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Chapter 17. Tertiary Sector In Indian Economy (UPSC IAS CSE Civil Services CSAT Prelims Paper-1 Topicwise Previous Year Papers)

Chapter 17. Tertiary Sector In Indian Economy (UPSC IAS CSE Civil Services CSAT Prelims Paper-1 Topicwise Previous Year Papers)

1. Which one of the following is not an instrument of selective credit control in India?(1995)
(a) Regulation of consumer credit
(b) Rationing of credit
(c) Margin requirements
(d) Variable cash reserve ratios
2. Bank Rate implies the rate of interest:(1995)
(a) paid by the Reserve Bank of India on the Deposits of Commercial Banks
(b) charged by Banks on loans and advances
(c) payable on Bonds
(d) at which the Reserve Bank of India discounts the Bills of Exchange
3. Consider the following:(1995)
1. Industrial Finance Corporation of India
2. Industrial Credit and Investment Corporation of India
3. Industrial Development Bank of India
4. Unit Trust of India
The correct sequence in which the above were established is:
(a) 1, 2, 4, 3
(b) 1, 3, 2, 4
(c) 4, 3, 2, 1
(d) 1, 4, 3, 2
4. As part of the liberalisation programme and with a view to attract foreign exchange, the government and the RBI have, devised two scheme known as FCNR ‘A’ and FCNR ‘B’.
Which of the following is/are true regarding these two schemes?(1995)
1. Under scheme ‘A’ RBI bears exchange rate fluctuations.
2. Under scheme ‘B’ other banks are to meet out the difference in exchange rate fluctuations.
3. Both the schemes stand withdrawn now.
4. Only scheme ‘A’ has been withdrawn
Codes:
(a) 3 only
(b) 1 and 2
(c) 1, 2 and 3
(d) 1, 2 and 4
5. Hawala transactions relate to payments: (1996)
(a) received in rupees against overseas currencies and vice versa without going through the official channels
(b) received for sale/transfer of shares without going through the established stock exchanges
(c) received as commission for services rendered to overseas investors/buyers/sellers in assisting them to get over the red tape and/or in getting preferential treatment
(d) made to political parties or to individuals for meeting election expenses
6. The sum of which of the following constitutes Broad Money in India?(1997)
1. Currency with the public
2. Demand deposits with banks
3. Time deposits with banks
4. Other deposits with RBI
Choose the correct answer using the codes given below:
(a) 1 and 2
(b) 1, 2 and 3
(c) 1, 2, 3 and 4
(d) 1, 2 and 4
7. The banks are required to maintain a certain ratio between their cash in hand and total assets. This is called:(1998)
(a) SBR (Statutory Bank Ratio)
(b) SLR (Statutory Liquid Ratio)
(c) CBR (Central Liquid Reserve)
(d) CLR (Central Liquid Reserve)
8. The accounting year of the Reserve Bank of India is:(1998)
(a) April-March
(b) July-June
(c) October-September
(d) January-December
9. Which one of the following is the correct sequence of decreasing order of the given currencies in terms of their value in Indian Rupees?(1998)
(a) US dollar, Canadian dollar, New Zealand dollar, Hong Kong dollar
(b) US dollar, New Zealand dollar, Canadian dollar, Hong Kong dollar
(c) US dollar, Hong Kong dollar, Canadian dollar, New Zealand dollar
(d) Hong Kong dollar, US dollar, New Zealand dollar, Canadian Dollar.
10. The farmers are provided credit from a number of sources for their short and long term needs. The main sources of credit to the farmers include:(1999)
(a) the Primary Agricultural Cooperative Societies, commercial banks, RRBs and private money lenders
(b) the NABARD, RBI, commercial banks and private money lenders
(c) the District Central Cooperative Banks (DCCB) , the lead banks, IRDP and JRY
(d) the Large Scale Multi-purpose Adivasis Programme, DCCB, IFFCO and commercial banks
11. Since 1980, the share of the tertiary sector in the total GDP of India has:(1999)
(a) shown an increasing trend
(b) shown a decreasing trend
(c) remained constant
(d) been fluctuating
12. Consider the following statements regarding Reserve Bank of India:(2001)
1. It is a banker to the Central Government
2. It formulates and administers monetary policy
3. It acts as an agent of the Government in respect of India
4. It handles the borrowing programme of Government of India
Which of these statements are correct?
(a) 1 and 2
(b) 2, 3 and 4
(c) 1, 2, 3 and 4
(d) 3 and 4
13. Consider the following:(2002)
1. Currency with the public
2. Demand deposits with banks
3. Time deposits with banks
Which of these are included in Broad Money (M3) in India ?
(a) 1 and 2
(b) 1 and 3
(c) 2 and 3
(d) 1, 2 and 3
14. Consider the following financial institutions of India:(2002)
1. Industrial Finance Corporation of India (IFCI)
2. Industrial Credit and Investment Corporation of India (ICICI)
3. Industrial Development Bank of India (IDBI)
4. National Bank for Agriculture and Rural Development (NABARD)
The correct chronological sequence of the establishment of these institution is :
(a) 1, 2, 3, 4
(b) 2, 3, 4, 1
(c) 3, 4, 1, 2
(d) 4, 1, 2, 3
15. Debenture holders of a company are its:(2003)
(a) shareholders
(b) creditors
(c) debtors
(d) directors
16. In the last one decade, which one among the following sectors has attracted the highest Foreign Direct Investment inflows into India?(2004)
(a) Chemicals other than fertilizers
(b) Services sector
(c) Food processing
(d) Telecommunication
17. Consider the following statements:(2004)
1. The National Housing Bank the apex institution of housing finance in India, was set up as a wholly-owned subsidiary of the Reserve Bank of India
2. The Small Industries Development Bank of India was established as a whollyowned subsidiary of the Industrial Development Bank of India
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
18. Consider the following statements:(2004)
1. Reserve Bank of India was nationalized on 26 January, 1950
2. The borrowing programme of the Government of India is handled by the Department of Expenditure, Ministry of Finance
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
19. Consider the following statements: (2005)
1. Sensex is based on 50 of the most important stocks available on the Bombay stock Exchange (BSE) .
2. For calculating the Sensex, all the stock are assigned proportional weightage.
3. New York Stock Exchange is the oldest stock exchange in the world.
Which of the statements given above is/are correct?
(a) 2 only
(b) 1 and 3
(c) 2 and 3
(d) none
20. Which one of the following Indian banks is not a nationalized bank?(2006)
(a) Corporation Bank
(b) Dena Bank
(c) Federal Bank
(d) Vijaya Bank
21. Consider the following statements: (2006)
1. Life Insurance Corporation of India is the oldest insurance company in India.
2. National Insurance Company Limited was nationalized in the year 1972 and made a subsidiary of General Insurance Corporation of India.
3. Headquarters of United Indian Insurance Company Limited are located at Chennai.
Which of the statements given above are correct?
(a) 1, 2 and 3
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1 and 3 only
22. Consider the following statements:(2007)
1. The repo rate is the rate at which other banks borrow from the Reserve Bank of India.
2. A value of 1 for Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
23. The National Housing Bank was set up in India as a wholly-owned subsidiary of which one of the following?(2007)
(a) State Bank of India
(b) Reserve Bank of India
(c) ICICI Bank
(d) Life Insurance Corporation of India
24. Which one of the following pairs is not correctly matched?(2009)
(a) Japan:Nikkei
(b) Singapore:Shcomp
(c) UK:FTSE
(d) USA:Nasdaq
25. Which of the following terms indicates a mechanism used by commercial banks for providing credit to the government?(2010)
(a) Cash Credit Ratio
(b) Debt Service Obligation
(c) Liquidity Adjustment Facility
(d) Statutory Liquidity Ratio
26. With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements:(2010)
1. They cannot engage in the acquisition of securities issued by the government.
2. They cannot accept demand deposits like Savings Account
Which of the statement given above is/ are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
27. In the parlance of financial investments, the term ‘bear’ denotes(2010)
(a) An investor who feels that the price of a particular security is going to fall
(b) An investor who expects the price of particular shares to rise
(c) A shareholder or a bondholder who, has an interest in a company, financial or otherwise
(d) Any lender whether by making a loan or buying a bond
28. In India, the interest rate on savings accounts in all the nationalized commercial banks is fixed by(2010)
(a) Union Ministry of Finance
(b) Union Finance Commission
(c) Indian Banks’ Association
(d) None of the above.
29. With reference to the institution of Banking Ombudsman in, India, which one of the statements is not correct?(2010)
(a) The Banking Ombudsman is appointed by the Reserve Bank of India.
(b) The Banking Ombudsman can, consider complaints from Non Resident Indians having accounts in India.
(c) The orders passed by the Banking Ombudsman are final and binding on the parties concerned.
(d) The service provided by the Banking Ombudsman is free of any fee.
30. With reference to India, consider the following:(2010)
1. Nationalization of Banks
2. Formation of Regional Rural Banks
3. Adoption of villages by Bank Branches
Which of the above can be considered as steps taken to achieve the “financial inclusion” in India?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
31. Consider the following statements:(2010)
The functions of commercial banks in India include
1. Purchase and sale of shares and securities on behalf of customers
2. Acting as executors and trustees of wills
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
32. The International Development Association, a lending agency, is administered by the(2010)
(a) International Bank for Reconstruction and Development
(b) International Fund for Agricultural Development
(c) United Nations Development Programme.
(d) United Nations Industrial Development Organization
33. The basic aim of Lead Bank Scheme is that(2012 – I)
(a) big banks should try to open offices in each district
(b) there should be stiff competition among the various nationalized banks
(c) individual banks should adopt particular districts for intensive development
(d) all the banks should make intensive efforts to mobilize deposits
34. The Reserve Bank of India regulates the commercial banks in matters of(2013 – I)
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.
(a) 1 and 4 only
(b) 2, 3 and 4 only
(c) 1, 2 and 3 only
(d) 1, 2, 3 and 4
35. An increase in the Bank Rate generally indicates that the(2013 – I)
(a) market rate of interest is likely to fall
(b) Central Bank is no longer making loans to commercial banks
(c) Central Bank is following an easy money policy
(d) Central Bank is following a tight money policy
36. Which of the following grants / grant direct credit assistance to rural households?(2013 – I)
1. Regional Rural Banks
2. National Bank for Agriculture and Rural Development
3. Land Development Banks
Select the correct answer using the codes given below.
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
37. Consider the following statements:(2013 – I)
1. Inflation benefits the debtors.
2. Inflation benefits the bondholders.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
38. Consider the following liquid assets:(2013 – I)
1. Demand deposits with the banks
2. Time deposits with the banks
3. Saving deposits with the banks
4. Currency
The correct sequence of these assets in the decreasing order of liquidity is
(a) 1-4-3-2
(b) 4-3-2-1
(c) 2-3-1-4
(d) 4-1-3-2
39. What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas?(2014 – I)
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.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
40. In the context of Indian economy, which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?(2014 – I)
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.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4
41. ‘Basel III Accord’ or simply ‘Basel III’, often seen in the news, seeks to(2015-I)
(a) develop national strategies for the conservation and sustainable use of biological diversity
(b) improve banking sector’s ability to deal with financial and economic stress and improve risk management
(c) reduce the greenhouse gas emissions but places a heavier burden on developed countries
(d) transfer technology from developed Countries to poor countries to enable them to replace the use of chlorofluorocarbons in refrigeration with harmless chemicals
42. With reference to Indian economy, consider the following(2015-I)
1. Bank rate
2. Open market operations
3. Public debt
4. Public revenue
Which of the above is/are component/ components of Monetary Policy?
(a) 1 only
(b) 2, 3 and 4
(c) 1 and 2
(d) 1, 3 and 4
43. When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?(2015-I)
(a) India’s GDP growth rate increases drastically
(b) Foreign Institutional Investors may bring more capital into our country
(c) Scheduled Commercial Banks may cut their lending rates
(d) It may drastically reduce the liquidity to the banking system
44. What is/are the purpose/purposes of the ‘Marginal Cost of Funds based Lending Rate (MCLR) ’ announced by RBI?(2016-I)
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.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
45. 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?(2016-I)
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.
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3
46. The term ‘Core Banking Solutions’ is sometimes seen in the news. Which of the following statements best describes/describe this term? (2016-I)
1. It is a networking of a bank’s branches which enables customers to operate their accounts from any branch of the bank on its network regardless of where they open their accounts.
2. It is an effort to increase RBI’s control over commercial banks through computerization.
3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
47. With reference to ‘Bitcoins’, sometimes seen in the news, which of the following statements is/are correct?(2016-I)
1. Bitcoins are tracked by the Central Banks of the countries.
2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address.
3. Online payments can be sent without either side knowing the identity of the other.
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
48. The term ‘Base Erosion and Profit Shifting’ is sometimes seen in the news in the context of (2016-I)
(a) mining operation by multinational companies in resource-rich but backward areas
(b) curbing of the tax evasion by multinational companies
(c) exploitation of genetic resources of a country by multinational companies
(d) lack of consideration of environmental costs in the planning and implementation of developmental projects
49. There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? (2016-I)
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Reducing import duty
Select the correct answer using the code given below.
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2, 3 and 4
50. Which of the following is/are included in the capital budget of the Government of India?(2016-I)
1. Expenditure on acquisition of assets like roads, buildings, machinery, etc.
2. Loans received from foreign governments
3. Loans and advances granted to the States and Union Territories
Select the correct answer using the code given below.
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
51. ‘Global Financial Stability Report’ is prepared by the
(2016-I)
(a) European Central Bank
(b) International Monetary Fund
(c) International Bank for Reconstruction and Development
(d) Organization for Economic Cooperation and Development
 

Solutions

1. (d) Variable Reserve Ratio (Cash Reserve Ratio) is aimed to control only volume of credit (quantitative method) not both volume and purpose of credit for which bank gives loans. (Qualitative method and selective control method are used for these purposes. It has a number of limitations.
2. (d) Bank Rate is that rate of interest at which central bank of a country provides refinancing facilities to commercial banks. The bank rate, a benchmark rate at which RBI buys or re-discounts bills of exchange or other commercial papers eligible for purchase. Every bank needs refinancing as it is very difficult to match borrowings and flow of deposits.
3. (a) IFCI – July 1948; ICICI – 1955; IDBI – July 1964; UTI – 1963
4. (d) Under the FCNR (A) Scheme, the RBI bore any exchange rate risk, while in the case of FCNR (B) Scheme banks have to bear the exchange rate risk. The FCNR (A) Scheme was replaced by the FCNR (B) Scheme in 1994.
5. (a) Hawala is an illegal method of remittance across countries. There are money brokers who are the middle men who undertake hawala transfer. This method of remittance does not involve physical movement of cash. It is also known as Hundi. The word Hawala means trust. The Hawala system works as it is based on mutual trust between the hawala agents. It works outside the banking system and legal financial systems. The remittance happen based on communication between the hawala agents. It is an alternate to traditional remittance system.
6. (c) Narrow money is the most liquid part of the money supply because the demand deposits can be withdrawn anytime during the banking hours. Time deposits on the other hand have a fixed maturity period and hence cannot be withdrawn before expiry of this period. When we add the time despots into the narrow money, we get the broad money, which is denoted by M3. M3 = Narrow money + Time Deposits of public with banks. We note here that the Broad money does not include the interbank deposits such as deposits of banks with RBI or other banks. At the same time, time deposits of public with all banks including the cooperative banks are included in the Broad Money.
7. (b) SLR or the Statutory Liquidity Ratio is that portion of total deposits which a commercial bank has to maintain with itself at any given point of time in the form of liquid assets like cash in hand, current balances with other banks and first class securities which can be turned into cash (gold, cash or other approve securities) . This ratio at present is 25%. Some assets have to be in liquid form to take care of financial emergencies which every bank has to face. It regulates the credit growth in India.
8. (b) The central bank’s accounting year runs from July 1 to June 30. On 11 Mar, 1940, RBI Accounting Year changed from Jan-Dec to July-June.
9. (a)
10. (a) Regional rural banks were established under RRB Act 1976. They provide credit to agriculture and other rural activities. As of March 2014, the number of RRBs has been reduced to 57.
11. (a) The share of the tertiary sector in the total GDP or Gross Domestic Product of India is increasing which is a sign of economic development. This reproduces the trend shown by western countries as they were developing.
12. (c) Functions of RBI: sole authority to issue currency; government’s bank; banker’s bank; guardian of money market; lender of the last resort; sole reservoir of Foreign exchange reserves; controller of credit; clearing house for settling inter bank transactions. It follows an independent monetary policy.
13. (d) Narrow money is the most liquid part of the money supply because the demand deposits can be withdrawn anytime during the banking hours. Time deposits on the other hand have a fixed maturity period and hence cannot be withdrawn before expiry of this period. When we add the time deposits into the narrow money, we get the broad money, which is denoted by M3.
M3 = Narrow money + Time Deposits of public with banks. We note here that the Broad money does not include the interbank deposits such as deposits of banks with RBI or other banks. At the same time, time deposits of public with all banks including the cooperative banks are included in the Broad Money.
14. (a) IFCI – 1948; ICICI – 1955; IDBI – 1964; NABARD – 1982
15. (b) Debenture is a long-term bond issued by a company in return for a loan which have a fixed rate of interest.
16. (b) Service sector received 21% of total FDI flow between 2006 to 2010.
17. (c) The National Housing Bank (NHB) is a state owned bank and regulation authority in India, created on July 8, 1988 under section 6 of the National Housing Bank Act (1987) . The headquarters is in New Delhi. The institution, owned by the Reserve Bank of India, was established to promote private real estate acquisition. NHB is regulating and re-financing social housing programs and other activities like research and IT-initiatives, too.
Small Industries Development Bank of India is an independent financial institution for the growth and development of micro, small and medium scale enterprises in India. Set up in 2 April, 1990 through an Act of Parliament, it was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of India.
18. (d) RBI was established in 1935 and was nationalized on 1 January, 1949. RBI handles the borrowing programme of the central and State Governments.
19. (a) The ‘BSE SENSEX’ is a value-weighted index composed of 30 stocks and was started in 1 January, 1986. The origin of the NYSE can be traced to 17 May, 1792. Amsterdam stock exchange (1602) is considered oldest in the world and was established by the Dutch East India company.
20. (c) Federal Bank is a major Indian commercial bank in the private sector, headquartered at Kochi, Kerala.
21. (c) The oldest existing insurance company in India is the National Insurance Company, which was founded in 1906, and is still in business.
22. (a) Repo Rate is the rate at which commercial banks borrow funds from RBI. A reduction in the repo rate will help banks to get money from the central bank at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.
A value of (0) for Gini Coefficient in a country implies that there is perfect equality in the system. If the value is 1 then there is complete inequality in the country.
23. (b) National Housing Bank has been set up under the National Housing Bank Act of 1987, which was passed on 9th July, 1988. It is wholly owned by the Reserve bank of India and was created to encourage housing, finance institutions and provide them with financial support.
24. (b) Shangai – Shcomp; Singapore – SIMEX, Straits Time. Shcomp is a composite index of Shanghai Stock exchange. SIMEX and Strait Times are indicators for Singapore.
25. (d)
26. (b) A non-banking financial company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business, but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. They cannot accept demand deposits like commercial banks as they are not a part of clearance and settlement system.
27. (a) Bear is a speculator who sells shares in anticipation of fall operator prices to buy them back and thus make a profit.
28. (d) It is fixed by Reserve Bank of India. In 2011, RBI permitted the commercial banks to fix interest rate on saving account independently.
29. (c) The Banking ombudsman Scheme is an expeditious and inexpensive forum for bank customers for resolution of complaints relating to certain services rendered by banks. Any person aggrieved by the decision of the Banking Ombudsman can approach the Appellate Authority. The Appellate Authority is vested with a Deputy Governor of the RBI.
30. (d) “Financial inclusion” is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups. Banking services are in the nature of public good. It is essential that availability of banking and payment services be available to the entire population without discrimination.
31. (c) Miscellaneous functions of commercial banks in India include : Transfer and collection of funds, purchase and sale of shares on behalf of customers, acting as executors and transfers of wills, purchase and sale of foreign exchange etc.
32. (a) International Development Association (IDA) , is that part of the World Bank that helps the world’s poorest countries. It complements the World Bank’s other lending arm— the International Bank for Reconstruction and Development (IBRD) which serves middle-income countries with capital investment and advisory services. IDA was created in 1960.
33. (c) The basic aim of Lead Bank scheme is that the bank should adopt particular districts for intensive development by offering loans and banking services.
34. (d) The Reserve Bank of India is the main monetary authority of the country and beside that, in its capacity as the central bank, acts as the bank of the national and state governments.
35. (d) A tight monetary policy is a course of action undertaken by Central bank to constrict spending in an economy, or to curb inflation when it is rising too fast. The increased bank rate increases the cost of borrowing and effectively reduces its attractiveness.
36. (c) Land development bank started financing long term loan for more significant rural development activities like rural and cottage industries, rural artisans etc. The main purpose of RRB’s is to mobilize financial resources from rural / semi-urban areas and grant loans and advances mostly to small and marginal farmers, agricultural labourers and rural artisans. NABARD doesnot give “direct” credit assistance. It provides credit Via intermediaries such as Microfinance companies, Cooperative society, RRB.
37. (a) Those who benefit from higher inflation are debtors and those who suffer from it are creditors. If one has substantial debt, each rupee one has to repay would be worth less than when it was borrowed. In this way, one pays back less in real terms.
38. (d) Currency/cash is the most liquid, then the demand deposits (current accounts) , then the saving deposits with bank and finally the least liquid is the time deposits with the bank (fixed deposits) .
39. (c) Besides giving access to banking, it also enables government subsidies and social security benefits to be directly credited to the accounts of the beneficiaries, enabling them to draw the money from the bank saathi or business correspondents in their village itself.
40. (a)
41. (b) Basel III is a comprehensive set of reform measures which was developed by the Basel Committee on Banking Supervision and to strengthen the regulation, supervision and risk m anagement of the banking sector. These measures aim to:
Improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source; improve risk management and governance; strengthen banks’ transparency and disclosures.
42. (c) The RBI implements the monetary policy through open market operations, bank rate policy, reserve system, credit control policy, moral persuasion and through many other instruments.
43. (c) When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points; the Scheduled Commercial Banks may cut their lending rates.
44. (c) (i) With effect from 1st April, 2016, all loans in India shall be priced with reference to Marginal Cost of Funds based Lending Rates (MCLR) which will comprise of :- 1. Marginal Cost of Funds 2. Negative carry on account of CRR 3. Operating Costs 4. Tenor of premium. Banks shall review and publish their MCLR every month on a pre-announced date. Marginal Cost of Funds which will comprise of marginal cost of borrowings and return on net-worth.
(ii) Both right. Verbatim lifted from RBI’s press statement first paragraph.
Ref : https://rbi. org. in/SCRIPTs/BS_PressRelease Display. aspxs?prid=35749
45. (b) (i) They can enable transfers and remittance through mobile phones. The RBI guidelines say that the payments bank cannot undertake lending activities.
(ii) Mobile phone companies and supermarket eligible. But, Payment banks can’t issue credit card or give loans. Go by eliminating all options with “2”, and you’re left with (b) 1 and 3 only.
46. (a) (i) Core Banking Solution (CBS) is networking of branches, which enables Customers to operate their accounts, and avail banking services from any branch of the Bank on CBS network, regardless of where he maintains his account. The customer is no more the customer of a Branch. He becomes the Bank’s Customer. Thus CBS is a step towards enhancing customer convenience through Anywhere and Anytime Banking.
(ii) 3 is definitely not the purpose, so by elimination the answer is (a) .
47. (b) (i) Bitcoin are not maintained by the Central Bank. Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into a public ledger.
(ii) They’re not tracked by any central bank or authority. Both 2 and 3 are right.
48. (b) (i) Base Erosion and Profit Shifting (BEPS) is a tax avoidance strategy used by multinational companies, wherein profits are shifted from jurisdictions that have high taxes (such as the United States and many Western European countries) to jurisdictions that have low (or no) taxes (so-called tax havens) . The BEPS project is said to be an “attempt by the world’s major economies to try to rewrite the rules on corporate taxation to address the widespread perception that the (corporations) don’t pay their fair share of taxes”.
(ii) BEPS aims to curb the tax evasion by MNCs, hence B is the answer.
49. (c) (i) In order to reduce the fiscal deficit, the government needs to increase its earnings and reduce its expenditure. This is done by following methods: Cut down the subsidies; reforms in tax structures; improve profit generated by Public Sector Enterprises and austerity measures.
(ii) Just by applying logic i. e. to reduce deficit, we’ve to increase income and reduce Expenditure.

img_ext_export_70rWgFW6vD_592.png
So, answer is only 1 and 3.
50. (d) (i) The main items of capital budget are receipts and expenditure for capital (Financial) gains. It also includes loans raised by Government from public, Reserve Bank and other parties, and from foreign Governments and bodies. It also includes capital expenditure on acquisition of assets like land, buildings, machinery, equipment, etc and loans and advances granted by Central Government to State and Union Territory Governments, Government companies, Corporations and other parties.
Ref: to the parts of Budget given in Disha’s Crack CSAT Paper-1, page E-56 (3rd Ed. )
51. (b) (i) The Global Financial Stability Report (GFSR) is a survey by the IMF staff published twice a year, in the spring and fall. The report draws out the financial ramifications of economic issues highlighted in the IMF’s World Economic Outlook (WEO) .
(ii) IMF prepares this report.
Ref : thehindu:April 14, 2016 .
www. thehindu. com/business/Economy/world-output-faces-risk-of-39-drop-by-2021/article 8472298. ece
 

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