Banking
Question : Which of the following statements is an example of positive economics?
Option 1: The government should regulate the banking sector to prevent financial crises.
Option 2: Tax cuts for corporations will stimulate economic growth.
Option 3: Wealth redistribution is necessary for a just society.
Option 4: Economic efficiency should be prioritized over equity.
Correct Answer: Tax cuts for corporations will stimulate economic growth.
Solution : The correct answer is (b) Tax cuts for corporations will stimulate economic growth.
Tax cuts for corporations will stimulate economic growth is an example of positive economics because it presents a cause-and-effect relationship based on empirical evidence and economic analysis. It suggests that tax cuts for corporations will lead to an increase in economic growth. Positive economics focuses on analyzing economic data and facts to provide objective analysis and understanding of how the economy functions.
Question : Which of the following is not a function of the RBI?
Option 1: Issuing currency notes
Option 2: Regulating the banking system
Option 3: Conducting monetary policy
Option 4: Regulating the stock market
Correct Answer: Regulating the stock market
Solution : The correct answer is (d) Regulating the stock market.
Regulating the stock market is not a function of the Reserve Bank of India (RBI). The RBI's primary functions include issuing currency notes, regulating the banking system, and conducting monetary policy. It is responsible for maintaining price stability, controlling inflation, and managing the overall monetary and financial stability of the country. The regulation of the stock market falls under the jurisdiction of the Securities and Exchange Board of India (SEBI), which is an independent regulatory body specifically established for this purpose. Therefore, option d. Regulating the stock market is not a function of the RBI.
Question : Which of the following institutions regulates and supervises the functioning of non-banking financial companies (NBFCs) in India?
Option 1: Reserve Bank of India (RBI)
Option 2: Insurance Regulatory and Development Authority of India (IRDAI)
Option 3: Securities and Exchange Board of India (SEBI)
Option 4: None of the above
Correct Answer: Reserve Bank of India (RBI)
Solution : The correct answer is (a). Reserve Bank of India (RBI).
The Reserve Bank of India is the regulatory authority responsible for regulating and supervising the functioning of non-banking financial companies (NBFCs) in India. NBFCs are financial institutions that provide various financial services, such as loans, credit facilities, investments, and asset financing, but do not hold a full banking license. The RBI regulates and supervises NBFCs to ensure their stability, compliance with regulations, and protection of the interests of depositors and borrowers. The Insurance Regulatory and Development Authority of India (IRDAI) regulates and supervises insurance companies, while the Securities and Exchange Board of India (SEBI) oversees the securities market in India.
Question : Comprehension:
In the following passage, some words have been deleted. Read the passage carefully and select the most appropriate option to fill in each blank.
The modern world (1) ________ around technology. It has advanced dramatically in the beyond twenty years, and presently, we can't envision a world without PCs and cell phones. The last century saw fast progressions in innovation and science, which were unfathomable previously. The internet is perhaps the most significant of these. Today, it is no longer a science fiction concept to communicate with people anywhere in the world. While smartphones keep us constantly connected to the virtual world, the wireless internet has eliminated the need to use a physical wire to connect with this world. Today, we rely on the Internet to pay our bills, book tickets, travel, and conduct banking transactions. Li-Fi, a new technology that uses light signals to (2) ________ data and reduces external interference, is currently in development. On the other hand, such rapid progress comes with some (3) ________. Another sort of wrongdoing, known as digital wrongdoing, is the greatest danger to security today. WannaCry was one of the biggest recent cyberattacks. It infected more than 230,000 computers in over 150 countries and threatened to erase valuable data unless ransom payments were made. Personal and (4) ________ data continue to be stolen frequently, and our country's cyber security is still lacking. It's also possible to say that people miss out on important experiences in the real world because they spend so much time in the virtual world. The distinction between the real and online worlds sometimes appears to blur, especially as social media grows in popularity. For instance, the internet was said to have become so addictive in China that programmes were established to help people get off of it. However, technology's benefits (5)________ its drawbacks. It all comes down to what we do with it. One thing to keep in mind is that technology can serve us well but not completely.
Select the most appropriate option to fill in the blank no. 2.
Option 1: lay
Option 2: disturb
Option 3: transmit
Option 4: communicate
Correct Answer: transmit
Solution : The most appropriate choice is the third option.
The word transmit means to broadcast or send out an electrical signal and fits well in the context of technology that uses light signals to send or convey data.
Question : What is a good indicator to identify the effect of policies on the industrial sector?
Option 1: Rise in capital formation.
Option 2: Rise in the share of the Industry sector in the GDP.
Option 3: Rise in banking services.
Option 4: Rise in imports.
Correct Answer: Rise in the share of the Industry sector in the GDP.
Solution : The correct option is the Rise in the share of the industry sector in the GDP.
A rise in the share of the industrial sector in GDP is a good indicator of policy effects. It signifies increased industrial output, investments, and economic growth, reflecting the sector's robustness. Policymakers often use this metric to assess the success of policies aimed at promoting industrial development and overall economic progress.
Question : Which of the following is not a function of a stock exchange?
Option 1: Facilitating trading of securities
Option 2: Ensuring fair and transparent transactions
Option 3: Regulating the banking sector
Option 4: Providing liquidity to investors
Correct Answer: Regulating the banking sector
Solution : The correct answer is (c) Regulating the banking sector.
Regulating the banking sector is not a function of a stock exchange. Stock exchanges primarily serve as marketplaces where securities such as stocks, bonds, and derivatives are bought and sold. They facilitate the trading of securities between buyers and sellers.
However, regulating the banking sector is typically the responsibility of regulatory bodies such as central banks and financial regulatory authorities. These entities oversee and regulate banks, ensuring their compliance with banking laws, capital requirements, and prudential regulations.
Question : Choose which of the following statements is true.
Option 1: Debentures Redemption Reserve is set aside by all the companies except All India Financial Institutions regulated by RBI and Banking Companies.
Option 2: Amount is set aside to Debentures Redemption Reserve by Unlisted Companies which are not Non-Banking Finance Companies (NBFCs) or Housing Finance Companies (HFCs).
Option 3: Amount is set aside to Debentures Redemption Reserve by all Unlisted Companies.
Option 4: Debentures Redemption Investment is made by the companies required to set aside amount to Debentures Redemption Reserve.
Correct Answer: Amount is set aside to Debentures Redemption Reserve by Unlisted Companies which are not Non-Banking Finance Companies (NBFCs) or Housing Finance Companies (HFCs).
Solution : Answer = amount is set aside to Debentures Redemption Reserve by Unlisted Companies which are not Non-Banking Finance Companies (NBFCs) or Housing Finance Companies (HFCs).
The amount is set aside for Debentures Redemption Reserve by Unlisted Companies which are not Non-Banking Finance Companies (NBFCs) or Housing Finance Companies (HFCs) only. Unlisted companies, excluding NBFCs and HFCs, are required to set aside an amount to the Debentures Redemption Reserve as per regulatory requirements. Hence, the correct option is 2.
Question : Which of the following is a feature of a non-banking financial company (NBFC)?
Option 1: Accepting deposits from the public
Option 2: Regulated by the Reserve Bank of India (RBI)
Option 3: Providing credit facilities
Correct Answer: Providing credit facilities
Solution : The correct answer is (c). Providing credit facilities
NBFCs are financial institutions that provide various financial services and products similar to traditional banks but without holding a banking license. One of the primary functions of NBFCs is to provide credit facilities, including loans, advances, asset financing, and other forms of credit to individuals and businesses.
NBFCs play a crucial role in providing credit and financial services to individuals and businesses, especially those who may have limited access to traditional banking services.
Question : Assertion: The service sector contributes the highest share of India's GDP.
Reason: India has witnessed significant growth in sectors such as IT, telecommunications, banking, tourism, and healthcare.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Assertion is false, but the reason is true.
Correct Answer: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Solution : The correct answer is (a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
The assertion is true. The service sector has been a significant driver of India's economic growth and contributes a substantial portion of the country's GDP.
The reason provided, stating that India has witnessed significant growth in sectors such as IT, telecommunications, banking, tourism, and healthcare, is also true. These sectors are part of the service sector and have experienced notable growth in India. The expansion of these industries has contributed to the increased share of the service sector in India's GDP.
Therefore, both the assertion and the reason are true, and the reason correctly explains the assertion.
Question : Which among the following comes under the primary sector of the Indian Economy?
Option 1: Sugar Industry
Option 2: Dairy Industry
Option 3: Banking Industry
Option 4: Transport of Goods
Correct Answer: Dairy Industry
Solution : The correct answer is Dairy.
The primary sector refers to all areas of human endeavour that use natural resources to produce essential goods, including agriculture, horticulture, dairy production, mining, fisheries, forestry, etc. By converting raw materials into valuable products, the secondary sector increases the value of natural resources.
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