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Money and Banking MCQs for UPPSC (UP) Exam
It covers all Important Questions with answers on Money and Banking for the UPPSC (UP) exam. The questions are based on important topics. Details about the questions:- Topic: Money and Banking
- Type of Questions: MCQs with solutions
- Number of Questions: 49
- You can attempt them on EduRev to score high in UPPSC (UP) exam.
Fiscal Policy in India is formulated by which of the following?- a)The Reserve Bank of India
- b)NITI Aayog
- c)Ministry of Finance
- d)The Finance Commission
Correct answer is option 'C'. Can you explain this answer?
Fiscal Policy in India is formulated by which of the following?
a)
The Reserve Bank of India
b)
NITI Aayog
c)
Ministry of Finance
d)
The Finance Commission
 | Ritika Choudhury answered |
Ministry of finance is the nodal agency for formulation of the fiscal policy
Consider the following statements:
1. White Label ATMs are owned and operated by the bank
2. Green Label ATMs are used for agricultural transactions
3. Brown Label ATMs are owned and operated by a non-banking entity
Which of the statements given above is/are correct?- a)1 and 2 only
- b)2 only
- c) 3 only
- d)2 and 3 only
Correct answer is option 'B'. Can you explain this answer?
Consider the following statements:
1. White Label ATMs are owned and operated by the bank
2. Green Label ATMs are used for agricultural transactions
3. Brown Label ATMs are owned and operated by a non-banking entity
Which of the statements given above is/are correct?
1. White Label ATMs are owned and operated by the bank
2. Green Label ATMs are used for agricultural transactions
3. Brown Label ATMs are owned and operated by a non-banking entity
Which of the statements given above is/are correct?
a)
1 and 2 only
b)
2 only
c)
3 only
d)
2 and 3 only
 | Lekshmi Basak answered |
-On Site ATM - ATMs Inside the Bank
-Off site ATM - ATM outside the bank premises but is located at other places, such as shopping centres, airports, railways station and petrol stations.
-White Label ATM - ATM Provided by NBFC (Non Banking Financial Company)
-Green Label ATM - ATM Provided for Agricultural Transaction
-Orange Label ATM - ATM Provided for Share Transactions
-Yellow Label ATM - ATM provided for E-commerce
-Pink Label ATM - ATM for women banking
-Brown Label ATM - ATM are those Automated Teller Machines where hardware and the lease of the ATM machine is owned by a service provider but cash management and connectivity to banking networks is provided by a sponsor bank .
The base year used for WPI is- a)1993-94
- b)2001-02
- c)2004-05
- d)None of the above
Correct answer is option 'C'. Can you explain this answer?
The base year used for WPI is
a)
1993-94
b)
2001-02
c)
2004-05
d)
None of the above
| | Koko Singh answered |
Option C is correct that is 2004-05.
Consider the following statements about Statutory Liquidity Ratio (SLR):
1. It includes cash and gold.
2. Banks may earn returns on money parked as SLR
Which of the statements given above is/are correct?- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
Consider the following statements about Statutory Liquidity Ratio (SLR):
1. It includes cash and gold.
2. Banks may earn returns on money parked as SLR
Which of the statements given above is/are correct?
1. It includes cash and gold.
2. Banks may earn returns on money parked as SLR
Which of the statements given above is/are correct?
a)
1 only
b)
2 only
c)
Both 1 and 2
d)
Neither 1 nor 2
 | Sneha Choudhary answered |
Statutory Liquidity Ratio (SLR)
The Statutory Liquidity Ratio (SLR) is the percentage of a bank's Net Demand and Time Liabilities (NDTL) that it needs to maintain in the form of liquid assets such as cash, gold, and approved securities. It is a prudential regulation imposed by the Reserve Bank of India (RBI) on banks to ensure the stability and solvency of the banking system.
Statement 1: It includes cash and gold.
The first statement is correct. The SLR includes cash, gold, and approved securities. Banks are required to maintain a certain proportion of their NDTL as liquid assets, and these assets can include cash, gold, and government securities. However, the SLR does not include all the assets held by a bank, but only those that meet the criteria specified by the RBI.
Statement 2: Banks may earn returns on money parked as SLR
The second statement is also correct. Banks are allowed to earn returns on the money parked as SLR. While maintaining the SLR, banks invest their excess funds in government securities, which are considered safe and provide a return on investment. This allows banks to earn income on the funds that they are required to hold as liquid assets. The returns earned on SLR investments help banks enhance their profitability and manage their liquidity position effectively.
Conclusion
Both statements 1 and 2 are correct. The SLR includes cash, gold, and approved securities, and banks are allowed to earn returns on the money parked as SLR. The SLR requirement serves as a prudential measure to ensure that banks maintain a certain level of liquidity and stability in their operations. It also helps the central bank in regulating the money supply and managing inflation in the economy.
The Statutory Liquidity Ratio (SLR) is the percentage of a bank's Net Demand and Time Liabilities (NDTL) that it needs to maintain in the form of liquid assets such as cash, gold, and approved securities. It is a prudential regulation imposed by the Reserve Bank of India (RBI) on banks to ensure the stability and solvency of the banking system.
Statement 1: It includes cash and gold.
The first statement is correct. The SLR includes cash, gold, and approved securities. Banks are required to maintain a certain proportion of their NDTL as liquid assets, and these assets can include cash, gold, and government securities. However, the SLR does not include all the assets held by a bank, but only those that meet the criteria specified by the RBI.
Statement 2: Banks may earn returns on money parked as SLR
The second statement is also correct. Banks are allowed to earn returns on the money parked as SLR. While maintaining the SLR, banks invest their excess funds in government securities, which are considered safe and provide a return on investment. This allows banks to earn income on the funds that they are required to hold as liquid assets. The returns earned on SLR investments help banks enhance their profitability and manage their liquidity position effectively.
Conclusion
Both statements 1 and 2 are correct. The SLR includes cash, gold, and approved securities, and banks are allowed to earn returns on the money parked as SLR. The SLR requirement serves as a prudential measure to ensure that banks maintain a certain level of liquidity and stability in their operations. It also helps the central bank in regulating the money supply and managing inflation in the economy.
Which of the following will be part of fiscal deficit?
1. Internal debt
2. Government’s external debt
3. Securities issued to food corporation of India
4. Liability to RBI
5. Liability of Central Government to states
Select the correct answer using the codes given below:- a)1, 2, 3 and 4
- b)1, 2, 4 and 5
- c)1, 3, 4 and 5
- d)1, 2 and 4 only
Correct answer is option 'D'. Can you explain this answer?
Which of the following will be part of fiscal deficit?
1. Internal debt
2. Government’s external debt
3. Securities issued to food corporation of India
4. Liability to RBI
5. Liability of Central Government to states
Select the correct answer using the codes given below:
1. Internal debt
2. Government’s external debt
3. Securities issued to food corporation of India
4. Liability to RBI
5. Liability of Central Government to states
Select the correct answer using the codes given below:
a)
1, 2, 3 and 4
b)
1, 2, 4 and 5
c)
1, 3, 4 and 5
d)
1, 2 and 4 only
| | Raksha Das answered |
3 is considered as central assistance and is not considered as part of fiscal deficit
Which of the following items come under ‘Current Account’ of the Balance of Payment?
1. Exports
2. Interest payments
3. Private remittance
4. FDI
5. External lending and borrowing
Select the correct answer using the code given below:- a)1, 2 and 3
- b)2, 3 and 4
- c)1, 2, 3 and 5
- d)1, 2, 3, 4 and 5
Correct answer is option 'A'. Can you explain this answer?
Which of the following items come under ‘Current Account’ of the Balance of Payment?
1. Exports
2. Interest payments
3. Private remittance
4. FDI
5. External lending and borrowing
Select the correct answer using the code given below:
1. Exports
2. Interest payments
3. Private remittance
4. FDI
5. External lending and borrowing
Select the correct answer using the code given below:
a)
1, 2 and 3
b)
2, 3 and 4
c)
1, 2, 3 and 5
d)
1, 2, 3, 4 and 5
 | Divyansh Singh answered |
The category of dairy products?
1. Milk
2. Cheese
3. Yogurt
4. Butter
5. Cream
6. Ice cream
7. Sour cream
8. Cottage cheese
9. Whey protein powder
10. Condensed milk.
1. Milk
2. Cheese
3. Yogurt
4. Butter
5. Cream
6. Ice cream
7. Sour cream
8. Cottage cheese
9. Whey protein powder
10. Condensed milk.
The establishment of payment banks is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?
1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of payment banks
2. Payment banks can issue both credit cards and debit cards
3. Payment banks cannot undertake lending activities
Select the correct answer using the code given below:- a)1 only
- b)1 and 3 only
- c)2 only
- d)1, 2 and 3
Correct answer is option 'B'. Can you explain this answer?
The establishment of payment banks is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?
1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of payment banks
2. Payment banks can issue both credit cards and debit cards
3. Payment banks cannot undertake lending activities
Select the correct answer using the code given below:
1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of payment banks
2. Payment banks can issue both credit cards and debit cards
3. Payment banks cannot undertake lending activities
Select the correct answer using the code given below:
a)
1 only
b)
1 and 3 only
c)
2 only
d)
1, 2 and 3
| | Anshul Thakur answered |
Payment banks eg paytm
Consider the following pairs:1. Repo rate : Policy rate set by the central bank2. 91-day Treasury Bill yield : Long-term government security yield3. 182-day Treasury Bill yield : Short-term government security yield4. Basel III norms : Prudential regulatory framework for banksHow many pairs given above are correctly matched?- a)Only one pair
- b)Only two pairs
- c)Only three pairs
- d)All four pairs
Correct answer is option 'C'. Can you explain this answer?
Consider the following pairs:
1. Repo rate : Policy rate set by the central bank
2. 91-day Treasury Bill yield : Long-term government security yield
3. 182-day Treasury Bill yield : Short-term government security yield
4. Basel III norms : Prudential regulatory framework for banks
How many pairs given above are correctly matched?
a)
Only one pair
b)
Only two pairs
c)
Only three pairs
d)
All four pairs
| | Rashi Mukherjee answered |
Understanding the Pairs
Let’s evaluate each pair to determine how many are correctly matched.
1. Repo rate : Policy rate set by the central bank
- This pair is correctly matched.
- The repo rate is indeed the rate at which the central bank lends money to commercial banks, acting as a key tool for monetary policy.
2. 91-day Treasury Bill yield : Long-term government security yield
- This pair is incorrectly matched.
- A 91-day Treasury Bill is a short-term security, typically issued for 3 months, which means its yield is associated with short-term financing rather than long-term.
3. 182-day Treasury Bill yield : Short-term government security yield
- This pair is correctly matched.
- Similar to the 91-day Treasury Bill, a 182-day Treasury Bill is also a short-term security, making this pair accurate.
4. Basel III norms : Prudential regulatory framework for banks
- This pair is correctly matched.
- Basel III is indeed a global regulatory framework established to strengthen bank capital requirements and promote financial stability.
Conclusion: Count of Correct Matches
- Correct matches: 1 (Repo rate) + 1 (182-day Treasury Bill yield) + 1 (Basel III norms) = 3 pairs.
- Incorrect match: 2 (91-day Treasury Bill yield).
Thus, the correct answer is that only three pairs are correctly matched, making option 'C' the right choice.
Let’s evaluate each pair to determine how many are correctly matched.
1. Repo rate : Policy rate set by the central bank
- This pair is correctly matched.
- The repo rate is indeed the rate at which the central bank lends money to commercial banks, acting as a key tool for monetary policy.
2. 91-day Treasury Bill yield : Long-term government security yield
- This pair is incorrectly matched.
- A 91-day Treasury Bill is a short-term security, typically issued for 3 months, which means its yield is associated with short-term financing rather than long-term.
3. 182-day Treasury Bill yield : Short-term government security yield
- This pair is correctly matched.
- Similar to the 91-day Treasury Bill, a 182-day Treasury Bill is also a short-term security, making this pair accurate.
4. Basel III norms : Prudential regulatory framework for banks
- This pair is correctly matched.
- Basel III is indeed a global regulatory framework established to strengthen bank capital requirements and promote financial stability.
Conclusion: Count of Correct Matches
- Correct matches: 1 (Repo rate) + 1 (182-day Treasury Bill yield) + 1 (Basel III norms) = 3 pairs.
- Incorrect match: 2 (91-day Treasury Bill yield).
Thus, the correct answer is that only three pairs are correctly matched, making option 'C' the right choice.
Consider the following statements and identify the right ones
1. RBI has the sole right to issue currency notes
2. Minimum reserve system has been replaced by proportional reserve system- a)1 only
- b)2 only
- c)1 and 2 both
- d)None
Correct answer is option 'A'. Can you explain this answer?
Consider the following statements and identify the right ones
1. RBI has the sole right to issue currency notes
2. Minimum reserve system has been replaced by proportional reserve system
1. RBI has the sole right to issue currency notes
2. Minimum reserve system has been replaced by proportional reserve system
a)
1 only
b)
2 only
c)
1 and 2 both
d)
None
 | Kunal Mukherjee answered |
Statement 1 is true: Yes, the Reserve Bank of India (RBI) has the sole authority to issue currency notes in India, excluding one rupee notes and coins, which are issued by the Ministry of Finance. Section 22 of the Reserve Bank of India Act gives the RBI this authority.
Statement 2 is False: The Reserve Bank of India (RBI) replaced the proportional reserve system with the minimum reserve system (MRS) in 1956 to make note issuance more flexible and to meet the economy's growing currency needs.
Hence Statement 1 is correct.
Statement 2 is False: The Reserve Bank of India (RBI) replaced the proportional reserve system with the minimum reserve system (MRS) in 1956 to make note issuance more flexible and to meet the economy's growing currency needs.
Hence Statement 1 is correct.
Consider the following statements regarding the Marginal Standing Facility (MSF) of RBI:
1. It is similar to the repo rate for the financial institutions.
2. It is on the lines of the liquidity adjustment facility and part of it.
3. Though it is a costlier route to fulfill overnight requirement of funds, it is not a penal rate.
4. Banks use this route once they exhaust all channels to raise short-term funds.
Which of the statements given above is/are not correct?- a)1, 3 and 4 only
- b)1, 2 and 3 only
- c)1, 2 and 4 only
- d)1, 2, 3 and 4
Correct answer is option 'A'. Can you explain this answer?
Consider the following statements regarding the Marginal Standing Facility (MSF) of RBI:
1. It is similar to the repo rate for the financial institutions.
2. It is on the lines of the liquidity adjustment facility and part of it.
3. Though it is a costlier route to fulfill overnight requirement of funds, it is not a penal rate.
4. Banks use this route once they exhaust all channels to raise short-term funds.
Which of the statements given above is/are not correct?
1. It is similar to the repo rate for the financial institutions.
2. It is on the lines of the liquidity adjustment facility and part of it.
3. Though it is a costlier route to fulfill overnight requirement of funds, it is not a penal rate.
4. Banks use this route once they exhaust all channels to raise short-term funds.
Which of the statements given above is/are not correct?
a)
1, 3 and 4 only
b)
1, 2 and 3 only
c)
1, 2 and 4 only
d)
1, 2, 3 and 4
 | Vijay Kumar answered |
The correct answer is:
1. 1, 3 and 4 only
Explanation:
- Statement 1 is not correct: The Marginal Standing Facility (MSF) is not exactly the same as the repo rate; it is an emergency borrowing rate for banks above the repo rate. The MSF allows banks to borrow funds overnight from the RBI against government securities.
- Statement 2 is correct: The MSF is on the lines of the Liquidity Adjustment Facility (LAF) and is a part of it, designed to help banks manage overnight liquidity shortages.
- Statement 3 is not correct: While the MSF is a costlier route compared to the repo rate, it is considered a penal rate since it is higher than the repo rate to discourage excessive reliance on it.
- Statement 4 is not correct: Although banks typically use the MSF after exhausting other avenues for raising short-term funds, the nature of MSF being a penal rate and its higher cost is implied in the statement, making it misleading.
Therefore, statements 1, 3, and 4 are not correct.
Which of the following receipts are the revenue receipts of Government?
1. Recovery of loans given to the states and union territories
2. Interest received from telecommunication
3. Debt and profit received from RBI
4. Income by tax
Select the correct option:- a)1, 2, 4
- b)2, 3, 4
- c)1, 2, 3
- d)1, 2, 3, 4
Correct answer is option 'B'. Can you explain this answer?
Which of the following receipts are the revenue receipts of Government?
1. Recovery of loans given to the states and union territories
2. Interest received from telecommunication
3. Debt and profit received from RBI
4. Income by tax
Select the correct option:
1. Recovery of loans given to the states and union territories
2. Interest received from telecommunication
3. Debt and profit received from RBI
4. Income by tax
Select the correct option:
a)
1, 2, 4
b)
2, 3, 4
c)
1, 2, 3
d)
1, 2, 3, 4
 | Kiran Sharma answered |
Revenue Receipts of Government
Revenue receipts refer to the income received by the government through various sources. These receipts are non-debt receipts and do not create any liability for the government. They are used to meet the day-to-day expenses and operational costs of the government. Revenue receipts can be further classified into tax revenue and non-tax revenue.
Tax Revenue
Tax revenue consists of the income generated through various taxes levied by the government. It includes direct taxes such as income tax, corporate tax, and indirect taxes such as goods and services tax (GST), excise duty, customs duty, etc.
Non-Tax Revenue
Non-tax revenue includes all other sources of income for the government apart from taxes. It includes various receipts such as interest received on loans given, dividends from public sector undertakings, fees and fines, etc.
Analysis of Receipts
1. Recovery of loans given to the states and union territories: This is a non-tax revenue receipt. The government provides loans to the states and union territories for various purposes. When these loans are repaid, it is considered as a revenue receipt for the government. Therefore, option 1 is a revenue receipt.
2. Interest received from telecommunication: This is a non-tax revenue receipt. The government earns revenue through the licensing and spectrum fees charged to telecommunication companies. Additionally, the government may also earn interest on loans given to the telecommunication sector. Therefore, option 2 is a revenue receipt.
3. Debt and profit received from RBI: This is a non-tax revenue receipt. The government may earn revenue in the form of interest on loans given to the Reserve Bank of India (RBI) or profit shared by the RBI. Therefore, option 3 is a revenue receipt.
4. Income by tax: This is a tax revenue receipt. Taxes levied on individuals and businesses form a major part of the government's revenue. Therefore, option 4 is a revenue receipt.
Conclusion
Based on the analysis, options 2, 3, and 4 are revenue receipts of the government. Therefore, the correct option is b) 2, 3, 4.
Revenue receipts refer to the income received by the government through various sources. These receipts are non-debt receipts and do not create any liability for the government. They are used to meet the day-to-day expenses and operational costs of the government. Revenue receipts can be further classified into tax revenue and non-tax revenue.
Tax Revenue
Tax revenue consists of the income generated through various taxes levied by the government. It includes direct taxes such as income tax, corporate tax, and indirect taxes such as goods and services tax (GST), excise duty, customs duty, etc.
Non-Tax Revenue
Non-tax revenue includes all other sources of income for the government apart from taxes. It includes various receipts such as interest received on loans given, dividends from public sector undertakings, fees and fines, etc.
Analysis of Receipts
1. Recovery of loans given to the states and union territories: This is a non-tax revenue receipt. The government provides loans to the states and union territories for various purposes. When these loans are repaid, it is considered as a revenue receipt for the government. Therefore, option 1 is a revenue receipt.
2. Interest received from telecommunication: This is a non-tax revenue receipt. The government earns revenue through the licensing and spectrum fees charged to telecommunication companies. Additionally, the government may also earn interest on loans given to the telecommunication sector. Therefore, option 2 is a revenue receipt.
3. Debt and profit received from RBI: This is a non-tax revenue receipt. The government may earn revenue in the form of interest on loans given to the Reserve Bank of India (RBI) or profit shared by the RBI. Therefore, option 3 is a revenue receipt.
4. Income by tax: This is a tax revenue receipt. Taxes levied on individuals and businesses form a major part of the government's revenue. Therefore, option 4 is a revenue receipt.
Conclusion
Based on the analysis, options 2, 3, and 4 are revenue receipts of the government. Therefore, the correct option is b) 2, 3, 4.
Consider the following pairs:1. 90-day overdue norm - Loan considered NPA if not serviced for 90 days2. 5 / 25 Refinancing - Allows extension of loan tenure to 25 years with interest adjusted every 5 years3. SDR (Strategic Debt Restructuring) - Involves converting debt to 51% equity and selling to highest bidder4. S4A (Scheme for Sustainable Structuring of Stressed Assets) - Involves change in company ownershipHow many pairs given above are correctly matched?- a)Only one pair
- b)Only two pairs
- c)Only three pairs
- d)All four pairs
Correct answer is option 'C'. Can you explain this answer?
Consider the following pairs:
1. 90-day overdue norm - Loan considered NPA if not serviced for 90 days
2. 5 / 25 Refinancing - Allows extension of loan tenure to 25 years with interest adjusted every 5 years
3. SDR (Strategic Debt Restructuring) - Involves converting debt to 51% equity and selling to highest bidder
4. S4A (Scheme for Sustainable Structuring of Stressed Assets) - Involves change in company ownership
How many pairs given above are correctly matched?
a)
Only one pair
b)
Only two pairs
c)
Only three pairs
d)
All four pairs
| | Mahi Das answered |
Understanding the Pairs
Let's analyze each of the pairs to determine how many are correctly matched:
1. 90-day overdue norm
- Correctness: This is accurate; a loan is classified as a Non-Performing Asset (NPA) if it has not been serviced for 90 days.
2. 5 / 25 Refinancing
- Correctness: This is also correct; this refinancing option allows borrowers to extend their loan tenure to 25 years, with interest rates adjusted every 5 years.
3. SDR (Strategic Debt Restructuring)
- Correctness: This pair is correctly matched. SDR involves converting a portion of the debt into equity, allowing the lender to take control of the company by obtaining 51% ownership, which can then be sold to the highest bidder.
4. S4A (Scheme for Sustainable Structuring of Stressed Assets)
- Correctness: This pair is incorrect. S4A does not inherently involve a change in ownership; rather, it aims to restructure stressed assets to make them sustainable while maintaining the existing ownership structure.
Conclusion
- Out of the four pairs, three are correctly matched (1, 2, and 3). Thus, the correct answer is option 'C', which indicates that only three pairs are accurate.
Let's analyze each of the pairs to determine how many are correctly matched:
1. 90-day overdue norm
- Correctness: This is accurate; a loan is classified as a Non-Performing Asset (NPA) if it has not been serviced for 90 days.
2. 5 / 25 Refinancing
- Correctness: This is also correct; this refinancing option allows borrowers to extend their loan tenure to 25 years, with interest rates adjusted every 5 years.
3. SDR (Strategic Debt Restructuring)
- Correctness: This pair is correctly matched. SDR involves converting a portion of the debt into equity, allowing the lender to take control of the company by obtaining 51% ownership, which can then be sold to the highest bidder.
4. S4A (Scheme for Sustainable Structuring of Stressed Assets)
- Correctness: This pair is incorrect. S4A does not inherently involve a change in ownership; rather, it aims to restructure stressed assets to make them sustainable while maintaining the existing ownership structure.
Conclusion
- Out of the four pairs, three are correctly matched (1, 2, and 3). Thus, the correct answer is option 'C', which indicates that only three pairs are accurate.
Consider the following statements:Statement-I:
The Regional Rural Banks (RRBs) were established in 1975 with the primary objectives of providing credit to weaker sections at concessional rates and mobilizing rural savings for productive activities in rural areas.Statement-II:
Co-operative banks in India predominantly cater to the needs of agriculture, rural-based industries, and to a lesser extent, trade and industry in urban centers, operating under dual regulatory control.Which one of the following is correct in respect of the above statements?- a)Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
- b)Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
- c)Statement-I is correct, but Statement-II is incorrect
- d)Statement-I is incorrect, but Statement-II is correct
Correct answer is option 'A'. Can you explain this answer?
Consider the following statements:
Statement-I:
The Regional Rural Banks (RRBs) were established in 1975 with the primary objectives of providing credit to weaker sections at concessional rates and mobilizing rural savings for productive activities in rural areas.
The Regional Rural Banks (RRBs) were established in 1975 with the primary objectives of providing credit to weaker sections at concessional rates and mobilizing rural savings for productive activities in rural areas.
Statement-II:
Co-operative banks in India predominantly cater to the needs of agriculture, rural-based industries, and to a lesser extent, trade and industry in urban centers, operating under dual regulatory control.
Co-operative banks in India predominantly cater to the needs of agriculture, rural-based industries, and to a lesser extent, trade and industry in urban centers, operating under dual regulatory control.
Which one of the following is correct in respect of the above statements?
a)
Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
b)
Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
c)
Statement-I is correct, but Statement-II is incorrect
d)
Statement-I is incorrect, but Statement-II is correct
 | Learnpro Institute answered |
Statement-I: The Regional Rural Banks (RRBs) were indeed established in 1975 with the objective of providing credit to weaker sections (such as farmers, small entrepreneurs, and rural laborers) at concessional rates and mobilizing rural savings for productive activities. This statement is correct.
Statement-II: Co-operative banks in India primarily serve the rural and agricultural sectors, including rural-based industries, and to a lesser extent, urban trade and industry. These banks are indeed regulated under dual control, with oversight by both the Reserve Bank of India (RBI) and the respective state governments. This statement is also correct.
However, Statement-II does not explain Statement-I, as the two are related to different types of financial institutions. RRBs and co-operative banks serve somewhat similar objectives in rural areas, but they operate differently and are distinct entities. Thus, while both statements are correct, Statement-II does not provide an explanation for Statement-I. Hence, Correct Answer - Option A
What was the primary objective behind the establishment of Regional Rural Banks (RRBs) in India?- a)To provide credit to urban industries at subsidized interest rates.
- b)To serve the banking needs of urban centers and metropolitan areas.
- c)To cater to the banking requirements of the rural population and weaker sections at concessional interest rates.
- d)To exclusively focus on mobilizing urban savings for industrial development.
Correct answer is option 'C'. Can you explain this answer?
What was the primary objective behind the establishment of Regional Rural Banks (RRBs) in India?
a)
To provide credit to urban industries at subsidized interest rates.
b)
To serve the banking needs of urban centers and metropolitan areas.
c)
To cater to the banking requirements of the rural population and weaker sections at concessional interest rates.
d)
To exclusively focus on mobilizing urban savings for industrial development.
 | Anoushka Reddy answered |
Introduction
Regional Rural Banks (RRBs) were established in India to address the specific banking needs of the rural population and to support weaker sections of society. The primary objective behind their formation is to foster inclusive financial development in the country.
Key Objectives of RRBs:
Conclusion
The establishment of Regional Rural Banks is a significant step towards bridging the gap between the urban and rural financial ecosystems. By focusing on the banking requirements of the rural population and weaker sections at concessional interest rates, RRBs play a crucial role in fostering economic development and ensuring financial inclusion in India.
Regional Rural Banks (RRBs) were established in India to address the specific banking needs of the rural population and to support weaker sections of society. The primary objective behind their formation is to foster inclusive financial development in the country.
Key Objectives of RRBs:
- Financial Inclusion: RRBs aim to provide banking services to the unbanked rural population, ensuring access to credit and financial products.
- Support for Weaker Sections: RRBs focus on catering to the needs of marginalized communities, ensuring they receive financial support at concessional interest rates.
- Development of Agriculture and Rural Economy: By providing loans for agricultural activities and rural development projects, RRBs contribute to the overall growth of the rural economy.
- Employment Generation: RRBs promote self-employment and entrepreneurship in rural areas by facilitating credit for small businesses and agricultural ventures.
- Localized Banking Services: With a presence in rural areas, RRBs understand local needs and can provide customized banking solutions, enhancing trust and reliability.
Conclusion
The establishment of Regional Rural Banks is a significant step towards bridging the gap between the urban and rural financial ecosystems. By focusing on the banking requirements of the rural population and weaker sections at concessional interest rates, RRBs play a crucial role in fostering economic development and ensuring financial inclusion in India.
The percentage of demand and time liabilities that banks have to keep with RBI is- a)SLR
- b)CRR
- c)OMO
- d)Bank rate
Correct answer is option 'B'. Can you explain this answer?
The percentage of demand and time liabilities that banks have to keep with RBI is
a)
SLR
b)
CRR
c)
OMO
d)
Bank rate
 | Anjana Sharma answered |
Explanation:
The percentage of demand and time liabilities that banks have to keep with the Reserve Bank of India (RBI) is known as the Cash Reserve Ratio (CRR).
Cash Reserve Ratio (CRR):
- The CRR is a monetary policy tool used by the RBI to control the liquidity in the economy.
- It refers to the portion of bank deposits that banks are required to keep with the RBI in the form of cash reserves.
- The CRR is determined as a percentage of the bank's net demand and time liabilities (NDTL).
- NDTL refers to the total demand and time liabilities of a bank, which includes the total deposits held by the bank.
- The CRR is applicable to both scheduled commercial banks and cooperative banks.
Impact of CRR:
- By increasing the CRR, the RBI reduces the liquidity in the banking system as banks have to keep a higher portion of their deposits with the RBI.
- On the other hand, by decreasing the CRR, the RBI increases the liquidity in the banking system as banks have more funds available for lending and investment.
Significance of CRR:
- The CRR serves as a tool for the RBI to control inflation and money supply in the economy.
- By increasing the CRR, the RBI reduces the excess liquidity in the economy, which helps in controlling inflation.
- Additionally, the CRR helps in maintaining the stability of the banking system by ensuring that banks have a certain amount of funds readily available in the form of cash reserves.
Difference between CRR and SLR:
- SLR stands for Statutory Liquidity Ratio, which is the percentage of NDTL that banks have to maintain in the form of specified liquid assets such as cash, gold, and government securities.
- While both CRR and SLR are tools used by the RBI to control liquidity, the key difference is that the CRR is in the form of cash reserves held with the RBI, whereas the SLR is in the form of liquid assets held by the banks themselves.
In conclusion, the correct answer to the question is option 'B', CRR. The CRR refers to the percentage of demand and time liabilities that banks have to keep with the RBI in the form of cash reserves. It is an important tool used by the RBI to control liquidity in the banking system and maintain stability in the economy.
The percentage of demand and time liabilities that banks have to keep with the Reserve Bank of India (RBI) is known as the Cash Reserve Ratio (CRR).
Cash Reserve Ratio (CRR):
- The CRR is a monetary policy tool used by the RBI to control the liquidity in the economy.
- It refers to the portion of bank deposits that banks are required to keep with the RBI in the form of cash reserves.
- The CRR is determined as a percentage of the bank's net demand and time liabilities (NDTL).
- NDTL refers to the total demand and time liabilities of a bank, which includes the total deposits held by the bank.
- The CRR is applicable to both scheduled commercial banks and cooperative banks.
Impact of CRR:
- By increasing the CRR, the RBI reduces the liquidity in the banking system as banks have to keep a higher portion of their deposits with the RBI.
- On the other hand, by decreasing the CRR, the RBI increases the liquidity in the banking system as banks have more funds available for lending and investment.
Significance of CRR:
- The CRR serves as a tool for the RBI to control inflation and money supply in the economy.
- By increasing the CRR, the RBI reduces the excess liquidity in the economy, which helps in controlling inflation.
- Additionally, the CRR helps in maintaining the stability of the banking system by ensuring that banks have a certain amount of funds readily available in the form of cash reserves.
Difference between CRR and SLR:
- SLR stands for Statutory Liquidity Ratio, which is the percentage of NDTL that banks have to maintain in the form of specified liquid assets such as cash, gold, and government securities.
- While both CRR and SLR are tools used by the RBI to control liquidity, the key difference is that the CRR is in the form of cash reserves held with the RBI, whereas the SLR is in the form of liquid assets held by the banks themselves.
In conclusion, the correct answer to the question is option 'B', CRR. The CRR refers to the percentage of demand and time liabilities that banks have to keep with the RBI in the form of cash reserves. It is an important tool used by the RBI to control liquidity in the banking system and maintain stability in the economy.
The base year to calculate CPI-AL is- a)1980-81
- b)1986-87
- c)2001-02
- d)2003-04
Correct answer is option 'B'. Can you explain this answer?
The base year to calculate CPI-AL is
a)
1980-81
b)
1986-87
c)
2001-02
d)
2003-04
 | Nilanjan Banerjee answered |
The base year to calculate CPI-AL is 1986-87 and 260 items are included in the index.
Consider the following pairs:1. Cash Reserve Ratio (CRR) - Banks maintain a part of their total deposits with the RBI in cash form.
2. Statutory Liquidity Ratio (SLR) - Banks maintain a part of their total deposits in liquid assets with the RBI.
3. Bank Rate - The interest rate charged by the RBI on its short-term lendings.
4. Repo Rate - The rate of interest the RBI charges on long-term borrowings from banks.
How many pairs given above are correctly matched?- a)Only one pair
- b)Only two pairs
- c)Only three pairs
- d)All four pairs
Correct answer is option 'A'. Can you explain this answer?
Consider the following pairs:
1. Cash Reserve Ratio (CRR) - Banks maintain a part of their total deposits with the RBI in cash form.
2. Statutory Liquidity Ratio (SLR) - Banks maintain a part of their total deposits in liquid assets with the RBI.
3. Bank Rate - The interest rate charged by the RBI on its short-term lendings.
4. Repo Rate - The rate of interest the RBI charges on long-term borrowings from banks.
How many pairs given above are correctly matched?
2. Statutory Liquidity Ratio (SLR) - Banks maintain a part of their total deposits in liquid assets with the RBI.
3. Bank Rate - The interest rate charged by the RBI on its short-term lendings.
4. Repo Rate - The rate of interest the RBI charges on long-term borrowings from banks.
How many pairs given above are correctly matched?
a)
Only one pair
b)
Only two pairs
c)
Only three pairs
d)
All four pairs
 | Upsc Toppers answered |
1. Cash Reserve Ratio (CRR) - Correct. Banks are required to maintain a part of their total deposits with the RBI in cash form.
2. Statutory Liquidity Ratio (SLR) - Incorrect. Banks maintain a part of their total deposits in liquid assets with themselves, not with the RBI.
3. Bank Rate - Incorrect. The Bank Rate is the interest rate charged by the RBI on its long-term lending, not short-term.
4. Repo Rate - Incorrect. The Repo Rate is the rate of interest the RBI charges on short-term borrowings, not long-term.
Only the first pair is correctly matched.
2. Statutory Liquidity Ratio (SLR) - Incorrect. Banks maintain a part of their total deposits in liquid assets with themselves, not with the RBI.
3. Bank Rate - Incorrect. The Bank Rate is the interest rate charged by the RBI on its long-term lending, not short-term.
4. Repo Rate - Incorrect. The Repo Rate is the rate of interest the RBI charges on short-term borrowings, not long-term.
Only the first pair is correctly matched.
Consider the following statements and identify the right ones.
i. Central government does not have exclusive power to impose tax which is not mentioned in state or concurrent list.
ii. The constitution also provides for transferring certain tax revenues from union list to states.- a)i only
- b)ii only
- c)both
- d)none
Correct answer is option 'B'. Can you explain this answer?
Consider the following statements and identify the right ones.
i. Central government does not have exclusive power to impose tax which is not mentioned in state or concurrent list.
ii. The constitution also provides for transferring certain tax revenues from union list to states.
i. Central government does not have exclusive power to impose tax which is not mentioned in state or concurrent list.
ii. The constitution also provides for transferring certain tax revenues from union list to states.
a)
i only
b)
ii only
c)
both
d)
none
 | Nidhi Deshpande answered |
Central government has exclusive power to impose tax which is not mentioned in state or concurrent list.
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