UPSC Prelims PYQs – Public Finance & Banking (Economy)

1. Consider the following statements:

1. In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India.
2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs).
3. In India, Stock Exchanges can offer separate trading platforms for debts.

Which of the statements given above is/are correct?

[UPSC Civil Services Exam – 2024 Prelims]

2. With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements:

1. There is no minimum capital requirement for wholly owned banking subsidiaries in India.
2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.

Which of the statements given above is/are correct?

[UPSC Civil Services Exam – 2024 Prelims]

3. With reference to the Indian economy, “Collateral Borrowing and Lending Obligations are the instruments of:

[UPSC Civil Services Exam – 2024 Prelims]

4. Which one of the following activities of the Reserve Bank of India is considered to be part of ‘sterilization?

[UPSC Civil Services Exam – 2023 Prelims]

5. Consider the following markets:

1. Government Bond Market
2. Call Money Market
3. Treasury Bill Market
4. Stock Market

How many of the above are included in capital markets?

[UPSC Civil Services Exam – 2023 Prelims]

6. With reference to the Central Bank digital currencies, consider the following statements:

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 time-frame for spending it.

Which of the statements given above is/are correct?

[UPSC Civil Services Exam – 2023 Prelims]

7. Consider the following statements:

1. In India, credit rating agencies are regulated by 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?

[UPSC Civil Services Exam – 2022 Prelims]

8. In India, which one of the following is responsible for maintaining price stability by controlling inflation?

[UPSC Civil Services Exam – 2022 Prelims]

9. With reference to the Indian economy, consider the following statements:

1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.
3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy dollars.

Which of the statements given above are correct?

[UPSC Civil Services Exam – 2022 Prelims]

10. The money multiplier in an economy increases with which one of the following?

[UPSC Civil Services Exam – 2021 Prelims]

11. In India, the central bank’s function as the ‘lender of last resort’ usually refers to which of the following?

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.

[UPSC Civil Services Exam – 2021 Prelims]

12. Consider the following statements:

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?

[UPSC Civil Services Exam – 2021 Prelims]

13. With reference to ‘Urban Cooperative Banks’ in India, consider the following statements:

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?

[UPSC Civil Services Exam – 2021 Prelims]

14. Indian Government Bond Yields are influenced by which of the following?

1. Actions of the United States Federal Reserve
2. Actions of the Reserve Bank of India
3. Inflation and short-term interest rates

Select the correct answer using the code given below.

[UPSC Civil Services Exam – 2021 Prelims]

15. If you withdraw ₹1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be

[UPSC Civil Services Exam – 2020 Prelims]

16. If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?

1. Cut and optimize the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate

Select the correct answer using the code given below:

[UPSC Civil Services Exam – 2020 Prelims]

17. Consider the following statements:

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?

[UPSC Civil Services Exam – 2020 Prelims]

18. Which of the following is not included in the assets of a commercial bank in India?

[UPSC Civil Services Exam – 2019 Prelims]

19. What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?

[UPSC Civil Services Exam – 2019 Prelims]

20. The Chairmen of public sector banks are selected by the

[UPSC Civil Services Exam – 2019 Prelims]

21. The money multiplier in an economy increases with which one of the following?

[UPSC Civil Services Exam – 2019 Prelims]

22. Consider the following events:

1. The first democratically elected communist party government formed in a State in India.
2. India’s then largest bank, ‘Imperial Bank of India’, was renamed ‘State Bank of India’.
3. Air India was nationalised and became the national carrier.
4. Goa became a part of independent India

Which of the following is the correct chronological sequence of the above events?

[UPSC Civil Services Exam – 2018 Prelims]

23. Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?

1. It decides the RBI’s benchmark interest rates,
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.

Select the correct answer using the code given below: 

[UPSC Civil Services Exam – 2017 Prelims]

24. What is the purpose of setting up of Small Finance Banks (SFBs) in India?

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:

[UPSC Civil Services Exam – 2017 Prelims]

25. ‘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?

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

[UPSC Civil Services Exam – 2016 Prelims]

26. What is/are the purpose/purposes of the ‘Marginal Cost of Funds based Lending Rate (MCLR)’ announced by RBI?

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.

[UPSC Civil Services Exam – 2016 Prelims]

27. When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points which of the following is likely to happen?

[UPSC Civil Services Exam – 2015 Prelims]

28. With reference to Indian economy, consider the following:

1. Bank rate
2. Open market operations
3. Public debt
4. Public Revenue

Which of the above is/are component/components of Monetary Policy?

[UPSC Civil Services Exam – 2015 Prelims]

29. With reference to inflation in India, which of the following statements is correct?

[UPSC Civil Services Exam – 2015 Prelims]

30. If the interest rate is decreased in an economy, it will

[UPSC Civil Services Exam – 2014 Prelims]

31. The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to

[UPSC Civil Services Exam – 2014 Prelims]

32. What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas?

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.

[UPSC Civil Services Exam – 2014 Prelims]

33. In the context of Indian economy, which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?

1. To enable the Central Bank to control the amount of advances the banks can create
2. To make the people’s deposits with banks safe and liquid
3. To prevent the commercial banks from making excessive profits
4. To force the banks to have sufficient vault-cash to meet their day-to-day requirements

Select the correct answer using the code given below.

[UPSC Civil Services Exam – 2014 Prelims]

34. An increase in the Bank Rate generally indicates that the

[UPSC Civil Services Exam – 2013 Prelims]

35. Priority Sector Lending by banks in India constitutes the lending to

[UPSC Civil Services Exam – 2013 Prelims]

36. Supply of money remaining the same when there is an increase in demand for money, there will be

[UPSC Civil Services Exam – 2013 Prelims]

37. Which of the following grants/grant direct credit assistance to rural households?

1. Regional Rural Banks
2. National Bank for Agriculture and Rural Development
3. Land Development Banks

Select the correct answer using below.

[UPSC Civil Services Exam – 2013 Prelims]

38. Consider the following liquid assets:

1. Demand deposits with the banks
2. Time deposits with the banks
3. Savings deposits with the banks
4. Currency

The correct sequence of these assets in the decreasing order of liquidity is

[UPSC Civil Services Exam – 2013 Prelims]

39. The Reserve Bank of India regulates the commercial banks in matters of

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:

[UPSC Civil Services Exam – 2013 Prelims]

40. In the context of Indian economy, ‘Open Market Operations’ refers to

[UPSC Civil Services Exam – 2013 Prelims]

41. The Reserve Bank of India (RBI) acts as a bankers’ bank.

This would imply which of the following?

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:

[UPSC Civil Services Exam – 2012 Prelims]

42. Which of the following measures would result in an increase in the money supply in the economy?

1. Purchase of government securities from the public by the Central Bank
2. Deposit of currency in commercial banks by the public
3. Borrowing by the government from the Central Bank
4. Sale of government securities to the public by the Central Bank

Select the correct answer using the codes given below:

[UPSC Civil Services Exam – 2012 Prelims]

43. The basic aim of Lead Bank Scheme is that

[UPSC Civil Services Exam – 2012 Prelims]

44. In India, which of the following have the highest share in the disbursement of credit to agriculture and allied activities?

[UPSC Civil Services Exam – 2011 Prelims]

45. The lowering of Bank Rate by the Reserve Bank of India leads to

[UPSC Civil Services Exam – 2011 Prelims]