Question 1

What is the Cash Reserve Ratio (CRR) used by the RBI to control?

Accepted Answer

The Cash Reserve Ratio (CRR) is the percentage of deposits that commercial banks must maintain as cash reserves with the RBI. It is a monetary policy tool used to control money supply and inflation in the economy.

Question 2

What is the Pradhan Mantri Jan Dhan Yojana (PMJDY) primarily designed to achieve?

Accepted Answer

PMJDY, launched on 28 August 2014 by PM Narendra Modi, aims to provide universal access to banking services, financial inclusion, and zero-balance savings accounts to all Indian citizens.

Question 3

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

Accepted Answer

The RBI is the central bank responsible for monetary policy, banking regulation, and currency management. However, direct lending to individuals is not an RBI function.

Question 4

Which of the following is the primary function of the Reserve Bank of India (RBI)?

Accepted Answer

The RBI, established in 1935 and nationalized in 1951, serves as India's central bank with the primary function of regulating the monetary system, controlling inflation, and ensuring financial stability.

Question 5

Which of the following is the primary objective of the Pradhan Mantri Jan Dhan Yojana (PMJDY)?

Accepted Answer

PMJDY was launched in 2014 to provide universal access to banking services, with a focus on financial inclusion of the unbanked and underbanked population.

Question 6

Which of the following is NOT a function of Non-Banking Financial Companies (NBFCs)?

Accepted Answer

NBFCs are financial institutions that provide banking services but are not licensed banks. They cannot accept demand deposits (current/savings accounts) or issue cheques, which are exclusive to banks.

Question 7

What is the Cash Reserve Ratio (CRR) that commercial banks must maintain with the RBI as per the Banking Regulation Act?

Accepted Answer

The CRR is a 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 8

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) and are regulated by RBI under the Banking Regulation Act. NBFCs cannot accept demand deposits and are regulated under the NBFC Regulations, 2015.

Question 9

Under which ministry is the Pradhan Mantri MUDRA Yojana (PMMY) implemented?

Accepted Answer

PMMY was launched in 2015 to provide microfinance to non-corporate, non-farm small/micro enterprises and is implemented by the Ministry of Micro, Small and Medium Enterprises (MSME).

Question 10

The Cash Reserve Ratio (CRR) is a key monetary policy instrument used by the RBI. Which of the following correctly describes the purpose of CRR?

Accepted Answer

CRR is the percentage of deposits that commercial banks must maintain as cash reserves with the RBI. It is used to control money supply and inflation in the economy.

Question 11

Under the RBI's monetary policy framework, the Statutory Liquidity Ratio (SLR) is the minimum percentage of deposits that banks must maintain in the form of liquid assets. As of 2024, what is the current SLR?

Accepted Answer

The SLR is a key monetary policy tool used by RBI to control liquidity in the banking system. The current SLR as of 2024 is 18% of Net Demand and Time Liabilities (NDTL).

Question 12

In which year was the Pradhan Mantri Startup India initiative launched, and what is its primary objective?

Accepted Answer

Startup India was launched in 2016 to foster entrepreneurship and create a robust startup ecosystem through regulatory support, tax incentives, and funding mechanisms.

Question 13

What is the primary function of Non-Banking Financial Companies (NBFCs) in the Indian financial system?

Accepted Answer

NBFCs provide financial services similar to banks (lending, investment, etc.) but cannot accept demand deposits. They fill gaps in credit availability for specific segments.

Question 14

As per RBI guidelines, what is the primary difference between the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR)?

Accepted Answer

SLR requires banks to maintain a percentage of net demand and time liabilities in government securities and other approved securities, while CRR requires banks to maintain cash reserves with the RBI itself.

Question 15

Which section of the Reserve Bank of India Act, 1934 deals with the establishment and incorporation of the Reserve Bank of India?

Accepted Answer

Section 3 of the Reserve Bank of India Act, 1934 deals with the establishment and incorporation of the RBI. The RBI was established on April 1, 1935, and was nationalized on January 1, 1949. It is the central bank of India responsible for monetary policy and regulation of the banking sector.

Question 16

Under the Pradhan Mantri Jan Dhan Yojana (PMJDY), what is the primary objective, and which of the following is NOT a feature of the basic savings account opened under this scheme?

Accepted Answer

PMJDY, launched in August 2014, aims to provide universal access to banking services. Features include zero-balance accounts, free debit cards, and accident insurance. However, accounts do NOT come with automatic credit facilities or overdraft facilities at opening.

Question 17

Which of the following best describes the relationship between Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) in India's banking system?

Accepted Answer

Both SLR and CRR are reserve requirements mandated by RBI, but SLR requires banks to hold a percentage of deposits in government securities and other approved securities, while CRR requires banks to hold a percentage of deposits as cash reserves with RBI. SLR is broader in scope.

Question 18

As per RBI's monetary policy framework (2024), what is the primary difference between the Repo Rate and the Reverse Repo Rate in terms of their operational direction?

Accepted Answer

The Repo Rate is the rate at which RBI lends to commercial banks against government securities, while the Reverse Repo Rate is the rate at which RBI borrows from commercial banks. The Repo Rate is always higher than the Reverse Repo Rate to maintain a corridor system.

Question 19

In the context of RBI's regulatory framework, what is the primary distinction between a Scheduled Commercial Bank (SCB) and a Non-Banking Financial Company (NBFC) in terms of deposit-taking authority?

Accepted Answer

Scheduled Commercial Banks are authorized to accept deposits from the general public without any restrictions, while NBFCs can accept deposits only from specific categories (not from the general public) and are subject to stricter regulations under the RBI's NBFC guidelines.

Question 20

Under the RBI Act, 1934, which section empowers the Reserve Bank of India to act as the 'lender of last resort' and provide emergency financial assistance to scheduled commercial banks?

Accepted Answer

Section 17(4) of the RBI Act, 1934 empowers RBI to make loans and advances to scheduled banks against approved securities, effectively enabling its role as lender of last resort. This is a statutory power, not merely a policy function. Distractors like Section 42 (CRR), Section 45 (NBFCs), and Section 24 (SLR under Banking Regulation Act) are related but serve different purposes.

SSC CHSL RBI, Banks & NBFC

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