1. Consider the following:
- Cash Reserve Ratio (CRR)
- Open Market Operations (OMO)
- Repurchase (Repo) Transactions
- Standing Deposit Facility (SDF)
Which of the following is/are conducted at the discretion of the Reserve Bank of India (RBI) and not at the discretion of banks?
[A] Only 1, 2 and 3
[B] Only 2, 3 and 4
[C] Only 1, 3 and 4
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: A [Only 1, 2 and 3]
Notes:
In terms of management, Cash Reserve Ratio (CRR), Open Market Operations (OMO), and Repurchase (Repo) Transactions are all conducted at the discretion of the Reserve Bank of India. However, access to the Standing Deposit Facility (SDF) remains voluntary for banks, not at the discretion of the RBI.
2. Consider the following statements:
- Statement-I: The Reserve Bank of India regulates the maximum ATM transaction fees that banks can charge customers.
- Statement-II: ATM transaction fees are entirely determined by market competition without any regulatory oversight.
Which one of the following is correct in respect of the above statements?
[A] Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
[B] Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
[C] Statement-I is correct, but Statement-II is incorrect
[D] Statement-I is incorrect, but Statement-II is correct
Show Answer
Correct Answer: C [Statement-I is correct, but Statement-II is incorrect]
Notes:Statement-I:- This statement is correct.
- The Reserve Bank of India sets regulations regarding fees that banks can charge for ATM transactions to protect consumer interests.
Statement-II:
- This statement is incorrect.
- ATM transaction fees are subject to regulatory frameworks established by the Reserve Bank of India, preventing complete market-driven pricing.
3. Consider the following in regard to cryptocurrency regulation in India:
- Cryptocurrencies are recognized as legal tender by the Reserve Bank of India.
- The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 was passed by Parliament.
- Cryptocurrency transactions in India are taxed under the Income Tax Act.
Which of the above statements is / are correct?
[A] 3 only
[B] 1 and 2 only
[C] 1 and 3 only
[D] 1, 2 and 3
Show Answer
Correct Answer: A [3 only]
Notes:
The Reserve Bank of India does not recognize cryptocurrencies as legal tender. Although trading is not prohibited, cryptocurrencies are not officially accepted as a mode of payment. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 was proposed but has not yet been tabled or passed in Parliament. The tax structure for cryptocurrency transactions in India is that profits from these transactions are taxed at a flat rate of 30% under the Income Tax Act (as of April 2022). Virtual Digital Assets (VDAs) are included under the definition of property.
4. With reference to small finance banks in India, consider the following statements:
- AU Small Finance Bank is the first small finance bank in India.
- Small finance banks primarily focus on providing financial inclusion to underserved sections of society.
- Small finance banks can accept deposits and provide loans, but cannot issue credit cards.
- The Reserve Bank of India regulates small finance banks under the Banking Regulation Act, 1949.
How many of the above statements is/are correct?
[A] Only one
[B] Only two
[C] All four
[D] None
Show Answer
Correct Answer: B [Only two]
Notes:- AU Small Finance Bank is the first small finance bank in India: This is incorrect. The first small finance bank in India was Capital Small Finance Bank, established in 2016.
- Small finance banks primarily focus on providing financial inclusion to underserved sections of society: This is correct. They aim to serve the unbanked and underbanked populations.
- Small finance banks can accept deposits and provide loans, but cannot issue credit cards: This is incorrect. Small finance banks can issue credit cards, subject to regulatory approvals.
- The Reserve Bank of India regulates small finance banks under the Banking Regulation Act, 1949: This is correct. RBI oversees their operations and compliance.
Thus, two of the statements are correct. The correct answer is (B) Only two.
5. In the context of foreign investment regulations, consider the following statements:
- The Reserve Bank of India (RBI) plans to increase the foreign investment cap in listed firms from 5% to 10% for individual foreign investors.
- Foreign portfolio investors (FPIs) can currently hold up to 24% in Indian listed companies.
- Non-resident Indians (NRIs) are excluded from the new proposed regulations on foreign investment limits.
How many of the above statements is/are correct?
[A] Only one
[B] Only two
[C] All three
[D] None
Show Answer
Correct Answer: A [Only one]
Notes:- The Reserve Bank of India (RBI) plans to increase the foreign investment cap in listed firms from 5% to 10% for individual foreign investors: This is correct. The RBI is set to double the cap for individual foreign investors.
- Foreign portfolio investors (FPIs) can currently hold up to 24% in Indian listed companies: This is incorrect. The current limit for FPIs is 10%, which will be raised to 24% in the future.
- Non-resident Indians (NRIs) are excluded from the new proposed regulations on foreign investment limits: This is incorrect. NRIs are included in the proposed changes.
Thus, only the first statement is correct.
6. Regarding the concept of government borrowing and securities, consider the following statements:
- Government securities can have maturities ranging from 3 to 50 years.
- Sovereign green bonds are exclusively used for funding education projects.
- The Reserve Bank of India sets the Ways and Means Advances limit for government accounts.
How many of the above statements is/are correct?
[A] Only one
[B] Only two
[C] All three
[D] None
Show Answer
Correct Answer: B [Only two]
Notes:- Government securities can have maturities ranging from 3 to 50 years: This is correct. Government securities are issued with various maturities, from short-term to long-term.
- Sovereign green bonds are exclusively used for funding education projects: This is incorrect. Sovereign green bonds are used for financing environmentally sustainable projects, not limited to education.
- The Reserve Bank of India sets the Ways and Means Advances limit for government accounts: This is correct. The RBI does set the limit for Ways and Means Advances to manage government cash flow.
Thus, only two statements are correct.
7. With reference to the Reserve Bank of India (RBI) and its guidelines, which of the following observations is/are correct?
- The RBI was established in 1935 to respond to the economic troubles after the Great Depression.
- The RBI is the sole issuer of currency notes in India, except for one-rupee notes and coins, which are issued by the Government of India.
Select the correct option from the codes given below:
[A] Only 1
[B] Only 2
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: C [Both 1 & 2]
Notes:- The RBI was established in 1935 to respond to the economic troubles after the Great Depression. Correct: The Reserve Bank of India was indeed established in 1935 in response to the economic challenges posed by the Great Depression, aiming to stabilize the Indian economy.
- The RBI is the sole issuer of currency notes in India, except for one-rupee notes and coins, which are issued by the Government of India. Correct: The RBI is the sole authority for issuing currency notes in India, with the exception of one-rupee notes and coins, which are issued by the Government of India.
8. Regarding the Reserve Bank of India’s revised guidelines for Priority Sector Lending, consider the following statements:
- The maximum loan limit for housing loans in areas with a population above 50 lakh is Rs 50 lakh.
- Loans for renewable energy projects are capped at Rs 10 lakh per borrower for individual households.
- Urban cooperative banks must target 40% of their Adjusted Net Bank Credit towards priority sectors.
How many of the above statements are correct?
[A] Only one
[B] Only two
[C] All three
[D] None
Show Answer
Correct Answer: B [Only two]
Notes:- The maximum loan limit for housing loans in areas with a population above 50 lakh is Rs 50 lakh: This is correct. It is indeed Rs 50 lakh for these areas.
- Loans for renewable energy projects are capped at Rs 10 lakh per borrower for individual households: This is also correct; loans for individual households are eligible up to Rs 10 lakh.
- Urban cooperative banks must target 40% of their Adjusted Net Bank Credit towards priority sectors: This is incorrect; the target is set at 60%.
9. In the context of banking regulations, consider the following statements:
- Basel III is a global regulatory framework for banks aimed at strengthening bank capital requirements.
- Reserve Bank of India (RBI) is responsible for implementing Basel III in India.
- Liquidity Coverage Ratio (LCR) under Basel III ensures banks have enough liquid assets to cover short-term obligations.
How many of the above statements are correct?
[A] Only one
[B] Only two
[C] All three
[D] None
Show Answer
Correct Answer: C [All three]
Notes:- Basel III is a global regulatory framework for banks aimed at strengthening bank capital requirements: This is correct. Basel III was introduced to enhance the regulation, supervision, and risk management within the banking sector.
- Reserve Bank of India (RBI) is responsible for implementing Basel III in India: This is correct. RBI has adopted Basel III norms to ensure the stability of the Indian banking system.
- Liquidity Coverage Ratio (LCR) under Basel III ensures banks have enough liquid assets to cover short-term obligations: This is correct. LCR is designed to ensure that financial institutions have an adequate stock of unencumbered liquid assets.
10. With reference to the RBI’s digital initiatives, Sarthi and Pravaah, consider the following statements:
- Pravaah digitises internal workflows at RBI while Sarthi focuses on external regulatory applications.
- Recently, the Reserve Bank of India (RBI) received the Digital Transformation Award from Central Banking in London.
Which of the Statements given above is/are correct?
[A] Only 1
[B] Only 2
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: B [Only 2]
Notes:- Pravaah digitises internal workflows at RBI while Sarthi focuses on external regulatory applications. Incorrect: Launched in January 2023, Sarthi is an internal digital workflow system for RBI, enabling secure document storage, efficient record-keeping, and enhanced data analysis. In May 2024, Pravaah was introduced to streamline over 70 external regulatory applications, integrating smoothly with Sarthi to boost efficiency and transparency.
- Recently, the Reserve Bank of India (RBI) received the Digital Transformation Award from Central Banking in London. Correct: Recently, the Reserve Bank of India (RBI) received the Digital Transformation Award from Central Banking in London. The award specifically acknowledges RBI’s initiatives, Sarthi and Pravaah, which have modernised its operations.
