 2013]
A. Only progressive taxation
B. Only ordinary savings certificates
C. Deficit financing through monetary expansion
D. Only sale of existing government bonds to households
Answer: (C) Deficit financing through monetary expansion
Explanation: When public deficits are monetised, the central bank may create additional money to finance expenditure. If the resulting demand outpaces productive capacity, price pressures can follow. Inflation is not inevitable under every deficit-financing arrangement.
Q21. What was the underlying logic of the Lead Bank Scheme?
[UPSC CSE Prelims 2012]
A. Each bank must open a headquarters in every state
B. Banks should stop competing
C. A designated bank coordinates intensive banking development for each district
D. All deposits must be sent to RBI
Answer: (C) A designated bank coordinates intensive banking development for each district
Explanation: The scheme allots district-level coordination to a lead bank, which prepares and supports local credit plans with other financial institutions. The objective is geographic coverage, credit access and inclusive banking, not the elimination of competition.
Q20. Why may banks’ teaser-rate loans pose risks?
[UPSC CSE Prelims 2012]
A. A low initial rate may reset upward and increase default risk
B. They are always interest-free forever
C. They are issued solely to exporters
D. They are deposits rather than loans
Answer: (A) A low initial rate may reset upward and increase default risk
Explanation: Teaser loans begin with attractive initial interest rates, which can later rise. Borrowers assessed mainly on the introductory payment may struggle after repricing, raising credit risk for lenders. Such loans need not be limited to entrepreneurs or exports.
Q19. Which public institution principally frames India’s monetary policy?
[WBCS Prelims 2012]
A. Reserve Bank of India
B. State Bank of India
C. Life Insurance Corporation
D. Industrial Development Bank
Answer: (A) Reserve Bank of India
Explanation: The RBI is India’s central monetary authority. Monetary policy involves managing interest-rate and liquidity conditions in pursuit of policy objectives, whereas individual banks and insurers perform distinct commercial or sectoral roles.
Q18. Which institution is custodian of India’s official foreign-exchange reserves?
[UPPSC Civil Services Paper 1 2012]
A. Reserve Bank of India
B. State Bank of India
C. Union Finance Ministry
D. Export–Import Bank of India
Answer: (A) Reserve Bank of India
Explanation: The Reserve Bank of India maintains and manages foreign-exchange reserves under statutory powers. Reserve assets can include foreign-currency securities, gold, SDRs and the reserve position in the IMF.
Q17. Which financial services can microfinance encompass: credit, savings, insurance and remittances?
[UPSC CSE Prelims 2011]
A. Credit only
B. Credit and remittances only
C. Savings and insurance only
D. All four
Answer: (D) All four
Explanation: Microfinance is broader than microcredit. Financial inclusion for low-income customers can involve small loans, savings, insurance protection and payments or remittance facilities. Providing multiple services can help households manage risks and irregular cash flows.
Q16. What supports inclusive growth: self-help groups, micro and small enterprises and universal elementary education?
[UPSC CSE Prelims 2011]
A. SHGs alone
B. SHGs and MSMEs only
C. MSMEs and education only
D. All three
Answer: (D) All three
Explanation: Self-help groups can widen finance, smaller enterprises generate livelihoods, and education raises long-term capabilities. All contribute to participation in economic opportunities and wider distribution of benefits rather than growth confined to a narrow segment.
Q15. What is the immediate implication when RBI increases the Cash Reserve Ratio?
[UPSC CSE Prelims 2010]
A. Commercial banks have less money available to lend
B. RBI must reduce its own capital
C. Government tax collections stop
D. Commercial banks gain additional loanable reserves
Answer: (A) Commercial banks have less money available to lend
Explanation: CRR requires commercial banks to keep a prescribed share of eligible liabilities as cash balances with RBI. A higher CRR absorbs funds that otherwise could support loans, thereby tightening bank liquidity and potential credit expansion.
Q14. Why did Mauritius historically figure prominently as a source of FDI into India?
[UPSC CSE Prelims 2010]
A. Mandatory Indian preference for Mauritius
B. Double-taxation avoidance treaty advantages
C. Every Mauritian was an Indian citizen
D. Climate-related compulsory capital transfers
Answer: (B) Double-taxation avoidance treaty advantages
Explanation: The India–Mauritius tax treaty influenced the routing of investments by reducing or changing certain tax exposures under the prevailing provisions. Foreign direct investment statistics reflected treaty-based investment structures, not a formal preference based on ethnicity or climate.
Q13. Which institution was identified as the apex body promoting bank linkage of rural self-help groups?
[WBCS Prelims 2010]
A. Regional Rural Banks collectively
B. Grameen Bank
C. State Bank of India
D. NABARD
Answer: (D) NABARD
Explanation: NABARD supports rural banking and the Self-Help Group–Bank Linkage Programme, encouraging community thrift groups to obtain formal finance. Its refinancing and developmental activities broaden agricultural and rural credit access.
Q12. Which institution maintains the country’s foreign-exchange reserves?
[WBCS Prelims 2008]
A. Reserve Bank of India
B. State Bank of India
C. Export-Import Bank
D. Competition Commission
Answer: (A) Reserve Bank of India
Explanation: India’s foreign exchange reserves are managed by RBI within a central-bank framework. These assets provide external payment capacity, assist intervention when warranted and constitute a buffer against financial disruptions.
Q11. National Housing Bank was originally set up as a wholly owned subsidiary of which institution?
[UPSC CSE Prelims 2007]
A. State Bank of India
B. Reserve Bank of India
C. ICICI Bank
D. Life Insurance Corporation
Answer: (B) Reserve Bank of India
Explanation: NHB began operations in 1988 as a wholly owned subsidiary of RBI to develop housing finance. Its ownership subsequently shifted to the Union Government, but the historically correct institutional relationship is with the central bank.
Q10. Which among Corporation Bank, Dena Bank, Federal Bank and Vijaya Bank was not a nationalised bank?
[UPSC CSE Prelims 2006]
A. Corporation Bank
B. Dena Bank
C. Federal Bank
D. Vijaya Bank
Answer: (C) Federal Bank
Explanation: Federal Bank is a private-sector commercial bank, whereas the other named institutions were nationalised-sector banks at the time of the question. The historical distinction matters because later public-sector bank mergers changed several bank names and organisational structures.
Q9. At their establishment, which statements about development finance were true?
(1) NHB began as an RBI subsidiary.
(2) SIDBI was created as an IDBI subsidiary.
[UPSC CSE Prelims 2004]
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither
Answer: (C) Both 1 and 2
Explanation: NHB was originally wholly owned by RBI, and SIDBI started as a subsidiary of the Industrial Development Bank of India. The ownership of both changed later. Historical PYQs must be assessed against the legal and institutional position when asked.
Q8. Arrange IFCI, ICICI, IDBI and NABARD chronologically by establishment.
[UPSC CSE Prelims 2002]
A. IFCI, ICICI, IDBI, NABARD
B. ICICI, IDBI, NABARD, IFCI
C. IDBI, NABARD, IFCI, ICICI
D. NABARD, IFCI, ICICI, IDBI
Answer: (A) IFCI, ICICI, IDBI, NABARD
Explanation: IFCI was established in 1948, ICICI in 1955, IDBI in 1964 and NABARD in 1982. These institutions reflected different stages in developing industrial and rural financing capacity after independence.
Q7. What is included in India’s broad money aggregate M3: currency with the public, demand deposits and time deposits?
[UPSC CSE Prelims 2002]
A. Currency and demand deposits only
B. Currency and time deposits only
C. Demand and time deposits only
D. All three
Answer: (D) All three
Explanation: M3, or broad money, combines currency held by the public with demand and time deposits at banks, together with relevant additional RBI deposits under the formal definition. These items cover more than immediately spendable cash balances.
Q6. Which of these were components of domestic government debt: market borrowing, treasury bills and special securities issued to RBI?
[UPSC CSE Prelims 2001]
A. Market borrowing alone
B. Market borrowing and Treasury Bills
C. Treasury Bills alone
D. All three
Answer: (D) All three
Explanation: Internal debt is raised from domestic sources. Market loans, short-term Treasury Bills and qualifying special securities issued to RBI all represent forms of government borrowing within the country rather than external sovereign debt.
Q5. Which functions did the RBI perform: banker to government, monetary policy, IMF-related agency work and government borrowing management?
[UPSC CSE Prelims 2001]
A. Only the first two
B. Only the last three
C. All four
D. Only IMF and borrowing work
Answer: (C) All four
Explanation: The Reserve Bank handles government banking and debt-management operations alongside the country’s monetary policy. It also performs specified agency functions in India’s international financial relations. These roles are complementary parts of its central-banking mandate.
Q4. Which group lists important agricultural credit sources in India?
[UPSC CSE Prelims 1999]
A. Primary agricultural cooperatives, commercial banks, RRBs and private moneylenders
B. Only RBI and NABARD as direct farm lenders
C. Only employment schemes and fertiliser cooperatives
D. Only foreign financial institutions
Answer: (A) Primary agricultural cooperatives, commercial banks, RRBs and private moneylenders
Explanation: Farm finance has both formal channels—cooperatives, commercial banks and regional rural banks—and informal sources such as moneylenders. RBI and NABARD mainly perform regulatory, developmental or refinancing roles rather than replacing every local lending channel.
Q3. What was the RBI accounting year in 1998?
[UPSC CSE Prelims 1998]
A. April to March
B. July to June
C. October to September
D. January to December
Answer: (B) July to June
Explanation: At the time of this examination, RBI followed a July–June accounting year. It later aligned the accounting cycle with the government’s April–March financial year, making July–June the historically correct answer for this older question.
Q2. Which ratio requires banks to maintain a prescribed portion of liabilities in eligible liquid assets?
[UPSC CSE Prelims 1998]
A. Capital gains tax
B. Statutory Liquidity Ratio
C. Import duty ratio
D. Fiscal-deficit ratio
Answer: (B) Statutory Liquidity Ratio
Explanation: The Statutory Liquidity Ratio requires banks to retain a minimum proportion of net demand and time liabilities as specified liquid assets. It supports liquidity discipline, whereas CRR concerns balances maintained with RBI.
Q1. Which items form the usual core of broad money (M3) in India?
[UPSC CSE Prelims 1997]
A. Currency and demand deposits only
B. Currency, demand deposits and time deposits
C. Demand deposits and other RBI deposits only
D. Currency plus other RBI deposits only
Answer: (B) Currency, demand deposits and time deposits
Explanation: Broad money captures currency held by the public plus the deposit base, including demand and time deposits, in the standard definition. It is wider than narrow money because it recognises substantial savings kept as term deposits.