RBI and The Banking System

Q1.With reference to the liabilities of a bank as defined in the Indian banking context, consider the following statements: 1. Balances held in overdue fixed deposits are classified as Time Liabilities. 2. Margins held against Letters of Credit, if they are not payable on demand, are considered Time Liabilities. 3. Interest accrued on various deposits is categorized exclusively under Demand Liabilities. How many of the above statements are correct?

Q2.Consider the following statements: Statement-I: The regulatory authority for Housing Finance Companies (HFCs) has been transferred from the National Housing Bank (NHB) to the Reserve Bank of India (RBI). Statement-II: This transfer of regulatory power was a direct consequence of the Narasimham Committee's recommendation that the RBI, as a regulator, should not own the financial firms it regulates. Which one of the following is correct in respect of the above statements?

Q3.With reference to the Long Term Repo Operations (LTRO) introduced by the RBI, consider the following statements: 1. The primary purpose of LTRO is to assure banks of durable liquidity for a period of 1 to 3 years at the prevailing repo rate. 2. LTROs are expected to cause an increase in the short-term market interest rates charged by Scheduled Commercial Banks. 3. One of the intended effects of LTRO is to boost investment in corporate bonds. How many of the above statements are correct?

Q4.With reference to the functions of the Reserve Bank of India (RBI), consider the following statements: 1. The RBI has the sole and exclusive authority to issue all denominations of currency notes in India. 2. For issuing currency notes, the RBI is required to maintain a minimum reserve of ₹200 crore, the entirety of which must be held in the form of gold. 3. One-rupee notes and all coins are issued by the Government of India and are put into circulation exclusively by government agencies, bypassing the RBI's distribution network. How many of the above statements are correct?

Q5.Consider the following statements regarding the subsidiaries of the Reserve Bank of India: 1. The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the RBI that has taken over the management of the Indian Financial Network (INFINET). 2. The Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) owns and operates the currency printing presses located at Nasik and Dewas. 3. Reserve Bank Information Technology Pvt. Ltd. (ReBIT) was established to manage the IT and cybersecurity requirements for the RBI and its regulated entities. How many of the above statements are correct?

Q6.Consider the following statements: Statement-I: The Reserve Bank of India's surplus transfer to the government is guided by the Economic Capital Framework (ECF), which determines the appropriate level of risk provisions to be maintained by the central bank. Statement-II: The Currency and Gold Revaluation Account (CGRA) represents realized gains from the sale of gold and foreign exchange, and these gains are the primary source of the RBI's income that is transferred as surplus. Which one of the following is correct in respect of the above statements?

Q7.With reference to the differences between Banks and Non-Banking Financial Companies (NBFCs) in India, consider the following statements: 1. NBFCs are regulated under the Banking Regulation Act, 1949, whereas Banks are regulated under the Companies Act, 1956. 2. NBFCs are not required to maintain Reserve Ratios such as the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). 3. The Deposit Insurance Facility is not available to the depositors of NBFCs. How many of the above statements are correct?

Q8.Consider the following statements regarding the Financial Services Institutions Bureau (FSIB): 1. It was established to replace the Banks Board Bureau and recommends appointments for directors in public sector banks and insurers. 2. The Governor of the Reserve Bank of India is an ex-officio member of the FSIB. 3. The FSIB is an autonomous statutory body established by an Act of Parliament to ensure its independence. How many of the above statements are correct?

Q9.Consider the following statements: Statement-I: Following a 2020 amendment to the Banking Regulation Act, 1949, Co-operative Banks were brought under the exclusive regulatory control of the Reserve Bank of India, ending the dual control system. Statement-II: The amendment empowers the RBI to supersede the board of a Co-operative Bank under stress, but this action requires consultation with the concerned State Government. Which one of the following is correct in respect of the above statements?

Q10.Consider the following statements regarding reserve requirements in the Indian banking system: 1. While Scheduled Commercial Banks (SCBs) can earn returns on assets maintained under the Statutory Liquidity Ratio (SLR), the deposits maintained under the Cash Reserve Ratio (CRR) with the RBI do not yield any interest for the banks. 2. The RBI Act, 1934, empowers the Reserve Bank of India to fix the Cash Reserve Ratio (CRR) within a prescribed range of 0 per cent to 40 per cent of a bank's Net Demand and Time Liabilities (NDTL). 3. Both CRR and SLR assets are required to be maintained by the SCBs with the Reserve Bank of India. How many of the above statements are correct?

Q11.Consider the following statements regarding the various policy rates and facilities of the Reserve Bank of India: 1. The Bank Rate is the interest rate at which the RBI provides long-term loans to commercial banks and is fixed at a rate lower than the policy repo rate. 2. The Standing Deposit Facility (SDF) allows the RBI to absorb liquidity from the banking system without offering any government securities as collateral. 3. Under the Marginal Standing Facility (MSF), eligible banks can avail overnight loans against government securities at an interest rate that is typically set 25 basis points below the prevailing repo rate. How many of the above statements are correct?

Q12.Consider the following two statements: **Statement-I:** A 'Hawkish' monetary policy stance by a central bank might lead to the strengthening of the country's currency. **Statement-II:** A hawkish approach involves raising interest rates, which makes borrowing less appealing for consumers, leading to lower domestic demand for goods and services and thereby controlling inflation. Which one of the following is correct in respect of the above statements?

Q13.Consider the following statements regarding the regulation of financial institutions in India: 1. The National Housing Bank (NHB) is regulated by the Ministry of Finance, as it is now fully owned by the Government of India. 2. All Non-Banking Financial Companies (NBFCs) in India fall under the regulatory purview of the Reserve Bank of India. 3. Regional Rural Banks (RRBs) are supervised by NABARD but must also adhere to the regulatory norms prescribed by the RBI. How many of the above statements are correct?

Q14.With reference to Differentiated Banks in India, consider the following statements: 1. Payments Banks are permitted to provide loans and issue credit cards, but their area of operation is restricted. 2. Small Finance Banks are mandated to invest at least 75% of their 'demand deposit balances' in SLR-eligible Government Securities. 3. Both Small Finance Banks and Payments Banks are permitted to accept demand deposits from their customers. How many of the above statements are correct?

Q15.Consider the following two statements: Statement-I: The Reserve Bank of India (RBI) no longer holds any ownership stake in either the National Bank for Agriculture and Rural Development (NABARD) or the National Housing Bank (NHB). Statement-II: A key recommendation from the Narasimham panel was that the central bank should not own the entities that it is also tasked with regulating, to avoid a conflict of interest. Which one of the following is correct in respect of the above statements?

Q16.Consider the following statements regarding Basel Norms: 1. The Basel-I accord introduced a three-pillared approach involving minimum capital requirements, supervisory review, and market discipline. 2. Basel-I norms focused exclusively on credit risk. 3. As per the Reserve Bank of India, Basel-III norms are required to be complied with by all commercial banks, including both scheduled and non-scheduled ones. How many of the above statements are correct?

Q17.Consider the following two statements: Statement-I: The Countercyclical Capital Buffer (CCCB) is a mandatory capital requirement that banks must accumulate during periods of economic downturn to safeguard against rising systemic risks. Statement-II: The CCCB framework allows banks to use the accumulated capital during periods of stress to cover losses and continue lending, thereby counteracting distress economic conditions. Which one of the following is correct in respect of the above statements?

Q18.With reference to the components of bank capital, consider the following statements: 1. Tier-I capital is primarily composed of subordinate debt and revaluation reserves. 2. Tier-II capital, also known as core capital, mainly consists of share capital and disclosed reserves. 3. The loss absorption capacity of Tier-I capital is less than that of Tier-II capital. How many of the above statements are correct?

Q19.Consider the following statements regarding the Banking Regulation (Amendment) Act, 2020: 1. The Act brought all categories of co-operative societies and banks under the same supervisory process of the RBI as applicable to Scheduled Commercial Banks. 2. Primary Agricultural Credit Societies (PACS) are explicitly excluded from the provisions of the amended Act. 3. The impetus for bringing Urban Co-operative Banks under stricter RBI supervision was linked to financial irregularities observed in institutions like the Punjab and Maharashtra Co-operative (PMC) Bank. How many of the above statements are correct?

Q20.With reference to the National Payments Corporation of India (NPCI), consider the following statements: 1. It was established as a statutory body by the Payment and Settlement Systems Act, 2007. 2. It is an initiative solely of the Reserve Bank of India (RBI) to operate retail payment systems. 3. It operates as a 'For-Profit' company to foster competition in the digital payments landscape. How many of the above statements are correct?

Q21.Consider the following statements regarding cheques: 1. A Crossed Cheque can be encashed at the cash counter of a bank, whereas an Open Cheque can only be credited to the payee's account. 2. An Antedated Cheque bears a future date and cannot be honoured earlier than that date. 3. A Stale Cheque is one that is presented for payment after 3 months from its date of issue and is not honoured by the bank. How many of the above statements are correct?

Q22.Consider the following statements: Statement-I: The BHIM App, developed by NPCI, functions differently from digital wallets as it does not hold money itself but facilitates direct bank-to-bank transfers. Statement-II: The BHIM App is built upon the Immediate Payment Service (IMPS) infrastructure, which allows for real-time inter-bank electronic fund transfers. Which one of the following is correct in respect of the above statements?

Q23.Consider the following pairs: Type of ATM : Primary Function 1. White Label ATM : Hardware and lease owned by a service provider, but cash management by a sponsor bank. 2. Green Label ATM : Set up for facilitating e-commerce transactions. 3. Brown Label ATM : Set up, owned, and operated entirely by non-bank entities. How many of the above pairs are correctly matched?

Q24.Consider the following statements regarding asset classification in the Indian banking system: 1. A loan is classified as a Non-Performing Asset (NPA) if interest or principal remains overdue for a period of 60 days or more. 2. An NPA that has aged for more than 12 months is categorized as a sub-standard asset. 3. The term 'Stressed Assets' encompasses Non-Performing Assets and Restructured loans, but excludes assets that have been written-off. How many of the above statements are correct?

Q25.Consider the following statements: Statement-I: A sustained high level of Non-Performing Assets (NPAs) in the banking sector is generally associated with a reduction in the country's economic growth rate. Statement-II: High NPAs lead to a crisis of confidence, causing interest rates to fall, which subsequently discourages investment in new industrial projects. Which one of the following is correct in respect of the above statements?

Q26.With reference to the measurement of Non-Performing Assets (NPAs), consider the following statements: 1. Gross NPA (GNPA) represents the actual loss incurred by a bank, as it is calculated after deducting provisions for unpaid debts. 2. Net NPA (NNPA) is the total defaulted amount before any provisions are set aside, and it primarily affects a bank's goodwill and equity value. 3. The Provisioning Coverage Ratio (PCR) is the ratio of a bank's total provisions to its Gross NPAs, indicating the extent of funds set aside to cover loan losses. How many of the above statements are correct?

Q27.Consider the following statements regarding the framework for stressed asset resolution in India: 1. The SARFAESI Act, 2002, provided the legal framework for establishing a single, government-owned Asset Reconstruction Company (ARC). 2. The Prudential Framework for Resolution of Stressed Assets issued by the RBI in 2019 made the signing of an Inter-Creditor Agreement (ICA) by all lenders compulsory. 3. The concept of a 'Bad Bank' in India was first officially proposed by the Narasimham Committee in 1998. How many of the above statements are correct?

Q28.With reference to India's efforts for financial inclusion, consider the following statements: 1. The Lead Bank for a particular district is decided by the respective State Government, which assigns the role to a bank with a significant rural branch network. 2. The Lead Bank Scheme is applicable exclusively to Public Sector Banks to coordinate credit flow to priority sectors. 3. A decision passed by the Banking Ombudsman is final and binding on both the bank and the complainant, with no provision for appeal. How many of the above statements are correct?

Q29.Consider the following statements regarding Priority Sector Lending (PSL) in India: 1. Regional Rural Banks and Small Finance Banks are mandated to allocate 40% of their Adjusted Net Bank Credit (ANBC) for Priority Sector Lending. 2. To incentivize lending to the priority sector, banks with a surplus in their PSL targets can sell Priority Sector Lending Certificates (PSLCs) to banks that have a shortfall. 3. Under the PSL framework, the 'Startup sector' and 'Export Credit' are recognized categories. How many of the above statements are correct?

Q30.Consider the following statements: Statement-I: The Account Aggregator (AA) network enables a regulated financial institution to access a user's detailed transaction data from another financial institution, but only with the user's explicit consent. Statement-II: Unlike the Account Aggregator framework, systems like Aadhaar eKYC and CKYC are designed to share only a limited set of identity data fields and do not provide access to a user's transaction history or bank statements. Which one of the following is correct in respect of the above statements?

Q31.Consider the following statements regarding the balance sheet and income of the Reserve Bank of India (RBI): 1. A significant portion of the RBI's assets is held in foreign currency assets and gold, with domestic assets forming a smaller share. 2. An appreciation of the Indian Rupee against major foreign currencies generally leads to valuation gains, increasing the RBI's surplus. 3. The RBI's income is primarily generated from interest on its holdings of government securities and returns on its foreign currency assets. How many of the above statements are correct?

Q32.With reference to the regulation of Co-operative Banks in India, consider the following statements: 1. Following recent amendments, all Co-operative Banks are now exclusively regulated by the Reserve Bank of India, ending the role of State Governments. 2. The RBI has the authority to approve the appointment of Chief Executive Officers (CEOs) for Urban Co-operative Banks. 3. The regulatory changes bringing Co-operative Banks under stricter RBI norms apply to both Urban and Multi-State Co-operative Banks. Which of the statements given above is/are correct?

Q33.Consider the following statements regarding the Reserve Bank of India's monetary policy operations: Statement-I: A reduction in the Cash Reserve Ratio (CRR) by the RBI is intended to increase the lendable resources available with commercial banks. Statement-II: Such a reduction in the CRR is a primary tool used by the RBI when its monetary policy stance is 'withdrawal of accommodation'. Which one of the following is correct in respect of the above statements?

Q34.With reference to the regulatory framework for the amalgamation of Urban Co-operative Banks (UCBs), consider the following statements: 1. The framework allows for amalgamation even if the bank being acquired has a negative net worth, provided depositor interests are protected. 2. In such a merger, the 'Amalgamating Bank' refers to the weaker UCB that is transferring its business to a stronger entity. 3. The power of the Reserve Bank of India to sanction a scheme of amalgamation for banking companies, including UCBs, is a recently introduced provision in the banking laws. How many of the statements given above are correct?

Q35.Consider the following statements regarding the regulatory distinctions between Scheduled Commercial Banks and Non-Banking Financial Companies (NBFCs) in India: 1. Unlike banks, NBFCs are statutorily barred from being part of the payment and settlement system and cannot issue cheques drawn on themselves. 2. The deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation is not available to depositors of any type of NBFC. 3. All NBFCs are exempt from maintaining reserve ratios such as the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). Which of the statements given above is/are correct?

Q36.Consider the following statements regarding credit allocation policies in the Indian economy: Statement-I: The Reserve Bank of India periodically revises Priority Sector Lending (PSL) guidelines to align credit flow with emerging national priorities and address regional disparities. Statement-II: An expansion in the list of eligible activities under the PSL framework generally leads to a contraction of the overall credit supply in the economy. Which one of the following is correct in respect of the above statements?

Q37.Consider the following statements regarding the macroeconomic implications of a reduction in the policy repo rate by the Reserve Bank of India: 1. It is intended to increase the cost of funds for commercial banks, thereby contracting credit supply. 2. It may lead to a depreciation of the domestic currency as returns on domestic investments become less attractive. 3. It generally results in an immediate and significant strengthening of the domestic currency against major foreign currencies. How many of the above statements are correct?

Q38.With reference to the Monetary Policy Committee (MPC) in India, consider the following statements: 1. The Governor of the Reserve Bank of India acts as the ex-officio Chairperson of the committee. 2. The committee is mandated to meet at least six times in a financial year to review monetary policy. 3. All members of the MPC, including those nominated by the Government of India, are appointed by the RBI Governor. Which of the statements given above is/are correct?

Q39.Consider the following statements: Statement-I: A reduction in the policy repo rate by the central bank is often followed by commercial banks lowering their lending rates. Statement-II: The policy repo rate is a quantitative monetary policy tool that acts as a benchmark for the cost of funds in the banking system.

Q40.With reference to the recent performance of India's banking sector, consider the following statements: 1. Gross Non-Performing Assets (GNPA) of Scheduled Commercial Banks as a percentage of gross advances have consistently increased. 2. The growth rate of credit to the industrial sector has decelerated in the recent past. 3. The gap between bank credit growth and deposit mobilisation has widened, indicating potential liquidity pressures. How many of the statements given above are correct?

Q41.Consider the following statements regarding the role of the financial system in India: 1. The Unified Payments Interface (UPI) is a capital market instrument regulated by the Securities and Exchange Board of India (SEBI). 2. Banks act as intermediaries for corporate funding by linking businesses to capital markets for raising funds via instruments like Corporate Bonds. 3. The Pradhan Mantri Jan-Dhan Yojana (PMJDY) is a flagship scheme focused on providing universal health insurance. Which of the statements given above is/are correct?

Q42.Statement-I: The State Bank of India is not included in the list of 'Nationalised Banks' that were nationalised in 1969 and 1980. Statement-II: The Government of India holds a minority stake in the State Bank of India since its inception. Which one of the following is correct in respect of the above statements?

Q43.Consider the following statements regarding the management of bad loans by commercial banks: Statement-I: A loan 'write-off' by a bank legally extinguishes the borrower's obligation to repay the outstanding debt. Statement-II: Writing off non-performing loans helps a bank clean its balance sheet and may offer tax advantages, even while the option to recover the amount remains. Which one of the following is correct in respect of the above statements?

Q44.With reference to the stability of the microfinance sector in India, consider the following statements: 1. The weakening of the Joint Liability Group (JLG) model has been a contributing factor to rising stress in the sector. 2. Over-leveraging of borrowers, often through multiple loans from different lenders, has increased the probability of defaults. 3. Stricter prudential lending norms by the Reserve Bank of India have uniformly led to an immediate decrease in NPAs for all Microfinance Institutions. How many of the statements given above are correct?

Q45.With reference to the Insolvency and Bankruptcy Code (IBC) of India, consider the following statements: 1. The Code provides a framework for the insolvency resolution of corporate persons, partnership firms, and individuals. 2. A primary objective of the Code is to maximize the value of assets of the corporate debtor. 3. A resolution plan approved by the Committee of Creditors is final and binding on all stakeholders without further judicial approval. Which of the statements given above is/are correct?

Q46.With reference to the Lead Bank Scheme, consider the following statements: 1. Only public sector banks are designated as Lead Banks for district credit. 2. Its primary objective is enhancing credit flow to the priority sectors. 3. It is based on the Service Area Approach for SCBs and RRBs. Which of the statements given above is/are correct?

Q47.Consider the following statements regarding the key components and objectives of financial inclusion in India: 1. Financial literacy primarily involves the establishment of physical banking outlets in underserved areas. 2. The C. Rangarajan Committee defined financial inclusion as ensuring access to credit at market-driven rates. 3. Active usage of financial services, beyond mere account opening, is a critical measure of successful inclusion. How many of the statements given above are correct?

Q48.Consider the following statements regarding digital banking and financial inclusion: Statement-I: The proliferation of Digital Banking Units (DBUs) primarily aims to replace the need for financial literacy initiatives. Statement-II: Expanding digital financial services is a key strategy to overcome challenges of last-mile connectivity and improve the usage of financial products. Which one of the following is correct in respect of the above statements?

Q49.With reference to the microfinance sector in India, consider the following statements: 1. All entities engaged in microfinance, including Self-Help Groups, are regulated as NBFC-MFIs by the Reserve Bank of India. 2. The Joint Lending Group (JLG) model, a common practice for MFIs, operates on the principle of individual-only loan liability. 3. Microfinance aims to enhance financial inclusion by providing small loans to low-income households to foster self-sufficiency and economic empowerment. How many of the statements given above are correct?