MCQ Test: Banking Sector Reforms- 1 - Bank Exams MCQ

iwatch’ is a mobile app; available on the apple watch launched by the HDFC bank in April 2015.

one rupee notes are printed by the Ministry of Finance while other notes are printed by the RBI.

The sentence among the options provided that is not correct is:

1. RBI’s headquarter is in Delhi

The Reserve Bank of India (RBI), which is the central bank of India, has its headquarters in Mumbai, not Delhi. The other statements are:

1. RBI was nationalized on January 1, 1935: This statement is incorrect. RBI was established on April 1, 1935, based on the recommendations of the Hilton Young Commission. It was nationalized later, on January 1, 1949.

2. RBI is the custodian of the foreign currency in India: This is correct. The RBI plays a crucial role in the management of India's foreign exchange reserves and is the custodian of foreign currencies in India.

3. RBI has 4 Deputy Governors: This is correct. The RBI typically has four Deputy Governors, who are appointed to oversee various functions of the bank.

The Monetary Policy Committee (MPC) of India is responsible for fixing the benchmark interest rate in India. The MPC is a committee of the Reserve Bank of India (RBI), constituted by the Central Government of India, and is tasked with ensuring price stability while keeping in mind the objective of growth. The committee consists of six members – three officials of the Reserve Bank of India and three external members nominated by the Government of India. Decisions are made by majority vote of the committee members.

While the Reserve Bank of India (option 1) plays a crucial role in the country's monetary policy, the specific decisions regarding policy rates are made by the MPC. The other options listed, such as the Banking Association of India, NITI Aayog, or any other entity, are not responsible for deciding the monetary policy of India.

Forex Reserve is the short form of Foreign Exchange Reserve which is the collection of foreign currency.

In India, the second generation reform started from 1996 to 2007. During this period, 2 five year plans were included. 

1. The second generation of economic reforms in the country gave special stress on fiscal reforms, financial reforms, structural reforms, labor law reforms, etc.
2. The second-generation reforms focused on the economic growth of the country by setting targets to achieve growth in foreign direct investment by giving liberty to foreign firms to set up corporations in India.
3. It aimed at exploiting the knowledge-based global economy to enhance advancement in science and technology in India.
4. A clean environment was also one of the aims to be achieved in second-generation reform. 
5. At that time, the focus was more on economic growth, and no such measures were taken to control the population.

Thus, option 3 is the correct answer.

Key Points

• It is an independent, legislative body responsible for regulating and promoting the Indian insurance and reinsurance industries.
  • It was established by the Insurance Regulatory and Development Authority Act, 1999 a Parliament Act passed by the Indian government.

Important Points 

•  IRDAI is a 10-member body that includes the chairman, five full-time and four part-time members appointed by the Indian government
  • PhonePe on 30 August 2021 has been issued an insurance broking license from the Insurance Regulatory and Development Authority of India (IRDAI).
  • The union government has appointed former Financial Services Secretary Debasish Panda as Chairman of IRDAI.

1. The push for digitization in the wake of demonetization and the proposal for public sector bank (PSB) consolidation was the top agenda for Gyan Sangam which was the retreat for PSBs, government-owned Financial Institutions (FI), and insurance companies, held in March' 2016.
2. Gyan Sangam's 2 important aspects were:

• Automation of middle management functions: Referring to the manpower shortage, especially in middle management in PSBs, the sources said the retreat would have discussions on automating/digitizing many of these functions to ensure productivity improvement. Strategies for strengthening the ‘banking correspondent’-network and increasing the usage of micro ATMs and Point of Sale machines
• Expediting banking reforms: The high-profile meeting will also deliberate upon the need for the autonomous Banks Board Bureau (BBB) to expedite banking reforms including PSB consolidation. 

Thus, the new reforms in the Indian banking system include Digitisation of bank operations and Banking consolidation.

• Bank of Baroda is a public sector bank in India. Maharaja Sayajirao Gaekwad III of Baroda established this bank on July 20, 1908, in Baroda, the native state of Gujarat. This bank along with 13 other major commercial banks was nationalized by the Government of India on July 19, 1969.
• Indian Bank is a state-owned banking and financial services company, established in 1907. The headquarter of the bank is in Chennai, it has a large network of 2836 branches all over the country. It provides many banking and financial services such as savings accounts, fixed deposits, loans, etc.
• Canara Bank is indigenous and the third largest public sector bank of India, this bank was established on 1st July 1906 by Late Shri Ammembal Subbarao Pai and its headquarter is located in Bangalore Karnataka.
• Central Bank of India is a major public sector bank in India that was established in 1911 by Sir Sorabji Pochkhanwala, a Parsi banker influenced by the Swadeshi movement. It also has the distinction of being the first Indian commercial bank that was fully owned and managed by Indians at the time of its inception.

During the 1980s, India borrowed 7 billion USD from the International Monetary Fund (IMF). This borrowing was aimed at addressing India's economic challenges and supporting its development efforts. The loan from the IMF helped India stabilize its economy and implement necessary reforms to promote growth and financial stability.

The correct option is a, because 17 industries were reserved for public sector,Which reduced to 8 under New Industrial Policy.

India's Prime Minister during 1990, when the economic crisis was unfolding, was Vishwanath Pratap Singh (V. P. Singh). He served as the Prime Minister of India from December 1989 to November 1990. The economic crisis that began during his tenure led to significant economic reforms in the subsequent years under Prime Minister P. V. Narasimha Rao.

When India sought a loan from the International Monetary Fund (IMF), the Indian government pledged a portion of its gold reserves as collateral. This collateral provided assurance to the IMF that the loan would be backed by valuable assets. By using gold reserves as collateral, India demonstrated its commitment to repaying the loan and mitigating the risk for the IMF. This collateralization of gold reserves is a common practice when countries borrow from international financial institutions like the IMF.

Globalization aims at increasing the integration and interdependence among countries. Therefore, a is the correct option.

After the New Economic Policy, the growth of Indian economy is mainly driven by the service sector. So, b is the correct option.

IBRD or International Bank of Reconstruction and Development was the other name of the World Bank, therefore, the correct option is c.

The correct answer is (a) RBI, which stands for Reserve Bank of India. The financial sector in India is primarily regulated and supervised by the Reserve Bank of India. The RBI is the central banking institution in India and is responsible for formulating and implementing monetary policy, regulating and supervising banks, managing foreign exchange reserves, and promoting the stability and development of the financial system in the country. While entities like State Bank of India (SBI) and Industrial Development Bank of India (IDBI) play important roles in the Indian financial sector, the ultimate regulatory authority lies with the RBI.

The correct answer is (d) July. The Goods and Services Tax (GST) Act came into effect from July 1, 2017. The GST is a comprehensive indirect tax system that replaced multiple indirect taxes levied by the central and state governments in India. It is a single tax regime that is applicable throughout the country and aims to streamline the tax structure, eliminate cascading effects, and create a unified market. The implementation of the GST Act marked a significant reform in India's taxation system.

The correct answer is (b) Devalued. In 1991, as an immediate measure to resolve the balance of payment crisis, the Indian rupee was devalued against foreign currencies. Devaluation refers to a deliberate decrease in the value of a country's currency relative to other currencies. By devaluing the rupee, the Indian government aimed to make exports more competitive and encourage inflows of foreign currency. Devaluation helps to boost exports and address trade imbalances by making the country's goods and services relatively cheaper in international markets. Therefore, devaluation was one of the measures implemented in 1991 to address the balance of payment crisis in India.

The correct answer is (d) World Trade Organisation (WTO). The successor organization of the General Agreement on Trade and Tariff (GATT) is the World Trade Organisation (WTO). GATT was established in 1947 as an international agreement to promote trade liberalization and regulate global trade relations. Over time, as GATT evolved and expanded, it led to the establishment of the WTO in 1995.
The WTO serves as a global organization that deals with the global rules of trade between nations. It provides a framework for negotiating trade agreements, settles trade disputes, and monitors the implementation of trade policies. The WTO plays a vital role in facilitating international trade, promoting fair trade practices, and fostering economic cooperation among its member countries.
Therefore, the WTO is the successor organization of GATT and continues to govern international trade and address trade-related issues among its member nations.