Question 1

Which of the following statements correctly describes the primary regulatory scope of PFRDA (Pension Fund Regulatory and Development Authority)?

Accepted Answer

PFRDA is the statutory body established under the Pension Fund Regulatory and Development Authority Act, 2013, with the mandate to regulate, promote, and develop the pension fund industry in India. Its primary scope includes oversight of the National Pension System (NPS), regulation of pension fund managers, custodians, and trustees, and ensuring investor protection in pension products. PFRDA does NOT regulate insurance products (that is IRDAI's domain) nor does it regulate securities markets (that is SEBI's domain). Therefore, the answer is B.

Question 2

The National Pension System (NPS) is regulated by PFRDA and allows investors to choose from multiple investment options. Which of the following is NOT a permitted investment option under NPS?

Accepted Answer

The National Pension System (NPS) is a voluntary, defined-contribution pension scheme regulated by PFRDA. Under NPS, subscribers can invest in three asset classes through registered Pension Fund Managers (PFMs): (1) Equity (E) — stocks and equity-oriented instruments, (2) Corporate Bonds (C) — fixed-income securities issued by corporations, and (3) Government Securities (G) — bonds issued by the Government of India. These three asset classes form the core investment universe of NPS. Derivatives, commodities, and real estate are NOT permitted investment options under NPS. Therefore, the answer is D.

Question 3

Under SEBI regulations, which of the following is the primary objective of SEBI as stated in the Securities and Exchange Board of India Act, 1992?

Accepted Answer

The Securities and Exchange Board of India (SEBI) was established on 12 April 1988 as a non-statutory body and later given statutory status under the SEBI Act, 1992. The primary objectives of SEBI, as stated in Section 11 of the SEBI Act, 1992, are: (1) to protect the interests of investors in securities, (2) to promote the development of the securities market, and (3) to regulate the securities market. These three objectives form the core mandate of SEBI. Therefore, the answer is B.

Question 4

The Pension Fund Regulatory and Development Authority (PFRDA) regulates which of the following pension schemes in India?

Accepted Answer

PFRDA (Pension Fund Regulatory and Development Authority) was established on 1 October 2003 under the PFRDA Act, 2013 (which replaced the earlier PFRDA Regulation, 2003). PFRDA regulates the National Pension System (NPS), which is a voluntary, defined-contribution pension scheme open to all Indian citizens. NPS allows individuals to invest in equity, debt, and government securities through registered pension fund managers. PFRDA also regulates the Atal Pension Yojana (APY), a government-backed pension scheme for unorganized sector workers. Therefore, the answer is C.

Question 5

The Pension Fund Regulatory and Development Authority (PFRDA) oversees the National Pension System (NPS). Which of the following statements about PFRDA's regulatory scope is CORRECT?

Accepted Answer

PFRDA was established on 1 October 2003 as a statutory body under the Pension Fund Regulatory and Development Authority Act, 2013 (which came into force on 9 January 2015). PFRDA regulates all pension schemes in India, including the National Pension System (NPS), Atal Pension Yojana (APY), and other occupational pension schemes. PFRDA also regulates pension fund managers, custodians, and other intermediaries in the pension ecosystem. Therefore, answer is B.

Question 6

SEBI has issued detailed regulations for mutual funds operating in India. Under SEBI (Mutual Funds) Regulations, which of the following is NOT a permitted category of mutual fund schemes?

Accepted Answer

SEBI classifies mutual fund schemes into broad categories: Equity Funds, Debt Funds, Hybrid Funds, and Solution-Oriented Funds (including retirement and education funds). Within these, schemes are further categorized by investment strategy (e.g., growth, value, dividend). Commodity Funds (direct commodity investment by mutual funds) are NOT permitted under SEBI regulations. Mutual funds are restricted to securities markets and cannot directly invest in physical commodities. Therefore, answer is D.

Question 7

The Securities and Exchange Board of India (SEBI) was established to regulate and develop the securities market. Under which Act was SEBI granted statutory powers, and in which year did SEBI become a fully autonomous statutory body?

Accepted Answer

SEBI was established in 1988 as a non-statutory body but became a fully autonomous statutory body on 30 January 1992 under the Securities and Exchange Board of India Act, 1992. The SEBI Act, 1992 granted SEBI statutory powers to regulate the securities market, including stock exchanges, mutual funds, brokers, and listed companies. Therefore, answer is A.

Question 8

Under the Pension Fund Regulatory and Development Authority (PFRDA), the National Pension System (NPS) is structured into multiple tiers. Which of the following correctly describes Tier I of NPS?

Accepted Answer

Tier I of the National Pension System (NPS) is a non-withdrawable retirement account designed for long-term wealth accumulation. Contributions to Tier I are locked-in until retirement (age 60), except in cases of medical emergency or specified hardship conditions. Tier I is mandatory for all NPS subscribers and is regulated by PFRDA under the Pension Fund Regulatory and Development Authority Act, 2013. Therefore, answer is C.

Question 9

Which of the following regulatory bodies is responsible for regulating and supervising the insurance sector in India, including life insurance, general insurance, and health insurance?

Accepted Answer

The Insurance Regulatory and Development Authority of India (IRDAI) is the statutory body established under the Insurance Regulatory and Development Authority Act, 1999. IRDAI regulates, promotes, and ensures orderly growth of the insurance industry in India across all segments — life, general, and health insurance. It was established on 1 April 2000 and is headquartered in Hyderabad. Therefore, answer is B.

Question 10

Which of the following statements about SEBI's regulatory authority is correct?

Accepted Answer

SEBI (Securities and Exchange Board of India) is a statutory body established under the SEBI Act, 1992. SEBI has regulatory authority over stock exchanges, depositories, mutual funds, portfolio managers, investment advisers, and other market intermediaries. SEBI issues regulations and guidelines that are binding on all market participants. However, SEBI's authority is limited to the securities market and does not extend to banking regulation (RBI's domain), insurance regulation (IRDAI's domain), or pension fund regulation (PFRDA's domain). SEBI was given statutory status on 30 January 1992. Therefore, the answer is C.

Question 11

Under SEBI's regulatory framework, which of the following best describes the primary distinction between SEBI's jurisdiction over collective investment schemes and IRDAI's jurisdiction over insurance-linked investment products?

Accepted Answer

SEBI (Securities and Exchange Board of India), established under the Securities and Exchange Board of India Act, 1992, regulates collective investment schemes (mutual funds, ETFs, and other pooled investment vehicles) where the primary purpose is capital appreciation or income generation through securities. IRDAI (Insurance Regulatory and Development Authority), established under the Insurance Regulatory and Development Authority Act, 1999, regulates insurance-linked investment products (unit-linked insurance plans or ULIPs) where insurance protection is the primary purpose, with investment as a secondary feature. The key distinction is the PRIMARY PURPOSE: investment for SEBI-regulated products versus insurance protection for IRDAI-regulated products. Therefore, the answer is C.

Question 12

The Insurance Regulatory and Development Authority (IRDAI) was established under which Act, and what is its primary regulatory objective regarding insurance penetration in India?

Accepted Answer

IRDAI was established under the Insurance Regulatory and Development Authority Act, 1999. The Act came into force on April 1, 2000. The primary regulatory objectives of IRDAI include protecting the interests of policyholders, regulating the insurance industry, and promoting the growth and development of the insurance sector to increase insurance penetration in India. Option B is correct as it accurately identifies the IRDAI Act, 1999 as the governing legislation. Option A is incorrect because the Insurance Act, 1938 is the general law governing insurance contracts but did not establish IRDAI. Option C incorrectly names the IRDA Act (without 'I' for Insurance), which is a common acronym confusion. Option D confuses IRDAI with RBI, which is regulated under the RBI Act, 1934. The IRDAI Act, 1999 is the sole governing statute for IRDAI's establishment and powers.

Question 13

Under PFRDA regulations, what is the maximum annual contribution limit for a subscriber in the National Pension System (NPS) Tier I account, and which category of subscribers is exempt from this limit?

Accepted Answer

As per PFRDA guidelines (current as of 2024), there is no prescribed maximum annual contribution limit for NPS Tier I accounts — subscribers can contribute any amount up to their income capacity. However, for tax deduction purposes under the Income Tax Act, 1961, contributions are subject to tax limits (e.g., Section 80CCD allows deduction up to 10% of gross salary for employees, or 20% of gross income for self-employed individuals, subject to an overall ceiling under Section 80CCE). PFRDA does not impose a regulatory ceiling on contributions; the limits are tax-driven, not pension-regulatory. Government employees have specific contribution rules under the NPS (Government Employees) Regulations, but these are not exemptions from a PFRDA-imposed limit — rather, they are separate regulatory provisions. Therefore, answer is C.

Question 14

Which of the following statements accurately describes the relationship between SEBI's regulatory authority and the stock exchanges' self-regulatory organization (SRO) responsibilities under the Securities and Exchange Board of India Act, 1992?

Accepted Answer

Under the SEBI Act, 1992, SEBI is the primary regulator of securities markets, while stock exchanges (NSE, BSE) function as Self-Regulatory Organizations (SROs) under SEBI's oversight. The relationship is hierarchical: SEBI sets the regulatory framework, and stock exchanges implement and enforce rules within that framework. Stock exchanges have delegated regulatory authority to monitor member conduct, enforce listing standards, and ensure market integrity — but this authority is delegated by SEBI and remains subject to SEBI's supervision. SEBI can override, modify, or revoke exchange rules if they conflict with SEBI's regulatory objectives. This is a co-regulatory model, not a fully independent one. Therefore, answer is B.

Question 15

Under the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013, the National Pension System (NPS) is structured into how many tiers, and which tier is mandatory for all subscribers?

Accepted Answer

The National Pension System (NPS), regulated by PFRDA under the PFRDA Act, 2013, is structured into two main tiers: Tier I (mandatory) and Tier II (voluntary). Tier I is a non-withdrawable account (except in specific circumstances like retirement, death, or terminal illness) designed for long-term retirement savings. Tier II is a voluntary, fully withdrawable account that allows subscribers to invest additional funds with greater flexibility. All NPS subscribers must open a Tier I account; Tier II is optional. The PFRDA Act, 2013, also established PFRDA as the regulatory body with statutory authority over pension fund management, investment regulations, and subscriber protection. Therefore, answer is A.

Question 16

The Insurance Regulatory and Development Authority (IRDAI) was established under which Act, and what is the primary regulatory objective stated in that Act?

Accepted Answer

IRDAI was established under the Insurance Regulatory and Development Authority Act, 1999. The Act came into force on 4 April 2000. The primary regulatory objectives of IRDAI, as stated in Section 3 of the IRDAI Act, 1999, are: (1) protection of the interests of policyholders, (2) regulation and development of the insurance industry, and (3) promotion of professional and ethical conduct in the insurance sector. The Act replaced the earlier Insurance Act, 1938, and gave IRDAI statutory authority to regulate all classes of insurance business in India. Therefore, answer is C.

Question 17

Under the PFRDA framework, the Centralized Nodal Agency (CNA) and Points of Presence (PoPs) serve distinct functions in the National Pension System. Which statement correctly describes their roles?

Accepted Answer

Under the PFRDA framework, the Centralized Nodal Agency (CNA) is responsible for maintaining the central database of all NPS subscribers, processing transactions, and ensuring data integrity across the NPS ecosystem. Points of Presence (PoPs) are intermediaries (banks, post offices, financial institutions) that serve as customer touchpoints for NPS enrollment, contribution collection, and investor services. PoPs do not maintain the central database — they interface with the CNA for transaction processing. Option D is correct as it accurately describes the CNA's role in maintaining the central database and PoPs' role as customer service intermediaries. Option A is incorrect because PoPs do not maintain the central database; the CNA does. Option B confuses the roles by suggesting PoPs have regulatory authority, which they do not. Option C is a distractor suggesting that the CNA directly collects contributions, when in fact PoPs collect contributions and transmit them to the CNA. The PFRDA (National Pension System) Regulations, 2015 define these roles.

Question 18

Which of the following statements correctly describes the relationship between SEBI's regulatory authority over mutual funds and the role of the Association of Mutual Funds in India (AMFI)?

Accepted Answer

SEBI (Securities and Exchange Board of India) is the primary regulator of mutual funds in India under the Securities and Exchange Board of India Act, 1992. SEBI issues regulations, grants licenses, and enforces compliance. AMFI (Association of Mutual Funds in India) is a self-regulatory organization (SRO) that operates under SEBI's oversight and represents the interests of mutual fund industry members. AMFI does not have regulatory authority but serves as an industry body that promotes best practices, investor education, and code of conduct for its members. Option B is correct as it accurately describes SEBI as the primary regulator and AMFI as an SRO operating under SEBI's supervision. Option A is incorrect because AMFI does not have regulatory authority — it is a self-regulatory body, not a regulator. Option C confuses the roles by suggesting AMFI is a subsidiary of SEBI, which is incorrect. Option D is a distractor suggesting that SEBI and AMFI have equal regulatory authority, which is false — SEBI is the primary regulator. The SEBI Act, 1992 and SEBI (Mutual Fund) Regulations, 1996 establish this framework.

Question 19

Under the Pension Fund Regulatory and Development Authority (PFRDA) framework, the National Pension System (NPS) Tier II account is characterized by which of the following features?

Accepted Answer

The NPS Tier II account under PFRDA is a voluntary, non-contributory account with no lock-in period and full liquidity. It is designed to provide flexibility to subscribers who wish to invest in pension products without the restrictions of Tier I. Tier II allows withdrawal of funds at any time after opening the account, making it highly liquid. Option C is correct as it accurately describes Tier II's voluntary nature, absence of lock-in, and liquidity features. Option A is incorrect because Tier I (not Tier II) has a mandatory lock-in period until age 60 (with some exceptions). Option B confuses Tier II with Tier I by suggesting a lock-in period. Option D is a distractor suggesting that Tier II is mandatory, when in fact it is entirely voluntary and supplementary to Tier I. The PFRDA (National Pension System) Regulations, 2015 define the features of Tier II accounts.

Question 20

Under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, which of the following constitutes 'insider trading' as per the definition that requires both access to unpublished price-sensitive information (UPSI) AND a fiduciary relationship or connection with the company?

Accepted Answer

setup: Testing candidate's understanding of insider trading definition under SEBI regulations — specifically the dual requirement of UPSI and a qualifying relationship.

solution: SEBI Insider Trading Regulations define insider trading as dealing in securities while in possession of unpublished price-sensitive information (UPSI) by persons who have a fiduciary relationship, employment relationship, or connection with the company (such as directors, employees, consultants, or substantial shareholders). The regulation requires BOTH conditions: (1) possession of UPSI, AND (2) a qualifying relationship/connection. A person with UPSI but no connection to the company, or a connected person without UPSI, does not commit insider trading under the strict definition.

trap_explanation: Candidates often confuse 'insider trading' with mere possession of UPSI or mere trading by a connected person. The most tempting wrong answer assumes that ANY trading by a director/employee is insider trading, or that ANY person with UPSI commits insider trading — both are incomplete. The regulation requires BOTH elements simultaneously.

shortcut: UPSI + Connection = Insider Trading. Either element alone is insufficient.

SBI PO SEBI, IRDAI, PFRDA

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SEBI, IRDAI, PFRDA — Practice Questions

60-Second Revision — SEBI, IRDAI, PFRDA