Question 1

Which of the following best describes the Repo Rate set by the RBI?

Accepted Answer

The Repo Rate is the rate at which the RBI lends money to commercial banks against the security of government securities. It is a key tool of monetary policy used to control inflation and liquidity in the economy.

Question 2

The Pradhan Mantri MUDRA Yojana was launched to provide collateral-free loans to which sector?

Accepted Answer

PM MUDRA Yojana, launched in April 2015, aims to provide collateral-free and documentation-free loans to micro and small enterprises and individual entrepreneurs in the non-farm sector.

Question 3

Which of the following is the primary function of the Reserve Bank of India (RBI) in the Indian banking system?

Accepted Answer

The RBI, established in 1935 and nationalized in 1951, serves as the central bank of India. Its primary function is to regulate and supervise the banking system, control monetary policy, manage currency, and act as banker to the government. The RBI does not directly provide retail banking services to the general public.

Question 4

What is the primary difference between a Bank and a Non-Banking Financial Company (NBFC)?

Accepted Answer

Banks can accept demand deposits (current/savings accounts), while NBFCs cannot. Both can provide loans and other financial services, but only banks have the privilege of accepting deposits from the public.

Question 5

Which of the following is NOT a function of the Reserve Bank of India (RBI)?

Accepted Answer

The RBI is the central bank of India and performs functions such as monetary policy formulation, currency management, banking regulation, and acting as banker to the government. However, direct regulation of stock exchanges is the function of SEBI (Securities and Exchange Board of India), not RBI.

Question 6

What is the Cash Reserve Ratio (CRR) that commercial banks must maintain with the RBI as of 2024?

Accepted Answer

The CRR is the percentage of deposits that banks must keep as cash reserves with the RBI. As of 2024, the CRR stands at 4.5% of Net Demand and Time Liabilities (NDTL).

Question 7

Under which ministry is the MUDRA (Micro Units Development and Refinance Agency) scheme operated?

Accepted Answer

MUDRA is a refinance scheme operated under the Ministry of Micro, Small and Medium Enterprises (MSME) to provide collateral-free loans to micro and small enterprises.

Question 8

The Reserve Bank of India (RBI) was established in which year?

Accepted Answer

The Reserve Bank of India was established on April 1, 1935, under the Reserve Bank of India Act, 1934. It was nationalised on January 1, 1949. It is India's central banking institution.

Question 9

The Cash Reserve Ratio (CRR) is the percentage of deposits that commercial banks must maintain with the Reserve Bank of India. Which of the following best describes the impact of an increase in CRR?

Accepted Answer

CRR is a monetary policy tool used by the RBI to control liquidity in the banking system. When CRR is increased, banks have less money available to lend, which reduces the money supply in the economy and helps control inflation.

Question 10

Which of the following statements about the Statutory Liquidity Ratio (SLR) is correct?

Accepted Answer

SLR is the percentage of deposits that commercial banks must maintain in the form of liquid assets (government securities, cash, etc.). It is a tool used by the RBI to control the money supply and ensure the solvency of banks.

Question 11

The Pradhan Mantri MUDRA Yojana was launched to provide collateral-free loans to micro and small enterprises. In which year was it launched?

Accepted Answer

PM MUDRA Yojana was launched on 8 April 2015 by Prime Minister Narendra Modi to provide loans up to ₹10 lakh to non-corporate, non-farm small/micro enterprises without collateral.

Question 12

Which of the following is the primary objective of the Pradhan Mantri Mudra Yojana (PMMY)?

Accepted Answer

The Pradhan Mantri Mudra Yojana was launched in April 2015 by the Ministry of Finance to provide collateral-free loans to micro and small enterprises. The scheme aims to promote entrepreneurship and financial inclusion by offering credit to non-corporate, non-farm small/micro enterprises.

Question 13

Which of the following best describes the primary function of the Statutory Liquidity Ratio (SLR) as mandated by the Reserve Bank of India?

Accepted Answer

The SLR is a regulatory requirement that mandates commercial banks to maintain a minimum percentage of their Net Demand and Time Liabilities (NDTL) in the form of liquid assets (cash, gold, and approved securities). As of 2024, the SLR is set at 18% of NDTL. The primary function is to ensure banking system stability and control inflation by restricting the amount of credit banks can extend.

Question 14

Which of the following is a key difference between a Scheduled Commercial Bank (SCB) and a Non-Banking Financial Company (NBFC)?

Accepted Answer

Scheduled Commercial Banks can accept demand deposits (current and savings accounts) and are regulated under the Banking Regulation Act, while NBFCs cannot accept demand deposits and are regulated under the RBI Act and NBFC regulations. NBFCs focus on lending and investment activities.

Question 15

As per RBI guidelines, the Cash Reserve Ratio (CRR) is the percentage of deposits that commercial banks must maintain with the RBI. Which of the following best describes the impact of an increase in CRR?

Accepted Answer

An increase in CRR reduces the amount of money available with banks for lending, thereby decreasing money supply in the economy and reducing inflation. This is a contractionary monetary policy tool.

Question 16

The Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched in which year, and which ministry oversees it?

Accepted Answer

PMJDY was launched on 28 August 2014 by Prime Minister Narendra Modi with the objective of financial inclusion. It is overseen by the Ministry of Finance, Department of Financial Services.

Question 17

The Repo Rate is the rate at which the RBI lends money to commercial banks. Which of the following correctly describes the relationship between Repo Rate and lending by commercial banks?

Accepted Answer

The Repo Rate is a key monetary policy tool used by the RBI to control inflation and manage liquidity. When the RBI increases the Repo Rate, borrowing becomes expensive for banks, leading to higher lending rates for customers and reduced credit flow.

Question 18

The Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched with the primary aim of achieving financial inclusion. In which year was PMJDY launched?

Accepted Answer

PMJDY was launched on August 28, 2014, by Prime Minister Narendra Modi. The scheme aimed to provide universal access to banking services, with emphasis on savings accounts, remittance facilities, credit, insurance, and pension schemes.

Question 19

The Pradhan Mantri Mudra Yojana (PMMY) was launched to provide collateral-free loans to micro and small enterprises. Which of the following is NOT a correct feature of this scheme?

Accepted Answer

PMMY was launched in April 2015 by the Ministry of Finance to provide loans up to ₹10 lakh to non-corporate, non-farm small/micro businesses. The scheme offers three products: Shishu (up to ₹50,000), Kishore (₹50,001 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh).

Question 20

Under the RBI Act, 1934, which section empowers the Reserve Bank of India to act as the 'Lender of Last Resort' by providing emergency liquidity support to scheduled commercial banks?

Accepted Answer

Section 17 of the RBI Act, 1934 defines the 'Business which the Bank may transact' and is the statutory basis for RBI's role as Lender of Last Resort. It allows RBI to make advances to scheduled banks against approved securities. This is a core central banking function distinct from open market operations (Section 17(8)) or note issuance (Section 22).

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