6E) RBI and Indian Banking and Finance System (Prelims PYQs)

2023 Prelims PYQs

1] Consider the following statements with reference to India: [2023]

1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006’, the ‘medium enterprises’ are those with investments in plant and machinery between 15 crore and 25 crore.
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.

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

Show Answer

Ans: b) 2 only

2] With reference to Central Bank digital currencies, consider the following statements: [2023]

1. It is possible to make payments in a digital currency without using US dollar or SWIFT system.
2. A digital currency can be distributed with a condition programmed into it such as a time- frame for spending it.

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

Show Answer

Ans: c) Both 1 and 2

3] Consider the following statements: [2023]

1. The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived.
2. In an SHG, all members of a group take responsibility for a loan that an individual member takes.
3. The Regional Rural Banks and Scheduled Commercial Banks support SHGS.

How many of the above statements are correct?
a) Only one                        b) Only two
c) All three                         d) None

Show Answer

Ans: b) Only two

2022 Prelims PYQs

1] Consider the following statements: [2022]

1. In India, credit rating agencies are regulated by the Reserve Bank of India.
2. The rating agency popularly known as ICRA is a public limited company.
3. Brickwork Ratings is an Indian credit rating agency.
Which of the statements given above are correct?

a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

Show Answer

Ans: b) 2 and 3 only

2] With reference to the ‘Banks Board Bureau (BBB), which of the following statements are correct? [2022]

1. The Governor of RBI is the Chairman of BBB.
2. BBB recommends for the selection of heads for Public Sector Banks.
3. BBB helps the Public Sector Banks in developing strategies and capital raising plans.
Select the correct answer using the code given below:

a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

Show Answer

Ans: b) 2 and 3 only

2021 Prelims PYQs

1] Consider the following statements: [2021]

1) The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2) Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest.
3) The Governor of the RBI draws his power from the RBI Act.
Which of the above statements are correct?

a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

Show Answer

Ans: c) 1 and 3 only

2] With reference to urban cooperative banks in India consider the following statements: [2021]

1) They are supervised and regulated by local boards set up by the state governments
2) They can issue equity shares and preference shares.
3) They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966.
Which of the statements given above is/are correct?

a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

Show Answer

Ans: b) 2 and 3 only

3] In India, the central bank’s function as the ‘lender of last resort’ usually refers to which of the following? [2021]

1) Lending to trade and industry bodies when they fail to borrow from other sources
2) Providing liquidity to the banks having a temporary crisis
3) Lending to governments to finance budgetary deficits
Select the correct answer using the code given below.

a) 1 and 2
b) 2 only
c) 2 and 3 only
d) 3 only

Show Answer

Ans: b) 2 only

2020 Prelims PYQs

1] Consider the following statements: [2020]

1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks.
2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.
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

Show Answer

Ans: b) 2 only

2019 Prelims PYQs

1] The Service Area Approach was implemented under the purview of: [2019]

a) Integrated Rural Development Programme
b) Lead Bank Scheme
c) Mahatma Gandhi National Rural Employment Guarantee Scheme
d) National Skill Development Mission

Show Answer

Ans: b) Lead Bank Scheme

2] Which of the following is not included in the assets of a commercial bank in India? [2019]

a) Advances
b) Deposits
c) Investments
d) Money at call and short notice

Show Answer

Ans: b) Deposits

3] What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently? [2019]

a) To lessen the Government of India’s perennial burden of fiscal deficit and current account deficit
b) To support the infrastructure projects of Central and State Governments
c) To act as independent regulator in case of applications for loans of RS 50 crore or more
d) To aim at faster resolution of stressed assets of Rs 50 crore or more which are under consortium lending

Show Answer

Ans: d) To aim at faster resolution of stressed assets of Rs 50 crore or more which are under consortium lending\

4] The Chairmen of public sector banks are selected by the: [2019]

a) Banks Board Bureau
b) Reserve Bank of India
c) Union Ministry of Finance
d) Management of concerned bank

Show Answer

Ans: a) Banks Board Bureau

5] Consider the following statements: [2019]

The Reserve Bank of India’s recent directives relating to ‘Storage of Payment System Data, popularly known as data diktat, command the payment system providers that
1. they shall ensure that entire data relating to payment systems operated by them are stored in a system only in India
2. they shall ensure that the systems are owned and operated by public sector enterprises
3. they shall submit the consolidated system audit report to the Comptroller and Auditor General of India by the end of the calendar year
Which of the statements given above is/are correct?

a) 1 only
b) 1 and 2 only
c) 3 only
d) 1, 2 and 3

Show Answer

Ans: a) 1 only

2018 Prelims PYQs

1] Which one of the following links all the ATMs in India? [2018]

a) Indian Bank’s Association
b) National Securities Depository Ltd.
c) National Payments Corporation of India
d) Reserve Bank of India

Show Answer

Ans: c) National Payments Corporation of India

2] Consider the following statements: [2018]

1. Capital Adequacy Ratio (CAR) is the amount that the banks have to maintain in the form of their own funds to offset any loss that bank incur if the account holder fail to repay any dues.
2. CAR is decided by each individual bank.
Which of the following Statements given above is/are correct?

a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

Show Answer

Ans: a) 1 only

3] With reference to digital payments, consider the following statements: [2018]

1. BHIM app allows the user to transfer money to anyone with the UPI- enabled bank account.
2. While a chip pin debit card has four factors of authentication, BHIM app has only two factors of authentication.
Which of the statements given above is/are correct?

a) 1 only
b) 2 only
c) both 1 and 2
d) neither 1 and 2

Show Answer

Ans: a) 1 only

4] Which of the following best describes the term “Merchant Discount Rate” sometimes seen in news? [2018]

a) The incentive by a Bank given to a merchant for accepting payments through debit cards for financial transactions for purchasing goods and services.
b) The amount paid by bank to their customers when they pay by debit cards for financial transactions for purchasing goods and services.
c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit card.
d) The incentive given by the Government to merchants for promoting digital payments by their customers through PoS( point of sale) machines and debit cards.

Show Answer

Ans: c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit card.

5] With the references to the governance of the public sector banking in India, considering the following statements: [2018]

1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
2. To put the public sector banks in order, the merger of associate Banks with the parent State Bank of India has been affected.
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

Show Answer

Ans: b) 2 only

2017 Prelims PYQs

1] Who among the following can join the National Pension System (NPS)? [2017]

a) Resident Indian citizens only
b) Persons of age from 21 to 55 only
c) All State Government employees joining the services after the date of notification by the respective State Governments
d) All Central Government employees including those of Armed Forces joining the services on or after 1St April, 2004

Show Answer

Ans: c) All State Government employees joining the services after the date of notification by the respective State Governments

2] What is the purpose of setting up of Small Finance Banks (SFBs) in India? [2017]

1. To supply credit to small business units
2. To supply credit to small and marginal farmers
3. To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below:

a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

Show Answer

Ans: a) 1 and 2 only

3] Which of the following is a most likely consequence of implementing the ‘Unified Payments Interface (UPI)’? [2017]

a) Mobile wallets will not be necessary for online payments.
b) Digital currency will totally replace the physical currency in about two decades.
c) FDI inflows will drastically increase.
d) Direct transfer of subsidies to poor people will become very effective.

Show Answer

Ans: a) Mobile wallets will not be necessary for online payments.

4] Which of the following statements best describes the term ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’, recently seen in the news? [2017]

a) It is a procedure for considering ecological costs of developmental schemes formulated by the Government.
b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.
c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings.
d) It is an important provision in ‘The Insolvency and Bankruptcy Code’ recently implemented by the Government.

Show Answer

Ans: b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.

5] Consider the following statements: [2017]

1. National Payments Corporation of India (NPCI) helps in promoting  financial inclusion in the country.
2. NPCI has launched RuPay, a card payment scheme.
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

Show Answer

Ans: c) Both 1 and 2

2016 Prelims PYQs

1] The term ‘Core Banking Solutions’ is sometimes seen in the news. Which of the following statements best describes/describe this term? [2016]

1. It is a networking of a bank’s branches which enables customers to operate their accounts from any branch of the bank on its network   regardless of where they open their accounts.
2. It is an effort to increase RBI’s control over commercial banks through computerization.
3. It is a detailed procedure by which a bank with huge non- performing assets is taken over by another bank.
Select the correct answer using the code given below.

a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

Show Answer

Ans: a) 1 only

2] Regarding ‘Atal Pension Yojana’, which of the following statements is/are correct? [2016]

1. It is a minimum guaranteed pension scheme mainly targeted at unorganized sector workers.
2. Only one member of a family can join the scheme.
3. Same amount of pension is guaranteed for the spouse for life after subscriber’s death.
Select the correct answer using the code given below.

a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

Show Answer

Ans: c) 1 and 3 only

3] What is/are the purpose/purposes of the `Marginal Cost of Funds based Lending Rate (MCLR)’ announced by RBI? [2016]

1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances.
2. These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.
Select the correct answer using the code given below.

a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

Show Answer

Ans: c) Both 1 and 2

4] Pradhan Mantri MUDRA Yojana is aimed at: [2016]

a) Bringing the small entrepreneurs into formal financial system
b) Providing loans to poor farmers for cultivating particular crops
c) Providing pensions to old and destitute persons
d) Funding the voluntary organizations involved in the promotion of skill development and employment generation

Show Answer

Ans: a) Bringing the small entrepreneurs into formal financial system

5] 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? [2016]

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 and 2 only
b) 1 and 3 only
c) 2 only
d) 1, 2 and 3

Show Answer

Ans: b) 1 and 3 only

2015 Prelims PYQs

1] Pradhan Mantri Jan Dhan Yojana has been launched for: [2015]

a) Providing housing loan to poor people at cheaper interest rates
b) Promoting women’s Self Help Groups in backward areas
c) Promoting financial inclusion in the country
d) Providing financial help to marginalised communities

Show Answer

Ans: c) Promoting financial inclusion in the country

2] ‘Basel III Accord’ or simply ‘Basel III’, often seen in the news, seeks to: [2015]

a) Develop national strategies for the conservation and sustainable use of biological diversity
b) Improve banking sector’s ability to deal with financial and economic stress and improve risk management
c) Reduce the greenhouse gas emissions but places a heavier burden on developed countries
d) Transfer technology from developed Countries to poor countries to enable them to replace the use of chlorofluorocarbons in refrigeration with harmless chemicals

Show Answer

Ans: b) Improve banking sector’s ability to deal with financial and economic stress and improve risk management

2014 Prelims PYQs

1] The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to: [2014]

a) Banking operations
b) Communications networking
c) Military strategies
d) Supply and demand of agricultural products

Show Answer

Ans: a) Banking operations

2] What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas? [2014]

1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages.
2. It enables the beneficiaries in the rural areas to make deposits and withdrawals.
Select the correct answer using the code given below.

a) 1 only
b) 2 only
c) Both 1 and 2 only
d) Neither 1 nor 4

Show Answer

Ans: c) Both 1 and 2 only

2013 Prelims PYQs

1] Which of the following grants/ grant direct credit assistance to rural households? [2013]

1. Regional rural banks
2. National bank for agriculture and rural development
3. Land development Banks
Select the correct answer using the codes given below.

a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3

Show Answer

Ans: c) 1 and 3 only

2] Priority Sector Lending by banks in India constitutes the lending to__: [2013]

a) Agriculture:
b) Micro And Small Enterprises
c) Weaker Sections
d) All of The Above

Show Answer

Ans: d) All of The Above

3] The Reserve bank of India regulates the commercial banks in matters of: [2013]

1. Liquidity of assets
2. Branch expansion
3. Merger of banks
4. Winding-up of banks
Select the correct answer using the codes given below.

a) 1 and 4 only
b) 2, 3 and 4 only
c) 1, 2 and 3 only
d) 1, 2, 3 and 4

Show Answer

Ans: d) 1, 2, 3 and 4

2012 Prelims PYQs

1] The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following? [2012]

1. Other banks retain their deposits with the RBI.
2. The RBI lends funds to the commercial banks in times of need.
3. The RBI advises the commercial banks on monetary matters.

Select the correct answer using the codes given below:
a) 2 & 3 Only                      b) 1 & 2 Only
c) 1 & 3 Only                      d) 1, 2 & 3

Show Answer

Ans: d) 1, 2 & 3

2] The basic aim of Lead Bank Scheme is that: [2012]

a) Big banks should try to open offices in each district
b) There should be stiff competition among the various nationalized banks
c) Individual banks should adopt particular districts for intensive development
d) All the banks should make intensive efforts to mobilize deposits

Show Answer

Ans: c) Individual banks should adopt particular districts for intensive development

2011 Prelims PYQs

1] Why is the offering of ‘teaser loans” by commercial banks a cause of economic concern? [2011]

1. The teaser loans are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.
2. In India, the teaser loans are mostly given to inexperienced entrepreneurs to set up manufacturing or export units.

Show Answer

Ans: 1. The teaser loans are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.

2] In India, which of the following have the highest share in the disbursement of credit to agriculture and allied activities? [2011]

a) Commercial banks.
b) Cooperative banks.
c) Regional rural banks.
d) Microfinance institutions.

Show Answer

Ans: a) Commercial banks

3] Microfinance is the provision of financial services to people of low-income groups. This includes both the consumers and the self-employed. The service/services rendered under micro- finance is/are: [2011]

1. Credit facilities.
2. Savings faculties.
3. Insurance facilities.
4. Fund transfer faculties.

Select the correct answer using the codes given the lists?
a) 1 only                            b) 1 and 4 only
c) 2 and 3 only                  d) 1,2 ,3 and 4

Show Answer

Ans: d) 1,2 ,3 and 4

2010-1995 Prelims PYQs

1] With reference to the India, consider the following: [2010]

1. Nationalization of Banks.
2. Formation of Regional Rural Banks.
3. Adoption of villages by Bank Branches.

Which of the above can be considered as steps taken to achieve the “financial inclusion” in India?
a) 1 and 2 only                  b) 2 and 3 only
c) 3 only                             d) 1, 2 and 3

Show Answer

Ans: d) 1, 2 and 3

2] With reference to the institution of Banking Ombudsman in India, which one of the statements is not correct? [2010]

a) The Banking Ombudsman is appointed by the Reserve Bank of India.
b) The Banking Ombudsman can consider complaints from Non ‘ Resident Indians having accounts in India.
c) The orders passed by the Banking Ombudsman are final and binding on the parties concerned.
d) The service provided by the Banking Ombudsman is free of any fee.

Show Answer

Ans: c) The orders passed by the Banking Ombudsman are final and binding on the parties concerned.

3] Consider the following statements: [2010]

The functions of commercial banks in India include
1. Purchase and sale of shares and securities on behalf of customers.
2. Acting as executors and trustees of wills.

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

Show Answer

Ans: d) Neither 1 nor 2

4] In India, the interest rate on savings account in all the nationalized commercial banks is fixed by: [2010]

a) Union Ministry of Finance
b) Union Finance Commission
c) Indian Banks’ Association
d) None of the above.

Show Answer

Ans: d) None of the above.

5] Which of the following terms indicates a mechanism used by commercial banks for providing credit to the government? [2010]

a) Cash Credit Ratio
b) Debt Service Obligation
c) Liquidity Adjustment Facility
d) Statutory Liquidity Ratio

Show Answer

Ans: d) Statutory Liquidity Ratio

6] With the reference of the Non Banking Financial Companies ( NBFCs ) in India , Consider the following statements: [2010]

1. They cannot engage in the acquisition of Securities issued by the government.
2. They can not accept demand deposit like Saving Account.

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

Show Answer

Ans: b) 2 only

7] Consider the following statements with reference to Indira Gandhi National Old Age Pension Scheme (IGNOAPS): [2008]

1. All persons of 60 years or above belonging to the household below poverty line in rural areas are eligible.
2. The Central Assistance under this Scheme is at the rate of Rs. 300 per month per beneficiary. Under the Scheme, States havebeen urged to give matching amounts.

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

Show Answer

Ans: d) Neither 1 nor 2

8] Basel II relates to which one of the following? [2007]

a) International standards for safety in civil aviation
b) Measures against cyber crimes
c)  Measures against drug abouse by sportspersoans
d) International standards for measuring the adequacy of a bank’s capital

Show Answer

Ans: d) International standards for measuring the adequacy of a bank’s capital

9] The National Housing Bank was set up in India as a wholly-owned subsidiary of which one of the following? [2007]

a) State Bank of india
b) Reserve Bank of India
c)  ICICI Bank
d) life Insurance Corporation of India

Show Answer

Ans: b) Reserve Bank of India

10] Which one of the following Indian banks is not a nationalized bank? [2006]

a) Corporation Bank
b) Dena Bank
c) Federal bank
d) Vijaya Bank

Show Answer

Ans: c) Federal bank

11] Consider the following statements: [2006]

1. Life Insurance Corporation of India is the oldest insurance company is India.
2. National Insurance Company Limited was nationalized in the year 1972 and made a subsidiary of General Insurance
Corporation of India.
3. Headquarters of United India Insurance Company Limited are located at Chennai.

Which of the statements given above are correct?
a) 1, 2 and 3                      b) 1 and 2, only
c) 2 and 3, only                 d) 1 and 3, only

Show Answer

Ans: a) 1, 2 and 3

12] Consider the following statements: [2004]

1. The National Housing Bank, the apex institution of housing finance in India, was set up as a wholly- owned subsidiary of the Reserve Bank of India.
2. The Small Industries Development Bank of India was established as a wholly-owned subsidiary of the Industrial Development Bank of India.

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

Show Answer

Ans: c) Both 1 and 2 

13] In India, the first bank of limited liability managed by Indians and founded in 1881 was: [2003]

a) Hindustan Commercial Bank
b) Oudh Commercial Bank
c) Punjab National Bank
d) Punjab and Sind Bank

Show Answer

Ans: b) Oudh Commercial Bank

14] Consider the following statements: [2003]

1. The maximum limit of shareholding of Indian promoters in private sector banks in India is 49 per cent of the paid up capital.
2. Foreign Direct Investment up to 49 per cent from all sources is permitted in private sector banks in India under the automatic route.

Which to these statements is/are correct?
a) Only 1                           b) Only 2
c) Both 1 and 2                 d) Neither 1 nor 2

Show Answer

Ans: d) Neither 1 nor 2

15] Which of the following committees examined and suggested Financial Sector Reforms? [2001]

a) Abid Hussain Committee
b) Bhagwati Committee
c) Chelliah Committee
d) Narasimham Committee

Show Answer

Ans: d) Narasimham Committee 

16] Consider the following statements regarding Reserve Bank of India: [2001]

I. It is a banker to the Central Government.
II. It formulates and administers monetary policy.
III. It acts as an agent of the Government in respect of India’s membership of IMF.
IV. It handles the borrowing programme of Government of India.

Which of these statements are correct?
a) I and II                          b) II, III and IV
c) I, II, III and IV                 d) III and IV

Show Answer

Ans: c) I, II, III and IV 

17] The accounting year of the Reserve Bank of India is: [1998]

a) April-March
b) July-June
c) October-September
d) January-December

Show Answer

Ans: b) July-June 

18] Which one of the following is not an instrument of selective credit control in India? [1995]

a) Regulation of consumer credit
b) Rationing of credit
c) Margin requirements
d) Variable cost reserve ratios

Show Answer

Ans: d) Variable cost reserve ratios

We’re in the process of posting all the questions from 1995-2023. The tentative date of completion is 16 Dec 2023. We highly recommend purchasing our UPSC Prelims PYQ Book (2024 Edition) to access all questions in a single PDF.