1. Consider the following statements regarding Core Inflation and General (Headline) Inflation:
- Core inflation excludes food and fuel prices due to their high volatility.
- General or headline inflation in India is measured only by the Wholesale Price Index (WPI).
- Core inflation is considered a better measure of long-term inflationary trends than headline inflation.
- The Reserve Bank of India (RBI) bases its monetary policy inflation targeting strictly on core inflation in India.
Which of the above statements is / are correct?
[A] Only 1 and 2
[B] Only 2 and 3
[C] Only 1 and 4
[D] Only 1 and 3
Show Answer
Correct Answer: D [Only 1 and 3]
Notes:
Core inflation excludes volatile food and fuel prices, making it a better indicator of long-term inflation trends (statements 1 and 3 are correct). General inflation is not measured only by WPI; CPI is also used. RBI’s inflation targeting is based on headline CPI, not strictly core inflation; hence, statements 2 and 4 are incorrect.
2. What is the base year for the Reserve Bank of India- Digital Payments Index (RBI-DPI)?
[A] 2016
[B] 2017
[C] 2018
[D] 2019
Show Answer
Correct Answer: C [2018]
Notes:
Recently, the Reserve Bank of India (RBI) announced that its Digital Payments Index (RBI-DPI) rose to 493.22 in March 2025. This is a sharp increase from 465.33 recorded in September 2024, showing rapid growth in digital transactions. The Digital Payments Index is a tool created by RBI to measure the extent of digitisation of payments across India. It was first launched in January 2021 to track and encourage the adoption of digital payment systems. It is the first-of-its-kind index to map the nationwide spread of digital transactions. The base year for the index is March 2018, with the score for that year set at 100.
3. Who was the first Indian Governor of the Reserve Bank of India?
[A] Chintaman Dwarkanath Deshmukh
[B] Benegal Rama Rau
[C] H.V.R. Iyengar
[D] K.G. Ambegaonkar
Show Answer
Correct Answer: A [Chintaman Dwarkanath Deshmukh]
Notes:
Sir C.D. Deshmukh was the first Indian RBI Governor (1943-1949). He was a noted economist, represented India at the 1944 Bretton Woods Conference, and later became Finance Minister. Deshmukh’s tenure saw India’s transition from British to independent RBI leadership.
4. Who has been appointed as Executive Director (ED) of Reserve Bank of India (RBI) in July 2025?
[A] Kesavan Ramachandran
[B] Rohit Jain
[C] Rabi Sankar
[D] Vikram Sinha
Show Answer
Correct Answer: A [Kesavan Ramachandran]
Notes:
Recently, the Reserve Bank of India (RBI) appointed Kesavan Ramachandran as Executive Director (ED) from July 1, 2025. As Executive Director, he will oversee the Department of Regulation (Prudential Regulation Division). Earlier, Kesavan was Principal Chief General Manager in the Risk Monitoring Department. He has over 30 years of experience in currency management, banking and non-banking supervision, training, and administration. He served as RBI’s nominee on the Board of Canara Bank for more than five years.
5. Who is known as the father of banking reforms in India and served as the 13th Governor of the Reserve Bank of India?
[A] C. Rangarajan
[B] Y. V. Reddy
[C] Maidavolu Narasimham
[D] Duvvuri Subbarao
Show Answer
Correct Answer: C [Maidavolu Narasimham]
Notes:
M. Narasimham, 13th RBI Governor, chaired key banking reform committees in 1991 and 1998, introduced regional rural banks, and promoted banking sector modernization.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
