Question 1

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. Its primary functions include monetary policy regulation, currency management, banking supervision, and financial system stability.

Question 2

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

Accepted Answer

The CRR is the percentage of deposits that commercial 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). This is a dynamic monetary policy tool used to control liquidity in the banking system.

Question 3

Under which ministry does the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme operate?

Accepted Answer

PM-KISAN is a central sector scheme launched in December 2018 to provide direct income support to farmers. It is administered by the Ministry of Agriculture & Farmers Welfare and provides ₹6,000 per year in three installments to eligible farmers.

Question 4

What is the primary objective of Non-Banking Financial Companies (NBFCs) in India?

Accepted Answer

NBFCs are financial institutions that provide banking services without holding a banking license. They engage in lending, investment, and financial services but cannot accept demand deposits (current accounts). They are regulated by the RBI under the NBFC Regulations.

Question 5

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 functions include monetary policy formulation, regulation and supervision of banks, management of foreign exchange reserves, and acting as banker to the government.

Question 6

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

Accepted Answer

PMJDY was launched in 2014 with the primary objective of financial inclusion by providing universal access to banking services, deposit accounts, remittance facilities, credit, insurance, and pension to all households in the country.

Question 7

As per RBI guidelines, the Cash Reserve Ratio (CRR) is the percentage of deposits that commercial banks must maintain with the RBI. What is the primary purpose of CRR?

Accepted Answer

CRR is a monetary policy tool used by the RBI to control liquidity in the banking system and regulate inflation. By adjusting CRR, the RBI can increase or decrease the amount of money available for lending by banks.

Question 8

The Pradhan Mantri MUDRA Yojana was launched to provide collateral-free loans to micro and small enterprises. Under which ministry does MUDRA fall?

Accepted Answer

MUDRA (Micro Units Development and Refinance Agency) Yojana was launched in 2015 under the Ministry of Finance. It aims to provide loans up to ₹10 lakh to micro and small business units without collateral or third-party guarantees.

Question 9

What is the relationship between the Repo Rate and Reverse Repo Rate set by the RBI?

Accepted Answer

The Repo Rate is the rate at which the RBI lends to commercial banks, while the Reverse Repo Rate is the rate at which the RBI borrows from banks. The Reverse Repo Rate is always lower than the Repo Rate, and the difference between them forms a corridor that guides short-term interest rates in the economy.

Question 10

The Statutory Liquidity Ratio (SLR) requires commercial banks to maintain a certain percentage of their Net Demand and Time Liabilities (NDTL) in the form of liquid assets. Which of the following is NOT a valid liquid asset under SLR norms?

Accepted Answer

Under SLR norms, banks must maintain liquid assets in the form of cash, gold, and approved securities (government securities, state development loans). Cash held in vaults, gold bullion, and government bonds are valid liquid assets. However, loans given to customers, real estate, or shares of private companies are NOT valid liquid assets under SLR.

Question 11

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

Accepted Answer

The SLR is a monetary policy tool used by the RBI to control the money supply in the economy and ensure the solvency of commercial banks.

Question 12

As per RBI's monetary policy framework (2024), what is the relationship between the Repo Rate and Reverse Repo Rate?

Accepted Answer

The Reverse Repo Rate is always set at a fixed spread below the Repo Rate. As of 2024, if the Repo Rate is 6.50%, the Reverse Repo Rate is typically 6.00%, maintaining a 50 basis point corridor.

Question 13

Which of the following correctly describes the Cash Reserve Ratio (CRR) and its primary function in India's banking system?

Accepted Answer

CRR is the percentage of net demand and time liabilities that banks must maintain as cash reserves with RBI. As of 2024, CRR stands at 4.50%. Its primary function is to control money supply and ensure banking system liquidity.

Question 14

The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme was launched in which year, and what is the annual income support provided to eligible farmers?

Accepted Answer

PM-KISAN was launched in February 2019 by the Ministry of Agriculture & Farmers Welfare. It provides ₹6,000 per annum (₹2,000 per installment, 3 times yearly) to eligible small and marginal farmers.

Question 15

Under the Statutory Liquidity Ratio (SLR) framework, what is the minimum percentage of Net Demand and Time Liabilities (NDTL) that banks must maintain as liquid assets, and which assets qualify?

Accepted Answer

As of 2024, the SLR is 18.00% of NDTL. Qualifying assets include cash, gold, and approved securities (primarily government securities). SLR is a tool to ensure bank solvency and control money supply.

Question 16

As per RBI's Monetary Policy Framework (2024), if the RBI intends to inject liquidity into the banking system during a liquidity crunch, which of the following operations would it NOT typically employ?

Accepted Answer

The RBI uses multiple tools to manage liquidity. Reverse Repo Rate (RRR) is used to absorb liquidity (tighten), while Repo Rate cuts, Open Market Operations (OMO) purchases, and CRR reductions inject liquidity (ease). The question tests understanding of which tool does the opposite.

SSC GD Constable RBI, Banks & NBFC

RBI, Banks & NBFC— Rules & Concept

Key Points to Remember

Exam-Specific Tips

RBI, Banks & NBFC — Practice Questions

60-Second Revision — RBI, Banks & NBFC