YO U R S U C C ESS IS O U R S U C C ESS YO U R S U C C ESS IS O U R S U C C ESS

COMPUTER
KNOWLEDGE

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General
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PREFACE
This gives us immense pleasure to present you the latest edition of this book. We thank you
from the depth of our hearts, for the love and affection given by you just from the beginning. Dear
friends, change is the law of nature. We must learn to tolerate the blows of time with patience and learn
not only to endure, but also to expect, welcome, and enjoy both the joys as well as the sorrows of life.
We must do what we can to get ‘success.’ We have to operate with the information and skills that are
necessary for winning.
Today’s era is governed by technology. The technology has increased the pace of changing the
world we see day by day, and so the pattern of examination and criteria of selection have also changed.
As we are aware that interview is a part of various examinations and the written/objective exams are
going to be tougher than earlier.
Every choice you make — including the thoughts you have — has consequences. When you
start choosing the right behaviour and thoughts — which will take a lot of discipline — you’ll get the
right outcomes.
Be aware of the factors that influence the way you see the world, so that you can deal with them
and react against them. You are your own most important resource for making your life work. Success
is a moving target that must be tracked and continuously pursued.
In this context we have completely updated this book keeping the forthcoming examination
pattern in mind. This edition caters to need of General Awareness that is asked in most of the Banking
and Insurance examinations for various posts. This book is thoroughly based on the latest pattern in
which time limit is given for each section. Every chapter in this book describes the concept with the
help of various examples and at the end gives miscellaneous examples to clear the concepts. Examples
have been solved with standard as well as short methods. At the end of each chapter, exercises have been
given to master the topic by solving variety of exam oriented questions. So we have now given a complete
focus on concept building and mastering each topic through this book.
We are truly dedicated to providing you the best among the rest. This book is an initiative from
our side to make you perfect in this subject.
We will be highly gratified, if this book helps students in getting selection.
Any suggestions related to the this book shall always be welcomed and we shall endeavor to
incorporate them in our upcoming issues.

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CONTENTS
S.NO. CHAPTER NAME PG. NO.

1. INDIAN BANKING INDUSTRY 7-20

2. RESERVE BANK OF INDIA & MONETARY POLICY 21-32

3. NPA AND BASEL NORMS 33-42

4. INFLATION 43-52

5. NATIONAL INCOME 53-60

6. MONEY MARKET IN INDIA 61-69

7. CAPITAL MARKET IN INDIA 70-83

8. FOREIGN TRADE & FOREIGN EXCHANGE 84-92

9. PUBLIC FINANCE (BUDGET) 93-104

10. ECONOMIC PLANNING IN INDIA 105-113

11. SOCIAL WELFARE SCHEMES 114-127

12. INSURANCE SECTOR 128-141

13. MISCELLANEOUS 142-178

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INDIAN BANKING INDUSTRY

� HISTORICAL BACKGROUND
� TYPES OF BANKS
� TYPES OF COMMERCIAL BANKS
� NATIONAL PAYMENTS CORPORATION OF INDIA
� PEER-TO-PEER (P2P) LENDING
� TRADE RECEIVABLES DISCOUNTING SYSTEM
� PREVIOUS YEAR QUESTIONS

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CHAPTER
INDIAN BANKING
1
INDUSTRY
##It facilitates business transactions through receipts and
Historical Background
payments by cheques instead of currency.
The first bank of limited liability managed by Indians was
##It provides loans and advances to businessmen for short
Oudh Commercial Bank founded in 1881. Punjab National
term and long-term purposes.
Bank was established in 1894.
##It also facilitates import export transactions.
Swadeshi movement, which began in 1906, encouraged
the formation of a number of commercial banks. Banking ##It helps in national development by providing credit to
crisis during 1913 -1917 and failure of 588 banks in various farmers, small-scale industries and self-employed people
States during the decade ended 1949 underlined the need for as well as to large business houses which lead to balanced
regulating and controlling commercial banks. economic development in the country.
The Banking Companies Act was passed in February1949, ##It helps in raising the standard of living of people in
which was subsequently amended to read as Banking general by providing loans for purchase of consumer
regulation Act, 1949.This Act provided the legal framework durable goods, houses, automobiles, etc.
for regulation of the banking system by RBI. The largest bank
Types of Banks
- Imperial Bank of India - It was nationalised in 1955 and
rechristened as State Bank of India, followed by formation There are various types of banks which operate in our country
of its 8 Associate Banks in1959. On January 1, 1963 State to meet the financial requirements of different categories
Bank of Bikaner was merged with State Bank of Jaipur and of people engaged in agriculture, business, profession, etc.
a new bank was formed as State Bank of Bikaner & Jaipur.
In 2008 State Bank of Saurashtra was merged with SBI and Banks with a reserve capital of less than 5 lakh rupees qualify
State Bank of Indore was merged with SBI in 2010. SBI as non-scheduled banks. Unlike scheduled banks, they are not
merged 5 of its associate banks along with Bhartiya Mahila entitled to borrow from the RBI for normal banking purposes,
Bank with itself from 1 April 2017. except, in emergency or “abnormal circumstances.”

With a view to bring commercial banks into the mainstream Bank Classification In India
of economic development with definite social obligations and
There are two broad categories under which banks are
objectives, the Government issued an ordinance on 19 July
classified in india- scheduled and non-scheduled banks.
1969 acquiring ownership and control of 14 major banks in
the country. Six more commercial banks were nationalized The scheduled banks include commercial banks and
from 15 April 1980. cooperative banks. the commercial banks include regional
rural banks, small finance bank, foreign banks, private sector
Meaning of Bank
banks, and public sector banks. payments bank is a new
Bank is a lawful organization, which accepts deposits that can introduction to the category.
be withdrawn on demand. It also lends money to individuals
and business houses that need it. Cooperative banks include urban and rural banks.
Role of Banking Scheduled banks are the banks which are covered under the
Banks provide funds for business as well as personal needs second schedule of the Reserve Bank of India Act, 1934. To
of individuals. They play a significant role in the economy qualify for being a scheduled bank, a minimum of 5 lakh
of a nation. Let us know about the role of banking- paid-up capital is required on the bank’s behalf. The RBI
lends loan to these banks at bank rate as and when required.
##It encourages savings habit among people and thereby
makes funds available for productive use. On the basis of functions, the banking institutions in India
may be divided into the following types:
##It acts as an intermediary between people having surplus
money and those requiring money for various business 1. Central Bank (RBI, in India)
activities. 2. Commercial Banks

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{{ Public Sector Banks Public Sector Banks:
{{ Private Sector Banks These are banks where majority stake is held by the
Government of India or Reserve Bank of India. Examples
{{ Foreign Banks of public sector banks are: State Bank of India, Corporation
3. Development Banks (IFCI, SFCs, SIDBI, NABARD) Bank, Bank of Baroda and Dena Bank, etc.
4. Co-operative Banks Private Sector Banks:
{{ State Co-operative Banks In case of private sector banks majority of share capital of
{{ Central Co-operative Banks the bank is held by private individuals. These banks are
registered as companies with limited liability. For example:
{{ Primary Credit Societies ICICI Bank, EXIM Bank and Federal Bank etc.
5. Specialized Banks (EXIM Bank) Foreign Banks:
Central Bank These banks are registered and have their headquarters in
A bank which is entrusted with a foreign country but operate their branches in our country.
the functions of guiding and Some of the foreign banks operating in our country are
regulating the banking system of Hong Kong and Shanghai Banking Corporation (HSBC),
a country is known as its Central Citibank, American Express Bank, Standard & Chartered
bank. Such a bank does not Bank, Grindlay’s Bank, etc. The number of foreign banks
deal with the general public. It operating in our country has increased since the financial
acts essentially as Government’s sector reforms of 1991. According to a report by RBI there
banker, maintain deposit accounts are 45 foreign banks branches in India as on January 31,
of all other banks and advances 2018.
money to other banks, when needed. The Central Bank provides
guidance to other banks whenever they face any problem. It
Development Banks :
is therefore known as the banker’s bank. The Reserve Bank Business often requires medium and long-term capital for
of India is the central bank of our country. The Central Bank purchase of machinery and equipment, for using latest
maintains record of Government revenue and expenditure under technology, or for expansion and modernization. Such
various heads. It also advises the Government on monetary and financial assistance is provided by Development Banks. They
credit policies and decides on the interest rates for bank deposits also undertake other development measures like subscribing
and bank loans. In addition, foreign exchange rates are also to the shares and debentures issued by companies, in case
determined by the central bank. Another important function of of under subscription of the issue by the public. Industrial
the Central Bank is the issuance of currency notes, regulating Finance Corporation of India (IFCI) and State Finance
their circulation in the country by different methods. No other Corporations (SFCs) are examples of development banks
bank than the Central Bank can issue currency. in India.

Commercial Banks Co-operative Banks :

Commercial banks are regulated and managed under the People who come together to jointly serve their common
Banking Regulation Act, 1949. These are profit making interest often form a co-operative society under the Co-
banks based on their business model. Granting loans to the operative Societies Act. When a co-operative society engages
government, general public, and corporate and accepting itself in banking business. It is called a Co-operative Bank.
deposits counts as the primary function. The society has to obtain a licence from the Reserve Bank of
India before starting banking business. Any co-operative bank
Commercial Banks are banking institutions that accept as a society has to function under the overall supervision of
deposits and grant short-term loans, and advances to their the Registrar, Co-operative Societies of the State. As regards
customers. In addition to giving short-term loans, commercial banking business, the society must follow the guidelines set
banks also give medium-term and long-term loan to issued by the Reserve Bank of India.
business enterprises. Now-a-days some of the commercial
banks are also providing housing loan on a long-term basis Types of Co-operative Banks
to individuals. There are also many other functions of There are three types of co-operative banks operating in
commercial banks. our country. They are primary credit societies, central co-
Types of Commercial banks operative banks and state co-operative banks. These banks
are organized at three levels, village or town level, district
Commercial banks are of three types i.e., Public sector banks, level and state level.
Private sector banks and Foreign banks.
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State Co-operative Banks: modernisation of small-scale industrial units, use of new
These are the apex (highest level) co-operative banks in all technology and market activities. The aim and focus of
the states of the country. They mobilise funds and help in SIDBI is to promote, finance and develop small-scale
its proper channelisation among various sectors. The money industries.
reaches the individual borrowers from the state co-operative It headquartered at Lucknow and having its offices all over
banks through the central co-operative banks and the primary the country.
credit societies. SIDBI operates under the Department of Financial Services,
Central Co-operative Banks: Government of India.
These banks operate at the district level having some of National Bank for Agriculture and Rural Development
the primary credit societies belonging to the same district (NABARD):
as their members. These banks provide loans to their
NABARD was established
members (i.e., primary credit societies) and function as
on the recommendations of
a link between the primary credit societies and state co-
B.Sivaramman Committee, (by
operative banks.
Act 61, 1981 of Parliament) on
Primary Credit Societies: 12 July 1982 to implement the
These are formed at the village or town level with National Bank for Agriculture
borrower and non-borrower members residing in one and Rural Development Act
locality. The operations of each society are restricted to 1981. It replaced the Agricultural
a small area so that the members know each other and Credit Department (ACD) and
are able to watch over the activities of all members to Rural Planning and Credit Cell (RPCC) of Reserve Bank
prevent frauds. of India, and Agricultural Refinance and Development
Corporation (ARDC).
Specialised Banks :
##It is one of the premier agencies providing developmental
There are some banks, which credit in rural areas. NABARD is India’s specialised
cater to the requirements and bank for Agriculture and Rural Development in India.
provide overall support for setting
up business in specific areas of ##NABARD has its head office at Mumbai, India.
activity. EXIM Bank, SIDBI and ##The initial corpus of NABARD was Rs.100 crores.
NABARD are examples of such Consequent to the revision in the composition of share
banks. They engage themselves capital between Government of India and RBI, the
in some specific area or activity paid up capital as on 31 May 2017, stood at Rs.6,700
and thus, are called specialised banks. Let us know about crore with Government of India holding Rs.6,700
them. crore (100% share). The authorized share capital is
Export Import Bank of India (EXIM Bank): Rs.30,000 crore.
EXIM Bank was established in year 1982. If you want to ##NABARD is also known for its ‘SHG Bank Linkage
set up a business for exporting products abroad or importing Programme’ which encourages India’s banks to lend
products from foreign countries for sale in our country, to self-help groups (SHGs). Largely because SHGs
EXIM bank can provide you the required support and are composed mainly of poor women, this has evolved
assistance. The bank grants loans to exporters and importers into an important Indian tool for microfinance. By
and also provides information about the international March 2006, 22 lakh SHGs representing 3.3 core
market. It gives guidance about the opportunities for export members had to be linked to credit through this
or import, the risks involved in it and the competition to programme.
be faced, etc.
Functions and Roles of NABARD -
Small Industries Development Bank of India (SIDBI):
##Credit Functions
##Developmental and Promotional Functions
##Supervisory Functions
SIDBI was established on the year 2 April, 1990. It
nd
##Institutional and Capacity building
provides loan on easy terms to small scale business unites
##Role in Training
or industry including the newly established. It also finances

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SMALL BANK AND PAYMENT BANK
Payment Banks Small banks
What they can do • Offer Internet Banking • Sell forex to customers
• Sell Mutual Funds/ Insurance /Pensions • Sell Mutual Funds/ Insurance/ Pensions
• Offer Bill Payment Service • Can convert into a full-fledged bank
• Have ATMs & BCs • Operate across the country
• Can function as BC of other Banks
What they can’t do • Offer Credit Cards • Grant Large Loans
• Extend Loans • Float subsidiaries
• Handle Cross Remittances • Can’t sell complicated financial products
• Accept NRI Deposits
Eligibility Criterion • Issuer of Pre-Paid Cards, Telecom Companies, • Individuals/ Professionals with equal to or
NBFCs, Banking Companies, Super Market more than 10 years of experience, NBFCs,
Chain, Real Estate, Companies, PSUs Micro Organizations and Local Area Banks
• Minimum Capital Rs. 200 Crores (As on • Minimum Capital Rs. 200 Crores (As on 07/
07/ March/ 2023) March/ 2023)
• 75% Capital must be invested in G-Sec. • 75% Lending in PSL
Other provisions • 25% Deposits in Other Banks • Compulsory to comply with reserve system
• Min. 26% Investment from Indians • Individual borrowings are eligible up to 10%
• Compulsory Listing on a recognized stock and organizational borrowings are eligible up
exchange as net worth exceeds Rs. 500 to 15% of the total assets
Crores • Will provide BFs facility
• Maximum Balance Limit in an account is • 25% branches in non-banking rural areas.
Rs. 1 Lakh
• Compulsory to adopt technological and
networking solutions for operations
• Minimum capital requirement - 15%
Committee • Nachiket Mor Committee Usha Thorat Committee

11 PAYMENT BANKS- Note : Bharti Airtel launched India’s first live payments
1. Aditya Birla Nuvo bank named Airtel payment bank in March 2017.Paytm
payment bank, India Post payment bank, Fino Payment
2. Airtel M Commerce bank and Aditya Birla Payment Bank have also launched
3. Cholman-dalam Distribution services. Cholamandalam Distribution Services, Sun
Pharmaceuticals and Tech Mahindra have surrendered their
4. Department of Posts
licenses. Aditya Birla have discontinued their services from
5. Fino Pay Tech 26 July 2019.
6. National Securities Depository Limited In September 2015 RBI has issued in principle approval to
7. Reliance Industries 10 Small Finance Banks as follows.
8. Sun Pharma 1. Au Financiers (India) Ltd., Jaipur
2. Capital Local Area Bank Ltd., Jalandhar
9. Paytm
3. Disha Microfin Private Ltd., Ahmedabad
10. Tech Mahindra
4. Equitas Holdings P Limited, Chennai
11. Vodafone Mpesa
5. ESAF Microfinance and Investments Private Ltd., Chennai

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6. Janalakshmi Financial Services Private Limited, for a short period of time. Further the purpose of granting
Bengaluru advances is to meet the day-to-day requirements of business.
7. RGVN (North East) Microfinance Limited, Guwahati The rate of interest charged on advances varies from bank to
bank. Interest is charged only on the amount withdrawn and
8. Suryoday Micro Finance Private Ltd., Navi Mumbai
not on the sanctioned amount.
9. Ujjivan Financial Services Private Ltd., Bengaluru
10. Utkarsh Micro Finance Private Ltd., Varanasi Types of Advances
11. Shivalik Small Finance Bank Limited Saharanpur Banks grant short-term financial assistance by way of cash
credit, overdraft and bill discounting.
12. North East Small Finance Bank Guwahati (As on 07/
March/ 2023) Cash Credit
Functions of Commercial Banks Cash credit is an arrangement whereby the bank allows the
borrower to draw amount upto a specified limit. The amount
The functions of commercial banks are of two types. is credited to the account of the customer. The customer
(A) Primary functions can withdraw this amount as and when he requires. Interest
(B) Secondary functions. is charged on the amount actually withdrawn. Cash Credit
is granted as per terms and conditions agreed with the
Primary functions customers.
The primary functions of a commercial bank includes: Overdraft
##Accepting deposits; and Overdraft is also a credit facility granted by bank. A customer
##Granting loans and advances. who has a current account with the bank is allowed to
withdraw more than the amount of credit balance in his
Accepting deposits
account. It is a temporary arrangement. Overdraft facility
The most important activity of a commercial bank is to with a specified limit may be allowed either on the security
mobilise deposits from the public. People who have surplus of assets, or on personal security, or both.
income and savings find it convenient to deposit the amounts
Discounting of Bills
with banks. Depending upon the nature of deposits, funds
deposited with bank also earn interest. Thus, deposits with the Banks provide short-term finance by discounting bills, that
bank grow alongwith the interest earned. If the rate of interest is, making payment of the amount before the due date of the
is higher, public gets motivated to deposit more funds with the bills after deducting a certain rate of discount. The party gets
bank. There is also safety of funds deposited with the bank. the funds without waiting for the date of maturity of the bills.
In case any bill is dishonoured on the due date, the bank can
Grant of loans and advances
recover the amount from the customer.
The second important function of a commercial bank is to
Secondary Functions
grant loans and advances. Such loans and advances are given
to members of the public and to the business community at In addition to the primary functions of accepting deposits and
a higher rate of interest than allowed by banks on various lending money, banks perform a number of other functions,
deposit accounts. The rate of interest charged on loans and which are called secondary functions. These are as follows:
advances varies according to the purpose and period of loan Issuing letters of credit, travellers cheque, etc.
and also the mode of repayment. ##Undertaking safe custody of valuables, important
Loans documents and securities by providing safe deposit
vaults or lockers.
A loan is granted for a specific time period. Generally
commercial banks provide short-term loans. But term loans, ##Providing customers with facilities of foreign exchange
i.e., loans for more than a year may also be granted. The dealings.
borrower may be given the entire amount in lump sum or in ##Transferring money from one account to another; and
instalments. Loans are generally granted against the security from one branch to another branch of the bank through
of certain assets. A loan is normally repaid in instalments. cheque, pay order and demand draft.
However, it may also be repaid in lump sum.
##Standing guarantee on behalf of its customers, for
Advances making payment for purchase of goods, machinery,
An advance is a credit facility provided by the bank to its vehicles etc.
customers. It differs from loan in the sense that loans may be ##Collecting and supplying business information.
granted for longer period, but advances are normally granted
##Providing reports on the credit worthiness of customers.
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##Providing consumer finance for individuals by way of Credit cards are issued by the bank to persons who may or
loans on easy terms for purchase of consumer durables may not have an account in the bank. Just like debit cards,
like televisions, refrigerators, etc. credit cards are used to make payments for purchase, so
##Educational loans to students at reasonable rate of that the individual does not have to carry cash. Banks allow
interest for higher studies, especially for professional certain credit period to the credit cardholder to make payment
courses. of the credit amount. Interest is charged if a cardholder is not
able to pay back the credit extended to him within a stipulated
E-banking (Electronic Banking) period. This interest rate is generally quite high.
With advancement in information and communication Smart Card
technology, banking services are also made available through
computer. Now, in most of the branches you see computers A smart card is a plastic
being used to record banking transactions. Information about made pocket size card
the balance in your deposit account can be known through that is embedded with an
computers. In most banks now a days human or manual teller integrated circuit. Smart
counter is being replaced by the Automated Teller Machine card are also known as
(ATM). Banking activity carried on through computers and chip cards or integrated
other electronic means of communication is called ‘electronic circuit card (ICC). The
banking’ or ‘e-banking’. installed integrated circuit (IC Chip) on a smart card
consist of a memory, a processor and communicates to
Automated Teller Machine (ATM) the external world through the card surface. It stores
Banks have now installed their own Automated Teller data, help in identification and authentication, application
Machine (ATM) throughout the country at convenient processing etc.
locations. By using this, customers can deposit or withdraw Smart card classified into two sets :
money from their own account any time.
##Memory Card- These smart cards contain only
Debit Card non volatile memory storage components alongwith
dedicated security logic (occasionally).
##Micro Processor Cards- These smart cards contain
volatile memory as well as micro processor components.
Net Banking
With the extensive use of computer and Internet, banks have
now started transactions over Internet. The customer having
an account in the bank can log into the bank’s website and
access his bank account. He can make payments for bills,
give instructions for money transfers, fixed deposits and
Banks are now providing Debit Cards to their customers
collection of bills, etc.
having saving or current account in the banks. The customers
can use this card for purchasing goods and services at Phone Banking
different places in lieu of cash. The amount paid through In case of phone banking, a customer of the bank having
debit card is automatically debited (deducted) from the an account can get information of his account, make
customers’ account. banking transactions like, fixed deposits, money transfers,
Credit Card demand draft, collection and payment of bills, etc. by using
telephone.
As more and more people are now using mobile phones,
phone banking is possible through mobile phones. In mobile
phone a customer can receive and send messages (SMS)
from and to the bank in addition to all the functions possible
through phone banking
Bank Deposit Accounts
Types of Bank Deposit Accounts
On the basis of purpose they serve, bank deposit accounts
may be classified as follows:

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##Savings Bank Account Recurring Deposit Account: This type of account is suitable
##Current Deposit Account for those who can save regularly and expect to earn a fair
return on the deposits over a period of time. While opening
##Fixed Deposit Account the account a person has to agree to deposit a fixed amount
##Recurring Deposit Account once in a month for a certain period. The total deposit along
with the interest therein is payable on maturity. However,
##Flexi Deposit
the depositor can also be allowed to close the account before
Savings Bank Account : If a person has limited income its maturity and get back the money along with the interest
and wants to save money for future needs, the Saving Bank till that period. The account can be opened by a person
Account is most suited for his purpose. This type of account individually, or jointly with another, or by the guardian in the
can be opened with a minimum initial deposit that varies name of a minor. The rate of interest allowed on the deposits
from bank to bank. Money can be deposited any time in is higher than that on a savings bank deposit.
this account. Withdrawals can be made either by signing a
Flexi Deposit- These deposits are a combination of demand
withdrawal form or by issuing a cheque or by using ATM
and fixed deposits for meeting customer’s financial needs
card. Normally banks put some restriction on the number
in flexible manner. Only one SB account /CA is opened and
of withdrawals from this account. Interest is allowed on
the term deposits issued under the scheme are linked to this
the balance of deposit in the account. The rate of interest
account. Once balance in SB/CA crosses a pre-agreed level,
on savings bank account varies from bank to bank and also
such surpulas amount is automatically transferred to the fix
changes from time to time. A minimum balance has to be
deposit account of pre-determined maturity.
maintained in the account as prescribed by the bank.
Current Deposit Account: Big businessmen, companies National Payments Corporation of India
and institutions such as schools, colleges, and hospitals The National Payments Corporation of India is an umbrella
have to make payment through their bank accounts. Since organisation for operating retail payments and settlement
there are restriction on number of withdrawals from savings systems in India. It was founded in 2008, the NPCI is a
bank account, that type of account is not suitable for them. not-for-profit organisation registered under section 8 of
They need to have an account from which withdrawal can the Companies Act 2013. The organisation is owned by a
be made any number of times. For this purpose banks open consortium of major banks, and has been promoted by the
current account for them. Like savings bank account, this country’s central bank, the Reserve Bank of India.
account also requires certain minimum amount of deposit
while opening the account. On this deposit, bank does not SERVICES:
pay any interest on the balances. Rather the account holder RuPay
pays certain amount each year as operational charge. For RuPay is a domestic card scheme of India. The card has
the convenience of the account holders banks also allow Magnetic stripe, EMV chip. More than 300 cooperative
withdrawal of amounts in excess of the balance of deposit. banks and the Regional Rural Banks (RRBs) in the country
This facility is known as overdraft facility. It is allowed to have also issued
some specific customers and upto a certain limit subject to
previous agreement with the bank concerned. Rupay Contactless is a contactless payment technology
feature that allows cardholders to wave their card in front of
Fixed Deposit Account (also known as Term Deposit contactless payment terminals without the need to physically
Account): Many a time people want to save money for swipe or insert the card into a point-of-sale device.
long period. If money is deposited in saving bank account,
banks allow a lower rate of interest. Therefore, money is Bharat BillPay
deposited in a fixed deposit account to earn an interest at The Bharat bill payment system is a Reserve Bank of India
a higher rate. (RBI) conceptualised system driven by the NPCI. It is a
This type of deposit account allows deposit to be made of one-stop ecosystem for payment of all bills providing an
an amount for a specified period. This period of deposit may interoperable and accessible “Anytime Anywhere” bill
range from 7 days to 10 years or more, during which no payment service to all customers across India with certainty,
withdrawal is allowed. However, on request, the depositor reliability and safety of transactions.
can encash the amount before its maturity. In that case banks BHIM Aadhar Pay
give lower interest than what was agreed upon. The interest on
BHIM Aadhar pay is an Aadhar based payments interface
fixed deposit account can be withdrawn at certain intervals of
which allows real time payments to Merchants using Aadhar
time. At the end of the period, the deposit may be withdrawn
number of Customer & authenticating him/her through his/
or renewed for a further period. Banks also grant loan on the
her bio metrics.
security of fixed deposit receipt.
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National Electronic Toll Collection From December 16, 2019, 48 half-hourly batches occurring
between 00.30 am to 00:00 am everday regardless of a Holiday
FASTag is a device that employs Radio Frequency
or otherwise. There is no limit – either minimum or maximum
Identification (RFID) technology for making toll payments
– on the amount of funds that could be transferred using NEFT.
directly while the vehicle is in motion. FASTag (RFID Tag)
is affixed on the windscreen of the vehicle and enables a RTGS:
customer to make the toll payments directly from the account Real Time Gross Settlement (RTGS) is a funds transfer
which is linked to FASTag. utility that allows customers to transfer funds to their own
UPI: or other bank accounts promptly. The minimum amount
for an RTGS funds transfer in Rs2, 00, 000. Funds transfer
Unified Payments Interface (UPI) fund transfer service allows via RTGS happens in real time. RTGS is generally used for
customers to instantly transfer funds or request funds from transfer of large amounts.
others via mobile phones, by using their registered mobile
M-WALLETS
number. This service is available 24x7, including bank
holidays. Transfers funds via Virtual Payment Address (VPA) Popular digital payment mode via smartphones; enable
thus eliminating the need to remember beneficiary account easy payments to vendors with cash back carrot thrown in
number and IFS Code. Wallets include SBI Buddy, HDFC PayZapp, ICICI Pocket,
Paytm, Mobikwik. In all 40 entities have mobile wallet
BHIM: licences, of which 25 are operational. Interoperability is
Bharat Interface for Money(BHIM) is a mobile app developed a challenge.
by National Payments Corporation of India (NPCI), based PLASTIC MONEY
on the Unified Payment Interface (UPI). It was launched by Plastic money is a term used to represent the hard plastic
Narendra Modi, the Prime Minister of India, at a Digi Dhan cards used in day to day life in place of actual banknotes.
mela at Talkatora Stadium in New Delhi on 30 December They come in several forms such as debit cards, credit cards,
2016. It was named after Dr. Bhimrao R. Ambedkar and is store cards and pre-paid cash cards.
intended to facilitate e-payments directly through banks as 750 million cards in circulation; less than 400 million are
part of the 2016 Indian banknote demonetisation and drive used; 250-300 million debit cards used mainly at ATMs to
towards cashless transactions. The app supports all Indian withdraw cash; 27 million credit cards in use.
banks which use that platform, which is built over the
Immediate Payment Service infrastructure and allows the
Peer-to-Peer (P2P) Lending
user to instantly transfer money between bank accounts of P2P lending is a crowd-funding model (largely online) where
any two parties. It can be used on all mobile devices. people looking to invest their money with people who want
to borrow can do so. Peer-to-peer lending is a form of crowd-
IMPS: funding used to raise loans for people who need to borrow,
Immediate Payment Service (IMPS) fund transfer service from people who want to invest.
allows customers to instantly transfer money online or from Regulatory Practices by Major Countries
mobile phones using their registered mobile number 24x7,
� Australia � China
including bank holidays. IMPS can be used to receive or
transfer funds using beneficiary registered mobile number � France � Germany
and Money Mobile Identifier (MMID) or account number � New Zealand � United Kingdom
and branch IFSC code. This service is available 24x7 with
immediate confirmation of transaction. � United States of America

NEFT: All peer-to-peer lending (P2P) platforms will be regulated

by the Reserve Bank of India (RBI).
National Electronic Funds Transfer (NEFT) is an electronic
funds transfer system maintained by the Reserve Bank of India Fund transfer mechanism
(RBI). Started in November 2005, the setup was established and Fund transfer between participants on the P2P lending
maintained by Institute for Development and Research in Banking platform will happen through escrow account mechanisms.
Technology (IDRBT). NEFT enables bank customers in India to All fund transfers shall be through and from bank accounts,
transfer funds between any two NEFT-enabled bank accounts on and cash transactions are strictly prohibited.
a one-to-one basis. It is done via electronic messages.
Scope of activities of NBFC-P2P
Unlike real-time gross settlement (RTGS), fund transfers
through the NEFT system do not occur in real-time basis. Among several other things, an NBFC-P2P can:
NEFT settles fund transfers in half-hourly batches with 23 (i) Act as an intermediary providing an online marketplace
settlements occurring between 00:30 hrs. to 00:00 hrs. or platform to participants involved in P2P lending.

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(ii) Not raise deposits as defined by or under Section 45I(bb) 1. The aggregate exposure of a lender to all borrowers at
of the Act or the Companies Act, 2013. any point of time, across all P2Ps, shall be subject to a
(iii) Not lend on its own. cap of Rs 10 lakh.

(iv) Not hold, on its own balance sheet, funds received from 2. The aggregate loans taken by a borrower at any point of
lenders for lending, or funds received from borrowers time, across all P2Ps, shall be subject to a cap of Rs 10
for servicing loans lakh.

(v) Not cross-sell products except for loan-specific insurance 3. The exposure of a single lender to the same borrower,
products. across all P2Ps, shall not exceed Rs 50,000.

(vi) Not permit international flow of funds. 4. The maturity of the loans shall not exceed 36 months.

An NBFC-P2P will be expected to: Trade Receivables Discounting System

(i) Undertake due diligence on the participants. The scheme for setting up and operating the institutional
mechanism for facilitating the financing of trade receivables
(ii) Undertake credit assessment and risk profiling of the
of MSMEs from corporate and other buyers, including
borrowers and disclose the same to their prospective
Government Departments and Public Sector Undertakings
lenders.
(PSUs), through multiple financiers will be known as Trade
(iii) Undertake documentation of loan agreements and other Receivables Discounting System (TReDS). The TReDS
related documents. will facilitate the discounting of both invoices as well as
(iv) Provide assistance in disbursement and repayments of bills of exchange. Further, as the underlying entities are the
loan amount. same (MSMEs and corporate and other buyers, including
(v) Render services for recovery of loans originated on the Government Departments and PSUs), the TReDS could deal
platform. with both receivables factoring as well as reverse factoring
so that higher transaction volumes come into the system and
Prudential norms facilitate better pricing.

How Peer-To-Peer Lending Works*

Commits to a
borrower (2)

Gives cash to the

platform (6)

Borrower Applies for a Lending Platform Investor receives Lender/Investor

loan (1) (e.g. Lending Club) loan note (9)

(10) (11)

Issues the actual Infroms third-

loan (4) party bank that Purchases the loan note
Loan
borrower is Note (8) using Investor's cash (7)
verified,
Loan Note (5) Investors have
committed (3)

Partner Bank (e.g.

Web Bank)

Initial application and funding Loan note purchasing BI INTELLIGENCE

Loan note transfer Loan repayment

*This is a simplified graphic showing how a loan is processed through a peer-to-peer market place-revenue sources such as fees are not included

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INDIAN BANKING INDUSTRY - (PRACTICE QUESTIONS)
Q.1. Which of the following is true regarding Presidency Q.5. When was RBI nationalized?
Banks in India? (1) 1 January 1949 (2) 1 January 1950
(A) Bank of Bengal, Bank of Bombay, Bank of (3) 1 January 1951 (4) 1 January 1952
Madras
(5) None of these
(B) These banks are also called quasi banks
Q.6. As per the new guidelines issued by RBI minimum
(C) Imperial Bank of India was setup by merging required capital to setup a bank by corporate is ;
presidency Banks
(1) Rs. 600 cr. (2) Rs. 700 cr.
(D) These Banks are the first in India
(3) Rs. 400 cr. (4) Rs. 500 cr.
(E) These banks were nationalized on 1st January,1949
(5) None of these
(1) A and B are true
Q.7. When was SBI formed?
(2) A, B, C are correct
(1) 1955 (2) 1956
(3) A, B, C, E are correct
(3) 1957 (4) 1958
(4) All options are correct
(5) 1959
(5) No option is correct.
Q.8. Which of the following public sector banks has the
Q.2. Before the establishment of the Reserve Bank of largest number of branches in foreign countries?
India, who had been handed over the charge of
exchange control? (1) Bank of India
(1) Allahabad Bank (2) State Bank of India
(2) Imperial Bank of India (3) Punjab National Bank
(3) Punjab National Bank (4) Corporation Bank
(4) General Bank of India (5) None of these
(5) None of the above Q.9. The only merger of two public sector banks took
place between -
Q.3. Which of the following statements are true about
Central Bank of India? (1) Bank of India and New Bank of India
(A) It was started in 1911 (2) Punjab National Bank and New Bank of India
(B) It was India’s 1st Swadeshi Bank (3) Allahabad Bank and United Bank of India
(C) Its tagline “Central to you since 1911” (4) Punjab National Bank and Bank of Rajasthan
(D) Its Head office is in Lucknow (5) None of these
(E) Its 1 Chairman was Sir Pherozesha Mehta
st
Q.10. Which of the following banks was inaugurated by
(1) A and B are true Mahatma Gandhi in 1919?
(2) A, B, C are correct (1) Bank of Maharashtra
(3) A, B, C, E are correct (2) Bank of Baroda
(4) All options are correct (3) State Bank of Saurashtra
(5) No option is correct (4) Union Bank of India
Q.4. Deposit account which have not been operated more (5) None of these
than 10 years are to be classified as: Q.11. Which of the following terms is used in banking
(1) Inoperative accounts field?
(2) Dormant accounts (1) Input devices (2) Mouse
(3) Unclaimed accounts (3) Eraser (4) Bank rate
(4) Dead accounts (5) None of these
(5) None of these Q.12. Which of the following is Flexi deposit -

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(1) Demand Deposit Q.19. What is minimum paid up capital for setting up a
(2) Time Deposit Commercial Bank in India?

(3) Demand & Time Deposit (1) Rs. 100 cr (2) Rs. 200 cr
(3) Rs. 300 cr (4) Rs. 400 cr
(4) Fixed deposit
(5) Rs. 500 cr
(5) None of these
Q.20. Who is the founder of Punjab National Bank?
Q.13. Liquidity with a banker means:
(1) Lala Lajpat Rai
(1) Cash in hand
(2) K.V. Kamath
(2) Cash and bank balances
(3) M.K. Gandhi
(3) Short term current assets to convert into cash
(4) Shikha Sharma
(4) All the above
(5) None of these
(5) None of these
Q.21. Which bank has Tagline “Pure Banking Nothing
Q.14. Which is India’s third largest private bank, which else”?
was earlier named as UTI Bank?
(1) PNB (2) SBI
(1) ICICI Bank (2) Axis Bank
(3) Canara Bank (4) SIDBI
(3) IDBI (4) PNB
(5) None of these
(5) SBI
Q.22. Which was the first Indian Bank to setup an ATM
Q.15. Which of the following does not provide interest? in India?
(1) Savings Account (2) Current Account (1) SBI (2) BOB
(3) Fixed Account (4) Recurring Account (3) ICICI (4) HDFC
(5) None of these
(5) None of these
Q.23. What do you mean by LPG in Banking?
Q.16. Which of the following is the apex institution
which handles refinance for agriculture and rural (1) Liberalization, Privatization, Globalization
development in India? (2) Liberty, Peace, Grooming
(1) RBI (2) SIDBI (3) Light, Power, Gross
(3) NABARD (4) SEBI (4) Liberalization, Publication, Globalization
(5) None of these (5) None of these
Q.17. The interest on Saving account is calculated on - Q.24. When was IBA established ?
(1) Daily Basis (2) Daily Product Basis (1) 1945 (2) 1946
(3) Quarterly (4) Yearly (3) 1942 (4) 1943
(5) None of these (5) None of these
Q.18. Benefits of Core banking is Q.25. What is CBS?
(1) Reliable centralized data recovery (1) Cash Banking Solutions
(2) Enable warehousing and data mine technology (2) Core Banking Solutions
(3) Integrated customer center services (3) Convertible Bonds and Solutions
(4) Core infrastructure and used for future expenses (4) Cashless banking Solutions
(5) All the above (5) None of these

ANSWER KEY
1.(2) 2.(2) 3.(3) 4.(5) 5.(1) 6.(5) 7.(1) 8.(2) 9.(2) 10.(4)
11.(4) 12.(3) 13.(1) 14.(2) 15.(2) 16.(3) 17.(2) 18.(1) 19.(5) 20.(1)
21.(2) 22.(3) 23.(1) 24.(2) 25.(2)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)
Q.1. Which of the following institutions was formed Q.7. As per the data released by the National Statistical
in 1960 to assist the poor countries which could Office (NSO), retail inflation declined to how
not afford to borrow capital at market rates? much per cent in September 2021?
(Jan-02/2022 SBI PO Mains) (Jan-02/2022 SBI PO Mains)
(1) World Health Organisation (1) 2.15 (2) 4.35
(2) International Chamber of Commerce (3) 6.55 (4) 8.75
(3) International Business Organization (5) 9.95
(4) International Development Association Q.8. Wholesale price inflation (WPI) jumped
to________ high of 1(4)23 per cent in the month
(5) Multilateral Guarantee Agency (MIGA)
of November 2021
Q.2. K.V. Kamath committee, is related to (Jan-02/2022 SBI PO Mains)
(Jan-02/2022 SBI PO Mains) (1) 9-year (2) 10-year
(1) To decide the appropriate level of reserves (3) 12-year (4) 11-year
that the RBI should hold
(5) 14-year
(2) To make recommendations on norms for the Q.9. Who has been named Time magazine’s “Person
resolution of COVID-19 related stressed loans of the Year” for 2021?
(3) To analyse the pollution level of National (Jan-02/2022 SBI PO Mains)
Capital region of Delhi
(1) Jeff Bezos (2) Bill Gates
(4) To analyse FDI norms in India
(3) Elon Musk (4) Warren Buffett
(5) None of the above (5) None of these
Q.3. In August 2021, RBI imposed Monetary Penalty Q.10. Which of the following country has total number
to how many White Label ATMs? of public sector of banks 12?
(NABARD Grade A - 2021) (1) England (2) India
(1) Two (2) Three (3) Russia (4) Australia
(3) Four (4) Five (5) None of these
(5) Six Q.11. Bharti Airtel successfully conducted India’s first
Q.4. In the financial term “SWIFT”, what is ‘S’ stand for? 5G trial in the 700 MHz band in partnership with
(IBPS PO - 2017) which of the following in November 2021
(? Jan-02/2022 SBI PO Mains)
(1) Society (2) Saving
(1) Samsung (2) Nokia
(3) Scheme (4) Securitization
(3) Motorola (4) Vivo
(5) Standard
(5) Mi
Q.5. Branches of which of the following banks have started
Q.12. Which of the following bank recently tied up
functioning as the branches of Bank of Baroda (BoB)
with Star Health and Allied Insurance Company
from April 1, 2019?
Limited?
(Jan-02/2022 SBI PO Mains)
(Jan-02/2022 SBI PO Mains)
(1) Vijaya Bank (2) Dena Bank
(1) South Indian Bank
(3) Punjab Sindh Bank (2) Kerala Gramin Bank
(4) Allahabad Bank (3) Federal Bank
(5) Both 1 and 2 (4) Vallivattom Service Co-operative Bank
Q.6. What is the Share percentage of State Bank of India (5) Dhanlaxmi Bank
in Jio Payment bank? Q.13. FDI limit in the Defence manufacturing under
(Jan-02/2022 SBI PO Mains) automatic route was be raised to ____ per cent.
(1) 10% (2) 20% (Jan-02/2022 SBI PO Mains)
(3) 70% (4) 30% (1) 49 (2) 51 (3) 74
(5) 60% (4) 80 (5) 30

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Q.14. In 2020, how many public sector banks in India? Q.20. In July 2020, how much amount (in crore) was
(Jan-02/2022 SBI PO Mains) approved by the Union Cabinet for Agriculture
(1) 22 (2) 23 Infrastructure Fund?
(3) 12 (4) 14 (Jan-29/2021 SBI PO Mains)
(5) 13 (1) 25,000 Cr. (2) 50,000 Cr.
Q.15. The government is set to hire which of the (3) 75,000 Cr. (4) 1,00,000 Cr.
following as advisers to help Life Insurance (5) 2,00,000 Cr.
Corporation of India (LIC) prepare for an initial Q.21. Ethanol blending subsidy is ___ per annum or
public offering (IPO)? 50% of the rate of interest charged by banks
(Jan-29/2021 SBI PO Mains) whichever is lower?
(1) Deloitte Touche Tohmatsu India Ltd. (Jan-29/2021 SBI PO Mains)
(2) Goldman Sachs. (1) 6% (2) 10%
(3) Spark Capital Ltd. (3) 5% (4) 2%
(4) Morgan Stanley (5) 1%
(5) None of the above Q.22. National Payments Corporation of India (NPCI)
Q.16. PM Modi laid the foundation stone of Light House has launched recurring payments for UPI. What
projects (LHPs) It is related to ___ . is its name?
(Jan-29/2021 SBI PO Mains) (Jan-29/2021 SBI PO Mains)
(1) Shipping (2) Defence (1) UPI Repay (2) UPI Prepay
(3) Housing (4) IT (3) UPI AutoPay (4) UPI recurring
(5) None of the above (5) UPI pay
Q.17. India and ADB sign USD 231 million loan to Q.23. In December 2020, SBI Cards and Payment
augment electricity generation capacity in which Services Ltd (SBI Card) has raised how many
of the following state? rupees (in crores) by issuing bonds on a private
placement basis?
(Jan-29/2021 SBI PO Mains)
(Jan-29/2021 SBI PO Mains)
(1) Assam (2) Arunachal Pradesh
(1) 250 (2) 350
(3) Mizoram (4) West Bengal
(3) 450 (4) 550
(5) None of the above.
(5) 650
Q.18. Which bank has announced the launch of ‘Home
Utsav’? Q.24. In which of the following banks in India, LIC has
completed the acquisition of 51 percent in stake?
(Jan-29/2021 SBI PO Mains0
(Jan-29/2021 SBI PO Mains)
(1) Yes Bank (2) PNB
(1) Dena Bank (2) IDBI Bank
(3) ICICI Bank (4) Axis Bank
(3) Punjab National Bank
(5) SBI
(4) IDFC Bank (5) Bandhan Bank
Q.19. In Dec 2020, which of the following banks has
launched a 3-in-1 account for saving, trading & Q.25. Which of the following governs Non-Banking
demat? Financial Companies (NBFC)?
(Jan-29/2021 SBI PO Mains) (Jan-29/2021 SBI PO Mains)
(1) Ujjivan Small Finance Bank (1) Central government
(2) Janalakshmi Small Finance Bank (2) Reserve Bank of India
(3) Equitas Small Finance Bank (3) Small Industries Development Bank of India
(4) A U Small Finance Bank (4) Industrial Finance Corporation of India
(5) Suryoday Small Finance Bank (5) Securities and Exchange Board of India

ANSWER KEY
1.(4) 2.(2) 3.(3) 4.(1) 5.(5) 6.(4) 7.(2) 8.(3) 9.(3) 10.(2)
11.(2) 12.(3) 13.(3) 14.(3) 15.(1) 16.(3) 17.(1) 18.(3) 19.(3) 20.(4)
21.(1) 22.(3) 23.(3) 24.(2) 25.(2)

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RBI & MONETARY POLICY

##FUNCTIONS OF RBI
Monetary Authority
Regulator and supervisor of the financial system
Manager of Foreign Exchange
Issuer of currency
LOLR (Lender of Last Resort)-
Open Market Operations (OMO)
Market Stabilisation Scheme (MSS)
##MEASURES OF MONEY
##RESERVE BANK INFORMATION TECHNOLOGY PVT. LTD.
##BANKING OMBUDSMAN SCHEME
##NBFC OMBUDSMAN SCHEME
##OMBUDSMAN SCHEME FOR DIGITAL TRANSACTION
##SOME IMPORTANT COMMITTEES
##PRACTICE PAPER QUESTIONS
##PREVIOUS PAPER QUESTIONS

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CHAPTER
RBI & MONETARY
2
POLICY
The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of
India Act, 1934.
The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in
1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned,
since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India.
Functions of RBI
Monetary Authority
Formulates, implements and monitors the monetary policy.
Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors.

Regulator and supervisor of the financial system Manager of Foreign Exchange

Main Objective of Monetary policy in India: maintain Manages the foreign exchange in accordance with the
public confidence in the system, protect depositors’ provisions of Foreign Exchange Management Act, 1999.
interest and provide cost-effective banking services to Objective: to facilitate external trade and payment and
the public. promote orderly development and maintenance of foreign
exchange market in India.

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Issuer of currency Open Market Operations (OMO)
Issues and exchanges or destroys currency and coins not fit Outright sales/purchases of government securities, in addition
for circulation. to LAF, as a tool to determine the level of liquidity over the
medium term.
Objective: to give the public adequate quantity of supplies
of currency notes and coins and in good quality. Market Stabilisation Scheme (MSS)
This instrument for monetary management was introduced
Developmental role
in 2004. Liquidity of a more enduring nature arising from
Performs a wide range of promotional functions to support large capital flows is absorbed through sale of short-dated
national objectives. government securities and treasury bills. The mobilised cash is
Related Functions held in a separate government account with the Reserve Bank.

Banker to the Government: performs merchant banking Repo/Reverse Repo Rate

function for the central and the state governments; also acts These rates under the Liquidity Adjustment Facility (LAF)
as their banker. determine the corridor for short-term money market interest
rates. In turn, this is expected to trigger movement in other
Banker to banks: maintains banking accounts of all scheduled
segments of the financial market and the real economy.
banks.
Bank Rate
LOLR (Lender of Last Resort)-
It is the rate at which the Reserve Bank is ready to buy or
Monetary policy
rediscount bills of exchange or other commercial papers.
Monetary policy refers to the use of instruments under the It also signals the medium-term stance of monetary policy.
control of the central bank to regulate the availability, cost Base Rate (BR)
and use of money and credit.
It is the minimum rate of interest that a bank is allowed
The goal: achieving specific economic objectives, such as to charge from its customers. Unless mandated by the
low and stable inflation and promoting growth. government, RBI rule stipulates that no bank can offer loans
The main objectives of monetary policy in India are: at a rate lower than BR to any of its customers. It is effective
from 1 July, 2010. However, all existing loans, including
Maintaining price stability home loans and car loans, will continue to be at the current
Ensuring adequate flow of credit to the productive sectors rate. Only the new loans taken on or after July 1 and old loans
of the economy to support economic growth Financial being renewed after this date will be linked to BR.
stability Marginal Cost of Funds based Lending Rate (MCLR)
Direct Instruments ##All rupee loans sanctioned and credit limits from 1
Cash Reserve Ratio (CRR) April 2016 will be priced with MCLR which will be the
internal benchmark
The share of net demand and time liabilities that banks must
maintain as cash balance with the Reserve Bank. ##The MCLR will be a tenor linked internal benchmark.
Statutory Liquidity Ratio (SLR) ##Actual lending rates will be determined by adding
components of spread to the MCLR
The share of net demand and time liabilities that banks must
maintain in safe and liquid assets, such as, government ##Bank will review and publish their MCLR of different
securities, cash and gold. maturities every month on a pre-announced date
##Banks may specify interest dates on their floating rate
Refinance Facilities
loans. They will have the option to offer loans with reset
Sector-specific refinance facilities (e.g., against lending to dates linked either to the date of sanction of the loan/
export sector) provided to banks. credit limits or to the date of review of MCLR
Indirect Instruments ##The periodicity of reset shall be one year or lower
Liquidity Adjustment Facility (LAF) ##The MCLR prevailing on the day the loan is sanctioned
Consists of daily infusion or absorption of liquidity on a will be applicable till the next reset date, irrespective of
repurchase basis, through repo (liquidity injection) and the changes in the benchmark during the interim period
reverse repo (liquidity absorption) auction operations, using ##Existing loans and credit limits linked to the base rate
government securities as collateral. may continue till repayment or renewal, as the case may

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be. Existing borrowers will also have the option to move Tenor and Amount
to the MCLR linked loan at mutually acceptable terms Under the facility, the eligible entities can avail overnight,
##Banks will continue to review and publish base rate as up to two per cent of their respective Net Demand and Time
hitherto Liabilities (NDTL) outstanding at the end of the second
MCLR will comprise preceding fortnight. But for the intervening holidays, the
MSF facility will be for one day except on Fridays when
##Marginal cost of funds the facility will be for three days or more, maturing on the
##Negative carry on account of CRR following working day. In the event, the banks’ SLR holdings
fall below the statutory requirement up to two per cent of their
##Operating costs
NDTL, banks will not have the obligation to seek a specific
##Tenor premium waiver for default in SLR compliance arising out of use of
Marginal cost of funds this facility in terms of notification issued under sub section
(2A) of Section 24 of the Banking Regulation Act, 1949.
##Marginal cost of funds will comprise of Marginal cost
of borrowings and return on net worth Rate of Interest
Negative carry on account of CRR The rate of interest on amount availed under this facility will
be 25 basis points above the LAF repo rate, or as decided by
##Negative carry on the mandatory CRR which arises due
the Reserve Bank from time to time.
to return on CRR balances being nil
Required CRR*(marginal cost)/(1-CRR) Term Repo under the Liquidity Adjustment
Operating costs
Facility-
Operational Guidelines
##All operating costs associated with providing the loan
product including cost of raising funds will be included Term Repo under the Liquidity Adjustment Facility (LAF)
under this. for 14 days and 7 days tenors will be introduced for banks
(scheduled commercial banks other than RRBs) in addition
Tenor premium
to the existing daily LAF (repo and reverse repo) and MSF.
##The cost arise from loan commitments with longer tenor
Term repo auctions will be conducted on CBS (E-KUBER)
Bank shall publish the internal benchmark for different platform through electronic bidding as is done in the case
maturities of OMO auctions.
� Overnight MCLR � One-month MCLR The total amount of liquidity injected through term repos
� Three month MCLR � Six month MCLR would be limited to 0.25 per cent of NDTL of the banking
system.
� One year MCLR
While the 14 day term repo of tenor would be conducted
Marginal Standing Facility (MSF) - Scheme
every reporting Friday, the 7 day term repo would be
Definition: Marginal standing facility (MSF) is a window conducted on every non-reporting Friday.
for banks to borrow from the Reserve Bank of India in
In case the notified amount for the 14-day term repo is not
an emergency situation when inter-bank liquidity dries up
fully subscribed, a 7-day term repo would be conducted on
completely.
the following Friday for the remaining un-subscribed amount.
Description: Banks borrow from the central bank by In case of full subscription in the 14-day term repo, there
pledging government securities at a rate higher than the will be no 7 day term repo auction on the following Friday.
repo rate under liquidity adjustment facility or LAF in short.
Banks would be required to place their bids with the term repo
The MSF rate is pegged 100 basis points or a percentage
rate that they are willing to pay to RBI for the tenor of the
point above the repo rate. Under MSF, banks can borrow
repo expressed in percentage terms up to two decimal places.
funds up to one percentage of their net demand and time
liabilities (NDTL). Once the bidding time is over, all the bids would be arranged
in descending order of the term repo rates quoted and the
This facility is effective from May 9, 2011.
cut-off rate would be arrived at the rate corresponding to the
Eligibility : notified amount of the auction. Successful bidders would be
All Scheduled Commercial Banks having Current Account those who have placed their bids at or above the cut-off rate.
and SGL Account with Reserve Bank, Mumbai will be All bids lower than the cut-off rate would be rejected. RBI
eligible to participate in the MSF Scheme. will, however, reserve the right to (i) inject marginally higher
amount than the notified amount due to rounding effects and

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(ii) inject less than the notified amount without assigning any powers conferred by section 45ZB of the Reserve Bank of
reasons therefor. India Act, 1934, the Central Government has accordingly
No bids would be accepted at or below the prevailing Repo constituted, through a Gazette Notification dated 29th Sept
Rate under LAF. 2016, the Monetary Policy Committee of RBI, with the
following composition, namely:-
On the day prior to the auction, RBI will announce the
amount to be auctioned under term repo along with its tenor. (a) The Governor of the Bank—Chairperson, ex officio;
The minimum bid amount for the auction would be Rupees (b) Deputy Governor of the Bank, in charge of Monetary
one crore and multiples thereof. The allotment would be in Policy—Member, ex officio;
multiples of Rupees one crore. Term repo auctions would be (c) One officer of the Bank to be nominated by the Central
conducted on Fridays between 2.30 PM - 3.00 PM. In case Board—Member, ex officio;
Friday falls on a holiday, the auction would take place on the
preceding working day at Mumbai. (d) Shri Chetan Ghate, Professor, Indian Statistical Institute
(ISI) —Member
There will be provision of pro-rata allotment should there be
more than one successful bid at the cut-off rate. (e) Professor Pami Dua, Director, Delhi School of
Economics (DSE) — Member
There will be no restriction on the maximum amount of
bidding by individual bidders under term repo. (f) Dr. Ravindra H. Dholakia, Professor, Indian Institute of
Management (IIM),Ahmedabad— Member
The reversal of term repo would take place at the ‘start of
day’ on the day of completion of the term. The Members of the Monetary Policy Committee appointed
by the Central Government shall hold office for a period of
The eligible collateral for term repo and the applicable four years, with immediate effect or until further orders,
haircuts will remain the same as daily LAF repo and MSF. whichever is earlier.
All other terms and conditions as applicable to LAF
operations will also be made applicable to term repo. These
Measures of Money
conditions will, however, be subject to review on a periodic Money is a thing that is usually accepted as payment for
basis. goods and services as well as for the repayment of debts.
The first such term repo auction was conducted on October Money supply, like money demand, is a stock variable. The
11, 2013 (Friday) for 7 days. The notified amount for the total stock of money in circulation among the public at a
auction would be communicated to the market on October particular point of time is called money supply. RBI publishes
10, 2013 (Thursday). figures for four alternative measures of money supply, viz.
M1, M2, M3 and M4.
As hitherto, daily LAF for individual banks would be
restricted to a certain percentage of their NDTL outstanding They are defined as follows -
as on the last Friday of the second preceding fortnight M1 = CU + DD+OD (other deposit with RBI)
(currently it is at 0.50 per cent).
M2 = M1 + Savings deposits with Post Office savings
Monetary Policy Committee (MPC) banks
The Reserve Bank of India Act, 1934 (RBI Act) has M3 = M1 + Net time deposits of commercial banks
been amended by the Finance Act, 2016, to provide for a
statutory and institutionalised framework for a Monetary M4 = M3 + Total deposits with Post Office savings
Policy Committee, for maintaining price stability, while organisations (excluding National Savings
keeping in mind the objective of growth. The Monetary Certificates)
Policy Committee would be entrusted with the task of fixing where, CU is currency (notes plus coins) held by the public
the benchmark policy rate (repo rate) required to contain and DD is net demand deposits held by commercial banks.
inflation within the specified target level. A Committee- based The word ‘net’ implies that only deposits of the public held
approach for determining the Monetary Policy will add lot by the banks are to be included in money supply.
of value and transparency to monetary policy decisions. The The interbank deposits, which a commercial bank holds in
meetings of the Monetary Policy Committee shall be held other commercial banks, are not to be regarded as part of
at least 4 times a year and it shall publish its decisions after money supply.
each such meeting.
M1 and M2 are known as narrow money. M3 and M4 are
As per the provisions of the RBI Act, out of the six Members known as broad money.These gradations are in decreasing
of Monetary Policy Committee, three Members will be order of liquidity. M1 is most liquid and easiest for
from the RBI and the other three Members of MPC will be transactions whereas M4 is least liquid of all. M3 is the most
appointed by the Central Government. In exercise of the
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commonly used measure of money supply. It is also known 3. Mysore, karnataka
as aggregate monetary resources. 4. Salboni , West Bengal
##Govt. of India issue coins and 1 rupee note
Bank Note Paper Mill ##RBI issue 2 rupee and above note
##SPMCIL is an Indian government-owned corporation ##RBI can issue banknotes in the denomination 5000 and
that engages in the production of bank notes, coins, non– 10000 under RBI Act, 1934.
judicial stamps, postage stamps, and other government Reserve Bank Information Technology Pvt
related documents for India. Established- 2006
Ltd (ReBIT)
##Bharatiya Reserve Bank Note Mudran Private Reserve Bank Information Technology Pvt Ltd (ReBIT) has
Limited is the one of the subsidiaries of Reserve Bank been set up in 2016 as a wholly owned subsidiary by the Reserve
of India. Prints bank notes (Indian rupees) for Reserve Bank of India (RBI). It take cares of the IT requirements,
Bank of India (RBI). Established in- 1995 It has two including the cyber security needs of the Reserve Bank and its
presses one in Mysore and Salboni. It contains nine units, regulated entities. ReBIT will focus on IT and cyber security
which include four presses, four mints, and a paper mill. (including related research) of the financial sector and assist in
##India Government Mint operates four mints in the IT systems audit and assessment of the RBI regulated entities;
country for the production of coins. advise, implement and manage internal or system-wide IT
projects (both the existing & the new) of the Reserve Bank as
##Mumbai, Maharashtra mutually decided between the Reserve Bank and ReBIT.
##Kolkata, West Bengal IFTAS
##Hyderabad, Telangana Indian Financial Technology and Allied Services (IFTAS) is
registered under the wholly-owned subsidiary of the Reserve
##Noida, Uttar Pradesh
Bank of India Act, 2013. It provides critical infrastructure
Under The Coinage Act, 1906, which has been amended and services to the Reserve Bank of India, cooperatives and other
now known as Coinage Act 2010 the Government of India financial institutions.
responsibility of the production. Banking Ombudsman Scheme
Supply to the RBI for distribution RBI places an annual The Banking Ombudsman Scheme is an inexpensive
indent for the purpose production programme of coins. forum for bank customers, for resolution of complaints
Coins can be issued up to the denomination of Rs.1000. relating to certain services rendered by banks. The Banking
Coins in India presently-50 paisa, 1,2,5,10 rupee, Up to 50 Ombudsman Scheme is introduced under Section 35 A of
paisa coins called ‘small coins’, Coins rupee 1 and above the Banking Regulation Act, 1949 by RBI with effect from
called- Rupee coins 1995. Presently the Banking Ombudsman Scheme 2006 (As
amended upto July 1, 2017) is in operation.
Marks On Mint The Banking Ombudsman is a senior official appointed
Bombay (Mumbai) Mint by the Reserve Bank of India. As on date, twenty Banking
##Bombay (Mumbai) Mint has a diamond under the date Ombudsmen have been appointed with their offices located
of the coin (year of issue). The Proof coins from this mostly in state capitals. All Scheduled Commercial Banks,
mint have a mint mark ‘B’ or ‘M’. Regional Rural Banks and Scheduled Primary Co-operative
Banks are covered under the Scheme.
Calcutta (Kolkata) Mint The amount of compensation is limited to the amount
##Calcutta mint has no mark under the date of the coin arising directly out of the act or omission of the bank or
(year of issue). Or it has a “c” mark. Rs. 20 lakh, whichever is lower. The Banking Ombudsman
Hyderabad Mint may award compensation not exceeding Rs. 1 lakh to the
complainant for mental agony and harassment.
##Hyderabad Mint has a star under the date of the coin
Ombudsman Scheme’ for Non-Banking
(year of the issue). The other mint marks from Hyderabad
include a split diamond, and a dot in the diamond. Financial Companies (NBFC)
The Reserve Bank of India (RBI) launched ‘Ombudsman
Noida Mint Scheme’ for non-banking financial companies (NBFC)
##Noida mint has a dot under the year of issue (coin date). for redressal of complaints against them. As per the RBI,
CURRENCY OF INDIA (INR) - Notes are printed at four this Scheme will offer a speedy and cost-free complaint
printing presses. redressal mechanism relating to deficiency in the services
by NBFCs covered under the Scheme. The Scheme will be
1. Nashik, Maharashtra known as ‘Ombudsman Scheme for Non-Banking Financial
2. Dewas, Madhya Pradesh Companies, 2018’.
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The Scheme will cover all deposit-taking NBFCs for now Dharia Committee Public Distribution System
and based on the result and experience gained, it would DR Gadgil Committee Agricultural Finance
extend the scheme to cover those NBFCs who have the asset
Gadgil Committee (1961) Lead Bank System
size of Rs. 100 crore and above with customer interface.
Narsimham Committee Financial System
The NBFC ombudsmen will function and the complaints RN Malhotra Committee Reforms in Insurance Sector
of customer as per zone wise. For this NBFC ombudsmen
will discharge their functions from four offices in Chennai, Working Groups And Committees
Mumbai, Kolkata and New Delhi. The expert committee to review the Economic Capital
NBFC Ombudsman will not charge any fee for filing and Framework (ECF) - Bimal Jalan
resolving customers’ complaints. Task Force on Offshore Rupee Markets- Usha Thorat
If the NBFC does not reply within a period of 30 days (one FRBM (Fiscal Responsibility and Budget Management)
month) after receipt of the complaint from complainant or Review Committee - N.K. Singh
the NBFC rejects the complaint, or if the complainant is not High Level Committee (HLC) for implementation of Clause
happy with the reply given by the NBFC, then the complainant 6 of Assam Accord - M P Bezbarauah
can file the complaint with the NBFC Ombudsman. The High Level Task Force on Public Credit Registry for
India - Y M Deosthalee
Ombudsman Scheme for Digital Transactions
The Internal Study Group to Review the Working of the
It was announced in the Monetary Policy Statement of December Marginal Cost of Funds Based Lending Rate System
5, 2018, the Reserve Bank of India (RBI) launched the - Janak Raj
Ombudsman Scheme for Digital Transactions (OSDT) on January
The Inter-Regulatory Working Group on FinTech and Digital
31, 2019 for redressal of complaints against System Participants.
Banking - Sudarshan Sen
The Scheme was launched under Section 18 of the Payment The Working Group to Review of the Guidelines for Hedging
and Settlement Systems Act, 2007, provides a cost-free of Commodity Price Risk by Residents in the Overseas
and expeditious complaint redressal mechanism relating to Markets - Chandan Sinha
deficiency in customer services in digital transactions conducted The Household Finance Committee
through non-bank entities regulated by RBI. Complaints relating
- Tarun Ramadorai
to digital transactions conducted through banks will continue
to be handled under the Banking Ombudsman Scheme. The The Internal Working Group on Rationalisation of Branch
offices of Ombudsman for Digital Transactions will function Authorisation Policy - Lily Vadera
from the existing 21 offices of the Banking Ombudsman and will The Working Group on Development of Corporate Bond
handle complaints of customers from their respective territorial Market in India - Harun R Khan
jurisdiction. The Scheme provides for an Appellate mechanism The Working Group on Import Data Processing and
under which the complainant / System Participant has the option Monitoring System - AK Pandey
to appeal against the decision of the Ombudsman before the The Working Group on Interest Rate Options
Appellate Authority. - P G Apte
Committees and their main Focus Areas The Advisory Committee on Ways and Means Advances to
State Governments - Sumit Bose
B.Sivraman Committee Institutional Credit for
The Committee on Medium-term Path on Financial Inclusion
Agriculture and Rural
- Deepak Mohanty
Development
The Committee on Differential Premium System for Banks
Bhagwati Committee Unemployment
in India - Jasbir Singh
Bhagwati Committee Public Welfare The Working Group on Compilation of Flow of Funds Accounts
Cook Committee (on behalf Capital Adequacy of Banks for Indian Economy - D K Mohanty
of BIS)
The High Powered Committee on Urban Co-operative Banks
Dave Committee Mutual Funds (Functioning)
(UCBs) - R Gandhi
In order to ensure the robustness and credibility of the financial system and to minimise the risks, the Reserve Bank has
designated industry bodies Fixed Income, Money Markets and Derivatives Association of India (FIMMDA) and Foreign
Exchange Dealers Association of India (FEDAI) as the benchmark administrators for the Rupee interest rate and foreign
exchange benchmarks, respectively. The FIMMDA, FEDAI and Indian Banks Association (IBA) have since jointly floated
an independent company for benchmark administration. Benchmark submission activities of banks and PDs including their
governance framework for submission are proposed to be brought under the Reserve Bank’s on-site and off-site supervision.

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RBI AND MONETARY POLICY - (PRACTICE QUESTIONS)

Q.1. RBI is the lender of last resort, what does it mean? Q.7. Whenever RBI does some open market operation
(1) RBI advances necessary credit against eligible transaction, actually it wishes to which of the
securities. followings?
(2) Commercial banks give fund to RBI (1) Inflation only
(3) RBI advances money to public whenever there (2) Liquidity in economy
is any emergency (3) Increase borrowing powers of the banks
(4) All the above (4) Flow of FDI
(5) None of these (5) None of these
Q.2. Which of the following statements is incorrect? Q.8. Where was the first headquarter of RBI?
(1) RBI is a profit making institution acting in the (1) New Delhi (2) Mumbai
interest of the Govt. (3) Kolkata (4) Chennai
(2) Every country has only one central bank which (5) None of these
is managed by govt. officials. Q.9. Which of the following is/are the objective(s) of
(3) RBI does not perform any ordinary commercial monetary policy?
banking functions. (A) To anchor inflation expectation.
(4) RBI has adopted of MRS to issue currency. (B) To actively manage liquidity
(5) None of these (C) To maintain interest rate regime output &
Q.3. —————— Credit policy promotes investment. financial stability.
(1) Dear (2) Cheap (1) Only (A) (2) All (A), (B), (C)
(3) Restricted (4) Green (3) Only B (4) Both A & B
(5) None of these (5) None of these
Q.4. What can RBI do to improve efficiency of the Q.10. Which of the following is/are KEY POLICY rate
banking system? used by RBI to influence interest rate?
(1) It can bring about compulsory amalgamation of (A) Bank rate & repo rate
weak banks. (B) Reverse repo rate
(2) It can claim for compulsory liquidation. (C) CRR & SLR
(3) It can expedite winding up of proceedings to (1) Only (A) (2) Only (B)
safeguard the interest of depositors.
(3) All (4) Only (C)
(4) All of the above
(5) Both (A) & (B)
(5) None of these
Q.11. Which of the following rates signals the RBI’s long
Q.5. Which act has given control & supervision power term outlook on interest rate?
to RBI over commercial banks?
(1) Repo rate (2) Reverse repo rate
(1) RBI Act, 1934.
(3) Bank rate (4) SLR
(2) Banking regulation Act, 1949.
(5) CRR
(3) Both RBI Act, 1934 & Banking Regulation Act,
Q.12. The monetary authority in India, viz RBI is bound to
1949.
maintain a reserve against the note issued whatever
(4) Banking regulation Act, 1960. may be the amount, this system is called as ———
(5) None of these (1) MRS
Q.6. Central bank promotes commercial banking by - (2) PRS
(1) Providing cheap rediscounting facilities to (3) Maximum fiduciary issue system
commercial banks.
(4) Simple deposit system
(2) Providing liberalized rediscounting to commercial
(5) None of these
banks.
Q.13. Which of the following is not the function of RBI?
(3) Giving subsidies to new banks.
(1) Managing FOREX reserve
(4) All of the above
(2) Deciding Bank rate, CRR and SLR from time to time
(5) None of these
(3) Opening saving account for general public
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(4) Prescribing the capital adequacy ratio Q.20. What is the maximum number of official directors
(5) Current Management in RBI’s central board of Directors?
Q.14. Banks wishing to provide mobile banking services (1) One (2) Two
have to obtain permission from which of the following (3) Four (4) Five
authority: (5) None of these
(1) RBI (2) TRAI Q.21. Who appoints the governor of RBI?
(3) IRDAI (4) No permission needed (1) President of India
(5) None of these (2) Prime minister of India
Q.15. RBI takes certain steps to curb the menace of (3) Central govt. of India
inflation. In this context, which among the following (4) Vice President of India
will not help RBI in controlling the inflation in the
(5) None of these
country?
Q.22. The RBI reduces or increases different rates and
(1) An increase in the bank rate
ratios in ‘’basis points’’ one basis point is equal to -
(2) An increase in the reverse ratio requirements
(1) One tenth of a percent
(3) A purchase of securities in the open market
(2) One hundredth of a percent
(4) Increasing the repo rate
(3) One thousandth of a percent
(5) None of these
(4) One percent
Q.16. What will be the impact on the cash reserves of
(5) One hundred percent
commercial banks if RBI conduct a sale of securities?
Q.23. Under the BSBDA scheme of the RBI, any individual
(1) Increase
including those from weaker sections of the society,
(2) Decrease can open Zero balance account in which of the
(3) Remain constant following banks?
(4) Neither Increase or Decrease (1) Public sector banks
(5) None of these (2) Private sector banks
Q.17. Under which qualitative tool, RBI fixes maximum (3) Foreign banks operating in India
limit to loan and advances that can be made above (4) All of the above
which the commercial banks cannot exceed?
(5) Only (1) and (2)
(1) Rationing of credit (2) Margin requirement
Q.24. A major public sector bank raised interest rate on
(3) Loan-value ratio (4) Moral suasion loan by 25 basis points. This means the bank has
(5) None of these raised interest by 25 basis points of
Q.18. To combat rising inflation, RBI has to do which of (1) Saving bank interest rate
the following activities? (2) Base Lending rate
(1) increases bank rate (2) Sell govt. securities (3) Repo Rate
(3) Increase reserve ratio (4) All of the above (4) Present rate on deposits
(5) None of these (5) Discounts rate of interest
Q.19. If the cash reserve ratio (CRR) is increased by the Q.25. The LAF (Liquidity adjustment facility) is a facility
RBI, its impact on the expansion of credit creation extended by the RBI to the scheduled commercial
will be to- banks excluding—
(1) Decreases it (2) Increases it (1) RRBs (2) Private Banks
(3) No impact (4) Can’t say (3) Nationalized Banks (4) SBI
(5) None of these (5) None of these

Answer Key
1.(1) 2.(1) 3.(2) 4.(4) 5.(3) 6.(1) 7.(2) 8.(3) 9.(2) 10.(5)
11.(3) 12.(1) 13.(3) 14.(2) 15.(3) 16.(2) 17.(1) 18.(4) 19.(1) 20.(4)
21.(3) 22.(2) 23.(4) 24.(2) 25.(1)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)

Q.1. In November 2021 RBI introduced an Internal Q.5. In October 2021, RBI increase the IMPS limit from
Ombudsman mechanism for select Non-Banking 2 lakhs. What is the new limit of IMPS transfer?
Financial Companies. Deposit-taking NBFCs (SBI PO Mains 2022)
with assets size of _______must appoint an
(1) 4 Lakhs (2) 5 Lakhs (3) 8 Lakhs
Internal Ombudsman (IO)
(4) 10 Lakhs (5) 15 Lakhs
(SBI PO Mains 2022) Q.6. The Reserve Bank of India has revised the limit
(1) `50 crore (2) `500 crore for Ways and Means Advances (WMA) from
(3) `5,000 crore (4) `1,000 crore (1)20 lakh crore to ________ lakh cror(5)
(5) `100 crore (SBI PO Mains 2021)
Q.2. Reserve Bank of India has recently conducted a (1) 1.50 (2) 1.75 (3) 2.00
consumer confidence survey. Which of the following (4) 2.50 (5) 1.95
statement is TRUE in regard to the survey? Q.7. In Dec 2020, The Reserve Bank had launched a
(SBI PO Mains 2022) new edition of the Regulatory Sandbox which of
the following is the theme of the program?
(1) Both 1 and 2 (2) Either 1 or 2
(SBI PO Mains 2021)
(3) Only 2 (4) None of the above
(1) Retention of costumer
(5) Only 1
(2) EMI payment (3) Car Payment
Q.3. Choose the incorrect statement regarding launched
RBI’s Integrated Ombudsman Scheme? (4) Digital Payment (5) Retail Payments
(BI PO Mains 2022) Q.8. The Reserve Bank of India (RBI) board has finalised
a Three Year Roadmap Project ‘UTKARSH’. It is
(1) The Integrated Ombudsman Scheme was launched
meant for what purpose?
by Reserve Bank of India in November 202(1)
(SBI PO Mains 2021)
(2)The scheme is launched for Non-Banking
Financial Company(NBFC), banks and pre-paid (1) Coordination and supervision
instrument players. (2) Supervision and regulation
(3) The scheme will amalgamate banking (3) Coordination and regulation
ombudsman scheme 2006, NBFC ombudsman (4) Monitoring and coordination
scheme 2018 and Ombudsman scheme of digital (5) Monitoring and supervision
transactions 2019.
Q.9. According to BASEL-II guidelines the minimum
(4) The first centralized jurisdiction neutral receipt %CRAR is 9%, RBI released the 22nd issue of
and processing center is set up in New Delhi. the Financial Stability Report (FSR) The capital to
(5) The executive director of Consumer Education risk-weighted assets ratio (CRAR) of Scheduled
and Protection Department of RBI will be the Commercial Banks improved to how much per cent in
appellate authority under the integrated schem(5) September 2020 from 1(4)7 per cent in March 2020?
Q.4. Choose the incorrect answer regarding the Prompt (SBI PO Mains 2021)
Corrective Action(PCA) Framework launched by (1) 14.9 (2) 15.1 (3) 15.4
RBI on December 14, 2021? (4) 15.8 (5) 16.3
(SBI PO Mains 2022) Q.10. Choose the incorrect option regarding the
(1) The PCA Framework is for the Non-Banking Payment Infrastructure Development Fund(
Financial Company’s PIDF) which was launched by RBI 2021?
(2) The PCA Framework will be only applicable (SBI PO Mains 2021)
to Deposit-Taking NBFCs. (1) To benefit the acquiring banks/non-banks
(3) The provisions of the PCA Framework will and merchants by lowering overall acceptance
be effective from October 202(2) infrastructure costs.
(4) Capital and Asset Quality would be key (2) To increase payments acceptance infrastructure
monitoring areas. by adding 30 lakh touch points every year – 10
lakh physical and 20 lakh digital payment
(5) PCA framework for NBFCs will be reviewed
acceptance devices.
after three years.
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(3) RBI has invested 250 crore in this fun(4) (IBPS Clerk 2020)
(4) To increase the number of acceptance devices (1) e-Vishnu (2) e-Indra (3) e-Kuber
multi-fold in the country. (4) e-Shiva (5) e-Mohini
(5) POS will be established in tier 1 and tier 2 cities Q.18. Which bank received a license from Reserve Bank
Q.11. According to RBI’s National Strategy for of India (RBI) in July 2018 to launch operations
Financial Inclusion, minimum radius in which in India?
banking facilities should be available to a person (IBPS Clerk Mains 2020)
is ______. (1) Industrial and Commercial Bank of China
(SBI PO Mains 2021) (2) Industrial Trust of China
(1) 5 km (2) 50 km (3) 20 km (3) China Construction Bank
(4) 6 km (5) None of the above
(4) Bank of China
Q.12. Which bank has partnered with M1Xchange
(5) China Trust Commercial Bank
Trade Receivables Discounting System (TReDS)
platform for MSME bill discounting? Q.19. In June 2018, the Reserve Bank of India conducted
a Financial Literacy Week with the focus on creating
(SBI PO Mains 2019)
banking awareness. Which of the following was the
(1) State Bank of India (2) Bank of Baroda theme of the Financial Literacy Week?
(3) Bank of Maharashtra (IBPS Clerk Mains 2020)
(4) Bank of India (5) Corporation Bank (1) ‘Know Your Customer’
Q.13. Reserve bank of India (RBI) has finalised (2) ‘Customer Protection’
three years roadmap to improve regulation and
(3) ‘Know Your Bank’
supervision of the central bank. What is the name
of the roadmap? (4) ‘Safe Banking’
(SBI PO Mains 2019) (5) Other than the given options
(1) Unnati 2022 (2) Upkar 2021 Q.20. The RBI notified recently that the timeline
for the conversion of minimum KYC for
(3) Umang 2022 (4) Utkarsh 2022
prepaid payment instruments (PPIs) to full KYC
(5) Uphar 2022 compliant PPIs, the time has been extended from
Q.14. The fifth character of IFSC Code is 0 (zero) and 18 months to ________.
reserved for ______. (IBPS Clerk Mains 2020)
(SBI PO Mains 2019) (1) 36 months (2) 24 months
(1) Future use (2) Account information (3) months (4) 22 months
(3) Branch location (4) Cash withdrawal (5) 30 months
(5) Branch city Q.21. RBI has changed the timings of NEFT and RTGS,
Q.15. Which bank has signed an agreement to buy a Now in how many batches transaction through
stake in a subsidiary of BSE’s India International NEFT can be done?
Exchange (INX)? (IBPS Clerk Mains- 2020)
(SBI PO Mains 2019) (1) 48 (2) 34 (3) 23
(1) AXIS Bank (2) HDFC Bank (3) ICICI (4) 24 (5) 18
(4) Yes Bank (5) SBI
Q.22. The rate at which RBI gives short term loan to
Q.16. The RBI has appointed which bank as the Interim commercial banks is called.
Head for the Newly Formed Union Teritorry Ladakh?
(IBPS Clerk Mains- 2020)
(IBPS Clerk 2020_)
(1) Repo rate
(1) SBI (2) RBI
(2) Reverse Repo rate
(3) PNB (4) Bank Of Baroda
(3) Bank rate
(5) Jammu & Kashmir Bank
(4) Cash Reserve rate
Q.17. Trading of priority sector lending certificates
(5) None of these
(PSLCs) on the government’s ____________
portal by banks will attract integrated goods and Q.23. In January 2020, RBI has launched a mobile app,
services tax. MANI, to help visually challenged people to

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identify denomination of currency notes. What (1) IMF (2) WTO (3) WEF
does ‘M’ stand for in MANI? (4) WFO (5) World Bank
(1) Money (2) Mobile (3) Monetary Q.25. When was RBI nationalized?
(4) Machine (5) Merger (IBPS Clerk Mains 2021)
Q.24. World Economic Outlook Report is released by: (1) 1935 (2) 1947 (3) 1949
(IBPS PO MAINS 2016) (4) 1950 (5) 1983

Answer Key
1.(3) 2.(1) 3.(4) 4.(2) 5.(2) 6.(3) 7.(5) 8.(2) 9.(4) 10.(5)
11.(1) 12.(3) 13.(4) 14.(1) 15.(3) 16.(1) 17.(3) 18.(4) 19.(2) 20.(2)
21.(1) 22.(1) 23.(2) 24.(1) 25.(3)

NOTES

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NPA AND BASEL NORMS

##NON PERFORMING ASSETS -NPA

##ARC (ASSET RECONSTRUCTION COMPANY)
##DRT (DEBT RECOVERY TRIBUNAL)
##BASEL NORMS
##PROMPT CORRECTIVE ACTION (PCA)
##PRACTICE PAPER QUESTIONS
##PREVIOUS PAPER QUESTIONS

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CHAPTER

3 NPA AND BASEL

NORMS
NON PERFORMING ASSETS -NPA PROVISIONING NORMS
##NPA is defined as a credit facility in respect of which STANDARD ASSETS:-
the interest andor installment of principal has remained ##General provision of a minimum of 0.40 percent on
‘past due’ for a specified period of time. standard assets
##An asset, including a leased asset, becomes non- SUBSTANDARD ASSETS:-
performing when it ceases to generate income for the
bank. ##Unsecured outstanding balance - 25%

##In accounting, originally Bad & Doubtful Debts. ##Secured outstanding balance - 15%

FOR AGRICULTURAL PURPOSE D1 - 25%

##Interest or installment of principal remains overdue for D2 - 40%

two harvest seasons but for a period not exceeding two
D3 - 100%
and a half years in the case of an advance granted for
agricultural purpose
DOUBTFUL ASSETS :-
##Any amount to be received remains overdue for a period
##Unsecured portion of outstanding balance - 100%,
of more than 90 days in respect of other accounts.
Secured outstnading balance
OUT OF ORDER:-
LOSS ASSETS:-
##An account should be treated as out of order if the
##The entire assets should be written off, if permitted by
outstanding balance remains continuously in excess of
RBI then 100% provisoing of outstanding balance.
sanctioned limit /drawing power.
OVERDUE:- NPA MANAGEMENT- PREVENTIVE
MEASURES
# #Any amount due to the bank under any credit facility
is ‘overdue’ if it is not paid on due date fixed by ##Formation of the credit information bureau(India)
the bank. limited (CIBIL)
NET NPA:- ##Release of willful defaulter’s list. RBI also releases a
list of borrowers with aggregate outstanding of Rs. 1
##Net NPAs are those type of NPAs in which the bank has crore and above against whom banks have filed suits
deducted the provision regarding NPAs. Net NPA shows for recovery of their frauds.
the actual burden of banks.
##Reporting of frauds to RBI.
ASSET CLASSIFICATION ##Special Mention Accounts (SMA) for early identification
##Sub-Standard Assets- With effect from 31 March of bad debt.
2005,When a NPA remained due for a period less than ##Risk assessment and risk management.
or equal to twelve months.
LOK ADALAT
##Doubtful Assets-With effect from 31 March 2005,When
##To settle disputes involving account in “doubtful” and
substandard remained due for a period of twelve
“loss” category.
months.
##Outstanding balance of Rs.20 lakhs for compromise
##Loss Assets- A loss asset is one, where the bank or the settlement.
internal or external auditors or the RBI inspection has
identified the loss but the amount has not been written ##Proved to be quite effective for speedy justice and
off wholly recovery of small loans.

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##Progress through this channel is expected to pick up in ##For being appointed as DRT a person should be qualify
the coming years to be district judge and for being appointed as DRAT,
SARFAESI ACT-2002 the person should qualify to be a judge of the high court.
##Securitization and Reconstruction of Financial Assets ##In this court only the recovery cases of Rs.10 lakhs and
and Enforcement of Securities Interest Act above can be filed.
##The Act provides three alternative methods for recovery National Company Law Tribunal
of non-performing assets, namely: - The National Company Law Tribunal (NCLT) is a quasi-judicial
##Securitization body in India that deals with issues relating to Indian companies.
The NCLT was established under the Companies Act 2013 and
##Asset Reconstruction
was constituted on 1 June 2016 by the government of India. It
##Enforcement of Security without the intervention of is based on the recommendation of the justice Eradi committee
the Court. on law relating to insolvency and winding up of companies. All
##SARFAESI Act is not applicable on proceedings under the Companies Act, including proceedings
(i) NPA loans with outstanding less than Rs. 1 lakh relating to Arbitration, Compromise, arrangements and
(ii) NPA loan accounts where the amount is less than reconstruction and winding up of companies shall be disposed
20% of the principal and interest are not eligible to of by the National Company Law Tribunal.
be dealt with under this Act. The National Company Law Tribunal is the Adjudicating
(iii) Agriculture Lands Authority for Insolvency resolution process of Companies
and Limited Liability Partnerships under the Insolvency and
ARC (ASSET RECONSTRUCTION
Bankruptcy Code, 2016.
COMPANY)
Civil court do not have jurisdiction to entertain any suit
##A company which is set up with the objective of taking
over Distressed assets (NPA) from banks or financial or proceeding the Tribunal or the Appellate Tribunal is
institutions and to Reconstruct or re-pack these assets empowered to determine.
to make those assets saleable. The NCLT has thirteen benches. Justice M.M. Kumar, a
##To buy out troubled loans from banks and make special retired Chief Justice of the Jammu & Kashmir High Court
efforts at Recovering value from the assets, if necessary has been appointed as President of the NCLT. Decisions of
by special legislation, with special powers for recovery. the NCLT may be appealed to the National Company Law
##Restructuring of weak banks to divest the bad loan portfolio. Appellate Tribunal (NCLAT). The decisions of NCLAT may
##India’s first ARC with an initial equity of Rs.10 crore be appealed to the Supreme Court of India.
with ICICI bank, IDBI and SBI. Insolvency and Bankruptcy Board
##Incorporated as a public limited company on February The Insolvency and Bankruptcy Board of India was
11, 2002.
established on 1st October, 2016 under the Insolvency
##FDI limit in ARC - 100% and Bankruptcy Code, 2016 (Code). It is a key pillar
##Minimum network for ARC - 300 cr. of the ecosystem responsible for implementation of the
Code that consolidates and amends the laws relating to
DRT (DEBT RECOVERY TRIBUNAL)
reorganization and insolvency resolution of corporate
persons, partnership firms and individuals in a time bound
manner for maximization of the value of assets of such
persons, to promote entrepreneurship, availability of credit
and balance the interests of all the stakeholders.
It has regulatory oversight over the Insolvency Professionals,
##To recover their bad Debt quickly and efficiently.
Insolvency Professional Agencies, Insolvency Professional
##39 Debt Recovery Tribunal and 5 Debt Recovery Entities and Information Utilities. It writes and enforces
Appellate Tribunal
rules for processes, namely, corporate insolvency resolution,
##It is the special court established by central government corporate liquidation, individual insolvency resolution and
for the purpose of bank or any financial institutions individual bankruptcy under the Code.
recovery.
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Public Credit Registry ##The Committee’s Secretariat is located at the Bank for
International Settlements (BIS) in Basel, Switzerland.
Public Credit Registry (PCR), created by the Reserve Bank
Basel is a city of Switzerland
of India, is a digital registry to capture and store financial
information of borrowers, both existing and new borrowers. NEED FOR SUCH NORMS (BASEL-I)
The credit registry will collate the borrowing history of both ##The first accord by the name .Basel Accord I. was
individuals and corporate borrowers. Borrowers will have established in 1988 and was implemented by 1992.
access to their credit information and seek corrections. It was ##It was the very first attempt to introduce the concept of
recommended by the committee headed by Y.M. Deosthalee. minimum standards of capital adequacy. Then the second
The idea behind creating the public registry is to collate the accord by the name Basel Accord II was established in
financial information of individual and corporate borrowers 1999 with a final directive in 2003 for implementation
under one platform, inclusive of financial delinquencies, by 2006 as Basel II Norms.
pending legal suits, and wilful defaulters. The objective is to ##This has been fully implemented under the guidelines of
strengthen the credit culture of the Indian economy. the Reserve Bank of India from 1 April, 2009.

CAPITAL ADEQUACY RATIO FEATURES OF BASEL II NORMS

Basel II Norms are considered as the reformed & refined
form of Basel I Accord. The Basel II Norms primarily stress
on 3 factors, i.e. Capital Adequacy, Supervisory Review and
Market discipline. The Basel Committee calls these factors
as the Three Pillars to manage risks.
BASEL III NORMS
Capital adequacy ratio or CAR or CRAR is a ratio of the ##‘Basel III Capital Regulations’, were to apply till the
banks capital funds to risk weighted assets which has to CCB attains the level of 2.5 per cent.
be maintained to buffer the risk to the bank from its risk ##CORE capital (paid up capital + preferential shares
assets. should be 5.5% of risk Weighted Assets........ (1)
Tier I capital = core capital (paid up capital+ preferential share) ##Total tier 1 capital should be 7% of risk weighted
+ profit carry forward+ reserve from sale of assets etc… Assets…...(2)
Tier II capital = subordinated term debt + General loss reserve + ##Total capital should be 9% of RWA…. (3)
adjustment + undisclosed reserve (this is not for Indian Bank).
CAPITAL CONSERVATION BUFFER (CCB)
BASEL NORMS The CCB in the form of common equity of 2.5% of RWA.
A minimum capital Adequacy Ratio for bank will be 11.5%
after full application of the capital conservation buffer.
The implementation of the last tranche of 0.625 per cent of
the CCB was deferred. The implementation date of the Basel
III standards finalised in December 2017 has been deferred by
one year to 1 January 2023. The accompanying transitional
arrangements for the output floor have also been extended
by one year to 1 January 2028.
The implementation date of the revised market risk
framework finalised in January 2019 has been deferred by
one year to 1 January 2023.
##The Basel Committee on Banking Supervision provides
a forum for regular cooperation on banking supervisory The implementation date of the revised Pillar 3 disclosure
matters worldwide. requirements finalised in December 2018 has been deferred
by one year to 1 January 2023.
Domestic Systemically Important Banks (D-SIBs)
SBI, ICICI Bank and HDFC Bank, continue to be identified as Domestic Systemically Important Banks (DSIBs), under the
same bucketing structure as last year. The additional Common Equity Tier 1 (CET1) requirement for D-SIBs has already been
phased-in from April 1, 2016 and will become fully effective from April 1, 2019. The additional CET1 requirement will be in
addition to the capital conservation buffer.

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Bucket Banks CET-1
5 - 0.1%
4 - 0.80%
3 State Bank of India 0.60%
2 - 0.40%
1 ICICI Bank & HDFC Bank 0.20%
The higher capital requirements are applicable from April 1, 2016 in a phased manner and will become fully effective from
April 1, 2019. The additional common equity requirement for different buckets over the four year phase-in period is as under:
Basel-III for AIFIs (Draft Directions)
The Reserve Bank of India (RBI) decided to extend Basel-III Capital framework to All India Financial Institutions such as
Export-Import Bank of India, the National Bank for Agriculture and Rural Development, National Housing Bank, and the
Small Industries Development Bank of India.
As per the draft Master Direction on Prudential Regulation for AIFIs, AIFIs will implement all the three Pillars of Basel-III
capital regulations – pillar 1 covering capital, risk coverage, and containing leverage, pillar 2 covering risk management
and supervision, and pillar 3 covering market discipline.
The central bank wants AIFIs to achieve minimum total capital of 9 percent and a capital conservation buffer of 2.5 percent,
with the minimum total capital and CCB adding up to 11.5 percent, by April 1, 2022. For NHB, since the accounting year
is July-June, the implementation shall commence on July 1, 2022.
Capital instruments already issued by the AIFIs which no longer qualify under Basel-III will be allowed to be counted as
tier 1 or tier 2, as the case may be, as per the existing rules until their maturity or the first call date.
Prompt Corrective action (PCA)
##PCA applicable on All Scheduled Commercial Banks (Excluding Regional Rural Banks)
##The provisions of the revised PCA Framework are effective from January 1, 2022.
##The framework would be reviewed after three years.
PCA Framework for Banks
A. Capital, asset quality and profitability continue to be the key areas for monitoring.
B. Indicators to be tracked for Capital, asset quality and profitability would be CRAR/ Common Equity Tier I ratio, Net
NPA ratio and Return on Assets respectively.
C. Leverage would be monitored additionally as part of the PCA framework.
PCA matrix - Areas, indicators and risk thresholds
Parameter Indicator Risk Threshold 1 Risk Threshold 2 Risk Threshold 3
Capital CRAR- Minimum regulatory prescription upto 250 bps more than 250 bps -
(Breach of for capital to risk assets ratio + applicable
below Indicator but not exceeding -
either CRAR capital conservation buffer (CCB) <10.25% but 400 bps below In excess of
or CET 1 And/ Or >=7.75% Indicator <7.75%
but >=6.25% 312.50 bps below
ratio) Regulatory pre-specified trigger of Common upto 162.50 bps Indicator
Equity Tier 1 (CET 1min) + applicable below Indicator <3.625%
capital conservation buffer (CCB) <6.75% but >= more than 162.50
Breach of either CRAR or CET 1 ratio to 5.125% bps below but
trigger PCA not exceeding
312.50 bps below
Indicator

<5.125% but
>=3.625%

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Asset Quality Net Non-performing advances (NNPA) ratio >=6.0% but <9.0% >=9.0% but < 12.0% >=12.0%
Leverage Tier 1 Leverage ratio upto 50bps from 50bps- more than
100bps 100bps below
the regulatory
minimum

A bank will generally be placed under the PCA framework based on the Audited Annual Financial Results and the ongoing
Supervisory Assessment made by RBI. RBI may impose PCA on any bank during a year (including migration from one
threshold to another) in case the circumstances so warrant.
Mandatory and Discretionary Actions

Specifications Mandatory Actions Discretionary Actions

Risk Threshold 1 Restriction on dividend distribution/ remittance of profits. Special Supervisory Interactions
Promoters/owners/parent in the case of foreign banks to bring Strategy related
in capital Governance related
Capital related
Credit risk related
Risk Threshold 2 Restriction on branch expansion : domestic and/or overseas
Market risk related
Higher provisions as part of the coverage regime HR related
Profitability related
Risk Threshold 3 Restriction on branch expansion; domestic and/or overseas Operations related
Restriction on management compensation and director’s fees, Any other
as applicable

CAMELS RATING
In India RBI inspect all the banks through CAMELS rating.
C – CAPITAL ADEQUACY A – ASSETS QUALITY M – MANAGEMENT
E – EARNING L – LIQUIDITY S – SENSTIVITY TO MARKET RISK
But due to BASEL 3 Norms CAMELS POLICY is being closed & in place of that INROADS policy is going to be
rd

introduced.
INROADS-INDIAN RISK ORIENTED AND DYNAMIC RATING SYSTEM
RISK MATRIX
1. CREDIT RISK 2. MARKET RISK
3. INTREST RATE RISK 4. LIQUIDITY RISK
5. BUSSINESS RISK 6. OPERATIONAL RISK
7. LEGAL RISK 8. FOREX RISK
What is a bad bank?
A bad bank is a corporate entity that alienates illiquid and risky assets held by banks and financial institutions or a group
of banks. It is created to help banks clear their balance sheets by transferring their bad loans so that the banks can focus on
their core business of taking deposits and lending money. The first bad bank in the world was created in 1988 by US-based
Mellon Bank to hold its stressed assets.
To tackle the growing problem of mounting bad debts in the banking sector, the Indian Finance Minister announced the
creation of Bad Bank. This will be tasked with acquiring bad debts from several banks’ worth `2 lakh crores. After the bad
debts are acquired, the stressed assets will be sold in the market by India Debt Resolution Company Ltd (IDRCL). The
government has already given its go-ahead for `30,600 crores that can be used as a guarantee.

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NPA & BASEL NORMS - (PRACTICE QUESTIONS)
Q.1. SARFAESI Act not applicable in ——— (5) None of these
(1) House property (2) Machinery Q.10. Under asset classification of NPA accounts above
(3) Agricultural land (4) KVP one year but upto three year assets due known as
———
(5) None of these
(1) substandard asset (2) standard assets
Q.2. When NPA considered in case of long duration
(3) doubtful asset (4) bad debts
crops——
(5) loss assets
(1) 4 crop season (2) 2 crop season
Q.11. A provisioning coverage ratio on gross NPA is
(3) 3 crop season (4) 1 crop season
prescribed by RBI is ———
(5) None of these (1) 100% (2) 90%
Q.3. In PCR, ‘P’ Stands for ——— (3) 70% (4) 40%
(1) Payment (2) Provident (5) None of these
(3) Provision (4) None of these Q.12. What is the provisioning percentage of standard
(5) All of these assets ————
Q.4. NPA implemented under the recommendation of (1) 0.10% (2) 0.20%
which committee— (3) 0.40% (4) 0.60%
(1) Shivraman committee (5) None of these
(2) Narshimham committee Q.13. If anyone fail to meet its payment obligations to
(3) K P committee the lender even when it has capacity to honor the
obligations is known as ————
(4) None of these
(1) Drawer (2) Drawee
(5) All of these
(3) Wilful Defaulter (4) Spot Defaulter
Q.5. In CCCB , ‘B’ Stands for ———
(5) None of these
(1) Bottom (2) Button
Q.14. Which committee recommended wilful loan
(3) Butter (4) Buffer defaulter————
(5) None of these (1) Narsimham committee
Q.6. SARFAESI Act was passed in the year————— (2) Shivraman committee
(1) 2005 (2) 2013 (3) S.S.Kohli committee
(3) 2002 (4) 2001 (4) P.K Nayak committee
(5) 2012 (5) None of these
Q.7. When outstanding balance is more than drawing Q.15. NPA under D3 category (beyond 3 years), how much
power and the account become out of order is known provision should be maintained;
as ———— (1) 100% provision both on secured and unsecured
(1) hold on account (2) dormant account portion
(3) irregular account (4) demat account (2) 40% provision on secured and 100% on
unsecured portion
(5) None of these
(3) 25% provision on secured and 40% on unsecured
Q.8. When NPA considered in case of short duration
portion
crops————
(4) 15% provision on secured and 25% on unsecured
(1) 1 crop season (2) 2 crop season
portion
(3) 3 crop season (4) 4 crop season (5) None of these
(5) None of these Q.16. When bank ensure that bank maintain a buffer of
Q.9. When RBI started implementation of NPA guidelines capital that can be used to absorb losses during
———— economic stress is known as —
(1) 1990 (2) 1991 (1) Conservation Buffer
(3) 1992 (4) 1995 (2) Surplus

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(3) Profit Q.25. The business activities of a bank that generally do not
(4) Surcharge involve booking assets (loans) and taking deposits
(5) None of these are called———
Q.17. In BCBS , ‘s’ stands for ——— (1) ALM
(1) Support (2) Stop (2) Bad loan exposure
(3) Supervision (4) Standard (3) off balance sheet exposure
(5) None of these (4) NPA
Q.18. In which year Basel III implementation started ? (5) None of these
(1) 1st April 2010 (2) 1st April 2013 Q.26. In ICAAP, assessment process organized by—
(3) 1 April 2014
st
(4) 1st April 2015 (1) RBI (2) Bank itself
(5) None of these (3) CIBIL (4) SIDBI
Q.19. When RBI supervise Basel implementation bank (5) None of these
wise is known as ? Q.27. Main motive of Basel accord is——
(1) ICAAP (2) SRDP (1) Increase Risk weighted assets
(3) SREP (4) SRAP (2) Decrease portfolio income
(5) None of these (3) Increase Risk tolerance level
Q.20. When BASEL III was fully implemented in - (4) Decrease in portfolio income
(1) March 2017 (2) March 2018 (5) None of these
(3) March 2019 (4) March 2020 Q.28. Which department setup by RBI to collect, store, and
(5) None of these disseminate credit data to banks on credit exposures
Q.21. Which of the following can purchase NPA? of Rs. 5 crore and above——
(1) ARC (1) CRILC (2) CIBIL
(2) Banks (3) CRISIL (4) ICRA
(3) Financial Institutions (5) None of these
(4) NBFC Q.29. Which of the following statement is correct in the
(5) All of the above context of NPA account?
Q.22. Core capital is also known as —— (1) The interest cannot be debited to the account
(1) Tier I capital (2) Tier II capital even if it has been recovered
(3) Tier III capital (4) Tier IV capital (2) If interest has been debited during the year but
(5) None of these not recovered and account has become NPA at the
Q.23. Which committee is related to NPA? end of the year interest can be taken to income
(1) Khanna Committee (3) In case of government guaranteed account
interest can be taking to income when not recovered
(2) L K Jha Committee
(4) Interest cannot be debited to account and credited
(3) Mahalanobis Committee
to profit and loss account till it is recovered
(4) C. Rao Committee
(5) None of these
(5) None of the above
Q.30. What is the minimum investment in Security
Q.24. What is a method for calculating and controlling Receipts for ARC which was earlier 5%?
exposure to market risk——
(1) 10% (2) 15%
(1) Value at risk (2) Risk cover
(3) 20% (4) 25%
(3) Stop loss (4) Lose cover risk
(5) None of these
(5) None of these

ANSWER KEY
1.(3) 2.(4) 3.(3) 4.(2) 5.(4) 6.(3) 7.(3) 8.(2) 9.(3) 10.(3)
11.(3) 12.(3) 13.(3) 14.(1) 15.(3) 16.(1) 17.(3) 18.(2) 19.(3) 20.(3)
21.(2) 22.(1) 23.(2) 24.(1) 25.(3) 26.(2) 27.(3) 28.(1) 29.(1) 30.(2)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)
Q.1. Which is a specialized financial institution that buys (1) 50 (2) 60 (3) 70
the NPA or bad assets from banks and financial (4) 80 (5) 90
institutions so that it can clean up the balance sheets? Q.8. What is the full form of NPA?
(IDBI - 2019) (NABARD Grade-A 2017)
(1) Bad Banks (2) ARC (3) RBI (1) Non Performing Asset
(4) NHB (5) SEBI
(2) National Policy Association
Q.2. The Maximum amount that can be remitted
(3) Non Performing Agency
through RTGS______?
(4) Non Performing Academy
(IBPS PO Mains 2015)
(5) None of these
(1) 1 Cr (2) 50 Lakh (3) 2 Lakh
(4) 10 Lakh (5) No upper ceiling Q.9. RBI removed which of the following bank from
the Prompt Corrective Action (PCA) framework
Q.3. Which of the following is not a Monetary tool of RBI?
on complying parameters like net non-Performing
(IBPS PO Mains2015) Assets and capital ratio?
(1) Reverse Repo Rate (2) Repo Rate (NABARD Grade-A 2018)
(3) SLR (1) Bank of India (2) Bank of Maharashtra
(4) Minimum support price (3) Indian Bank (4) Central Bank of India
(5) Other than those given option (5) Union Bank of India
Q.4. In July 2020, how much amount (in crore) was Q.10. Where is Headquarter of Basel?
approved by the Union Cabinet for Agriculture
(NABARD Grade-A 2016)
Infrastructure Fund?
(1) Switzerland (2) China (3) Russia
(SBI PO - 2021)
(4) Geneva (5) India
(1) 25,000 Cr. (2) 50,000 Cr.
Q.11. Which are the three pillars of the Basel III ?
(3) 75,000 Cr. (4) 1,00,000 Cr.
(NABARD Grade-A 2018)
(5) 2,00,000 Cr.
(1) Market discipline, Supervisory review
Q.5. According to BASEL-II guidelines the minimum Process, Minimum capital requirement.
%CRAR is 9%, RBI released the 22nd issue of the
(2) Market Money, Supervisory review Process,
Financial Stability Report (FSR) The capital to
Minimum capital requirement.
risk-weighted assets ratio (CRAR) of Scheduled
Commercial Banks improved to how much per (3) Market discipline, Supervisory review
cent in September 2020 from 1(4)7 per cent in Process, Maximum capital requirement.
March 2020? (4) Market Discount, Supervisory review Process,
(SBI PO - 2021) minimum capital requirement.
(1) 14.9 (2) 15.1 (3) 15.4 (5) None of these
(4) 15.8 (5) 16.3 Q.12. What are Basel norms for banks?
Q.6. ‘Non-performing Assets” (NPA) of Indian (NABARD Grade-A 2018)
Commercial Banks are _____. (1) International banking regulations
(NABARD Grade-A 2018) (2) National banking regulations
(1)Buildings and Land (3) International banking and Insurance regulations
(2)Loans not repaid within stipulated time (4) Both A and B
(3)Government securities (5) None of these
(4)Cash holding (5)None of the above Q.13. In October 2020, which bank has raised `5,000
Q.7. NPA as defined by the RBI, “if for a period of more crores by issuing Basel-III compliant bonds?
than _______ days, the interest or installment (IBPS RRB - 2021)
amount is overdue then that loan account can be
(1) PNB (2) Yes Bank (3) SBI
termed as a Non-Performing Asset?
(4) Axis Bank (5) ICICI Bank?
(NABARD Grade-A 2018)
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Q.14. How many types of non-performing assets? Q.20. Which Article of the Constitution of India
(IBPS RRB - 2021) contains various provisions for settlement of
(1) Substandard Assets, Doubtful Assets, Loss disputes through Lok Adalat?
Assets. (IBPS RRB - 2021)
(2) Sub-standard Assets, Doubtful Assets, Profit (1) Article 14 (2) Article 19
Assets. (3) Article 39A (4) Article 21
(3) Standard Assets, Doubtful Assets, Loss Assets. (5) None of these
(4) Sub-standard Assets, Progress Assets, Loss Q.21. Which among the following risks are covered
Assets. under the Basel-ll norms?
(5) None of these (SBI CLERK - 2020)
Q.15. Which bank has announced the launch of its ACE 1. Market risk
Credit Card in India in collaboration with Google 2. Credit risk
Pay and Visa? 3. Operational risk
(SBI Clerk - 2020) (1) Both (1) and (2) (2) Both (2) and (3)
(1) PNB (2) Axis Bank (3) Both (1) and (3) (4) All (1), (2) and (3)
(3) ICICI Bank (4) Yes Bank (5) None of these
(5) Bank of Maharashtra Q.22. The Working and operations of NBFCs are
Q.16. _________is an account maintained in foreign regulated by___.
currency with an Authorised Dealer Bank. (IBPS Clerk - 2017)
(IBPS RRB - 2021) (1) SEBI
(1) Exchange Earners Foreign Currency Account (2) RBI
(2) Exchange Eligible Foreign Currency Account (3) Finance Ministry, GOI
(3) Earners’ Eligible Foreign Currency Account (4) IRDA
(4) Earners’ Exchange Foreign Currency Account (5) None of the above
(5) Equity Exchange Foreign Currency Account Q.23. Where is the headquarter of Multilateral
Q.17. There are_______ BASEL Accords that have been Investment Guarantee Agency (MIGA) located?
introduced. (IBPS Clerk - 2017)
(1) 3 (2) 2 (3) 1 (1) New York (2) Geneva (3) Brussels
(4) 4 (5) None of the above (4) Rome (5) Washington D.C.
Q.18. Consortium accounts will be classified as NPA Q.24. What does the primary deficit in the subcontext
based on. of the government budget relate to –
(IBPS RRB - 2018) (1) Interest payment requirement
(1) the individual bank’s recovery. (2) Borrowing requirement
(2) The liability of the account (3) (b) less (a)
(3) The capital of the bank (4) (a) plus (b)
(4) The no of directors of the company. (5) None of these
(5) None of these Q.25. Agencies which purchases NPA form Banks is
Q.19. Small Finance Banks (SFBs) will be required called.
to extend 75% of their adjusted net bank credit (IBPS PO - 2017)
(ANBC) for ____. (1) Asset Recovery Company
(SBI PO - 2018) (2) Payment Banks
(1) MSME (3) NBFC
(2) Agricultural Credit (4) Reserve Bank of India
(3) Priority Sector Lending (5) None of the above
(4) Unorganised Sector
(5) None of them
ANSWER KEY
1.(1) 2.(5) 3.(4) 4.(4) 5.(4) 6.(2) 7.(5) 8.(1) 9.(4) 10.(1)
11.(1) 12.(1) 13.(3) 14.(1) 15.(2) 16.(1) 17.(1) 18.(1) 19.(2) 20.(3)
21.(4) 22.(2) 23.(5) 24.(3) 25.(1)

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INFLATION

##STAGES OF INFLATION
##CAUSES OF INFLATION
##IMPACT OF INFLATION AND DEFLATION ON ECONOMY
##MEASUREMENT OF INFLATION IN INDIA
##CORE INFLATION
##INFLATION RELATED TERMS
##PRACTICE PAPER QUESTIONS
##PREVIOUS PAPER QUESTIONS

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CHAPTER

4 INFLATION

inflation might be in order; because this would lead to

DEFINITION
waves of optimism inducing businessmen to invest more.
Inflation is defined as a sustained increase in the general level
But this cannot go on forever because the limit is set
of prices for goods and services. It is measured as an annual
by full employment ceiling, after which the prices
percentage increase. As inflation rises, every rupee you own
start rising and moderate inflation starts assuming the
buys a smaller percentage of a good or service.
nature of hyper-inflation which, in turn, has disastrous
The value of a rupee does not stay constant when there consequences on production.
is inflation. The value of a rupee is observed in terms of
It distorts the smooth functioning of price mechanism,
purchasing power, which is the real, tangible goods that
hinders capital formation, stimulates speculative
money can buy. When inflation goes up, there is a decline in
activities and hoarding, leads to misallocation of
the purchasing power of money. For example, if the inflation
productive resources.
rate is 2% annually, then theoretically a Re 1 pack of gum
will cost Rs 1.02 in a year. After inflation, your money can’t In short, inflation invites business to seek profits
buy the same amount of goods it could beforehand. via manipulation of markets rather than via efficient
production.
STAGES OF INFLATION
2. Effects on Distribution:
##Creeping inflation(0-3%)
Inflation has the effect of redistributing income because
##Trotting inflation (Walking And Running Inflation) prices of all factors do not rise in the same proportion.
(3%-10%) Entrepreneurs stand to gain more than wage earners
##Galloping inflation(10%-20%) or fixed income groups. Speculators, hoarders, black
##Hyper inflation(20% and above) marketers and smugglers stand to gain on account of
windfall profits.
##Note- Percentage values are only approximate. Data may
vary. Changes in the value of money also result in the
redistribution of wealth partly because during inflation
CAUSES OF INFLATION there is no uniform rise in prices and partly because debts
Demand Pull inflation (Wage Pull Inflation)- This is the are expressed in terms of money. Inflation is a kind of
typical situation in which demand is more and supply is less hidden tax, steeply regressive in character and in effects.
(commonly referred to as the “demand-pull” occurrence, or This redistribution of wealth as a result of inflation puts
“excess demand inflation”). When wage inflation occurs, the more burden on those groups of the economy which are
prices for the product or service increase, thus leading into the least able to bear it.
situation known as demand-pull inflation. An example of this 3. Effects on Debtors and Creditors:
would be the dramatic changes in the economy during war.
Debtors borrow from creditors to pay the latter along
Cost-Push Inflation - When an increase of price occurs in with the rate of interest at some future date. Changes in
regard to the product or maintenance of a service or product, the price level affect them differently at different times.
the expected increase in price is the resultant effect. For an During inflation when the prices rise (and the real value
example, if a car manufacturer paid more for a vital part of of money goes down), the debtors pay back less in real
an engine, the labour cost would decrease to counter the terms than what they had borrowed, and thus, to that
new price. extent they are gainers. On the other hand, the creditors
get less in terms of goods and services than what they
Impact of Inflation and Deflation on Economy
had lent and stand to lose to that extent. During the
1. Effects on Production: period of deflation, however, when prices fall (and the
Keynes felt that as long as there were unemployed real value of money rises), creditors stand to gain and
resources in the economy a moderate or a mild dose of debtors lose.

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4. Effects on the Entrepreneurs: they may suffer more, as they may not find it easy to
When prices rise, producers, traders speculators and get their wages increased. Similarly, in deflation the real
entrepreneurs stand to gain on account of windfall profits value of the money wages received by them increases
because prices rise at a faster rate than cost of production, and they may gain a little.
besides, there is time-lag between the two. Moreover, 8. Effects on Middle Class and Salaried Persons:
they gain because the prices of their inventories (stock) The hardest hit are the persons who receive fixed
go up. incomes, usually called the middle class. Persons who
Again, they generally being borrowers of money for live on past savings, fixed interest or rent, pensioners,
business purposes, stand to gain. On the other hand, government employees, teachers etc., suffer during
falling prices heavily reduce the profits on account of periods of rising prices as their incomes remain fixed.
the fact that wages fail to fall along with the fall in the Kemmerer remarked: “The middle class, however, which
prices. Entrepreneurs, therefore, react to it by curtailing by hard work and thrift has built up a fund of saving to
the volume of production and hence employment goes educate its children and to provide a livelihood for times
down generating a full-fledged depression. of sickness and for old age, finds itself in a desperate
5. Effects on Investors: situation in a time of serious inflation.” During deflation,
however, middle class is able to get some relief on
Different kinds of investors are affected differently by account of falling prices and rising value of money.
inflation and deflation. One can invest in bonds and
debentures which yield a fixed rate of interest income or 9. Effects on Government:
one can invest in real estate or equities (shares) whose In a mixed economy, the public sector is affected by
returns (dividends) rise and fall with profits earned by fluctuations in price level. As prices rise, the government
the companies concerned. When prices rise, the returns has to spend more on goods and services including raw
on equities go up on account of the rise in profits, while materials for carrying through their project. Estimates
the bonds and debenture-holders gain nothing as their are revised and taxes are raised. On the other hand, when
incomes remain fixed. prices fall, the government sector or the public sector
On the other hand, equity-holders will lose during has to incur less costs.
depression on account of a fall in the price level, while 10. Effects on Public Moral:
the debenture- and bond-holders gain. To the extent Inflation results in arbitrary redistribution of wealth
investors are able to diversify their investment, they can favoring businessmen and debtors and hurting
protect themselves from the effects of the fluctuation in consumers, creditors, petty shopkeepers, small investors
prices. and fixed income earners. This lowers the public moral.
6. Effects on Farmers: The ethical standards and the public moral had fallen to
Farmers gain during inflation. The prices of farm miserably low levels during the period of hyper-inflation
products go up and the cost incurred by them (like in Germany.
interest and taxes) either remain constant or do not Measurement of Inflation in India
increase much, at any rate i.e., costs lag behind prices
Inflation in India is measured through two major indices
received by the farmers. In India, during war and post-
namely Consumer Price Index (CPI) and Wholesale Price
war period, farmers were able to pay-off their old debts
Index (WPI). The most important index is All India CPI
on account of high prices of their products because of
by CSO. Labour Bureau prepares three CPIs for specific
inflation. Moreover, farmers are generally debtors and
occupational groups. WPI is prepared by Office of Economic
have to pay less in real terms, while the land revenue
Affairs, Ministry of Commerce and Industry.
and taxes etc., do not rise much. Thus, farmers stand to
gain during periods of inflation. The WPI, where prices are quoted from wholesalers, is
constructed by Office of Economic Affairs, Ministry of
7. Effects on Wage Earners:
Commerce and Industries. In the case of CPI (prices quoted
Wage-earners generally suffer during inflation, despite from retailers), there are several indices to measure it: CPI
the fact that they obtain a wage rise according to a rise in for industrial labourers (CPI-IL), agricultural labourers (CPI-
the cost of living index. However, wages do not rise as AL) and rural labourers (CPI-RL) besides an all India CPI.
much as the rise in prices of those commodities, which
In addition, Gross Domestic Product (GDP) deflator and
the workers consume. Further, there is a lag between a
Private Final Consumption Expenditure (PFCE) deflator from
rise in the price level and a rise in wages. If the workers
the National Accounts Statistics (NAS) provide an implicit
are organized, they may not suffer much during inflation
economy-wide inflation estimate.
but if they are unorganized like the agricultural labourers,
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Consumer Price Index onwards. Of these, the CPI combined is the most important
of all the CPIs as it is relevant for all categories of people.
Two Ministries – Ministry of Statistics and Programme
Implementation (MOSPI) and Ministry of Labour and In April 2014, the RBI has selected the all India CPI (of CSO)
Employment (MOLE) are engaged in the construction of as the inflation index to target inflation under its new inflation
different CPIs for different groups/sectors. CPI inflation is targeting monetary policy framework. RBI’s decision has
also called as retail inflation as the prices are quoted from made the CPI as the prime inflation index.
retailers. Following are the various CPIs. (ii) CPIs by MOLE (Labour Bureau)
(a) CPI for all India or CPI combined. The Labour Bureau, Ministry of Labour and Employment
(b) CPI for Agricultural Labourers (AL) (MOLE) is preparing different indices for various categories of
people. These were CPI for Rural Labourers (CPI-RL), CPI for
(c) CPI for Rural Labourers (RL); and
Agricultural Labourers (CPI-AL) and CPI for Industrial Workers
(d) CPI for Industrial Workers (IW) (CPI-IW). There was a CPI for Urban Non-Manual Employees
(i) CPI by MOSPI (CSO) (CPI-UME), but it was discontinued from April 2010.
The CSO, which comes under MOSPI, is constructing the rural, Since these CPIs were for specific categories of workers, it
urban and the combined CPIs. They are published from 2011 lacked the quality of an all India index.

Different price indices in India

Index Agency Base Year
WPI Office of Economic Affairs, Ministry of Commerce and Industries (MOCI) 2011-12
CPI All India, CPI -Urban and Rural CSO, Ministry of Statistics and Programme 2012
Implementation (MOSPI)
CPI-AL Labour Bureau, Ministry of Labour and Employment (MOLE) 1986-87
CPI-RL 1986-87
CPI-IW 2001
On the other hand, the first three indices are for specific with 2011-12 as the base year has a total of 697 items including
occupational categories. The CPI compiled and released at 117 items for primary articles 16 items for fuel and power and
national level by MOLE reflect fluctuations in retail prices 564 items for manufacturing products. The prices tracked are
relating to specific segments of population in the country ex-factory price for manufactured productes, mandi price for
like industrial Workers (CPI-IW), agricultural laborers agri commodities and ex-mines prices for minerals weights
(CPI-AL) and rural labourers (CPI-RL). given to each commodity covered in the WPI.
What is the difference between the various CPIs? Phillips Curve
Difference between the various CPIs is not just that they The Phillips curve is a graphic representation of the inverse
measure price level changes for different sectors or groups. relationship between unemployment and inflation. According
In addition to such a sector specific price level measurement; to the hypothesis, the lower the unemployment rate, the
these indices differ in terms of their geographical coverage, higher the rate of inflation, and vice versa.
commodities included, weights assigned to the different
commodity groups and the base year on the basis of which
price level changes are compared.
The Wholesale Price Index (WPI)
The WPI is published by the Office of Economic Adviser,
Ministry of Commerce and Industry. It is in use since 1942
and is being published from 1947 regularly. It has a long
history for serving as the nationwide inflation indicator till Reflation
the emergence of the combined CPI in 2011. An important To recover from the recession, RBI tries to increase the
feature of the WPI which separate it from the CPI is that money supply and the government tries to give fiscal stimulus
prices are collected from wholesalers. in the form of tax cuts or subsidies. These actions take the
The new WPI series aimes at capturing the price movement economy from a deflationary path towards a reflationary
in a more realistic way in keeping with the times. The basic path. Reflation is thus, the increase in price levels when the
difference between the two series is that the new WPI index economy recovers from recession.

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Inflation Tax Deflation
The term “inflation tax” does not refer to a legal tax paid to A general decline in prices, often caused by a reduction
the government; rather, it refers to the penalty for retaining in the supply of money or credit. Deflation can be caused
currency during a period of high inflation. It is a form of also by a decrease in government, personal or investment
taxation in which the government alters the money supply. spending. The opposite of inflation, deflation has the side
When the supply of money expands, the value of existing effect of increased unemployment since there is a lower
money decreases, resulting in a form of tax on existing level of demand in the economy, which can lead to an
money holders. economic depression. Central banks attempt to stop severe
Skewflation- Skewflation is the episodic price rise in one/ deflation, along with severe inflation, in an attempt to keep
small groups of commodities while prices of the remaining the excessive drop in prices to a minimum.
goods and services remain the same. Hyperinflation
Example: Price rise of onions. Extremely rapid or out of control inflation. There is no precise
GDP Deflator- GDP Deflator is the ratio of the value of numerical definition to hyperinflation. Hyperinflation is a
goods and services produced by an economy in a given year situation where the price increases are so out of control that
at current prices to the value of goods and services produced the concept of inflation is meaningless.
during the base year at current prices. Stagflation
The GDP deflator is used to determine how much of the A condition of slow economic growth and relatively high
growth in GDP is due to higher pricing rather than an increase unemployment - a time of stagnation - accompanied by a
in output. rise in prices, or inflation.
Core Inflation Disinflation
Another way to analyse inflation data is by looking at “core A slowing in the rate of price inflation. Disinflation is used
inflation,” which is generally a chosen measure of inflation to describe instances when the inflation rate has reduced
that excludes the more volatile categories like food and marginally over the short term. It is used to describe periods
energy prices. The main argument here is that the central of slowing inflation.
bank should effectively be responding to the movements in Reflation
permanent component of the price level rather than temporary
Reflation is the act of stimulating the economy by
deviations. increasing the money supply or by reducing taxes. It is the
Since core inflation is derived from the headline, it reflects opposite of disinflation. It can refer to an economic policy
the weaknesses in the primary measure of inflation. whereby a government uses fiscal or monetary stimulus in
order to expand a country’s output. This can possibly be
In Indian context, the derivation of core inflation by exclusion achieved by methods that include reducing tax, changing
of food and energy from CPI/WPI discards a substantial the money supply, or even adjusting interest rates. Just
portion of the commodity basket. So the price movement of as disinflation is considered an acceptable antidote to
the remaining commodities may not be representative of the high inflation, reflation is considered to be an antidote
underlying inflationary trend. to deflation (which, unlike inflation, is considered bad
regardless how high it is).
IIP (Index of Industrial Production)
Recession
IIP is and index for India whiich details ot the growth of
various sector in an economy such as mineral, mining, When there is a negative growth in the GDP for two
electricty and manufacturing. A high level panel had firmed consequtive quarters in a financial year, the condition is
up the methodology for the IIP with new base year of 2011- known as recession.
12. The statistics ministry has proposed the new base year Agflation
for IIP as 2017-2018.
An increase in the price of food that occurs as a result of
The new IIP series has total of 809 items occuring in the increased demand from human consumption and use as an
manufactring sector in the item basket (405 item group), alternative energy resource. While the competitive nature of
where 149 new itmes have been added and 124 items have retail supermarkets allows some of the effects of agflation
been deleted from the 2004-05 series. The earlier series had to be absorbed, the price increases that agflation causes
620 itemes (397 itmes groups) in the manufactring sector. are largely passed on to the end consumer. The term is
Inflation Related Terms derived from a combination of the words “agriculture” and
“inflation”.

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consumers. This will lower the amount of cash entering
Inflation, Interest Rate and RBI
the economy.
If the interest rate is low then loan will be cheap. It gives
It’s the RBI’s responsibility to check and monitor inflation via
more borrowing power in the hands of consumers. With
indicators like the Wholesale Price Index (WPI), Consumer
low cost loans easily available, the consumers spend
Price Index (CPI) and the Producer Price Indexes (PPI), to
more due to which the economy grows and naturally
take best decision to keep the economy in balance. There must
creating more inflation. If the RBI feels that the economy
be enough economic growth to increase wages and decrease
is growing very fast, and the gap between demand and
unemployment, but not too much growth that it leads to very
supply may increase to a greater extent, then it will
high inflation. The target of inflation rate must be between
increase the interest rates. Increase in interest rate means
two and three percent per year.
costly loans. It gives less borrowing power in the hands of

NOTES

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INFLATION - (PRACTICE QUESTIONS)
Q.1. What is/are the possible cause of inflation? Q.7. Which of the following measures can be undertaken
(i) Growth in population. to control inflation?
(ii) Rise in unemployment. (A) Control on public expenditure
(iii) Increasing Urbanization. (B) Control on hoarding and black marketing
(1) Only option i is correct. (C) Restrictive credit policy
(2) Only option ii is correct. (1) Options A & B is correct
(3) Only option iii is correct. (2) Options B & C is correct
(4) All of these (3) Options A & C is correct
(5) None of these (4) Options A, B & C is correct
Q.2. What is/are the possible cause of demand-pull (5) None of these
inflation? Q.8. Which of the following measures can be undertaken
(A) An increase in costs of goods and services. to control deflation?
(B) A reduction in the interest rates leading to lower (A) Increase in the government spending
EMIs. (B) Decreasing interest rates
(C) An increase in government spending. (C) Suspending government employees
(1) Only option A is correct. (1) Options A & B is correct
(2) Only option A & B are correct. (2) Options B & C is correct
(3) Only option B & C are correct.
(3) Options A & C is correct
(4) All of these
(4) Options A, B & C is correct
(5) None of these
(5) None of these
Q.3. Which of the following is one of the effect of
Q.9. Which of the following statement is true about
Inflation?
wholesale price index?
(1) Reduction in the purchasing power of money.
(A) It consist of 697 items in total.
(2) It reduces the cost of living.
(B) Manufactured item has maximum weightage
(3) It enhances the standard of living.
(C) Its base year was revised to 2011-12 from 2004-
(4) Reduces the price of products.
05.
(5) None of these
(1) Options A & B is correct.
Q.4. The Phillips curve shows the relationship between
(2) Options B & C is correct.
inflation and ________.
(3) Options A & C is correct.
(1) Poverty
(4) Options A, B & C is correct.
(2) Purchasing power
(5) None of these
(3) Unemployment
(4) Growth domestic product Q.10. Which of the following products/articles holds
maximum weightage in WPI?
(5) None of these
(1) Primary articles (2) Fuel items
Q.5. Which of the following is a reason for deflation?
(3) Manufactured items (4) Equal weightage
(1) Surplus budgeting (2) Growth in GDP
(5) None of these
(3) High interest rates (4) All the above
Q.11. Who among the following benefits the most from
(5) None of these
inflation?
Q.6. Which of the following is an effect of deflation?
(1) Creditor (2) Debtor
(1) An increase in the purchasing power of money
(3) Wage employee (4) All of these
(2) A decrease in the price of goods and services
(5) None of these
(3) Decrease in the gross domestic product of a
country Q.12. Compiling and releasing monthly Wholesale Price
Indices is done by:
(4) All the above
(1) The Office of the Economic Adviser (Ministry
(5) None of these
of Commerce & Industry).
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(2) Ministry of Statistics and Programme (4) All options except (B) is true
Implementation (5) All options are true
(3) Central Statistical Office Q.18. Which of the following is not the stage of inflation?
(4) All of these (1) Hyper-Inflation (2) Walking Inflation
(5) None of these (3) Depression (4) Creeping Inflation
Q.13. What is the most powerful tool used by the Reserve (5) None of these
Bank of India to control inflation? Q.19. A continuous fall in the GDP for two consecutive
(1) Increasing policy rates. quarter is defined as:
(2) Decreasing policy rates. (1) Recession (2) Depreciation
(3) Decreasing government expenditure (3) Prosperity (4) Recovery
(4) Increasing the tax structure (5) None of these
(5) None of these Q.20. A phase in the economy characterized by continuous
Q.14. A condition in which both inflation and recession increase in GDP after an era of negative growth is
exists is known as: termed as:
(1) Stagnation (2) Stagflation (1) Recession (2) Depreciation
(3) Walking inflation (4) Deflation (3) Prosperity (4) Recovery
(5) None of the above (5) None of these
Q.15. Which one of the following is ‘most vulnerable’ to Q.21. A phase in the economy characterized by continuous
evil effects of inflation? fall the in GDP leading to negative growth is termed
as:
(1) A salaried employee
(1) Recession (2) Depreciation
(2) An agricultural farmers
(3) Prosperity (4) Recovery
(3) A person who have borrowed money from bank.
(5) None of these
(4) College student.
Q.22. Which of the following economy has faced hyper-
(5) None of these inflation?
Q.16. The process to correct inflation is: (1) Japan (2) Venezuela
(1) Stagnation (2) Stagflation (3) Germany (4) All of these
(3) Deflation (4) Disinflation (5) None of these
(5) None of the above Q.23. In order to negate the evil effects of Inflation one
Q.17. Which of the following statement is true regarding must invest in:
Deficit Financing: (1) Bonds (2) Equity
(A) Deficit financing is a method of meeting (3) Saving account (4) Current Account
government deficits through the creation of new (5) None of these
money.
Q.24. Which of the following statement is true:
(B) The deficit is the gap caused by the excess of
(1) Inflation is inversely related to decreasing money
government expenditure over its receipts.
supply.
(C) Deficit financing provides the government (2) Deflation is inversely related to decreasing money
resources for the plans. supply.
(D) It has been replaces by ‘Ways and Means (3) Reflation is related to decreasing in money
Advances’ from April 1997. supply.
(1) All options except D is true (4) Disinflation is related to increasing in money
(2) All options except (A), (B) & (C) is true supply.
(3) All options except C is true (5) None of these

ANSWER KEY
1.(4) 2.(3) 3.(1) 4.(3) 5.(3) 6.(4) 7.(4) 8.(1) 9.(4) 10.(3)
11.(2) 12.(1) 13.(1) 14.(2) 15.(2) 16.(4) 17.(5) 18.(3) 19.(1) 20.(4)
21.(2) 22.(4) 23.(2) 24.(2)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)
Q.1. Ministry of Statistics and Programme Implementation (5)It is the graph which indicates the various
(MOSPI) and _____________are engaged in the production possibilities of two commodities when
construction of different CPIs for different groups/ resources are fixed.
sectors. Q.7. Total number of items covered under Wholesale
(IBPS PO MAINS 2020-21) Price Index are-
(1) Ministry of Finance (IBPS PO MAINS 2020)
(2) Ministry of Defense (1)697 (2)504
(3) Ministry of Home Affairs (3)616 (4)532
(4) Ministry of Labour and Employment (5)422
(5) CSO Q.8. Which of these is Not a type of Consumer price
Q.2. In order to show the average price changes of goods, index?
Wholesale price index is reported on- (IBPS Clerk MAINS 2018)
(IBPS PO MAINS 2020) (1) CPI for Industrial Workers (IW)
(1)Quarterly basis (2)Monthly basis (2) CPI for Agricultural Labourer (AL)
(3)weekly (4)yearly (3) CPI for Rural Labourer (RL)
(5)every 2 years (4) CPI (Rural/Urban/Combined)
Q.3. Producer Price Index measures- (5) CPI for investors(IV)
(IBPS PO MAINS 2020) Q.9. Base year to calculate CPI is-
(1)Cost changes from the viewpoint of whole seller (IBPS Clerk MAINS 2018)
(2)Price movements from the investors point of view (1)2010 (2)2011
(3)Price movements due to change in demand or (3)2012 (4)2007
supply of a product (5)2000
(4)Cost changes from the viewpoint of the consumer Q.10. What are the causes to measure Inflation? (IBPS
(5)Price movements from the seller’s point of view (Clerk MAINS 2018)
Q.4. What is the Base year to Calculate WPI? (1)Demand-pull inflation
(IBPS PO MAINS 2020) (2)Cost-push inflation (3)Devaluation
(1)1998-99 (2)2000-01
(4)Rising wages (5)All of the above
(3)2004-05 (4)2008-09
Q.11. Who has the authority to measure Inflation in India?
(5)2011-12 (IBPS Clerk MAINS 2018)
Q.5. How is Inflation measured? (1) Ministry of Commerce and Industry
(IBPS PO MAINS 2020)
(2) Reserve bank of India
(1)Wholesale Price Index
(3) Ministry of finance
(2)Consumer Price Index
(4) Ministry of Home affairs
(3)Value index
(5) Central statistics office
(4)Both (1) & (2) (5)Both (2) & (3)
Q.12. How many types of inflation?
Q.6. What is Consumer Price Index?
(IBPS Clerk MAINS 2018)
(IBPS PO MAINS 2020)
(1) 2 (2) 3
(1)An index that measures and tracks the changes in
(3) 4 (4) 5
the price of goods in the stages before the retail level.
(5) 6
(2)An index that measures the percentage change in
the price of a basket of goods and services consumed Q.13. A persistent fall in the general price level of goods
by households. and services is known as __________:
(3)A statistic composite index of life expectancy, (IBPS Clerk MAINS 2018)
education and per capita income indicators (1) Deflation (2) Disinflation
(4)An index that measures the average changes in (3) Stagflation (4) Depression
prices received by domestic producers for their output. (5) None of these

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Q.14. Which among the following is an anti-inflationary Q.20. Whether Family Court Act is__________.
measure? (IBPS RRB - 2021)
(IBPS Clerk MAINS 2018) (1) Central Statute
(1) Stagflation (2) Hyper Inflation (2) State Statute
(3) Exchange Rate (4) Disinflation (3) Municipal Statute
(5) None of these (4) Executive Statute
Q.15. Phillips Curve is used to show relation between which (5) None of these
of following variable?
Q.21. Among the following options, which of these is a
(IBPS Clerk MAINS 2018) revenue receipt?
(1) Tax’s and Inflation
(SBI CLREK - 2020)
(2) Employment and Inflation
(1) Loan recovery
(3) GDP Growth and Infilation
(2) External grants
(4) Unemployment and Inflation
(3) Disinvestment
(5) None of these
(4) Borrowings
Q.16. Inflation is measured by _______.
(5) None of these
(IBPS RRB - 2021)
(1) Consumer price index Q.22. The Working and operations of NBFCs are regulated
by___.
(2) Wholesale price index
(IBPS Clerk - 2017)
(3) Marshall’s index
(4) All of the above (1) SEBI
(5) None of the above (2) RBI
Q.17. High inflation levels in the economy leads to (3) Finance Ministry, GOI
_______ in the supply of money. (4) IRDA
(IBPS RRB - 2018) (5) None of the above
(1) Increase Q.23. Where is the headquarter of Multilateral Investment
(2) Decrease Guarantee Agency (MIGA) located?
(3) No change (IBPS Clerk - 2017)
(4) All of the above (1) New York (2) Geneva
(5) None of the above (3) Brussels (4) Rome
Q.18. Consortium accounts will be classified as NPA based on (5) Washington D.C.
(IBPS RRB - 2018) Q.24. What does the primary deficit in the subcontext of
(1) the individual bank’s recovery. the government budget relate to –
(2) The liability of the account (1) Interest payment requirement
(3) The capital of the bank (2) Borrowing requirement
(4) The no of directors of the company. (3) (b) less (a)
(5) None of these (4) (a) plus (b)
Q.19. Small Finance Banks (SFBs) will be required to (5) None of these
extend 75% of their adjusted net bank credit (ANBC) Q.25. Agencies which purchases NPA form Banks is called
for ____. (IBPS PO - 2017)
(SBI PO - 2018)
(1) Asset Recovery Company
(1) MSME
(2) Payment Banks
(2) Agricultural Credit
(3) NBFC
(3) Priority Sector Lending
(4) Reserve Bank of India
(4) Unorganised Sector
(5) None of the above
(5) None of them
ANSWER KEY
1.(4) 2.(2) 3.(5) 4.(5) 5.(4) 6.(2) 7.(1) 8.(5) 9.(3) 10.(5)
11.(1) 12.(2) 13.(1) 14.(4) 15.(4) 16.(1) 17.(1) 18.(1) 19.(2) 20.(1)
21.(2) 22.(2) 23.(5) 24.(3) 25.(1)

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NATIONAL INCOME

##SOURCES OF INCOME
##METHODS OF CALCULATING NATIONAL INCOME
##MEASURES OF NATIONAL INCOME
##TYPE OF GOODS
##DEPRECIATION
##HISTORY OF STATISTICAL SYSTEM IN INDIA
##NATIONAL SAMPLE SURVEY ORGANISATION (NSSO)
##PRACTICE PAPER QUESTIONS
##PREVIOUS PAPER QUESTIONS

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CHAPTER
NATIONAL
5
INCOME
interest to capital and profit to organisations. This will be
Definition
equal to the income of the nation. In other words, total income
J.M.Keynes, a famous economist defined national income is equal to the reward given to various factors of production.
as follows - By adding the money sent by the Indian citizens from abroad
“National Income is the money value of all goods and services to the income of the various factors of production, we get the
produced in a country during a year”. gross national income.

Sources Of Income GDP = Rent + Wage + Interest +Profit + Income from

abroad
It is not that countries which are endowed with a bounty of
natural wealth- minerals or forests or the most fertile lands This method will help us to know the contributions made
- are naturally the richest countries. In fact the resource rich by different agents like landlords, labourers, capitalists and
Africa and Latin America have some of the poorest countries organizers to national income.
in the world, whereas many prosperous countries have Expenditure Method
scarcely any natural wealth. National income can also be calculated by adding up the
There was a time when possession of natural resources was expenditure incurred for goods and services. Government as
the most important consideration but even then the resource well as private individuals spend money for consumption and
had to be transformed through a production process. The production purposes. The sum total of expenditure incurred
economic wealth, or well-being, of a country thus does not in a country during a year will be equal to national income.
necessarily depend on the mere possession of resources; GDP = Individual Expenditure + Government Expenditure
the point is how these resources are used in generating a
flow of production and how, as a consequence, income and This method will help us to identify the expenditure incurred
wealth are generated from that process. People combine by different agents.
their energy with natural and manmade environment within Any one of the above methods can be used for calculating
a certain social and technological structure to generate a flow national income.
of production.
Production method = Income method = Expenditure
Methods of calculating National Income method
Production Method Measures of National Income
This method is based on the total production of a country Gross Domestic Product (GDP)
during a year. First of all production units are classified into
GDP is the total money value of all final goods and services,
primary, secondary and tertiary sectors then we identify the
produced with in the geographical boundary of the country
various units that come under these sectors. We estimate the
during a financial year.
goods and services produced in each of these sectors. The
sum total of products produced in these three sectors is the SOME MACRO ECONOMIC IDENTITIES
total output of the nation. The next step is to find out the Gross Domestic Product measures the aggregate production
value of these products in terms of money. The money sent of final goods and services taking place within the domestic
by Indian citizens working abroad is also added to this. Now economy during a year.
we get the gross national income.
GDP = Value of all services produced within the country
GDP = Money value of final goods and services + Income + value of all goods produced within the country.
from abroad
Gross National Product (GNP)
Income Method
But the whole of it may not accrue to the citizens of the
Factors of production together produce output and income. country. For example, a citizen of India working in United
The income received by the factors of production during a States may be earning her wage and it will be included
year can be obtained by adding rent to land, wages to labour, in the United States GDP. But legally speaking, she is an
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Indian. When we try to compensate this, in order to maintain may be subsidies granted by the government on the prices
symmetry, we must deduct the earnings of the foreigners who of some commodities (in India petrol is heavily taxed by the
are working within our domestic economy, or the payments government, whereas cooking gas is subsidised). So we need
to the factors of production owned by the foreigners. For to add subsidies to the NNP evaluated at market prices. The
example, the profits earned by the Korean-owned Hyundai measure that we obtain by doing so is called Net National
car factory will have to be subtracted from the GDP of India. Product at factor cost or National Income.
The macroeconomic variable which takes into account Thus, NNP at factor cost =
such additions and subtractions is known as Gross National National Income (NI ) = NNP at market prices -(Indirect
Product (GNP). It is,therefore, defined as follows taxes - Subsidies) = NNP at market prices - Net indirect
GNP=GDP + Factor income earned by the domestic taxes (Net indirect taxes = Indirect taxes- Subsidies)
factors of production employed in the rest of the world Personal Income (PI) = NI - Undistributed profits - Net
- Factor income earned by the factors of production of interest payments made by households - Corporate tax
the rest of the world employed in the domestic economy. + Transfer payments to the households from the gov.
Various Method for calculating National and firms.
Income However, even PI is not the income over which the
Hence, GNP=GDP + Net factor income from abroad households have complete say. They have to pay taxes from
PI. If we deduct the Personal Tax Payments (for example
income tax), and Non-tax Payments (such as fines) from
PI, we obtain what is known as the Personal Disposable
Income. Thus
Personal Disposable Income (PDI) = PI - Personal tax
payments - Non-tax payments.
Personal Disposable Income is the part of the aggregate
income which belongs to the households. They may decide
to consume a part of it, and save the rest.
Type Of Goods
Final Goods
An item that is meant for final use and will not pass
through any more stages of production or transformations,
for example an article of clothing which is ready to be sold
finally to the consumers for final use. Such a good is called
a final good.
(+)

Final goods may be of two types consumption goods and

capital goods. we can distinguish between Goods like food,
and clothing, and services like recreation that are consumed
We have already noted that a part of the capital gets consumed when purchased by their ultimate consumers are called
during the year due to wear and tear. This wear and tear is consumption goods or consumer goods. (This also includes
called depreciation. Naturally, depreciation does not become services which are consumed but for convenience we may
part of anybody’s income. If we deduct depreciation from refer to them as consumer goods.)Then there are other goods
GNP the measure of aggregate income that we obtain is called that are of durable character which are used in the production
Net National Product (NNP). Thus, process. These are tools, implements and machines. While
they make production of other commodities feasible, they
NNP=GNP - Depreciation
themselves don’t get transformed in the production process.
It is to be noted that all these variables are evaluated at market They are also final goods yet they are not final goods to be
prices. Through the expression given above, we get the value ultimately consumed.
of NNP evaluated at market prices. But market price includes
Intermediate Goods
indirect taxes. When indirect taxes are imposed on goods
and services, their prices go up. Indirect taxes accrue to the All the final goods and services produced in an economy
government. We have to deduct them from NNP evaluated in a given period of time are either in the form of
at market prices in order to calculate that part of NNP which consumption goods (both durable and non-durable) or
actually accrues to the factors of production. Similarly, there capital goods. As final goods they do not undergo any
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further transformation in the economic process. Of the CENTRAL STATISTICS OFFICE (CSO)
total production taking place in the economy a large
The CSO, headed by a Director General, consists of five
number of products don’t end up in final consumption and
Divisions, namely, the National Accounts Division (NAD),
are not capital goods either. Such goods may be used by
the Economic Statistics Division (ESD), the Social Statistics
other producers as material inputs.
Division (SSD), the Training Division and the Coordination
Counting them separately will lead to the error of double & Publication Division (CAP). The CSO has wing located
counting. Whereas considering intermediate goods may in Kolkata known as Industrial Statistics Wing.
give a better description of total economic activity, counting
The Central Statistical Office is responsible for coordination
them will highly exaggerate the final value of our economic
of statistical activities in the country, and for evolving
activity.
and maintaining statistical standards. Its activities include
Depreciation National Income Accounting; conduct of Annual Survey of
Already existing capital stock suffers wear and tear and Industries, Economic Censuses and its follow up surveys,
needs maintenance and replacement. A part of the capital compilation of Index of Industrial Production, as well
goods produced this year goes for replacement of existing as Consumer Price Indices, Gender Statistics, imparting
capital goods and is not an addition to the stock of capital training on Official Statistics, Five Year Plan work relating to
goods already existing and its value needs to be subtracted Development of Statistics in the States and Union Territories;
from gross investment for arriving at the measure for net dissemination of statistical information, work relating to
investment. This deletion, which is made from the value of trade, energy, construction, and environment statistics,
gross investment in order to accommodate regular wear and revision of National Industrial Classification, etc.
tear of capital,is called depreciation. National Sample Survey Organisation (NSSO)
Net Investment = Gross investment - Depreciation National Sample Survey (NSS) was set up in 1950 on the
We can imagine as if the machine is being gradually used recommendations of National Income Committee, chaired by
up in each year’s production process and each year one late Prof. P. C. Mahalanobis to fill up large gaps in statistical
twentieth of its original value is getting depreciated. So, data for computation of national income aggregates, especially
instead of considering a bulk investment for replacement in respect of unorganized / household sector of the economy.
after twenty years, we consider an annual depreciation Initially statistical work of NSS except for fieldwork used to
cost every year. This is the usual sense in which the term be carried out by Indian Statistical Institute under the guidance
depreciation is used and inherent in its conception is the of Prof. Mahalanobis, while NSS Directorate was created and
expected life of a particular capital good, like twenty years assigned the fieldwork. NSS was reorganized as National
in our example of the machine. Depreciation is thus an Sample Survey Organisation (NSSO) in March 1970 on the
annual allowance for wear and tear of a capital good.In recommendation of Review Committee Chaired by Sh. B.
other words it is the cost of the good divided by number Sivaraman, when all aspects of NSS work was brought under
of years of its useful life. Notice here that depreciation a single organization under Government of India. However
is an accounting concept. No real expenditure may have full integration was not possible until June, 1972 (on the eve of
actually been incurred each year yet depreciation is annually launching of NSS 27th round). In a way, this marked the end
accounted for. of an era in the history of NSS. In the new set-up Governing
Council (GC) of NSSO with a non-official Chairman to guide
History of Statistical System In India all the activities of NSSO came in as the apex body of the new
The first attempt to calculate national income of India was organization and NSS surveys were given a new perspective.
made by Dada Bhai Naoroji in 1867-68. The first scientific In 2006, consequent to formation of National Statistical
attempt was made by Prof.V.K.R.V.Rao in 1931-32. The Commission, GC of NSSO was dissolved and a Steering
first official attempt was made by Prof.P.C.Mahalanobis in Committee of National Sample Survey came in its place. The
1948- 49. The final report was submitted in 1954. Today NSSO is now called as National Sample Survey organisation.
national income is calculated and published by the Central The NSSO functions under the overall direction of a Steering
Statistics office. Committee with requisite independence and autonomy in
the matter of collection, processing and publication of NSS
Only after India became independent did the Government of
data. In addition to the non official Chairman, the Steering
India establish a Central Statistical Unit (1949), which was
Committee is composed of academicians, data users from
later (1951) converted into the Central Statistics office (CSO)
Central and State Government departments and senior officers
and the Department of Statistics, which constitute presently
of the Ministry. The NSSO is headed by the Director General
the National Statistical Organisation (NSO) of the Ministry
and Chief Executive Officer (DG & CEO), who is also the
of Statistics and Programme Implementation.
Member Secretary of the Steering Committee.
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NATIONAL INCOME - (PRACTICE QUESTIONS)
Q.1. Which is the most important source for National (3) Winning a Lottery
Income in India? (4) Agent’s Commission for selling a house
(1) Agriculture (2) Services (5) None of These
(3) Industry (4) Business Q.8. With which of the following we divide the National
(5) None of these Income to calculate Per Capita Income?
Q.2. When the economy grows, what effect it has on the (1) Total population of a country
tertiary sector - (2) Working Population
(1) Decrease and then increases (3) Total Area of the Country
(2) Increases and then decreases (4) Total Capital Formation
(3) increases (5) None of These
(4) decreases Q.9. Which of the following is true about India’s National
(5) none of these Income?
Q.3. What is National Income – (1) The % of Agriculture is more than that of
(1) National product value at market cost services.

(2) Net National Value at Factor cost (2) The % of Industries is more than that of the
Agriculture
(3) Domestic value at market cost
(3) The % of services is more than of Industry
(4) Domestic Value at factor cost
(4) The % of services is more than that of the
(5) None of these combined % of manufacturing and agriculture
Q.4. Which of the following calculates National Income (5) None of these
of India–
Q.10. Which of the following is equal to depreciation?
(1) Planning Commission
(1) Gross National Product - net national product
(2) Finance Ministry
(2) Net National Product - GNP
(3) CSO
(3) Gross national product - personal income
(4) RBI
(4) Personal income – Personal taxes
(5) None of these
(5) None of these
Q.5. In 1867-68 who calculated the per capita income at
20 rupees for the first time in India Q.11. Which of the following is not the method of
measurement of national income -
(1) M.G. Ranade (2) Sir W.Hunter
(1) Production Method
(3) Naoroji (4) R.Dutt
(2) Income method
(5) None of these
(3) Investment method
Q.6. Who gave the concept of ‘Drain of Wealth’?
(4) Expenditure method
(1) Bal Gangadhar Tilak
(5) None of these
(2) Naoroji
Q.12. Which of the following fields in India received the
(3) G.K. Gokhale largest proportion of gross national product -
(4) Govind Sharma (1) In agriculture and related fields
(5) None of these (2) Public Administration in defence
Q.7. Which of the following is not included in National (3) Service sector
Income?
(4) Manufacturing, construction, electricity and gas
(1) Tenant’s rent
(5) None of these
(2) Expenditure on bridges
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Q.13. What is Nation’s National income - Q.19. A country’s economic development is dependent on -
(1) The Government’s annual revenue (1) Natural Resources (2) Capital Formation
(2) The sum value of all products (3) Market size (4) All of these
(3) The surplus production in the commercial sectors (5) None of these
(4) Deducting the imports from exports Q.20. Which of the following issues Human Development
report?
(5) None of these
(1) UNCTAD (2) ASEAN
Q.14. Which of the following is not included while
calculating the National income? (3) IBRD (4) UNDP

(1) Rent (2) Mixed income (5) None of these

Q.21. Head office of CSO is located in-
(3) Pension (4) Retained earnings
(1) Mumbai (2) Kolkata
(5) None of these
(3) New Delhi (4) Chennai
Q.15. What is the type of Indian economy?
(5) Bengaluru
(1) Socialist (2) Mixed
Q.22. What is the base year of GVA/GDP ?
(3) Gandhian (4) Independent
(1) 2011-12 (2) 2012-13
(5) None of these
(3) 2013-14 (4) 2009-10
Q.16. What do you understand by closed economy?
(5) 2014-15
(1) Control of inflation Q.23. GVA stands for-
(2) Deficit Financing (1) Gross Value Added
(3) Only Export (2) Gross Valid Add
(4) No import No export (3) Gross Value Addition
(5) None of these (4) Gross Value Admission
Q.17. Which of the following publishes World Investment (5) None of these
report? Q.24. Which of the following is a feature of Indian
(1) I.B.R.D (2) I.M.F Economy?
(3) U.N.D.P (4) W.T.O (1) High income economy
(5) UNCTAD (2) Medium income economy
Q.18. Human development Index includes which of the (3) Lower medium income economy
following - (4) Lower income economy
(1) US dollars per capita GDP (5) None of these
(2) Real GDP per capita at purchasing power Q.25. From where did the Gross Happiness start?
(3) US dollar gross national product (1) Greece (2) Bhutan
(4) US dollars per capita national income (3) Bangladesh (4) India
(5) None of these (5) None of these

ANSWER KEY
1.(2) 2.(3) 3.(2) 4.(3) 5.(3) 6.(2) 7.(3) 8.(1) 9.(4) 10.(1)
11.(3) 12.(3) 13.(2) 14.(4) 15.(2) 16.(4) 17.(5) 18.(4) 19.(4) 20.(4)
21.(3) 22.(1) 23.(1) 24.(3) 25.(2)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)
Q.1. National Income is equal to: (1) 2% (2) 3%
(NABARD Grade-A 2018) (3) 4% (4) 5%
(1) GDP- Capital Depreciation (5) 6%
(2) NNP at factor cost - subsidy + Indirect taxes Q.7. Under DAY-NRLM, the maximum lending rate
(3) NNP at current price- subsidy + Indirect taxes for women SHG’s (taking into account the interest
(4) NNP at current price- Indirect taxes +subsidy subvention) is?
(5) None of these (NABARD Grade-A 2019)
Q.2. Which of the following aggregate is called National (1) 5% (2) 6%
Income? (3) 7% (4) 8%
(NABARD Grade-A 2019) (5) 10%
(1) Net National Product at Market Price Q.8. In which year were the National Minorities
(2) Net National Product at Factor cost Development and Finance Corporation set up?
(3) Gross Domestic Product at Market Price (NABARD Grade-A 2019)
(4) Gross Domestic Product at Factor cost (1) 1992 (2) 1994
(5) None of these (3) 1996 (4) 1998
Q.3. What is the Total horticulture production in 2019-20 (5) 2000
according to first advance estimates? Q.9. Which of the following crop has the maximum water
(IBPS PO MAINS 2020) requirement?
(1) 313.35 million tonnes (NABARD Grade-A 2019)
(2) 183.17 million tonnes (1) Sugarcane (2) Sugar
(3) 377 million tonnes (3) Wheat (4) Pulses
(4) 320.48 million tonnes (5) None of these
(5) 140.47 million tonnes Q.10. CREDAI is an apex body of which industry/ sector?
Q.4. Which of the following organization is one of the (SBI CLERK MAINS 2021)
parts of the ‘World Bank’? NABARD Grade-A 2019
(1) Tourism (2) Real estate
(IBPS PO MAINS 2020)
(3) IT (4) Hospitality
(1) The International Bank for Reconstruction and
Development (IBRD) (5) None of the above
(2) The World Intellectual Property Organization Q.11. The government’s stake in ITC Limited which is
(WIPO) worth about Rs. 20250 cr currently___ ____.
(3) The International Finance Corporation (IFC) (SBI CLERK MAINS 2021)
(4) The Multilateral Investment Guarantee Agency (1) 6.43% (2) 7.93%
(MIGA) (3) 8.33% (4) 10.43%
(5) Financial Action Task Force (5) 15.53%
Q.5. What is the estimated kharif foodgrains crop output Q.12. Which of the following risks are associated with
for 2019-20, as per first advance estimate? the calculation of Capital to Risk (weighted) Assets
(IBPS PO MAINS 2020) Ratio (CRAR)?
(1) 140.57 million tonnes NABARD Grade-A 2019 (IBPS Clerk - 2017)
(2) 120.47 million tonnes (1) Only I (2) Only I & II
(3) 130.28 million tonnes (3) Only III (4) Only I & III
(4) 150.44 million tonnes (5) All I, II & III
(5) 160 million tonnes Q.13. The government has notified raising the threshold
Q.6. What is the maximum premium for horticultural limit of PF withdrawal for deduction of tax (TDS)
crops under PMFBY? from existing Rs 30,000 to _____.
(NABARD Grade-A 2019) (SBI CLERK MAINS 2021)
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(1) Rs 40,000 (2) Rs 50,000 Q.20. With respect to Debit Cards, in MDR , M stands for
(3) Rs 80,000 (4) Rs 1 lakh ________.
(5) Rs 2 lakh (IBPS Clerk - 2020)
Q.14. RBI has changed the timings of NEFT and RTGS (1) Minimum (2) Maximum
Now in how many batches transaction through (3) Merchant (4) Micro
NEFT can be done?
(5) None of the above
(IBPS Clerk - 2020)
Q.21. The Base year of All-India WPI has been revised
(1) 48 (2) 34
from 2004-05 to-
(3) 23 (4) 24
(IBPS Clerk - 2020)
(5) 18
(1) 2009-10 (2) 2010-11
Q.15. NSSO is the _______________.?
(3) 2011-12 (4) 2012-13
(IBPS Clerk - 2017)
(1) National Survey Organization (5) 2013-14
(2) National Sample Survey Organization Q.22. Department of Financial Services (DFS), Ministry
of Finance and National Informatics Centre (NIC)
(3) National Security Survey Organization
have jointly developed a mobile app called Jan Dhan
(4) National Unemployment Survey Organization Darshak as a part of _____ initiativ(5)
(5) None of these (IBPS Clerk -2018)
Q.16. Which is the most important source for National
(1) Digital India (2) Fiancial Inclusion
Income in India?
(3) Direct Benefit Transfer
(NABARD Grade-A 2018)
(1)Agriculture (2)Services (4) All of these (5) None of these
(3)Industry (4)Business Q.23. Skill India program aims to achieve a target of
training 40 million people by _________.
(5)None of these
Q.17. When the economy grows, what effect it has on the (SBI PO Mains 2022)
tertiary sector? (1) 2022 (2) 2025
(NABARD Grade-A 2019) (3) 2030 (4) 2040
(1) Decrease and then increases (5) 2050
(2) Increases and then decreases Q.24. SAMADHAAN portal has been launched by which
(3) increases (4) decreases ministry?
(5) none of these (SBI PO Mains 2022)
Q.18. India spends what percentage of GDP in the health sector? 1. Micro, Small and Medium Enterprises
(NABARD Grade-A 2019) 2. Law 3. Mines
(1) 2.50% (2) 1.50% 4. Labour and Employment
(3) 5.50% (4) 0.50% 5. Science and Technology
(5) 3.50%
Q.25. The electronic payment which is made by scanning
Q.19. What is the stake of Indian government in IDBI? a code through the mobile phone is known as _____.
(IDBI 2019) (IBPS PO - 2017)
(1) 25.48% (2) 45.48%
(1) Barcode (2) Bharat QR code
(3) 50.48% (4) 68.48%
(3) Scan & Pay (4) Point-of-Sale (POS)
(5) 70.48%
(5) None of these
ANSWER KEY
1.(3) 2.(2) 3.(4) 4.(1) 5.(1) 6.(4) 7.(3) 8.(2) 9.(1) 10.(2)
11.(2) 12.(5) 13.(3) 14.(1) 15.(2) 16.(2) 17.(3) 18.(2) 19.(2) 20.(3)
21.(3) 22.(2) 23.(3) 24.(1) 25.(2)

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MONEY MARKET IN INDIA

##FINANCIAL MARKET
##INDIA MONEY MARKET
##INSTRUMENTS OF MONEY MARKET
##NEGOTIABLE INSTRUMENTS ACT, 1881
##PRACTICE PAPER QUESTIONS
##PREVIOUS PAPER QUESTIONS

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CHAPTER
MONEY MARKET
6
IN INDIA

Indian Money Market

Unorganised Sector Organised Sector Co-operative Sector

Money Indigenous Nidhi's Chit

Lenders Bankers Funds

RBI Public Sector Private Sector Development Banks DFHI Ltd.

Banks Banks and Financial
Institutions

SBI Other Nationalised UTI, LIC,IFC, IDBI

Banks

Scheduled Banks Non-Scheduled Banks

Indian Banks Foreign Banks

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There are certain organisation in the financial market which ##The maturity period of CDs issued by banks should not
deal in money while keeping a synch. These institutions be less than 7 days and not more than 364 days, from
combined together are called Money Market. the date of issue.
Money Market Institutions are ##Minimum amount of CD should be Rs. 1 lakh i.e., the
minimum deposit that could be accepted from a single
Government of India and other sovereign bodies
subscriber should not be less than Rs. 1 lakh & in
Banks and Development Financial Institutions multiples of Rs 1 lakh there after.
PSUs [Public Sector Undertakings Commercial Papers
Private sector organizations ##Commercial papers [CPs] are negotiable short-term
The Government /Quasi government owned non-corporate unsecured promissory notes with fixed maturities, issued
entities. by well-rated organizations.
Large numbers of instruments that are traded in the money ##These are generally sold on discount basis. Organizations
market are issued by Government of India, State governments can issue CPs either directly or through banks or
and other statutory bodies. Instruments that are issued by the merchant banks [called as dealers]. These instruments
Development Financial Institutions [DFI] and banks carry are normally issued in the multiples of five lakh.
the highest credit ratings amongst non-government issuers ##Minimum Time period – 7 days
mainly due to their connection with the Indian Government.
##Maximum Time Period – 364 days
Instruments of Money Market
Dated Government Securities
Call Money Market
##These are securities issued by the Government of India
Call money market is a market for uncollateralized lending and State Governments.
and borrowing of funds. This market is predominantly
overnight and is open for participation only to schedule ##The date of maturity is specified in the securities
commercial banks and the primary dealers. The largest money therefore they are known as dated securities.
market is - Mumbai Zero -Coupon Bonds
Notice Money ##It is issued at a discount to face value. No interest is
One financial institution borrow money from another paid during the period of the bond. But at the time of
financial institution for 2 days to 14 days. maturity full payment or bullet payment of the face value
would be done.
Term Money
Deep-Discount Bonds:
One financial institution borrow money from another
financial institution for more than 14 days. ##It was first introduced by IDBI in June 1994 followed
by ICICI. It is similar to zero-coupon bonds with longer
Treasury Bills
maturity.
These are the lowest risk category instruments for the short
term. RBI issues treasury bills [T-bills] at a prefixed day and Negotiable Instruments Act, 1881
for a fixed amount. There are 3 types of treasury bills. Definition of Negotiable Instruments
##91-day T-bill: maturity is in 91 days, it is auctioned on According to section 13 of the Negotiable Instruments Act,
wednesday of every week and day of payment thursday. 1881, a negotiable instrument means “promissory note, bill
##182-day T-bills: maturity is in 182 days, it is auctioned of exchange, or cheque, payable either to order or to bearer”.
on Wednesday, which is non reporting week and day of Types of Negotiable Instruments
payment Thursday.
According to the Negotiable Instruments Act, 1881 there are
##364-day T-bill: maturity is 364 days, it is auctioned on
three types of negotiable instruments i.e., promissory note,
Wednesday which is a reporting week and payment on
bill of exchange and cheque. However many other documents
thursday.
are also recognized as negotiable instruments on the basis of
Certificates of Deposits custom and usage, like hundis, treasury bills, share warrants,
##CDs are issued by banks and Financial Institutions (FI). etc., provided they possess the features of negotiability. In the
following sections, we shall study about Promissory Notes
##This instrument was first time allowed in India in 1989.
(popularly called pronotes), Bills of Exchange (popularly
##A CD is a negotiable promissory note, secure and short called bills), Cheques and Hundis (a popular indigenous
term, of up to a year, in nature. document prevalent in India), in detail.

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Promissory Note (Section-4 Of N.I. Act 1881) Pass it to some one else by signing on the back of a
Suppose you take a loan of Rupees Five Thousand from your cheque.
friend Ramesh. You can make a document stating that you Crossed cheque: Since open cheque is subject to risk of theft,
will pay the money to Ramesh or the bearer on demand. Or it is dangerous to issue such cheques. This risk can be avoided
you can mention in the document that you would like to pay by issuing another types of cheque called ‘Crossed cheque’.
the amount after three months. This document, once signed The payment of such cheque is not made over the counter
by you, duly stamped and handed over to Ramesh, becomes a at the bank. It is only credited to the bank account of the
negotiable instrument. Now Ramesh can personally present it payee. A cheque can be crossed by drawing two transverse
before you for payment or give this document to some other parallel lines across the cheque, with or without the writing
person to collect money on his behalf. He can endorse it in ‘Account payee’ or ‘Not Negotiable’.
somebody else’s name who in turn can endorse it further till Bearer cheque: A cheque which is payable to any person
the final payment is made by you to whosoever presents it who presents it for payment at the bank counter is called
before you. This type of a document is called a Promissory ‘Bearer cheque’. A bearer cheque can be transferred by mere
Note. delivery and requires no endorsement.
Bill of Exchange (Section-5 of N.I. ACT 1881) Order cheque: An order cheque is one which is payable to
Suppose Rajiv has given a loan of Rupees Ten Thousand a particular person. In such a cheque the word ‘bearer’ may
to Sameer, which Sameer has to return. Now, Rajiv also be cut out or cancelled and the word ‘order’ may be written.
has to give some money to Tarun. In this case, Rajiv can The payee can transfer an order cheque to someone else by
make a document directing Sameer to make payment up to signing his or her name on the back of it.
Rupees Ten Thousand to Tarun on demand or after expiry Hundis : A Hundi is a negotiable instrument by usage. It is
of a specified period. This document is called a Bill of often in the form of a bill of exchange drawn in any local
Exchange, which can be transferred to some other person’s language in accordance with the custom of the place. Some
name by Tarun. times it can also be in the form of a promissory note. A
Section 5 of the Negotiable Instruments Act, 1881 defines a hundi is the oldest known instrument used for the purpose
bill of exchange as ‘an instrument in writing containing an of transfer of money without its actual physical movement.
unconditional order, signed by the maker, directing a certain The provisions of the Negotiable Instruments Act shall apply
person to pay a certain sum of money only to or to the order to hundis only when there is no customary rule known to
of a certain person, or to the bearer of the instrument’. the people.
Cheques (Section-6 of N.I. ACT 1881) Demand Draft
Cheque is a very common form of negotiable instrument. The Demand Draft is a pre-paid Negotiable Instrument,
If you have a savings bank account or current account in a wherein the drawee bank undertakes to make payment in full
bank, you can issue a cheque in your own name or in favour when the instrument is presented by the payee for payment.
of others, thereby directing the bank to pay the specified The demand draft is made payable on a specified branch of
amount to the person named in the cheque. a bank at a specified centre. In order to obtain payment, the
Therefore, a cheque may be regarded as a bill of exchange; beneficiary has to either present the instrument directly to
the only difference is that the bank is always the drawee in the branch concerned or have it collected by his / her bank
case of a cheque. through the clearing mechanism.
The Negotiable Instruments Act, 1881 defines a cheque Banker’s Cheque
as a bill of exchange drawn on a specified banker and
Banker’s cheque is another payment instrument which is
not expressed to be payable otherwise than on demand.
used by banks to settle payment obligations on behalf of their
Actually, a cheque is an order by the account holder of the
customers. This instrument is guaranteed by the bank for its
bank directing his banker to pay on demand, the specified
full value and is similar to a demand draft. In practice, these
amount, to or to the order of the person named therein or
instruments are payable at the branch of issue and are used
to the bearer.
for payment within the local clearing jurisdiction.
Types of Cheque Payment Orders
Open cheque: A cheque is called ‘Open’ when it is possible
Payment Orders are issued by banks for payments made on
to get cash over the counter at the bank. The holder of an
behalf of the bank. These instruments are signed by a banker
open cheque can do the following:
and carry the guarantee of the bank on the availability of the
Receive its payment over the counter at the bank, Deposit funds. These instruments are payable at the branch of issue.
the cheque in his own account
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MONEY MARKET- (PRACTICE QUESTIONS)

Q.1. Which of the following is the regulator of money (3) Commercial bills (4) Shares
market? (5) Certificates of deposits
(1) Government of India Q.7. Which of the following statement is true about
(2) Reserve Bank of India commercial paper?
(3) Insurance Regulatory Development Authority (A) It is a promissory note
(4) Telecom Regulatory Authority of India (B) It is traded in the money market
(5) None of these (C) It was introduced in 1990
Q.2. What is call money? (D) It is a secure instrument
(1) It is an overnight loan in the money market. (1) Option C & D are correct.
(2) It is loan of above 1 day to 14 days in the money (2) Option A & B are correct.
market. (3) Option B & C are correct.
(3) It is loan of above 14 day to 364 days in the (4) Option A, B & C are correct.
money market.
(5) All options are correct.
(4) It is an amount charged on ISD calls.
Q.8. Which of the following statement is true about
(5) None of these certificate of deposit?
Q.3. What is notice money? (A) It is a secure instrument in comparison to
(1) It is an overnight loan in the money market. commercial paper.
(2) It is a loan for 2 days to 14 days in the money (B) It is a promissory note
market. (C) It is traded in the capital market.
(3) It is a loan of above 14 days to 364 days in the (D) It was introduced in 1990.
money market.
(1) Option A & B are false
(4) It an amount given in order to book a delivery.
(2) Option C & D are false
(5) None of these
(3) Option B & C are correct.
Q.4. What is term money?
(4) Option A, C & D are correct.
(1) It is an overnight loan in the money market
(5) All options are correct.
(2) It is a loan of above 1 day to 14 days in the money
market. Q.9. Which of the following statement is false about
Treasury bill?
(3) It is a loan of above 14 days to 364 days in the
money market. (A) It is a secure instrument.
(4) It is a loan provided on certain terms and (B) It is a promissory note.
conditions by bank to its customer. (C) It is issued by the government.
(5) None of these (D) It’s is issued for a maximum maturity of 1 year.
Q.5. Which of the following is related to Money Market? (1) Option A & B are false
(1) Commercial money (2) Only Option C is true
(2) Treasury bills (3) Option B & D are correct.
(3) Cheque (4) Option A, & D are correct.
(4) Shares (5) All options are correct except C.
(5) Derivative Q.10. Which of the following statement is true about
Q.6. Which of the following is not related to money commercial bill?
market? (A) It is a promissory note
(1) Treasury bills (2) Commercial paper (B) It is a bill of exchange
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(C) It is a trade bill of deposit is issued?
(D) It is issued by the Reserve Bank of India (1) The minimum amount for certificate of deposit
(1) Option A & B are correct. is 5 lacs.

(2) Option A & D are correct. (2) The minimum amount for certificate of deposit
is 5 crores.
(3) Option B & C are correct.
(3) The minimum amount for certificate of deposit
(4) Option C & D are correct. is 1 lacs.
(5) All options are correct. (4) The minimum amount for certificate of deposit
Q.11. Which of the following statement is related to dated is 1 crore
securities? (5) None of these
(A) It is a secure instrument. Q.15. Which of the following is considered to be more
(B) It is issued by RBI on the behalf of government. secure instrument?
(C) It acknowledge the debt by a government. (1) Cheque (2) Draft
(D) The date of maturity is mentioned on the (3) Commercial paper (4) Hundi
certificate (5) All of the above
(1) Only Option A & B Q.16. What is the maximum validity of a Cheque?
(2) Only Option C & D (1) 30 days (2) 60 days
(3) Only Option B & C (3) 90 days (4) 180 days
(4) Only Option A, C & D (5) None of these
(5) All of the above Q.17. Which is not a type of Cheque?
Q.12. What is the minimum amount at which commercial (1) Stale Cheque
paper can be issued?
(2) Mutilated Cheque
(1) The minimum amount for commercial papers is
5 lacs. (3) Account payee Cheque

(2) The minimum amount for commercial papers is (4) Crossed Cheque
5 crores. (5) Promissory Cheque
(3) The minimum amount for commercial papers is Q.18. Which is a type of crossing in a Cheque?
1 lacs. (1) Negotiable crossing
(4) The minimum amount for commercial papers is (2) Special crossing
1 crore
(3) level crossing
(5) None of these
(4) Precise crossing
Q.13. What is the minimum and maximum maturity of
certificate of deposit issued by financial institutions (5) Named crossing
except bank? Q.19. Which of the following Cheque is payable on the
(1) Certificate of deposit issued by financial counter?
institutions are for 1 year to 3 years. (1) Account payee Cheque
(2) Certificate of deposit issued by financial (2) Crossed Cheque
institutions are for 7 days to 1 year.
(3) Bearer Cheque
(3) Certificate of deposit issued by financial
(4) Special crossing Cheque
institutions are for 15 days to 90 days.
(5) None of these
(4) Certificate of deposit issued by financial
institutions are for 1 years to 10 years. Q.20. A Cheque issued whose maturity date is over is
termed as?
(5) None of these
(1) Dead Cheque (2) Mutilated Cheque
Q.14. What is the minimum amount at which certificate
(3) Stale Cheque (4) Blank Cheque
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(5) None of these Q.24. Which of the following is related to deep discount
Q.21. Which of the following act defines a Cheque? bond?

(1) Reserve Bank of India Act 1934 (A) It is a long term zero coupon bond

(2) Negotiable Instrument Act 1881 (B) The rate of interest is mentioned on the
certificate
(3) Banking Regulation Act 1949
(C) It issued by post office only.
(4) Companies Act 2013
(D) The date of maturity is not defined
(5) Foreign Exchange Management Act 1999
(1) Only Option A
Q.22. Which of the following instrument is defined under
negotiable instrument act? (2) Only Option C & D

(1) Cheque (2) Promissory note (3) Only Option B & C

(3) Bill of exchange (4) Draft (4) Only Option A, C & D

(5) All of these (5) All options are related

Q.23. Which of the following institution cannot participate Q.25. Commercial Bill is a type of-
in call money market? (1) Promissiory Note (2) Bill of Exchange
(1) Banks (2) NBFC (3) Cheque (4) Draft
(3) Primary dealers (4) RBI (5) None of the above
(5) None of the above

ANSWER KEY
1.(2) 2.(1) 3.(2) 4.(3) 5.(2) 6.(4) 7.(4) 8.(2) 9.(5) 10.(3)
11.(5) 12.(1) 13.(1) 14.(3) 15.(2) 16.(3) 17.(5) 18.(2) 19.(3) 20.(3)
21.(2) 22.(5) 23.(2) 24.(1) 25.(4)

NOTES

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)

Q.1. What does the letter ‘L’ stands for in the term LAF Q.9. Where is the headquarter of Multilateral Investment
commonly used in financial/economic news? Guarantee Agency (MIGA) located?
(IBPS Clerk Mains 2017) (IBPS Clerk Mains 2017)
(1) Liquidity (2) Least (1) New York (2) Geneva
(3) Liabilities (4) Long (3) Brussels (4) Rome
(5) Liquid (5) Washington (DC)
Q.2. Money lent for one day is called ______.
Q.10. Who is the issuing authority of coins in India?
(IBPS Clerk Mains 2017)
(1) Reserve Bank of India
(1) Call money (2) Notice money
(2) Government of India
(3) Term Money (4) All of the above
(3) Ministry of Finance
(5) None of these
Q.3. Interest Rate Risk is which type of risk: (4) Both 1 and 2
(IBPS PO MAINS 2020) (5) None of these
(1) Static risk (2) Liability Pure Risk Q.11. What does ‘CC’ stand for in ‘NAFCC’?
(3) Dynamic risk (4) Diversifiable risk (IBPS Clerk Mains 2017)
(5) Market Risk (1) Climate Change (2) Cash Credit
Q.4. What does ‘A’ stand for in ‘NACH’? (3) Closed Capital (4) Complementary currency
(IBPS PO MAINS 2020) (5) Credit Card
(1) Application (2) Arbitrage Q.12. Amortization refers to writing off :
(3) Automated (4) Adjustment (IBPS Clerk Mains 2017)
(5) Assets (1) Depleting assets (2) Wasting assets
Q.5. Which one of the following is a Credit Card Association?
(3) Intangible assets (4) Fictitious assets
(IBPS PO MAINS 2020)
(5) None of these
(1) India Card (2) Master Card
Q.13. Consider the following statements about
(3) SBI Card (4) Citi Bank Cards
cryptocurrencies and identify the incorrect statement:
(5) BOB Card
(IBPS Clerk Mains 2017)
Q.6. The NISM is a public trust established by ___.
(1) A cryptocurrency is a basically a digital asset
(IBPS Clerk Mains 2017)
(2) It uses cryptography to ensure the security of
(1) RBI (2) SEBI
transactions
(3) NABARD (4) IRDAI
(3) This is different from cash in that cryptocurrencies
(5) None of these have no physical form.
Q.7. ‘GDR’ is a bank certificate issued in more than one
(4) There is a cryptocurrency central bank that issues
country for shares in a foreign company. What does
new currency.
‘R’ stands for in ‘GDR’?
(IBPS Clerk Mains 2017) (5) None of these
(1) Ratio (2) Receipt Q.14. What is meant by “Underwriting” the term
frequently used in financial sector?
(3) Revenue (4) Risk
(IBPS Clerk Mains 2017)
(5) Reserve
Q.8. The Working and operations of NBFCs are regulated (1) Under valuation of the assets
by___. (2) The act of taking on a risk for a fee
(IBPS Clerk Mains 2017) (3) Giving a guarantee that a loan will not become
(1) SEBI (2) RBI a bad loan
(3) Finance Ministry, GOI (4) The act of permission to float an IPO
(4) IRDA (5) None of the above (5) None of the above
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Q.15. Which of the following Credit Rating agency has consumer staples, et(3)
launched an index to measure the performance of (2) Inflation is indicative of the decrease in the
FPI’s in fixed markets? purchasing power of a unit of a country’s currency
(IBPS Clerk Mains 2017) (3) Inflation measures the average price change in
(1) CRISIL (2) ICRA goods and services in a quarter
(3) ONICRA (4) CIBIL (4) Both (1)&(2) (5) Both (1)&(3)
(5) SMERA Q.20. Who has the authority to measure Inflation in India?
Q.16. Which of the following is/are a component of (SBI PO MAINS 2017)
organised Indian money market? (1) Ministry of Statistics and Programme Implementation
1. Commercial Papers (2) Reserve bank of India
2. Mutual Funds (3) Ministry of finance
3. Treasury Bills (4) Ministry of Home affairs
4. Cash Management Bills (5) Central statistics office
Which of the above statement is true? Q.21. What are the causes to measure Inflation?
(SBI PO MAINS 2022) (SBI PO MAINS 2021)
(1) 1, 2 and 3 (2) 2, 3 and 4 (1) Demand-pull inflation
(3) 1, 3 and 4 (4) All of the above (2) Cost-push inflation
(5) None of these (3) Devaluation
Q.17. Consider the following statements regarding the (4) Rising wages
financial market: (5) All of the above
1. Money market and capital market are the two Q.22. What is Full Form of WPI?
segments of the financial market of an economy. (IBPS PO MAINS 2021)
2. The long-term financial market is called money (1) Wholesale Price Instability
market while the short time financial market is called (2) Word Price Index
capital market.
(3) Wholesale Price Index
Which of the above statement is true?
(4) Weighted Price Index
(SBI PO MAINS 2022)
(5) Weighted Price Indice
(1) Only 1 (2) Only 2
Q.23. Base year to calculate CPI is-
(3) Both 1 and 2 (4) Neither 1 nor 2
(SBI PO MAINS 2014)
(5) All of the above
(1) 2010 (2) 2011
Q.18. What is/are the possible cause of inflation?
(3) 2012 (4) 2007
(IBPS PO MAINS 2017)
(5) 2000
(i) Growth in population.
Q.24. Which of these is Not a type of Consumer price index?
(ii) Rise in unemployment.
(SBI CLERK MAINS-2016)
(iii) Increasing Urbanization.
(1) CPI for Industrial Workers (IW)
(1) Only option i is correct.
(2) CPI for Agricultural Labourer (AL)
(2) Only option ii is correct.
(3) CPI for Rural Labourer (RL)
(3) Only option iii is correct.
(4) CPI (Rural/Urban/Combined)
(4) All of these (5) None of these
(5) CPI for investors(IV)
Q.19. What is inflation?
Q.25. Total number of items covered under WPI are-
(SBI CLERK MAINS 2020)
(IBPS PO MAINS 2020)
(1) Inflation refers to the rise in the prices of most
(1) 697 (2) 504
goods and services of daily or common use, such
(3) 616 (4) 532
as food, clothing, housing, recreation, transport,
(5) 422
ANSWER KEY
1.(1) 2.(1) 3.(5) 4.(3) 5.(2) 6.(2) 7.(2) 8.(2) 9.(5) 10.(2)
11.(1) 12.(3) 13.(4) 14.(2) 15.(1) 16.(1) 17.(5) 18.(4) 19.(4) 20.(5)
21.(5) 22.(3) 23.(3) 24.(5) 25.(1)

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CAPITAL MARKET IN INDIA

##SOURCES OF FUNDS
##TYPE OF PUBLIC ISSUES
##KINDS OF SHARES
##DERIVATIVE
##COMMODITY MARKET
##DEMAT ACCOUNT
##NET ASSET VALUE (NAV)
##SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
##STOCK MARKET/STOCK EXCHANGE
##PRACTICE PAPER QUESTIONS
##PREVIOUS PAPER QUESTIONS

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CHAPTER
CAPITAL MARKET
7
IN INDIA
Capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can
raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising
of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market
(equity securities) and the bond market (debt).

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3. Secured Debenture
Type Of Public Issues
4. Unsecured Debenture
Initial Public Offering [IPO]
When an unlisted company in order to raise the capital, invites KINDS OF SHARES
the purchase applications from the public for its new equity Equity Shares
shares through an offer, the offer is known as Initial Public
Equity shares are also known as common stock or
Offering. Any company can bring IPO only once.
common shares. Equity holders are considered to be the
Follow On Public Offering (FPO) actual owners of the company and their claim is known as
When a listed company in order to raise the capital, invites residual claim
the purchase applications from the public for its new equity Preference Shares
shares through an offer, the offer is known as Follow-on
Preference shares are those shares which are given preference
Public Offer. In other word any company issuing its new
as regards to payment of dividend and repayment of capital.
shares to the public other than the first time.
Preference shareholders cannot exercise their voting rights on
Right Issue all the matters. They can vote only on the matters affecting
Here, a listed organization proposes to issue fresh securities their own interest.
to its existing shareholders as on a record date. The rights are Secondary Market
offered in a particular ratio to the number of securities held
prior to the issue. This route is best suited for organizations
who would like to raise capital without diluting the stake
of its existing shareholders. In other word the existing
shareholders are offered right of first denial. These shares
can be sold to others only when existing shareholders don’t
purchase these shares.
Preferential Issue
This is an issue of either shares or convertible securities by
listed organizations to a select group of people under Section
(81) of the Companies Act,1956. This issue is neither a Rights
issue nor Public issue and is a faster way for any organization
to raise capital.

##The secondary market is the financial market where

previously issued securities and financial instruments
such as stock, bonds, options, and futures are bought
and sold.
##The term “secondary market” is also used to refer to the
market for any used goods or assets, or an alternative
use for an existing product or asset where the customer
base is the second market.
Debenture Corporate Action
##A long term security or Debt instrument yielding a fixed ##Declaration of dividends, issue of bonus shares, and
rate of interest issued by a company. splitting shares into smaller denominations are called
##A debenture is a medium to long term debt instrument corporate actions. They impact the market price of shares
used by large companies to borrow money at a fixed as they alter the intrinsic value of the shares.
rate of interest. Buyback of Shares
##Types of debenture ##Buyback is a method for an organization to invest by
1. Convertible Debenture buying shares from other investors in the market. It is
done by the organization for the purpose of improving
2. Non-convertible Debenture
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the liquidity in its shares and enhancing the shareholders these contracts do not fall under the purview of rules and
wealth. As per SEBI regulations, the organization is regulations of an exchange, they generally suffer from
permitted to buy back its share. counterparty risk
##STOCK SPLIT- A corporate action in which a company Futures Contracts- A futures contract is an agreement
divides its existing shares into multiple shares. Although between two parties to buy or sell an asset at a certain time
the number of shares outstanding increases by a specific in future at a certain price. These are basically exchange
multiple, the total value of the shares remains the same traded, standardized contracts. The exchange stands
compared to pre-split amounts, because the split did not guarantee to all transactions and counterparty risk is largely
add any real value. eliminated.
# #BONUS SHARE- A bonus share is a free share of Options- It is a bilateral contract in which Option Writer
stock given to current shareholders in a company, (also known as Option Seller) sells the right to buy or sell
based upon the number of shares that the shareholder the agreed quantity of underlying asset at an agreed price on
already owns While the issue of bonus shares a certain future date to the Option Buyer.
increases the total number of share issued and owned, Option Writer can’t force the Option Buyer to execute
it does not change the value of the company. Although the contract while Option Buyer can force the Option
the total number of issued shares increases, the ratio Writer (Option Seller) for the execution of contract.
of number of shares held by each shareholder remains Means the Option Buyer has liberty to execute or not
constant. to execute the contract. The Option Seller has right
What is A Derivative ? to choose between transfer of assets and paying the
differential amount to the Option Buyer at the time of
The term ‘Derivative’ stands for a contract whose price is
execution of contract.
derived from or is dependent upon an underlying asset. The
underlying asset could be a financial asset such as currency, If Option Buyer is getting the right to BUY the underlying
stock and market index, an interest bearing security or a asset, the option will be known as Call Option (BBC)
physical commodity. Today, around the world, derivative
contracts are traded on electricity, weather, temperature and If Option Buyer is getting the right to SELL the underlying
even volatility. asset, the option will be known as Put Option (BSP)
Forward Contracts- These are promises to deliver an asset
at a pre- determined date in future at a predetermined price. If the agreement can be executed only on the expiry date,
Forwards are highly popular on currencies and interest then it is known as European Option.
rates. The contracts are traded over the counter (i.e. outside
the stock exchanges, directly between the two parties) and If the agreement can be executed on or before the expiry
are customized according to the needs of the parties. Since date, then it is known as American Option.

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Swap agreed upon repayment schedule. In the same manner
an American company Sam & Co. has borrowed funds
The meaning of swap is to change one thing with another.
from an FI situated in India as per agreed upon repayment
It is a contract in which two parties agree to exchange each
schedule similar to that of Ankit & Co. Now if Ankit &
other’s known series of future obligations on a certain rate
Co. and Sam & Co. enter into an agreement with each
or formula agreed upon by them.
other under which they will be paying each other’s
e.g. Ankit & Co. which is an Indian company has installment as per agreed upon rate, this agreement is
borrowed funds from FI situated in America as per called as SWAP.

ASBA (Application Supported by Blocked Amount):

Commodity Market
This is a step towards the capital market reforms and
transparency. Under this when any investor applies for
securities in the new issue market he/ she is not required
to transfer the amount in the issuer’s account with the
application. The amount is blocked in his/ her account
and the issuer company will get the funds only after
the allotment on the basis of number of allotted shares.
With this investors’ interest is protected by reducing the
complication and time lag for refund of excess application
money.
What is A Demat Account?
##Securities (shares, Debenture, Bonds etc) are held
electronically in a dematerialized (or ‘Demat’) account
Commodity markets are markets where raw or primary instead of the investor taking physical possession of
products are exchanged. These raw commodities are traded certificates.
on regulated commodities exchanges, in which they are ##The move from physical certificates to electronic book
bought and sold in standardized contracts. keeping.
This article focuses on the history and current debates Advantage of Demat Account-
regarding global commodity markets. It covers physical
##No risk due to loss on account of fire, theft or mutilation
product (food, metals, electricity) markets but not the ways
that services, including those of governments, nor investment, ##Bonus/Right shares/split allotted to the investor directly
nor debt, can be seen as a commodity. credit into his demat account.
MCX (Now known as metropolitan Stock Exchange of ##Transaction Costs are low
India Limited) - is the first commodity exchange which ##A single demat account can hold both Equity and Debt
launched the ipo of 700 cr. instruments

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##No stamp duty on transfer of securities unit holder will get per unit on redemption or winding up of
##From April 2006, it has become mandatory for mutual fund. Net Sales given by the difference between the
any person holding a demat account to possess a total sales and total repurchases of the units of a fund.
permanent account number (PAN). Related Terms
Portfolio Management Authorized Capital
It is the practice of soliciting the services of professional It is the maximum amount of share capital fixed in the
and qualified fund managers for the purpose of investment Memorandum of Association of a company as required by
in the capital market. the Company’s act. They are also known as nominal capital.
It involves entrustment of investment activities to fund Issued Capital
managers who for a small premium undertake the task of It is that part of a company’s capital that has been subscribed
preparing and managing an investment portfolio for the and alloted to shareholders. It is a broader concept than paid
investors. This helps ordinary investors in optimizing returns up capital.
and lowering risks on their investment.
Paid Up Capital
Net Asset Value (NAV)
It is that part of the issued capital of a company, paid up by
The investment efficiency of the mutual fund can be measured the shareholders (promoters). It is that part, invested by the
in terms of the NAV values and Net Sales. NAV is the indicator promoters. Therefore, an issued capital may or may not be
of the investment performance and it indicates the amount each a paid up capital.

ASBA (Application Supported By Blocked Amount

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##There were 20 regional stock exchange in Bombay in
Important Terminology & Important Points
1992.
Arbitrage
##But trading was concentrated by BSE and it enjoy
A company listed in many stock exchanges & the rate of monopoly
share is different in different stock exchange. Through this
##User from out side Bombay found it extremely difficult
situation customer got profit through trading & this profit is
for trading.
known as arbitrage.
##BSE imposed higher entry barrier
Hedging
##So the services of brokers were extremely high.
When customer invest money in different assets like share,
debenture, bond….. To control the risk of market. Securities And Exchange Board of India
Bull Market (SEBI)
A bull market is associated with increasing investor The Securities and Exchange Board of India was established
confidence, and increased investing in anticipation of future in 1988 & given statutory powers on April 12, 1992 in
price increases (capital gains). A bullish trend in the stock accordance with the provisions of the Securities and
market often begins before the general economy shows clear Exchange Board of India Act, 1992 (Recommendation of
signs of recovery. Narsimhan Committee). BUDGET 2015-16, FMC (Forward
Bear Market Market Commission) merged in SEBI.

A bear market is a general decline in the stock market over a Member of SEBI
period of time. It is a transition from high investor optimism ##Chairman- Nominated by Govt. of India
to widespread investor fear and pessimism.
##Two member from finance ministry
Blue Chip Stocks
##A Deputy governor of RBI
A Blue Chip Stock is the share of a company with Large Market
##5 member nominated by GOI.
Capitalization and strong, consistent performance track record
irrespective of stages and siuation of economy. Major Stock Regional Office
Indexes of Stock Exchanges are made of Blue Chip Stocks. 1- New Delhi
Margin Trading 2- Chennai
When an investor pays for a part of his/her purchases and 3- Kolkata
remaining part is paid by the broker/banker as a short term
funding to the investor on which no interest charged if repaid 4- Ahmedabad
within time, is known as margin trading. This facility is Local Offices— Chandigarh, Bengaluru, Lucknow,
mainly used in intraday trading. Hyderabad, Dehradun, Kochi, Guwahati, Jaipur,
Kerb Trading Bhubaneswar, Indore, Patna, Panaji, Ranchi, Raipur,
Jammu, Shimla, Vijaywada and Andhra Pradesh
Trading after the official time. It is illegal.
Stock Market/Stock Exchange
##The first Indian company which was listed in NASDAQ
is INFOSYS. This is a place where buying & selling of share completed
by common man or financial institution.
##First Indian company which was listed in DOWJONES-
ICICI Every stock exchange have certain Broker (DALALs) who
are registered. Customer can buy or sell securities through
##1929-30 recession started with the downfall of dow jones. broker.
##Investment- use of money for the purpose of profit. listing is important for a company in stock exchange if the
##Disinvestment- selling of the share of PSUs by GOI. company participating in trading system.
This process started in India from 1991. Any company can be listed in different stock exchange.
Problem of Stock Market Before SEBI Came India’s oldest stock exchange is BSE.
##Market was extremely restrictive regulation on the BSE is also known as DALAL STREET.
issuers enforced by the Controller of capital issues (cci). 3 famous stock exchange of Mumbai are
First organized stock exchange was established in 1875 1:- BSE 2:- NSE 3:- OTCEI
in Bombay.
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Bombay Stock Exchange (BSE) 8. Those companies which are in BSE have more than
1. BSE & NSE share 80% business of stock exchange. 0.5% market capitalization with compare to total market
capitalization of BSE.
2. BSE is the oldest stock exchange of Asia.
National Stock Exchange (NSE)
3. It was established in 1875.
National Stock Exchange (NSE) was established in the mid
4. BSE started an index on the basis of 30 companies & it 1990s as a demutualized electronic exchange.
is known as BSE 30 or Sensex.
Committee related to NSE- M.J.Ferwani Committee .
5. Sensex- sensitive index of stock exchange. It is the
barometer of indian economy. NSE was established by IDBI,UTI,LIC,GIC,IFCI etc…..

6. The base year of Sensex is 1978-79. NSE started operation in 1994 with electronic trading.
7. Reliance have largest share in BSE 30 companies. Then By march 31st 1999, all the 23 stock exchange in the country
Infosys & ICICI. has computerized online screen based trading.

Energy, Precious Metals, Base Metals,

Indian Commodities Exchange Ltd. ICEX Mumbai
Agricultural Produces
Energy, Precious Metals, Base Metals,
Metro Politan Stock Exchange of India Ltd. MSEI Mumbai
Agricultural Produces
National Commodity and Derivative
NCDEX Mumbai Agricultural Produces
Exchange Ltd.
National Multi-Commodity Exchange of
NMCE Ahmedabad Agricultural Produces
India Ltd.
Ace Derivatives and Commodity Exchange
ACE Mumbai Agricultural Produces
Ltd.
Energy, Precious Metals, Base Metals,
Universal Commodity Exchange Ltd. UCX Mumbai
Agricultural Produces
COUNTRY WISE MAJOR STOCK EXCHANGES
The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the
leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.
S.No. Country Stock Index
1 Australia CSE Composite Index, S & P / ASX 100
2 Brazil Ibovespa - Bovespa Index
3 Canada S & P / T S X 60, S & P / T S X Composite Index
4 China SSE Composite Index, SZSE Component Index
5 France CAC 40
6 Germany DAX, TecDAX
7 Hong Kong Hang Seng Index
8 India Sensex, Nifty
9 Japan Nikkei 225
10 New Zealand NZX 50 Index
11 Russia RTS Index
12 Singapore FTSE Group Indices
13 South Korea KOSPI
14 Taiwan Taiwan Capitalization Weighted Stock Index (TAIEX)
15 United Kingdom FT 30 Index, FTSE 100 Index
16 United States NYSE Arca Major Market Index, Dow Jones Industrial Average, NASDAQ Composite

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OTCEI Nifty is an index based on 50 shares traded on the NSE.
The OTCEI, which was set up in 1992, was the first The Nifty is also known as national index for fifty
computerized stock exchange in India. company.
WHAT HAPPENED AFTER THAT…………….. Mutual Fund
1. Equity trade in at NSE commenced in november 1994. A mutual fund is a professionally managed investment
2. With in one year of operation,NSE surpassed the BSE fund that pools money from many investors to purchase
in term of turnover. securities. These investors may be retail or institutional in
nature. Primary structures of mutual funds include open-
3. BSE was working since 1875, with monopoly now it had
end funds, unit investment trusts, and closed-end funds.
to face competition with NSE.
Exchange-traded funds (ETFs) are open-end funds or unit
4. So in march 1995, bse also adopted similar innovation investment trusts that trade on an exchange. Mutual funds
to keep up in the race (bolt- BSE online trading system). are also classified by their principal investments as money
M-CAP (MARKET CAPITALIZATION):- market funds, bond or fixed income funds, stock or equity
Market Capitalization is the aggregate valuation of the funds, hybrid funds or other.
company based on its current share price and the total number The first company that dealt in mutual funds was the Unit
of outstanding shares. Trust of India. It was set up in 1963 as a joint venture of the
Companies are divided in to 3 forms on the basis of market Reserve Bank of India and the Government of India.
capitalization- Association of Mutual Funds in India
1. LARGE CAP :- Large CAP is more then 10 thousand crore. The Association of Mutual Funds in India (AMFI) is
2. MID CAP:- MCAP is between 2500 cr. To 10000 cr. dedicated to developing the Indian Mutual Fund Industry
on professional, healthy and ethical lines and to enhance and
3. SMALL CAP:- Small CAP is less than 2500 cr.
maintain standards in all areas with a view to protecting and
National Securities Clearing Corporation promoting the interests of mutual funds and their unit holders.
Ltd- NSCCL AMFI, the association of SEBI registered mutual funds in
It is a subsidiary of NSE established in 1995. Everyday India of all the registered Asset Management Companies, was
trade (sale or buy) done on the NSE, NSCCL becomes the incorporated on August 22, 1995, as anon-profit organisation.
country party. As of now, all the 44 Asset Management Companies that are
registered with SEBI, are its members
CENTRAL DEPOSITORY SERVICES LIMITED
(CDSL) & NATIONAL SECURITIES DEPOSITORIES Mutual Fund
LTD.–(NSDL)
CDSL, is the second indian central securities depository
based in Mumbai, its main function is the holding securities
either in certificated or uncertificated (dematerialized) form,
to enable book entry transfer of securities.
In november 1996, National Security Deposit LTD.–NSDL,
the first depository in india was established.
For the purpose of that if you buy any share it will
automatically converted in electronic form & deposited in
your demat a/c.
Index
##It is an investment vehicle .
Index shows how a specified portfolio of share prices is
moving to give an indication of the market trends. It is a ##It consists of a pool of funds collected from many
basket of securities and the average price movement of the investors for the purpose of investing.
basket of securities indicates the index movement, whether ##Investments can be made in securities such as stocks,
upwards or downwards. bonds, money market instruments and similar assets.
Sensex And Nifty ##Mutual funds are operated by Fund managers, who invest
Sensex is an index based on 30 shares traded on the BSE. the fund’s capital and attempt to produce income for the
The Sensex is the barometers of the Indian markets. The fund’s investors.
indices are composite in nature in that they cover a large ##A mutual fund’s portfolio is designed according to its
segment of industries objectives as specified in its portfolio.
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CAPITAL MARKET - (PRACTICE QUESTIONS)
Q.1. NAV calculation of mutual funds means —— (4) All of the above
(1) Liquidity (5) None of these
(2) Dividend payment Q.8. When share are issued at fixed price is known as
(3) Net worth of shares ———

(4) Capitalization (1) Floor price (2) Public issue

(5) None of these (3) Private issue (4) Dividend issue

Q.2. What purchases do not incur any brokerage or stamp (5) None of these
duty—— Q.9. What is a future contract——.
(1) FPO (2) Right issue (1) It is a standardized forward contract
(3) IPO (4) Debenture (2) Is an obligation
(5) None of these (3) May be for financial instruments or commodities
Q.3. Ordinary shares issued to existing shareholders is (4) All of these
known as ? (5) None of these
(1) IPO (2) FPO Q.10. If a person bought ‘option contract’ is ———.
(3) Right issue (4) Bonus share (1) An obligation, but not a right
(5) None of these (2) Both a right and an obligation
Q.4. The difference between cost price and sale price of (3) A right, but not an obligation
share held by an investor is known as ——
(4) Neither a right nor an obligation
(1) Dividend (2) Profit
(5) None of these
(3) Interest (4) Capital gain
Q.11. When a person looking for profit by simultaneously
(5) None of these entering in to transactions in two or more markets
Q.5. Extra dividend provided to ordinary shareholders is called——
who have received their dividend is known as—— (1) Position (2) hedging
(1) Cumulative preference share (3) arbitrage (4) All of these
(2) Convertible preference share (5) None of these
(3) Participating preference share Q.12. When a person buy or sell assets in order to mitigate
(4) Redeemable preference share risk of price fluctuation is called———
(5) None of these (1) Insurance (2) Hedging
Q.6. Preference shares that may be repurchased by the (3) Arbitrage (4) All of these
issuing company are—— (5) None of these
(1) Cumulative preference share Q.13. Long position in two call and put with the same
(2) Convertible preference share strike price to expiration date is called———
(3) Participating preference share (1) Spread (2) Stock
(4) Redeemable preference share (3) Straps (4) Straddle
(5) None of these (5) None of these
Q.7. SEBI act 1992 empowers SEBI with ———— Q.14. Derivative is a product whose value is derived from
power the value of underlying assets is called——
(1) Constitutional power (1) Product (2) Service
(2) Non statutory power (3) Factors (4) Bases
(3) Statutory power (5) None of these

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Q.15. What is a mechanism mandated by SEBI to subscribe for shares on debentures or to deposit
determine the exit price of voluntary delisting—— money with the company———?
(1) Floor price (1) Limited company (2) Unlimited Company
(2) Exit price (3) Public company (4) Proprietary Company
(3) Exit book building (5) None of these
(4) Reverse book building Q.21. If the dividends are unpaid any one year they
(5) None of these accumulate and paid at some later date to preference
shareholder when company has sufficient profit is
Q.16. Listing a company on the stock market requires that known as ——
the company————
(1) Convertible preference share
(1) Be a partnership firm
(2) Equity share
(2) Be proprietary firm
(3) Participatory preference share
(3) A limited liability company
(4) Cumulative preference share
(4) All of these
(5) None of these
(5) None of these
Q.22. It is mandatory that all listed equity share are settled
Q.17. If debt increases then the value of share affects in under compulsory rolling settlement within ———
the following way———— days
(1) The lower the debt the higher the share value (1) T+2 (2) T+5
(2) The lower the debt the lower the share value (3) T+1 (4) T+7
(3) The higher the debt the higher the share value (5) None of these
(4) No Effect Q.23. In ETF “T” stands for———.
(5) None of these (1) Transfer (2) Transaction
Q.18. If the growth factor increases when calculating (3) Traded (4) Term
present value will cause the value to ———
(5) None of these
(1) Decrease (2) Stay the same
Q.24. Who is the present Chairperson of SEBI?
(3) Increase (4) Approx. market price
(1) Madhabi Puri Buch
(5) None of these
(2) Hari Ojha
Q.19. An order to trade in a stock once trigger price is
reached is known as —— (3) K P Singh

(1) An at discretion order (4) Ram Gopal Hari

(2) An at market order (5) None of these

(3) An at passive order Q.25. When people buy IPO from stock market they have
to block his money in his bank account is called.....
(4) An at stop loss order
(1) ABBA (2) AMBA
(5) None of these
(3) ASBA (4) IMPS
Q.20. Which type of company restricts the right to transfer
shares and where the public may not be invited to (5) None of these

ANSWER KEY
1.(2) 2.(3) 3.(4) 4.(4) 5.(3) 6.(4) 7.(3) 8.(2) 9.(4) 10.(3)
11.(3) 12.(2) 13.(3) 14.(4) 15.(4) 16.(3) 17.(4) 18.(3) 19.(4) 20.(4)
21.(4) 22.(1) 23.(3) 24.(1) 25.(3)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)
Q.1. The Bonus shares may be issued out of the - (3) China has the highest percentage of subscribed
(SBI GRADE A-2021) capital in the Bank
(1) Free reserves (4) The headquarters is located in Beijing.
(2) Securities premium account (5) None of the above
(3) Capital redemption reserve account Q.7. What is a bank?
(4) Any of the above (5) None of the above (SBI Appprentice 2019)
Q.2. What can be said about the fiscal deficit? (1) A financial institution that accepts donations
(SBI PO Mains - 2018) from the public and creates a supply deposit while
simultaneously making profits
(1) Interest payments
(2) A technical organization that helps in scientific
(2) Borrowings
development
(3) Borrowings minus interest payments
(3) A house of worship located deep within the
(4) Interest payments minus borrowings woods
(5) None of these (4) A storage of emotions and feelings
Q.3. Fiscal Deficit is-
(5) None of the above
(SBI Clerk Mains 2018)
Q.8. Which of the following is typically involved in the
(1) Budget expenditure- Budget receipts excluding Money Market or Working Capital Market?
borrowings
(SEBI GRADE A 2021)
(2) Equal to Primary Deficit
(1) Long-term investment funds
(3) Capital expenditure - Capital receipts
(2) Venture capital
(4) Revenue expenditure - Revenue receipts
(3) Short-term financing options
(5) None of the above
(4) Retirement savings accounts
Q.4. Under which section bonus shares can not be issued
in lieu of dividend? (5) Real estate investments
(SBI PO Mains 2018) Q.9. Which of the following is NOT considered a market risk?
(1) Section 68(3) (SBI Clerk 2017)
(2) Section 45(2) (1) Interest rate risk (2) Currency risk
(3) Section 63(1) (3) Credit risk (4) Liquidity risk
(4) All of the above (5) None of these (5) Volatility risk
Q.5. In May 2021, which of the following has appointed Q.10. Who is the head of the committee formed by the
Serum Institute of India’s CEO Adar Poonawalla as Insurance Regulatory and Development Authority
the Chairman of the company? of India (IRDAI) to assist with the new Risk Based
(SBI PO Mains 2021) Capital (RBC) norms?
(1) Bajaj Finance Limited (BI Clerk 2018)
(2) Muthoot Finance Ltd (1) V. R. Iyer (2) Girish Radhakrishnan
(3) Magma Fincorp Limited (3) G. Srinivasan (4) Anup Wadhawan
(4) HDB Finance Services (5) Amitabh Chaudhry
(5) Tata Capital Financial Services Ltd Q.11. What is an Indian depository receipt?
Q.6. Which of the following statements is correct with (Bank of Baroda 2008)
respect to the New Development Bank? (1) A deposit account with a public sector bank.
(Bank of Baroda 2008) (2) It is a depository account with any of the
(1) It was established at the fourth BRICS summit depositories in India.
in New Delhi (3) An instrument in the form of depository receipt
(2) The Bank’s membership is open to members of created by an Indian depository against underlying
the United Nations. equity shares of the issuing company.

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(4) It is an instrument in the form of deposit receipt (4) Reserve Bank of India
issued by Indian depositories. (5) Registrar of Companies
(5) None of the above is correct. Q.18. Which of the following organisations issues the rules
Q.12. Capital market regulator is: of global trade?
(Bank of Baroda 2008) (Allahabad Bank 2011)
(1) R B I (2) I R D A (1) World Bank
(3) N S E (4) B S E (2) World Trade Organisation
(5) S E B I (3) Foreign Echange Dealers’ Association
Q.13. Which of the following is the regulator of the credit (4) Directorate General of Foreign Trade
rating agencies in India? (5) None of the above
(Bank of Baroda 2008) Q.19. What is cross-border exchange?
(1) R B I (2) The S B I (Allahabad Bank 2011)
(3) S I D B I (4) The S E B I (1) Trading of foreign currency in India.
(5) None of these (2) The trading of the Indian rupee in exchange for
Q.14. In India, the capital market is regulated by the Capital other currencies/ goods.
Markets Division of- (3) Hawala transactions in Indian rupee.
(LIC AAO Previous Year Papers 2013) (4) Unauthorised remittance of the Indian rupee.
(1) Reserve Bank of India (5) None of the above.
(2) Department of Economic Affairs. Ministry of Finance Q.20. Consider the following:
(3) Securities and Exchange Board of India 1. Foriegn currency convertable bonds
(4) Confederation of Indian In-dustry 2. Foriegn institutional investment which certain
conditions
(5) None of these
3. Global depository recipts
Q.15. Which of the following tools is used by the Reserve Bank
of India to reduce liquidity in the banking system? 4. None resident external
(LIC AAO Previous Year Papers 2013) Which of the above can be included in foriegn direct
investements?
(1) Cash Reserve Ratio
(SBI - 2010)
(2) Open market operations
(1) 1, 2 & 3 (2) 3 only
(3) Statutory Liquidity Ratio
(3) 2 & 4 (4) 1 & 4
(4) Current Base Rate
(5) All of the above.
(5) Repo Rate
Q.21. Which of the following economic concepts is
Q.16. As per the announcements made in the Union Budget ‘categorised on the basis of current account or capital
for 2010-11, public sector banks will get around Rs. account or both?
16,500 crores from the Government of India For
(RBI 2011)
what purpose the banks getting this amount?
(1) The balance of payments
(LIC ADO Previous Year 2009)
(2) Value of the foodgrains stock of a country.
(1) To strengthen their capital base
(3) Gross National Product (G N P)
(2) To provide retirement benefits to their employees
(4) Gross National Income (G N I)
(3) To give the public sector banks an image make over
(5) The total collection of direct taxes in the year
(4) All 1, 2 and 3 given above
Q.22. Which of the following cannot be called as a debt
(5) None of these instrument as referred to in financial transactions?
Q.17. Capital Markets of the World Which of the following (Indian Overseas Bank 2009)
organisations provides a guarantee to the exporters? (1) Certificate of deposit
(1) Exim Bank (2) Bonds (3) Stocks
(2) Export Credit Guarantee Corporation (E C G C) (4) Commercial papers
(3) Director General Foreign Trade (5) Loans

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Q.23. In one of his species, Pranab Mukherjee said that Q.24. What is the full form of ‘U L I P’, the term which
the government had no plans to dilute the roles of was in the news recently?
market regulators. This means, the role of which of (Syndicate Bank 2010)
the following will not be diluted? (1) Universal Life and Investment Plan.
(Syndicate Bank 2010) (2) Unit Loan and Insurance Plan.
(3) Universal Loan and Investment Plan.
(1) The Life Insurance Corporation of India (L I C) (4) Uniformly Loaded Investment Plan.
(2) Confederation of Indian Industry (C I I) (5) Unit Linked Insurance Plan.
(3) Federation of Chambers of Commerce and Q.25. Capital market regulator is:
Industry (F I C C I) (Bank of Baroda 2008)
(1) R B I (2) I R D A
(4) Bureau of Indian Standards
(3) N S E (4) B S E
(5) Securities and Exchange Board of India (S E B I) (5) S E B I

ANSWER KEY
1.(4) 2.(2) 3.(1) 4.(3) 5.(1) 6.(3) 7.(1) 8.(3) 9.(3) 10.(3)
11.(3) 12.(5) 13.(4) 14.(3) 15.(5) 16.(2) 17.(2) 18.(2) 19.(2) 20.(4)
21.(1) 22.(3) 23.(5) 24.(5) 25.(5)

NOTES

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FOREIGN TRADE & EXCHANGE

� FEATURES OF FOREIGN TRADE

� CURRENT ACCOUNT
� CAPITAL ACCOUNT
� DIFFERENCE BETWEEN FDI AND FII
� INDIA’S FDI POLICY
� ROUTES FOR FDI TO ENTER INTO INDIA
� NEER AND REER
� FERA TO FEMA
� PRACTICE PAPER QUESTIONS
� PREVIOUS PAPER QUESTIONS

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CHAPTER

8 FOREIGN TRADE &

EXCHANGE
BALANCED BALANCE OF PAYMENTS
Foreign Trade
Value of total receipts equals total payments.
Its exports and imports of merchandise from one country
to another countries under contract of sale. No country The Balance of Payment accounting has two types:
in the world produces all the commodities it requires. The Current account
commodities which a country produces is at advantage,
Capital account
because it can export.
Features of Foreign Trade Current Account
Import: if the seller is abroad, and the buyer is in the home ##All transactions relating to goods, services and
country. unrequited transfers constitute current account Flow of
Export: when the seller is in the home country and the items pertaining to specific period of time Visible items
purchaser is abroad. include goods Invisible items include services
Visible trade : which can be seen e.g.. Trade of goods. Capital Account
Invisible trade: which can not be seen e.g. Exchange of services. All transactions indicating changes in stock magnitudes
Balance Of Payments concerning capital receipts and payments constitute capital
account.
It is a systematic record of all the economic transactions
between the residents of that countries during a given period. Relates to
OR ##Change in stock of gold
A Balance of Payment account is a statement of double entry
system of record of all economic transactions (involving ##Change in reserve of foreign
foreign payments) between residents of a country and the rest ##Currency including SDR
of the world carried out in specific period of time.
##Financial claims & liabilities.
FAVORABLE BALANCE OF PAYMENTS
##Direct investment (FDI),
Value of total receipts more than total payments.
ADVERSE BALANCE OF PAYMENTS ##Portfolio investments (FII),
Value of total receipts less than total payments. ##External commercial borrowing (ECB) etc

Difference Between Current Account And Capital Account

Current Account Capital Account
##Indicates flow aspect of country’s national ## Indicates changes in stock magnitudes
transactions ## Relates to all transactions constituting debts and
##Relates to goods services and unrequited transfer of ownership
transfers

Convertibility of Rupee
Current Account Convertibility Capital Account Convertibility
• Money classified under current account can • Money classified under capital account cannot be
be easily converted into Dollar, Yen, Pound, easily converted into different currency. RBI has
Rupee etc. strict guidlines.
• We don’t have Full Capital Account Convertibility.

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and more industries under the automatic route. In the year
Foreign Investment
2000, government allowed FDI up to 100% on the automatic
Foreign Direct Investment (FDI) route for most activities; a small negative list was notified,
where either the automatic route was not available or there
It refers to direct investment in the productive capacities of
were limits on FDI.
a country by someone from outside the country.
FDI is prohibited under the government route as well as
Foreign Institutional Investors (FII) the automatic route in the following sectors, where FDI
These are investments by entities from outside the is not allowed.
country into the financial assets like debts and shares a) Atomic Energy
of companies from a different country, in which they
are incorporated. FIIs are required to register with b) Lottery Business
SEBI (Securities and Exchange Board of India) and any c) Gambling and Betting
foreign individual wanting to invest into India has to d) Business of Chit Fund
copy through one of these FIIs.
e) Nidhi Companies
Difference Between FDI And FII
Routes For FDI To Enter Into India
##In order to remove the ambiguity that prevails on what
is Foreign Direct Investment (FDI) and what is Foreign Automatic Route
Institutional Investment (FII) the Finance Minister in his In most sectors, FDI is permitted on the automatic route. FDI
budget speech of 2013 clarified as under– in such sectors does not require any prior approval and only
##“I propose to follow the international practice and lay requires notification of RBI.
down a broad principle that where an investor has a stake Government Approved Route
of 10% or less in a company, it will be treated as FII and, In respect of sectors/activities which are presently under
where an investor has a stake of more than 10%, it will automatic route but required Government approval earlier as
be treated as FDI. Arvind Mayaram committee will be per the extant policy during the relevant period, concerned
constituted to examine the application of the principle administrative Ministry/Department would be the Competent
and to work out the details expeditiously. Authorities for the grant of post-facto approval for foreign
Participatory Notes (P-Notes) investment. In case of proposals involving total foreign equity
##These are financial instruments used by investors or inflow of more than Rs 5000 crore, Competent Authority shall
hedge funds that are not registered with the Securities place the same for consideration of Cabinet Committee on
and Exchange Board of India to invest in Indian Economic Affairs (CCEA).
securities. Indian-based brokerages buy India-based The Foreign investgment promotion board (FIPB) the
securities and then issue participatory notes to foreign government abolished in April 2017.
investors. Any dividends or capital gains collected from Foreign Exchange
the underlying securities go back to the investors.
Foreign exchange reserves are an important component of the
Global Depository Receipts (GDRs) BoP and an essential element in the analysis of an economy’s
These are equity instruments issued in international markets like external position.
London, Luxembourg etc. Indian companies use GDRs to raise India’s Balance of Payments and Foreign Trade
capital from abroad. GDRs are designated in dollars, euros etc.
India’s foreign exchange reserves comprise Foreign Currency
American Depository Receipts (ADRSs) Assets (FCAs), gold, Special Drawing Rights (SDRs)
These are the equity instruments issued to American retail and Reserve Tranche Position (RTF) in the International
and institutional investors. They are listed in New York, either Monetary Fund (IMF).
on Nasdaq or New York Stock Exchange. Exchange Rate
Bharat Depository Receipts (BhDRs) Exchange Rate is the rate, at which Indian rupee will be
These are similar to ADR/GDR. They are used by non-Indian exchanged with other international currencies, say US dollar,
companies in the Indian stock markets for issuing equity to in the foreign exchange market.
Indian investors.
NEER And REER
India’s FDI Policy
The Nominal Effective Exchange Rate (NEER) and Real
To encourage FDI inflows, India has continued to be fine- Effective Exchange Rate (REER) indices are used as
tuned and progressively liberalized, allowing FDI in more indicators of .external competitiveness of the country over
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a period of time/NEER is the weighted average of bilateral
Some Important Terms In International
nominal exchange rates of the home currency in terms of
foreign currencies, while REER is defined as a weighted Banking
average of nominal exchange rates, adjusted for home and Offshore Banking Units (OBUs)
foreign country relative price differentials. ##As per RBI policy of Nov 12, 2002, within SEZs, the OBUs
From Foreign Exchange Regulation To would be virtually foreign branches of Indian banks located
in India. The major aspects of the guidelines are:
Management (FERA To FEMA)
##Eligibility Criteria : Banks operating in India viz. public
##High Level Committee on Balance of Payments (BoP) sector, private sector and foreign banks authorized to
(Chairman: Dr C Rangarajan, 1993), set the broad deal in foreign exchange are eligible to set up OBUs.
agenda in this regard.
##Capital: Parent bank to provide a minimum of USD 10
##The committee recommended the following million to its OBU.
##The introduction of a market-determined exchange rate Currency Accounts
regime within limits.
##NOSTRO ACCOUNT (Our Account with you)
##Liberalization of current account transactions leading to ##A nostro account is a record of funds held by a bank
current account convertibility. in another country in the currency of that country (in
##Strict regulation of external commercial borrowings, foreign currency).
especially short-term debt. ##VOSTRO ACCOUNT (your account with us)
Special Economic Zone (SEZ) ##A vostro account will be in the local currency of the
bank where the money is being held i.e. it is the bank in
Asia’s first Export Processing Zone (EPZ), was set up in
country B’s record of the money kept by the bank from
Kandla, India in 1965.
country A with it.
The first SEZ policy was announced in April, 2000, which ##LORO ACCOUNT (their account with them)
inter-alia provided for to make SEZ an engine of growth
##A loro account is a record of an account held by a bank
supported by quality infrastructure backed up by attractive
on behalf of a third party.
fiscal package.
Forex Reserves
To import stability to the SEZ regime, SEZ Act, 2005,
These are the reserves with the country (with RBI in India
was enacted and which came into effect from February
on behalf of Govt. of India) which are used to finance
10, 2006.
imports/make payments to countries abroad in settlement
As per the provisions of the SEZ Act, 2005, 100% FDI is of transactions. The movement in forex reserves is the net
allowed in SEZs through the automatic route. result of all external transactions.

Salient features: FCNR (B), NRE, and NRO Account

Particulars FCNR (B) Account NRE Account NRO Account
Joint account of two or Permitted Permitted Permitted
more NRIs
Joint account with a Not permitted Not permitted Permitted
resident in India
Denominated Currency Pound / Dollar/Yen/Euro Indian Rupees Indian Rupees
Principal Freely repatriable Freely repatriable Not repatriable
Interest Freely repatriable Freely repatriable Freely repatriable
Type of accounts Term deposits only. Current, Savings, Recurring, Current, Savings, Recurring, Fixed
Fixed Deposits. Deposits.
Period of FD Min 1 year, Max 3 years As per bank. As per bank.
Rate of interest As per bank. As per bank. As per bank.

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FOREIGN TRADE - (PRACTICE QUESTIONS)
Q.1. For any country, in which of the following categories (1) Balance in consolidated fund of the country.
can we define ‘Balance of Payment’? (2) Balance with International Monetary Fund
(1) Favorable Balance of Payment. (3) Balance in World Bank.
(2) Adverse Balance of Payment. (4) Public debt of that country.
(3) Balanced Balance of Payment. (5) Record of foreign trade of the country.
(4) Any one of the above term can be used Q.8. What is the effect of an increase in demand for
(5) None of these exports on the foreign currency reserve of a country?
Q.2. An economy that do not export or import from other (1) It will be Positive for the foreign currency reserve
country, is said to be.. of that country.
(1) Open economy (2) Closed economy (2) It will be Negative for the foreign currency
(3) Mixed economy (4) Socialist economy reserve of that country.

(5) Capitalist economy (3) It will be Neutral for the foreign currency reserve
of that country.
Q.3. If import increase then the current account deficit of
country is likely to- (4) All of these

(1) will remain constant (5) None of these

(2) is likely to Increase Q.9. Which of the following is included in the Balance
of payments of a country:
(3) is likely to decrease
(1) Current account (2) Capital account
(4) all of the above
(3) Revenue accounts (4) Saving account
(5) none of the above
(5) Both 1 & 2
Q.4. Which of the following is included in Export-Import
of a country? Q.10. What will be effect of an increase in the debt of a
country on current account deficit?
(1) Visible items (2) Invisible items
(1) It shall be effected positively.
(3) Only 1 (4) Both 1 & 2
(2) It shall be effected negatively
(5) None of the above
(3) It shall be effected neutrally
Q.5. Which of the following is not included in invisible
item in balance of payments: (4) All of these

(1) Tour and travels paid by tourist (5) None of these

(2) Foreign remittance Q.11. If the value of rupee declines rapidly in comparison
to dollar, then the price of Indian goods will-
(3) Hotel charges
(1) Grew cheaper for foreigners to import our
(4) Food grains product.
(5) None of these (2) Grew costlier for foreigners to export their
Q.6. Which of the following organization/institution will product.
provide fund for the deficit in balance of payments (3) Remain at the same price
of a country?
(4) All of the above
(1) International Monetary Fund
(5) None of these
(2) World Trade Organization
Q.12. In which of the following account is borrowings
(3) Bank for International Settlement from the World Bank be recorded in the balance of
(4) Group of 7 Developed Nations payments?
(5) None of these (1) Capital account (2) Visible Goods
Q.7. Which one of the following, clearly defines the (3) Current account (4) Revenue account
meaning of the balance of payments of a country?
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(5) Saving account. Q.17. Foreign exchange reserves of a country will increase,
Q.13. In which of the following is, the visible items if-
recorded for a country? (1) Increase taxes by the government
(1) Capital account (2) Export increases but import remain unchanged
(2) The balance of trade (3) Import increases but export remain unchanged
(3) Foreign Exchange (4) 1 and 2 both
(4) Reserve Bank of India (5) None of these
(5) None of these Q.18. All type of borrowings from outside the country is
Q.14. Which of the following is the full form of IMF? mentioned in-
(1) International Monetary Finance (1) Trade account (2) Capital account
(2) Internet Monetary Fund (3) Current account (4) Monetary account
(3) International Monetary Fund (5) None of these
(4) International Monetary Function committee Q.19. IMF gives loans:
(5) None of these (1) To fill gap in balance of payments
Q.15. Which of the following is the full form of FDI? (2) To fill gap in government budget
(1) Foreign direct investment
(3) To decrease poverty
(2) Foreign development investment
(4) To increase opportunities
(3) Fixed deposit interest
(5) All of the above
(4) Foreign disinvestment inherent
Q.20. A bank account held in foreign country by a domestic
(5) None of these bank denominated in the currency of that country is
Q.16. If balance of payments of country is in deficit, then: called:
(1) Current account will be in deficit (1) Loro account
(2) Export shall increase (2) Nostro account
(3) The country can borrow from abroad (3) Vostro account
(4) 1 and 3 both (4) Foreign currency convertible account
(5) None of these (5) Non-resident ordinary account
ANSWER KEY
1.(4) 2.(2) 3.(2) 4.(4) 5.(4) 6.(1) 7.(5) 8.(1) 9.(5) 10.(2)
11.(1) 12.(1) 13.(2) 14.(3) 15.(1) 16.(4) 17.(2) 18.(2) 19.(1) 20.(2)

NOTES

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)

Q.1. ICICI Bank opens representative office in ______. Q.7. Which of the following bank has signed an
(IBPS Clerk - 2021) agreement with National Bank for Agriculture and
Rural Development (NABARD) for the promotion
(1) Bhutan (2) China
of 2500 joint liability groups (JLG) in select districts
(3) Nepal (4) France of West Bengal?
(5) USA (IBPS PO Mains 2016)
Q.2. What is the Foreign Direct Investment (FDI) limit (1) State Bank of India (2) Bank of Baroda
permitted by government in Banking-public Sector?
(3) Punjab National Bank
(IBPS Clerk - 2021)
(4) Central Bank of India
(1) 100% (2) 74%
(5) None of these
(3) 20% (4) 49%
Q.8. What is the expanded form of ‘FATF’?
(5) None of the above
(SBI PO Mains 2022)
Q.3. Under the Reserve Bank of India Liberalised
(1) Financial Action Task Force
Remittance Scheme (LRS) all resident individuals,
including minors, are allowed to freely remit up to (2) Financial Asset Task Force
____per financial year. (3) Financial Asset Trade Force
(SBI Clerk Mains 2021) (4) Financial Action Trade Force
(1) $250,000 (2) $150,000 (5) None of the Above
(3) $130,000 (4) $20,000 Q.9. Which of the following is NOT a major currency
(5) $145,000 traded in the foreign exchange market?
Q.4. Many times the word “CAGR” comes in news. What (IBPS PO CLERK 2018)
does this word stand for-? (1) US dollar (2) Euro
(SBI Clerk Mains 2021) (3) Japanese yen (4) Chinese yuan
(1) Current avoided growth rate (5) Brazilian real
(2) Compound average growth rate Q.10. What is the term used to describe the difference
(3) Compound annual growth rate between the bid price and the ask price in the foreign
exchange market?
(4) Compound accelerated growth rate
(SBI PO Mains 2022)
(5) None of the above
(1) Spread (2) Margin
Q.5. GDR’ is a bank certificate issued in more than one
country for shares in a foreign company. What does ‘R’ (3) Pip (4) Lot
stands for in ‘GDR’? (5) Swap
(IBPS PO Mains 2017) Q.11. Which of the following is not a major currency in
(1) Ratio (2) Receipt the foreign exchange market?
(3) Revenue (4) Risk (BI Clerk Mains 2018)
(5) Reserve (1) Euro (2) Japanese Yen
Q.6. According to the government, after the abolition of (3) British Pound (4) Swiss Franc
the Foreign Investment Promotion Board (FIPB), now (5) Singapore Dollar
ministries will have to decide on FDI proposals within Q.12. Which of the following acts covers the Indian Trade
how many days of the application and any rejection? Rupee?
(IBPS Clerk - 2017) (SBI PO Mains_2014)
(1) 30 (2) 20 (1) Indian Contract Act, 1872
(3) 90 (4) 15 (2) Indian Foreign Trade (Development and
(5) 60 Regulation) Act, 1992
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(3) Companies Act, 2013 (1) Ravi Prasad (2) Harshvardhan
(4) Foreign Exchange Management Act, 1999 (FEMA) (3) S Jaishankar (4) Narender Modi
(5) Reserve Bank of India Act, 1934 (5) None of the above
Q.13. What was the exchange rate of one British Pound Q.18. The Global Multidimensional Poverty Index (MPI)
as of January 1, 2021? was developed by:
(SBI PO Mains 2021) (IBPS Clerk - 2018)
(1) 1.2203 USD (2) 1.1046 EUR (1) United Nations (2) World Bank
(3) 138.2595 JPY (4) 1.7975 CAD (3) United Nations Development Programme
(5) 10.8148 CNYINR
(4) International Monetary Fund
Q.14. Who is the Chairperson of the committee launched by
(5) World Economic Forum
SEBI for suggesting norms for Social Stock Exchange?
Q.19. Which of the following countries has launched the
(IBPS PO Mains_2017)
World’s first ‘floating nuclear power plant’ (FNPP)?
(1) Ishaat Hussain, Director of SBI Foundation
(SBI PO Mains 2016)
(2) Ratan Tata, Chairman Emeritus of Tata Sons
(1) China (2) USA
(3) Nandan Nilekani, Co-founder of Infosys
(3) Russia (4) India
(4) Adi Godrej, Chairman of the Godrej Group
(5) Japan
(5) Uday Kotak, MD and CEO of Kotak Mahindra Bank
Q.15. Which entities formed a joint venture to incorporate Q.20. What is the full form of FCCBs?
the Receivables Exchange of India Ltd (REXIL) on (IBPS RRB - 2021)
February 25, 2016? (1) Foreign Currency Convertible Bonds
(IBPS PO Mains 2021) (2) Foreign Convertible Credit Bonds
(1) National Stock Exchange of India Ltd (NSE) and (3) Financial Consortium and credit bureau
Small Industries Development Bank of India (SIDBI)
(4) Future Credit and Currency Bureau
(2) Reserve Bank of India (RBI) and Securities and
(5) None of the above
Exchange Board of India (SEBI)
Q.21. Which class of derivative has a value that is at least
(3) Bombay Stock Exchange (BSE) and National Bank
partly derived from one or more underlying stock
for Agriculture and Rural Development (NABARD)
exchange securities?
(4) State Bank of India (SBI) and National Payments
(SBI PO Mains 202)1
Corporation of India (NPCI)
(5) Industrial Development Bank of India (IDBI) (1) Trade Derivative (2) Commodity Derivative
and National Securities Depository Limited (NSDL) (3) Credit Derivative (4) Interest Rate Derivative
Q.16. Many times we read in newspapers that several (5) Equity Derivative
companies are adopting the FCCBs route to raise Q.22. The Reserve Bank of India (RBI) has asked banks
capital. What is the full form of FCCBs? authorized to deal in foreign exchange (Authorised
(RRB OFFICE ASSISTANT MAINS 2021) Dealer-I Banks) to share data with the Directorate
(1) Foreign Currency Convertible Bonds of Revenue Intelligence (DRI).
(2) Foreign Convertible Credit Bonds (IBPS PO Mains 2018)
(3) Financial Consortium and credit bureau (1) Securities and Exchange Board of India (SEBI)
(4) Future Credit and Currency Bureau (2) Ministry of Corporate Affairs
(5) None of the above (3) Central Bureau of Investigation (CBI)
Q.17. Who among the following from India had attended (4) Income Tax Department
key ministerial meetings of the regional forums of (5) None of the above
ASEAN, Mekong Ganga Cooperation (MGC) and
Q.23. Which of the following Companies is not listed in
East Asia Summit?
the Stock Exchange?
(SBI PO Mains 2021)
(SBI PO Mains 2021)
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(1) Airbnb (2) SpaceX (1) Only (i)
(3) IKEA (4) Uber (2) Only (ii)
(5) Patagonia (privately held outdoor clothing and (3) Only (iii)
gear company) (4) All (i), (ii) and (iii)
Q.24. We very frequently read about Special Economic (5) None of these
Zones (SEZs) in newspapers. These SEZs were Q.25. What is the name given to a type of mutual fund or
established with which of the following objectives? exchange-traded fund (ETF) that emphasizes current
(SBI CBO December 2022) income, either on a monthly or quarterly basis, as
(i) To attract foreign investment directly. opposed to capital gains or appreciation?
(ii) To protect domestic market from direct (IBPS Clerk Mains 2020)
competition from multinationals. (1) Growth Fund (2) Value Fund
(iii) To provide more capital to agricultural and allied (3) Index Fund (4) Sector Fund
activities. (5) Balanced Fund
ANSWER KEY
1.(3) 2.(3) 3.(1) 4.(3) 5.(2) 6.(5) 7.(1) 8.(1) 9.(5) 10.(1)
11.(5) 12.(4) 13.(2) 14.(2) 15.(1) 16.(1) 17.(3) 18.(3) 19.(3) 20.(1)
21.(5) 22.(5) 23.(5) 24.(1) 25.(1)

NOTES

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PUBLIC FINANCE

{{ HISTORICAL BACKGROUND
{{ CONCEPTS OF BUDGET
{{ TAXES ON INCOME AND EXPENDITURE
{{ PUBLIC DEBT
{{ FRBM ACT
{{ VAT & GST
{{ QUESTION & ANSWER

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CHAPTER

9 PUBLIC FINANCE

Historical Background
‘Budget System’ was introduced in Shanmukham Chetty on November
India on 7th April, 1860. Sir James 26, 1947.
Wilson the first Indian Finance In 1950-51 budget, the then Finance
Member delivered the budget Minister John Mathai announced the
speech expounding the Indian creation of the Planning Commission.
financial policy as an integral whole
for the first time. C. D. Deshmukh was the first Indian
Governor of RBI to have presented
The financial year for the Union and the State Governments in the Interim Budget for the year
India is from April to March. Each financial year is, therefore, 1951-52.
spread over two calendar years. The period of financial year
as from April to March was introduced in India from 1867. Morarji Desai was the only Finance Minister to have had
Prior to that, the financial year in India used to commence the opportunity to present two budgets on his birthday - in
on 1st May and ended on 30th April (L.K. Jha Committee’s 1964 and 1968. After Desai’s resignation, Indira Gandhi,
Report of the Committee On Change in Financial Year). the then Prime Minister of India, took over the Ministry of
Finance to become the only woman to hold the post of the
Although the Indian Constitution does not mention the finance minister. The 1965-66 budget contained the first
term ‘Budget’, it provides that the President shall in respect disclosure scheme for black money. Since 1980, budget
of every financial year cause to be laid before both the papers are printed in North Block. A week before the budget
Houses of Parliament, the House of People (Lok Sabha) is presented, the employees of the press stay in the ministry
and the Council of States (Rajya Sabha), a statement of the and have no means of communicating with the outside world.
estimated receipts and expenditure of the Government for
that year. This statement known as the ‘Annual Financial Pranab Mukherjee, the first Rajya Sabha member to hold the
Statement’ is the main fiscal or budgetary document of the Finance portfolio, presented the annual budgets for 1982-83,
Government. 1983-84 and 1984-85.
Budget has been described in Article-112 of the Indian Rajiv Gandhi presented the budget for 1987-89 after V. P.
Constitution as Annual Financial Statement. Singh quit his government and in the process became only
the third Prime Minister to present a budget after his mother
Article-110 Describes Money Bill and grandfather. Three interim budgets were presented in the
Railway Budget was separated from 1990s while Yashwant Sinha presented the interim budget.
General Budget in the year 1924 on Budgets for 1991-92 and 1998-99 Manmohan Singh
the recommendations of Acworth presented the 1996-97 interim Budget.
Committee. However it is again
merged with the Union Budget on P Chidambaram rewrote India‘s Exim Policy in one non-
the recommendation of NITI Aayog stop eight-hour sitting in July 1991, when he became the
Members B. Debroy and K. Desai on Commerce Minister.
21 Sep. 2016. R Venkataraman and Pranab Mukherjee were the Finance
Budget was presented each year on the last working day of Ministers who later became the President of India.
February by the Finance Minister of India in Parliament. But Service Tax was introduced in 1994-95 on services like
now budget is presented on 1st working day of February. The telephone services, stock brokers, health clubs, beauty parlours,
budget has to be passed by the House before it can come into dry cleaning services etc. to correct the disparity in taxation
effect on April 1, the start of India’s financial year. between goods and services, has become a buoyant source of
Former Finance Minister Morarji Desai presented the budget revenue in recent years. After elections in 1996, a non-Congress
ten times, the most by any finance minister. The first Union ministry assumed office. Hence the final budget for 1996-97
budget of independent India was presented by R. K. was presented by P. Chidambaram, who then belonged to Tamil

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Maanila Congress. Following a constitutional crisis when the funds, small savings and so on. These funds do not belong to
I. K. Gujral Ministry was on its way out, a special session of the government. They have to be paid back at some time to their
Parliament was convened just to pass Chidambaram’s 1997-98 rightful owners. Because of this nature of the fund, expenditures
budget. This budget was passed without a debate. from it are not required to be approved by Parliament.
Until the year 2000, the Union Budget was announced at 5 Supplementary, Additional Or Excess Grants
pm on the last working day of the month of February. This
If the amount authorized through appropriations for a
practice was inherited from the Colonial Era, when the British
particular service is found to be insufficient for the purposes
Parliament would pass the budget in the noon followed by
of that year or when a need has arisen during the current
India in the evening of the day.
financial year for supplementary or additional expenditure
It was Yashwant Sinha, the then Finance Minister of India in upon some new service not contemplated in the annual
the NDA government (led by BJP) of Atal Bihari Vajpayee, financial statement for that year, a supplementary demands for
who changed the ritual by announcing the 2001 Union Budget grants proposal shall be made before Parliament. However, if
at 11 am. It also showed, how the previous governments any money has been spent on any service during a financial
had continued the processes from pre-independence period, year in excess of the amount granted for that service and for
without giving it any thought. Jaswant Singh was Finance that year, demand for such excess, as the case may be is to
Minister for 13 days. Both Yaswant Sinha and Manmohan be laid before both the Houses of Parliament for authorizing
Singh have presented five Union Budgets in a row. In an (subject to the report of the Public Accounts Committee) the
election year, Budget may be presented twice - first to secure expenditure incurred in excess.
vote on account for a few months and later in full. The Budget
The House of the People shall have power relating to : -
is presented in Parliament on a date fixed by the President.
(a) Vote on Account- to make any grant in advance in respect
Concepts of Budget of the estimated expenditure for apart of any financial year
On the budget day, the Finance Minister tables 14 documents. pending the completion of the parliamentary procedure.
Of these, the main and most important document is the (b) Vote of Credit- to make a grant for meeting an
Annual Financial Statement. unexpected demand upon the resources of India when on
Annual Financial Statement account of the magnitude or the indefinite character of
Article 112 of the constitution requires the government to present the service the demand cannot be stated with the details
to the Parliament a statement of estimated receipts and expenditure ordinarily given in an annual financial statement;
in respect of every financial year, April 1 to March 31. This (c) Exceptional Grant- to make provision for an exceptional
statement is the annual financial statement. The annual financial grant that does not form part of the current service of any
statement is usually a white 10-page document. It is divided into financial year.
three parts, Consolidated Fund, Contingency Fund and Public
Revenue Receipt/ Expenditure
Account Fund. For each of these funds, the government has to
present a statement of receipts and expenditure. All receipts and expenditure that in general do not entail sale
or creation of assets are included under the revenue account.
Consolidated Fund
On the receipts side, taxes would be the most important
This is the most important of all the government funds. All revenue receipt. On the expenditure side, anything that
revenues raised by the government, money borrowed and does not result in creation of assets is treated as revenue
receipts from loans given by the government flow into the expenditure. Salaries, subsidies and interest payments are
consolidated fund of India. All government expenditure is good examples of revenue expenditure.
made from this fund, except for exceptional items met from the
Contingency Fund or the Public Account. Importantly, no money Capital Receipt/ Expenditure
can be withdrawn from this fund without Parliament’s approval. All receipts and expenditure that liquidate or create an asset,
Contingency Fund would in general be under capital account. For instance,
if the government sells shares (disinvests) in public sector
As the name suggests, any urgent or unforeseen expenditure is companies, like it did in the case of Maruti, it is in effect selling
met from this fund. The Rs 500-crore fund is at the disposal of an asset. The receipts from the sale would go under capital
the President. Any expenditure incurred from this fund requires account. On the other hand, if the government gives someone a
a subsequent approval from Parliament and the amount loan from which it expects to receive interest, that expenditure
withdrawn is returned to the fund from the consolidated fund. would go under the capital account. In respect of all the funds
Public Account Fund the government has to prepare a Revenue Budget (detailing
This fund is to account for flows for those transactions where the revenue receipts and revenue expenditure) and a Capital
government is merely acting as a banker, for instance, provident Budget (capital receipts and capital expenditure). Contingency

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Fund is clearly not that important. Public Account is important excise duty for example Sugar, Cotton, Textile, Tobacco,
in that it gives a view of select savings and how they are being Motor Spirit, Match Box and Cement etc.
used, but not that relevant from a budget perspective. The
consolidated fund is the key to the budget.
GST (GOODS AND SERVICE TAX):
Revenue Of Central Government
Receipt estimates on revenue account are divided into two
parts i.e. tax revenue and non tax revenue.
Tax revenue is divided into three parts:
(a) Tax on income and expenditure A single common “Goods and Services Tax” was pioneered
(b) Tax on assets and capital transaction; and by Prime Minister Atal Bihari Vajpayee. Vajpayee set up a
committee headed by the Finance Minister of West Bengal,
(c) Tax on goods and services
Asim Dasgupta to design a GST model.
Non-Tax Revenue is divided into two parts
Goods and Services Tax is an indirect tax (or consumption
(a) Fiscal and other services tax) imposed in India on the supply of goods and services.
(b) Interest receipts, dividends and profits GST is imposed at every step in the production process, but
is meant to be refunded to all parties in the various stages
Taxes On Income And Expenditure of production other than the final consumer. The GST was
Taxes on income are of two kinds i.e. Personal Income Tax launched at midnight on 1 July 2017 by the President of India.
and Corporation Tax i.e. tax on profits of companies. Goods and services tax are divided into five tax slabs for
Income Tax collection of tax - 0%, 5%, 12%, 18% and 28%. However,
Central government imposes personal income tax on Petroleum products, alcoholic drinks, electricity, are not
individual’s income and revenue received from this is taxed under GST. The tax came into effect from July 1,
distributed between the Centre and the States. Income tax 2017 through the implementation of One Hundred and
is not imposed on all individuals but on those who are First Amendment of the Constitution of India by the Indian
prosperous. Its basis is ‘Ability to Pay ‘ principle. government. The tax replaced existing multiple flowing taxes
levied by the central and state governments.
Corporation Tax
GST Council
Corporation tax is tax on income of companies. This tax is
imposed by Central Government on the profits of small and GST Council is the governing body of GST having 33
big companies. members. It is chaired by the Union Finance Minister. GST
Council is an apex member committee to modify, reconcile or
Securities Transaction Tax (STT) to procure any law or act or regulation based on the context
Sale of any asset (shares, property etc-) results in loss or of goods and services tax in India.
profit. Depending on the time the asset is held, such profits Article 279A (4) specifies that the Council will make
and losses are categorised as long term or short term capital recommendations to the Union and the States on the important
gain/loss. In the year 2004-05 budget, the government issues related to GST, such as, the goods and services will be
abolished long-term capital gains tax on shares (tax on profits subject or exempted from the Goods and Services Tax.
made on sale of shares held for more than a year) and replaced They lay down GST laws, principles that govern the following:
it with STT. It is a kind of turnover tax where the investor has
to pay a small tax on the total consideration paid/received ##Place of Supply
in a share transaction. In budget 2018-19, again 10% LTCG ##Threshold limits
(long term capital gain) tax introduced. ##GST rates on goods and services
Custom Duty ##Special rates for raising additional resources during a
Taxes imposed on imports. While revenue is an important natural calamity or disaster
consideration, custom duties may also be levied to protect ##Special GST rates for certain States
the domestic industry or sector (agriculture, for one), in
retaliation against measures by other countries etc. Goods and Services Tax Network (GSTN)
Union Excise Duty: The GSTN software is developed by Infosys Technologies
and the Information Technology network that provides the
Duties imposed on goods manufactured in the country by computing resources is maintained by the NIC. “Goods and
the Central Government, but those goods are exempted from Services Tax” Network (GSTN) is a non-profit organisation
union excise duties, on which State Government imposes
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GST

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formed for creating a sophisticated network, accessible Non-Scheme Expenditure
to stakeholders, government and taxpayers to access
This is largely the revenue expenditure of the government. The
information from a single source (portal).
biggest item of expenditure are interest payments, subsidies,
Direct Tax salaries, defence and pension. The capital component of the
Traditionally, these are taxes where the burden of tax falls on non-scheme expenditure is relatively small with the largest
the person on whom it is levied. These are largely taxes on allocation going to defence.
income or wealth. Income tax (on corporates and individuals),
FBT, STT and BCTT are direct taxes. Types of Deficit
Indirect Tax Revenue Deficit
In the case of indirect taxes the incidence of tax is usually Revenue Expenditure – Revenue Income
not on the person who pays the tax. These are largely taxes Budgetary Deficit
on expenditure and include customs, excise and GST. Total Expenditure – Total Income
Indirect taxes are considered regressive, the burden on the Fiscal Deficit
rich and the poor is alike. That is why governments strive
to raise a higher proportion of taxes through direct taxes. Budgetary Deficit + Borrowing & Other Liabilities
Moving on, we come to the next important receipt item in Primary Deficit
the revenue account, non-tax revenue. Fiscal Deficit – Interest Payment
Non-Tax Revenue
It is important to note that the entire defence expenditure is
The most important receipts under this head are interest non-scheme expenditure. We will now take up the various
payments (received on loans given by the government to deficits and the components of scheme and non-scheme
states, railways and others) and dividends and profits received expenditure.
from public sector companies.
FRBM Act:
Various services provided by the government - general
services such as police and defence, social and community Enacted in 2003, the Fiscal Responsibility and Budget
services such as medical services and economic services Management Act requires the elimination of revenue deficit
such as power and railways - also yield revenue for the by 2008-09. This means that from 2008-09, the government
government. Though Railways are a separate department, will have to meet all its revenue expenditure from its
all its receipts and expenditures are routed through the revenue receipts. Any borrowing would then only be to meet
consolidated fund. capital expenditure - repayment of loans, lending and fresh
investment. The Act also mandates a 3% limit on the fiscal
Public Debt deficit after 2008-09. This is a reasonable limit that allows
In normal accounting, debt is a stock, to be measured at a significant leverage to the government to build capacities in
point of time, while borrowing and repayment during a year the economy without compromising fiscal stability.
are flows, to be measured over a period of time. In Budget It is important to note that since the entire Budget is at current
parlance, however, you’ll find public debt receipts and market prices, the deficits are also calculated with reference
public debt disbursals. These are respectively borrowings to GDP at current market prices.
and repayments during the year. The difference between the
two is the net accretion to the public debt. Value-Added Tax (VAT) And GST:
Public debt can be split into two heads, internal debt (money VAT helps avoid cascading of taxes (tax being levied upon a
borrowed within the country) and external debt (funds price that includes one or more elements of tax) as a product
borrowed from non-Indian sources). passes through different stages of production/value addition.
The tax is based on the difference between the value of the
The internal debt comprises of Treasury Bills, Market output and the value of the inputs used to produce it. The aim
Stabilisation Scheme, Ways and Means Advance, and is to tax a firm only for the value added by it to the inputs it
securities against small savings. is using for manufacturing its output and not the entire input
Scheme Expenditure cost. VAT brings in transparency to commodity taxation: right
This is essentially the Budget support to the central plan and now, only the final tax paid by the consumer is apparent to
the central assistance to state and Union territory plans. Like them, while with value added tax generalised to goods and
all Budget heads, this is also split into revenue and capital services tax (GST) that subsumes both central and state
components. level taxation, the entire element of tax borne by a good (or
a service) would be represented by the GST paid on it.

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PUBLIC FINANCE (BUDGET)- (PRACTICE QUESTIONS)
Q.1. What is budget? have been discharged
(1) It is a monthly financial statement of estimated (C) The broad objectives of the Government to be
receipts and expenditures of the Government of India broken down into detailed work plans.
in a financial year. (1) Only option B & C is correct.
(2) It is an annual financial statement of estimated (2) Only option A & B are correct.
expenditures of the Government of India in respect
of each financial year. (3) Only option A, B & C are correct.
(3) It is quarterly financial statement of estimated (4) Only option A & C are correct.
receipts of the Government of India in respect of (5) None of these
each financial year.
Q.5. Which of the following is true regarding budget
(4) It is an annual financial statement of estimated preparation in India?
receipts and expenditures of the Government of India
(A) Budget preparation in India is a calculative
in respect of each financial year.
process between the Ministry of Finance and the
(5) None of these spending Ministries.
Q.2. Which of the following is true regarding a budget? (B) Top down approach with the Ministry of Finance
(A) Budget is a legal document. issuing guidelines or communicating instructions to
spending Ministries.
(B) It is passed by the legislature
(C) A bottom-up approach, wherein the spending
(C) It is approved by the President. Ministries plan and present requests for budget
(1) Only option A is correct. allocation.
(2) Only option A & B are correct. (1) Only option B & C is correct.
(3) Only option B & C are correct. (2) Only option A, B & C are correct.
(4) All of these (3) Only option A & B are correct.
(5) None of these (4) Only option A & C are correct.
Q.3. What were the different types of budget presented (5) None of these
in India? Q.6. What are the components of a budget?
(A) The Union Budget is presented to the Parliament (1) Annual Financial Statement
in two parts.
(2) Finance Bill
(B) Railway Budget consists of the detail of Indian
Railway. (3) Appropriation Bill
(C) General Budget consists the financial detail of (4) Demands for Grants
Indian Government. (5) All of the above
(1) Only option A, B & C is correct. Q.7. When is a budget presented in the Lok Sabha?
(2) Only option A & B are correct. (A) It is presented in accordance with article 204(1)
(3) Only option B & C are correct. of rules of procedure and conduct of business.
(4) Only option A & C are correct. (B) The budget is presented in the Lok Sabha on the
day as fixed by the president of India
(5) None of these
(C) Now it is presented at 11 am on the first working
Q.4. Which of the following is true regarding the nature day of February.
and objective of budget?
(1) Option A, B & C is correct.
(A) Government Budget is designed for optimal
allocation of scarce resources. (2) Only option B & C are correct.
(B) The main objective of Government financial (3) Only option A & B are correct.
management is to determine how adequately the (4) Only option A & C are correct.
financial and resource management responsibilities
(5) None of these
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Q.8. Which of the following is related to budget? (1) Deficit budget (2) Surplus Budget
(1) Plan expenditure (3) Balanced budget (4) Interim Budget
(2) Decided expenditure (5) All of these
(3) Undecided expenditure Q.16. Which of the following fund is related to article
(4) Option 1 & 2 are true 266(i)?

(5) Options 2 & 3 is true (1) Contingency Fund

Q.9. Which of the following is included to scheme (2) Consolidated Fund

expenditure? (3) Public Account Fund
(1) Central plans (4) All of these
(2) Centrally sponsored state plans (5) None of these
(3) Only option 2 is true Q.17. Which of the following fund is related to article
(4) Only option 1 is true 266(ii)?

(5) Both 1 and 2 is true (1) Contingency Fund

Q.10. Which of the following is included to non-scheme (2) Consolidated Fund

expenditure? (3) Public Account Fund
(1) Interest payments (4) All of these
(2) Subsidies (5) None of these
(3) wage and salary payments to government Q.18. Which of the following fund is related to article 267?
employees (1) Contingency Fund
(4) All of these (2) Consolidated Fund
(5) None of these (3) Public Account Fund
Q.11. Borrowing is included in which of the following (4) All of these
account?
(5) None of these
(1) Current account (2) Saving account
Q.19. What is the amount allocated for Contingency Fund?
(3) Capital account (4) Social account
(1) Rs. 50 crores
(5) None of these
(2) Rs. 500 crores
Q.12. Article 112 of the Constitution of India is related to:
(3) Rs. 5,000 crores
(1) Budget (Annual Financial Statement)
(4) Rs. 50,000 crores
(2) Financial Emergency
(5) None of these
(3) National Emergency
Q.20. Revenue Deficit is defined as:
(4) State budget
(1) Total Revenue Expenditure - Total Revenue
(5) None of these Receipt
Q.13. Article 110 of the Constitution of India is related to: (2) Revenue receipt plus Revenue expenditure
(1) Budget (2) Financial Bill (3) Revenue receipt minus Capital expenditure
(3) Money Bill (4) State budget (4) Capital receipt minus Revenue expenditure
(5) None of these (5) None of these
Q.14. Article 117 of the Constitution of India is related to- Q.21. Fiscal Deficit is defined as:
(1) Budget (2) Financial Bill (1) Total Capital receipt minus Revenue expenditure
(3) Money Bill (4) State budget (2) Total Borrowing minus Total expenditure
(5) None of these (3) Total Revenue receipt plus Revenue expenditure
Q.15. Which of the following is a type of budget? (4) Total Receipt minus Total expenditure
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(5) Total (non-borrowed) Receipt minus Total (C) Payment for Pensions, police, economic services
expenditure in various sectors, other general services such as
Q.22. Primary Deficit is defined as: tax collection, social services, and grants to foreign
governments.
(1) Fiscal Deficit – interest payments
(1) Only option A & C is correct
(2) Fiscal Deficit + interest payments
(2) Only option B & C are correct
(3) Fiscal Deficit – Revenue Expenditure
(3) Only option A, B & C are correct
(4) Fiscal Deficit – Capital Expenditure
(4) All of the above
(5) None of these
(5) None of these
Q.23. Which of the following Deficit indicates lack of
resources to accomplish a decided target for coming Q.25. Non-scheme capital expenditure mainly includes:
year: (A) Defence expenditure
(1) Revenue Deficit (2) Capital Deficit (B) Loans to public enterprises and loans to States.
(3) Primary Deficit (4) Fiscal Deficit (C) Loans to Union Territories and foreign
(5) None of these governments.

Q.24. Non-scheme revenue expenditure includes: (1) Only option A & C are correct

(A) Interest payments, subsidies (mainly on food (2) Only option B & C are correct
and fertilizers). (3) Only option A & B are correct
(B) Wage and salary payments to government (4) All of the above
employees, grants to States and Union Territories (5) None of these
governments.

ANSWER KEY
1.(4) 2.(4) 3.(1) 4.(3) 5.(2) 6.(5) 7.(1) 8.(1) 9.(5) 10.(4)
11.(3) 12.(1) 13.(3) 14.(2) 15.(5) 16.(2) 17.(3) 18.(1) 19.(2) 20.(1)
21.(5) 22.(1) 23.(4) 24.(3) 25.(4)

NOTES

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)

Q.1. What is the maximum amount of fund deposited Q.7. Which of the following organisation recommends
under the Public Provident Fund? the appointment of MD and CEO in public sector
(RRB office assistant mains 2021) banks?
(1) 1 lakhs (2) 50 thousand (1) RBI
(3) 1.5 lakhs (4) 2 lakhs (2) Bank Boards Bureau
(5) 2.5 lakhs (3) State Government
Q.2. Which is the first Public Sector Bank to issue capital (4) Central Government
to public?
(5) Management of concerned bank
(RRB office assistant mains 2021)
Q.8. Which of the following is the objective of the EASE
(1) Indian Overseas Bank reforms index?
(2) Syndicate Bank
(NABARD GRADE A 2021)
(3) Oriental Bank of Commerce
(1) Performance of each Public Sector Banks
(4) Punjab National Bank
(2) Performance of regional Rural Bank
(5) None of these
(3) To ease the working of Public Sector Banks
Q.3. Scope of public finance includes :
(SBI PO Mains 2022) (4) To measure the loan disbursement by Central
Banks
(1) Public revenue
(5) None of the above
(2) Public debt
(3) Public expenditure Q.9. Who among the following is associated as a head with
the Highlevel Task Force on Public Credit Registry
(4) All of the above
(PCR) formed by the Reserve Bank of India?
(5) None of these
(SBI-PO PYP 2020 Mains)
Q.4. Many a time we read a term PPP in financial
newspapers. What is the full form of the same as (1) S Venkitaraman
used in financial world ? (2) G. Ambegaokar
(RRB office assistant mains 2021) (3) Yeshwant M. Deosthalee
(1) Public per Capita Power (4) R S Gujral
(2) Per Capita Potential Purchases (5) S R Rao
(3) Purchasing Power Parity Q.10. In October 2021, RBI increase the IMPS limit from
(4) Present Purchasing Power 2 lakhs. What is the new limit of IMPS transfer?
(5) None of these (SBI PO October 2021)
Q.5. Which is the highest finance body for small scale (1) 5 lakhs (2) 10 lakhs
industries?
(3) 15 lakhs (4) 20 lakhs
(NABARD Grade B 2022)
(5) 25 lakhs
(1) IDBI (2) SIDBI
Q.11. What was the new limit for IMPS transfers set by the
(3) IFCI (4) NABARD
Reserve Bank of India in October 2021, and which
(5) None of these category of customers did it apply to?
Q.6. What does PIN stands for?
(SBI PO November 2012)
(RBI Office Attendant April 2021)
(1) Banking reforms
(1) Password Identification Number
(2) Education reforms
(2) Public Identification Number
(3) Agricultural reforms
(3) Private Identification Number
(4) Personal Identification Number (4) Tax reforms
(5) None of these (5) Healthcare reforms

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Q.12. RBI introduced an Internal Ombudsman mechanism Q.18. The Government of India changed the base year of
for select Non-Banking Financial Companies. the Consumer Price Index for Industrial Workers
Deposit-taking NBFCs with assets size of _______ (CII) from 1981 to which year?
must appoint an Internal Ombudsman (IO). (SBI PO Mains 2022)
(SBI PO November 2021) (1) 1991 (2) 1996
(1) Rs. 100 crore or more (3) 2001 (4) 2006
(2) Rs. 200 crore or more
(5) 2011
(3) Rs. 500 crore or more
Q.19. According to Global Financial Integrity, what is the
(4) Rs. 1000 crore or more estimated amount of black money that entered India
(5) Rs. 2000 crore or more (between 2005 to 2014?
Q.13. Which of the following has been recognized under IBPS PO Mains 2017)
the 1971 Ramsar Convention on Wetlands?
(1) $ 100 billion
(SBI PO Jan 2022)
(2) $ 300 billion
(1) National parks
(3) $ 500 billion
(2) World Heritage Sites
(4) $ 700 billion
(3) Wetlands of International Importance
(5) $ 770 billion
(4) Biosphere Reserves
(5) Protected Areas Q.20. Consider the following statements and identify the
right ones.
Q.14. NBFCs are allowed to accept/renew public deposits
for a minimum of 12 months and a maximum of (SBI Clerk Mains 2021)
_____ months? I. Central government does not have exclusive power
(SBI Clerk Mains 2016) to impose tax which is not mentioned in state or
concurrent list.
(1) 18 (2) 24
(3) 36 (4) 48 II. The constitution also provides for transferring
(5) 60 certain tax revenues from union list to states.
Q.15. In banking, what does the “C” stand for in PCA? (1) 1 only
(SBI PO 2017 June 04) (2) 2 only
(1) Credit (2) Capital (3) Option 1&2 both
(3) Core (4) Cooperative (4) All of the above
(5) Corrective (5) None of these
Q.16. What was the target for digital transactions through Q.21. The Govt. of India recently established a fund
UPI, USSD, Aadhar, IMPS for 2017-18? known as National Investment Fund (NIF). Which
(SBI PO 2017 June 04) of the following statement(s) is/are true in this
(1) 500 crore digital transactions regard?
(2) 1,000 crore digital transactions (NABARD Grade B 2022)
(3) 1,500 crore digital transactions 1. This fund is generated through the money received
from the sale of equity in State run companies.
(4) 2,000 crore digital transactions
(5) 2,500 crore digital transactions 2. The fund will help in revival of sick units of the
public sector companies of the Govt. of India.
Q.17. Which organization runs the National Financial
Switch? 3. The money deposited in the fund will be used for
social welfare schemes.
(SBI PO Mains 2022)
(1) Only 1 (2) Only 2
(1) RBI (2) SEBI
(3) IRDAI (4) NPCI (3) Only 3 (4) All 1, 2 and 3
(5) NABARD (5) None of these

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Q.22. The Doing Business Report, an international Q. 24. The Govt. of India recently gave its clearance to
publication, is published every year by which of the the new Agriculture scheme which will provide
following organization(s)? additional central assistance to the agri. sector. What
(NABARD Grade B 2022) is/are the main points of this scheme?
(NABARD Grade B 2022)
1. World Bank
1. Public Investment in agriculture sector will be
2. WTO
banned.
3. Reserve Bank of India
2. Govt. will help state govts. to achieve the targeted
(1) Only 1 growth rates in agri. sector.
(2) Only 2 3. State Govt. will get Rs. 40,000 crores to provide
(3) Only 3 subsidy to agri. sector.
(4) Both 1 and 2 (1) Only 1 is correct
(5) All 1, 2 and 3 (2) Only 2 is correct
Q.23. The public protest on which of the following issues (3) Only 3 is correct
recently brought the whole of the France to a near (4) Both 1 and 2 are correct
standstill for the second time in a month?
(5) None is correct
(NABARD Grade B 2022)
Q.25. Which one of the following statements regarding
1. Irregularities in Presidential elections held in Public Accounts Committee is incorrect?
2007.
(NABARD GRADE A 2021)
2. President Sarkozy s plan to reform public sector
(1) It consists of members from Rajya Sabha only.
pensions.
(2) It consists of twenty members from Lok Sabha
3. France s support to USA on Iraq s rebuilding
and ten members from Rajya Sabha
(1) Only 1
(3) The term of members of Public Accounts
(2) Only 3 Committee is five years
(3) Only 2 (4) Finance Minister is the Chair-person of the Public
(4) Both 1 and 3 Accounts Committee
(5) None of these (5) None of the above/More than one of the above

ANSWER KEY
1.(3) 2.(3) 3.(4) 4.(3) 5.(2) 6.(2) 7.(2) 8.(3) 9.(3) 10.(1)
11.(1) 12.(3) 13.(3) 14.(5) 15.(5) 16.(5) 17.(4) 18.(3) 19.(5) 20.(2)
21.(4) 22.(1) 23.(3) 24.(2) 25.(1)

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ECONOMIC PLANNING IN INDIA

{{ HISTORY OF PLANNING IN INDIA

{{ PLANNING COMMISSION
{{ NATIONAL DEVELOPMENT COUNCIL
{{ NITI AAYOG (MAIN POINTS)
{{ PRACTICE PAPER QUESTIONS
{{ PREVIOUS PAPER QUESTIONS

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CHAPTER
ECONOMIC
10
PLANNING IN INDIA
History of Planning In India State Planning Board
First attempt to initiate Apex planning body at State level is generally a State
economic planning in Planning Body comprising the Chief Minister as Chairman,
India was made by Sir M. Finance and Planning Ministers of that State and some
Visvesvarayya, a noted technical experts. District Planning Committee is also there
engineer and politician, comprising both official and non - official members.
in 1934 through his book, India’s five year plans
‘Planned Economy for
India’. From 1947 to 2017, this was the basis of the concept of
planning of the Indian economy. This was done through
In 1938, ‘National Planning five year plans developed, executed and implemented by
Commission’ was set - up Planning Commission (1951-2014) and NITI Aayog (2015-
under the chairmanship of JL Nehru by the Indian National 2017). With the prime minister as ex-officio chairman, the
Congress. Its recommendations could not be implemented commission also had a nominated vice-chairman, with the
because of the beginning of the Second World War and rank of a cabinet minister. Montek Singh Ahluwalia was the
changes in the Indian political situation. last Deputy Chairman of the Commission (resigned on 26
In 1944, ‘Bombay Plan’ was presented by 8 leading May 2014). The term of the Twelfth Plan ended in March
industrialists of Bombay. 2017.
In 1944, ‘Gandhian Plan’ was given by Shrimannarayan. Whenever the golden days of the country’s independence
In 1945, ‘People’s Plan’ was given by M N Roy. In 1950, will be remembered, it will also be mentioned that exactly 69
‘Sarvodaya Plan’ was given by J P Narayan. A few points of years ago, not only did India get freedom from the clutches of
this plan were accepted by the Government. the British, but the country also got that freedom which gave
India’s economics that direction too. Tried to give through
Planning Commission which the dream of a complete India was to be woven. As
The Planning Commission was set - up on March 15, 1950 India continued to touch new heights, the country’s economy
under the chairmanship of JL Nehru, by a resolution of also saw many ups and downs from time to time. While the
Union Cabinet. It is an extra - constitutional, non - statutory country’s economy saw a season of prosperity, on the other
and advisory body. It consists of Prime Minister as the ex - hand it also faced the autumn of economic crisis which created
officio Chairman, one Deputy - Chairman appointed by the conditions for the country’s treasury to be mortgaged. If an
PM and some full time members. The tenure of its members attempt is made to understand the development sequence of the
and deputy chairman is not fixed. Indian economy so far, then it can be divided into three periods.
First Plan (1951–1956)
National Development Council
The first Indian Prime Minister Jawaharlal Nehru presented
All the plans made by the Planning Commission have to
the first five-year plan to the Parliament of India on 8
be approved by National Development Council first. It was
December 1951. The plan is primarily agrarian sector,
constituted to build co-operation between the States and
including investment in dams and irrigation. The partition
the Planning Commission for economic planning. It is an
of India in the agricultural sector and the need for immediate
extra - constitutional and extra - legal body. It was set - up on
attention was considered the most difficult. The scheme was
August 6, 1952, by a proposal of the Government. The PM is
based on the Harald-Domar model.
the ex - officio chairman of NDC. Other members are Union
Cabinet Ministers, Chief Ministers and Finance Ministers of The most important feature of this phase was its active role in
all States, Lt. Governors of Union Territories and Governors all economic sectors of the state. Such a role was appropriate
of Centrally - ruled States. at that time as soon after independence India was facing
problems like basic capital and low capacity.

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The target growth rate was annual gross domestic product Stress was placed on employment, poverty alleviation and
(GDP) growth of 2.1%, the growth rate achieved was 3.6%. justice. The plan emphasized on agricultural production and self-
Net domestic product went up by 15%. The monsoon was reliance. In 1978 the newly elected Morarji Desai government
good and there was relatively high crop yields, increasing rejected the plan. The Electricity Supply Act was enacted in
product stocks and per capita income, which increased by 8%. 1975, which enabled the Central Government to enter into
National income has increased more than per capita income electricity generation and transmission. The Indian National
due to rapid population growth. Highway System was introduced for the first time and many
Second Plan (1956-1961) roads were widened to accommodate the increasing traffic.
Tourism also expanded. This Five Year Plan was scrapped by the
Public sector development in particular followed the “Janata Party Government” in 1978, a year before its time period.
planning Mahalanobis model, an economic development
model developed by the Indian statistician Prashant Chandra Target Growth: 5.6% and Actual Growth: 4.8% the plan was
Mahalanobis in 1953. Hydroelectric and heavy projects were successful.
set up at places like five steel mills like Bhilai, Durgapur, The growth rate was 4.4 and the achievement rate was 4.9%.
Rourkela etc. Coal production was increased. Railway lines Model - Based on DP house model. Main Objective – Poverty
were linked to the northeast. It was formed in 1948 with Homi Alleviation.
Jehangir Bhabha as the first chairman of the Atomic Energy Sixth Plan (1980-1985)
Commission. The Tata Institute of Fundamental Research
was established as a research institute. The Sixth Plan also marked the beginning of economic
liberalisation. This was the end of the Nehruvian plan and
‘Target Growth: 4.5% and Actual Growth’ 4.27% Indira Gandhi was the Prime Minister during this period.
This plan is also known as materialistic plan. The Sixth Plan was drawn up twice. A “continuous plan”
Third Plan (1961-1966) was made by the Janata Party (for the period 1978-1983).

The Third Plan focused on improving agriculture and wheat Target Growth: 5.2% and Actual Growth: 5.4%
production, but the brief Sino-Indian War of 1962 exposed the Seventh Plan (1985-1990)
economy’s weaknesses and shifted attention to the defense As a result of the Sixth Five Year Plan, there was steady
industry. growth in agriculture, a control of inflation and a favourable
The target of Gross Domestic Product (Gross Domestic balance of payments which had provided a strong base
Product) was to achieve a growth rate of 5.6 percent. The for the Seventh Five Year Plan building on the need for
achieved growth rate was 2.84 per cent. further economic growth. The 7th Plan was striving towards
This scheme was based on John Sandy and Sukhmay socialism and large scale energy production.
Chakraborty model. After this plan no new scheme was Target Growth: 5.0% and Actual Growth: 6.01%
implemented till 1967-1969. This time interval was called a Eighth Plan (1992–1997)
continuous plan. It is based on Mirden’s model.
1989-91 was a period of economic instability in India so no
Fourth Plan (1969-1974) five year plan was implemented. Between 1990 and 1992, there
Indira Gandhi was the Prime Minister at this time. The Indira were only annual plans. Strengthening was given priority with
Gandhi government nationalized 14 major Indian banks and 26.6% of the energy outlay. An annual growth rate of 6.6%
the Green Revolution improved agriculture. In addition, the was achieved against an average target of 5.6%. To achieve
Indo-Pakistani War of 1971 and the Bangladesh Liberation the target of an average of 5.6% per annum, an investment of
War took place in East Pakistan (now Bangladesh) as the 23.2% of GDP was required. The incremental capital ratio is 4.1.
situation was dire. Indira Gandhi gave the slogan ‘Garibi The savings come from domestic sources and foreign sources,
Hatao’ at the time of the 1971 election. Funds earmarked with the rate of domestic savings at 21.6% of GDP and foreign
for industrial development were sent to the war effort. India savings at 1.6% of GDP. This plan was the most successful
also in 1974 in response to the United States deployment of scheme ever. Most-primary education was universalised.
the Seventh Fleet to the Bay of Bengal The smiling Buddha Ninth Plan (1997-2002)
performed underground nuclear tests, partly. The fleet was
deployed to attack West Pakistan and warned India against The Ninth Five Year Plan India runs through the period from
expansion war. 1997 to 2002 with the main objective of achieving objectives
such as rapid industrialization, human development, full-scale
Target Growth: 5.6% and Actual Growth: 3.3% employment, poverty reduction and self-reliance on domestic
This plan was based on Ashok Rudra and A.S. Manne model. resources. Ninth Five Year Plan Background of India: The
Fifth Plan (1974–1978) backdrop of the Golden Jubilee of India’s independence was
prepared in the middle of the Ninth Five Year Plan.
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The main objectives of the Ninth Five-Year Plan of India are: Growth Rate: 8.9% Domestic Product Growth Rate: 8%
To give priority to the agriculture sector and to emphasize Literacy 85%
on rural development, to generate adequate employment 12th Plan (2012-2017)
opportunities and to promote poverty reduction, to stabilize
the growth rate of the economy. To accelerate food and The Planning Commission has set a target of achieving an
ensure nutritional security, to provide for basic infrastructural economic growth rate of 10 percent per annum in the 12th
facilities like education for all, safe drinking water, primary Five Year Plan from April 01, 2012 to March 31, 2017. Due
health care, transport, energy to check rising population to this, a target has been set to reduce the pace of economic
growth, women empowerment, Stimulate social issues like growth from 9 percent to 8.1 percent in the 11th Five Year
protection for particular group of society some benefits to Plan. The impact of the economic crisis that started in
create a liberal market for increase in private investment September 2008 has been seen in a big way in this financial
The growth rate during the Ninth Plan period was 5.35 per year. Annual average growth rate is achieved. However, this
cent, one percentage point lower than the target GDP growth is less than the proposed target of nine per cent of the 11th
of 6.5 per cent. plan. Among other things, the target of achieving an average
growth rate of four percent in the agriculture sector has been
Tenth Plan (2002-2007) fixed in the 12th Plan. The target of 10 per cent is for the
GDP growth of 8% per annum is achieved. Reduction of manufacturing sector.
poverty ratio by 5 percentage points by 2007. To provide
gainful and high quality employment in addition to the
Niti Aayog (Main Points)
minimal labor force; * All children in school in India by Vice Chairperson: Suman Bery
2003, by 2007 all children completed 5 years of schooling. Ex-Officio Members: Amit Shah, Rajnath Singh, Nirmala
Reduction in the gender gap in literacy and wage rates by at Sitaraman and Narendra Singh Tomar
least 50% by 2007, a decrease in the decade rate of population
growth to 16.2% between 2001 and 2011*, * Literacy rate Special Invitees: Nitin Gadkari, Piyush Goyal, Virendra
in the Tenth Plan period (75 percent within 2002) Raise Kumar, Ashwani Vaishnav and Rao Inderjit Singh
To - 2007). Full-time Members: V. K. Saraswat (former DRDO Chief),
Eleventh Plan (2007-2012) Ramesh Chand (Agriculture Expert) and Dr. Vinod Paul
(Public Health expert) and Arvind Virmani
Presently the period of Eleventh Five Year Plan in India
is from 1st April 2007 to 31st March 2012. The total Chief Executive Officer (CEO): B.V. R. Subrahmanyam
budget of the state’s five year plan has been approved by Governing Council: All Chief Ministers of States (and
the Planning Commission at Rs 71731.98 crore. This is Delhi and Puducherry), Lieutenant Governor of Andaman
39900.23 crore more than Udvya 10th plan. Agriculture & Nicobar Islands, and Special Invites. (as on 19 Mrach
Growth Rate: 3.5% Industry Growth Rate: 8% Service 2023)

NITI Aayog has replaced the Previous Planning Commission of India.

Parameter NITI Aayog Planning Commission

Financial Clout To be an advisory body, or a think tank. The Enjoy the powers to allocate funds to ministries and
powers to allocate funds might be vested State Governments.
in the Finance Ministry.

Full Time The number of full-time members could be The last commission had 8 full time members.
Members fewer than Planning Commssion.

State’s Role State Governments are expected to play a State’s role was limited to the National Development
more significant role than they did in the Council and annual interaction during Plan Meetings.
Planning Commission.

Member Secretary To be known as the CEO and to be Secretaries or Member Secretaries were appointed
appointed by the Prime Minister. through the usual process.

Part-Time To have a number of part time members, Planning Commission had no provision for Part-Time
Members depending on the need from time to time. Members.

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PLANNING AND NITI Aayog - (PRACTICE QUESTIONS)
Q.1. What does N stand for in “NITI Aayog”? (1) U.K. (2) U.S.A
(1) Nominal (2) National (3) Spain (4) Russia
(3) Numerical (4) Numbered (5) Italy
(5) Numismatic Q.10. What was the Basis of First Five Year Plan?
Q.2. Who is the CEO of NITI Aayog? (1) Harold -Domar Model
(1) Sindhushree Khullar (2) P.C. Mahalanobis Model
(2) Amitabh Kant (3) Both of the Above
(3) C.B. Krishnamurthy (4) All of the Above
(4) B.V. R. Subrahmanyan (5) None of these
(5) Sushma Swaraj Q.11. Which Plan is also known as Gadgil Yojna?
Q.3. Which of the following is a special invitee in the (1) 1st Five year plan (2) 2nd Five year plan
NITI Aayog? (3) 3rd Five year plan (4) 4th Five year plan
(1) Suresh Prabhu (2) Rajnath Singh (5) 5th Five year plan
(3) Kiran Rijiju (4) Nitin Gadkari Q.12. When was the National Development Council
(5) None of these constituted?
(1) 2 August, 1952 (2) 6 August, 1952
Q.4. What is the intial capital of SETU under NITI
Aayog? (3) 8 August, 1952 (4) 12 August, 1952
(1) 500 Crore (2) 1000 Crore (5) 22 August,1952
(3) 1500 Crore (4) 2000 Crore Q.13. Who appoints the Vice-Chairman of NITI Aayog?
(5) 2500 Crore (1) Prime Minister
Q.5. What does S stand for in SETU? (2) President of India
(1) Solar (2) Seminal (3) Chief Justice of the Supreme Court
(3) Silicon (4) Sole (4) Attorney General
(5) Self (5) None of these
Q.6. Who was the 1st Chairman of Planning Commission? Q.14. What is the total number of composition of Ex-officio
members under NITI Aayog?
(1) Rajendra Prasad (2) S. Radhakrishnan
(1) 2 (2) 4
(3) B.R. Ambedkar (4) Mahatma Gandhi
(3) 6 (4) 8
(5) J.L. Nehru
(5) 10
Q.7. What is the maximum limit of part-time members
Q.15. What is the old name of NITI Aayog?
in the erstwhile Planning Commission?
(1) Ayushman Bharat
(1) 0 (2) 1
(2) National Career Service
(3) 2 (4) 3
(3) National Service Scheme
(5) 4
(4) Planning Comission of India
Q.8. After which Former Prime Minister “AIM” scheme
under NITI Aayog has been setup? (5) None of these
(1) C.M. Annadurai (2) K. Kamraj Q.16. When the Government did announced the formation
of NITI Aayog?
(3) A.B. Vajpayee (4) L.K. Advani
(1) 1st Jan,2014 (2) 1st Jan,2015
(5) None of these
(3) 1st Jan,2016 (4) 1st April,2015
Q.9. The Economic Planning concept in India is taken
from which country? (5) 1st March,2015

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Q.17. Who was the first CEO of the NITI Aayog? (4) National Invitation for Development and
(1) Montek Ahluwalia Harnessing Innovation
(2) D.R. Gadgil (5) None of these
(3) Sindhushree Khullar Q.22. Which was the last Five year plan?
(4) Arundhati Bhattacharya (1) 10th (2) 11th
(5) D. Subbarao (3) 12th (4) 8th
Q.18. What was the maximum strength of full time (5) None of these
members in the Planning Commission? Q.23. What is the total number of part-time members under
(1) 8 (2) 9 NITI Aayog?
(3) 10 (4) 11 (1) 0 (2) 1
(5) 12 (3) 2 (4) 3
Q.19. What is the full form of AIM? (5) 4
(1) Atal Invitation Mission Q.24. NITI Aayog will have which of the following bodies
comprising of Chief Ministers of States and Lt.
(2) Atal Invention Mission Governors of Union Territories?
(3) Atal Impression Mission (1) Governing committee
(4) Atal Innovation Mission (2) Governing Panel
(5) None of these (3) Governing select committee
Q.20. Grand Innovation Challenge is associated with which (4) Governing Council
scheme/mission?
(5) None of these
(1) AIM (2) SETU
Q.25. Which of the following statements is/are correct
(3) AMRUT (4) JNNURM about NITI Aayog?
(5) None of these (A) A serving IES officer can become a part time
Q.21. What is the full form of NIDHI under Atal Innovation member of NITI Aayog
Mission? (B) A union minister can become a full time members
(1) National Invitation for Developing and of NITI Aayog
Harnessing Innovation (C) It was established in 2015.
(2) National Initiative for Development and (1) Only A (2) Only B
Harnessing Innovation
(3) Only C (4) Both B and C
(3) National Initiative for Developing and Harnessing
Innovation (5) None of these

ANSWER KEY
1.(2) 2.(4) 3.(4) 4.(2) 5.(5) 6.(5) 7.(1) 8.(3) 9.(5) 10.(1)
11.(3) 12.(2) 13.(1) 14.(2) 15.(4) 16.(2) 17.(3) 18.(1) 19.(4) 20.(1)
21.(2) 22.(3) 23.(5) 24.(4) 25.(3)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)
Q.1. The World Economic outlook, a survey conducted Q.6. The main aim of the Asian Development Bank (ADB)
and published by ___. is to promote social and economic development in
(IBPS Clerk Mains 2019) Asia. Where is the headquarters of ADB located?
(1) The World Bank (IBPS PO Mains_2017)
(2) The International Monetary Fund (IMF) (1) Manila, Philippines
(2) Tokyo, Japan
(3) The United Nations Development Programme
(UNDP) (3) Beijing, China
(4) The Organisation for Economic Co-operation (4) Seoul, South Korea
and Development (OECD) (5) Bangkok, Thailand
(5) The World Trade Organization (WTO) Q.7. Where is the headquarters of Organisation for
Economic Cooperation and Development?
Q.2. The Four pillars of smart city are Economic
Infrastructure, Institutional Infrastructure, Social (SBI Clerk Mains 2018)
Infrastructure and ____ Infrastructure. (1) New York, USA
(SBI PO Mains 2018) (2) Paris, France
(1) Environmental Infrastructure (3) Geneva, Switzerland
(2) Physical Infrastructure (4) Brussels, Belgium
(3) Technological Infrastructure (5) Vienna, Austria
(4) Cultural Infrastructure Q.8. 2017 Index of Economic Freedom is topped by which
country? –
(5) Political Infrastructure
(SBI PO Mains 2017)
Q.3. PMAY-G scheme is selected by the government
(1) Hong Kong
using a process that makes use of the Socio-
Economic Caste Census. In which year was this (2) Singapore
SECC launched? (3) Switzerland
(IBPS Clerk Mains 2022) (4) Australia
(1) 2011 (2) 2012 (3) 2013 (5) New Zealand
(4) 2014 (5) 2015 Q.9. Base year for calculating key macroeconomic from
2004-05 changed to?
Q.4. World Economic outlook published by?
(SBI PO Mains 2017)
(SBI PO Mains 2021)
(1) 2007-08
(1) The World Bank
(2) 2009-10
(2) The International Monetary Fund (IMF)
(3) 2011-12
(3) The United Nations Development Programme
(4) 2013-14
(UNDP)
(5) 2015-16
(4) The Organisation for Economic Co-operation
Q.10. South Asia economic focus report released by?
and Development (OECD)
(SBI PO Mains_2017 JUNE 04)
(5) The World Trade Organization (WTO)
(1) The World Bank
Q.5. According to the Economic Survey report, our GDP
(2) The International Monetary Fund (IMF)
has come down to 6.8% in 2018-19 from _____ in
2017-18. 7.20%. (3) The United Nations Development Programme
(UNDP)
(SBI PO Mains_2019)
(4) The Asian Development Bank (ADB)
(1) 6.4% (2) 6.6% (3) 6.9%
(5) The World Trade Organization (WTO)
(4) 7.2% (5) 7.5%
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Q.11. Which of the following options represents the (3) It is implemented by Ministry of Housing and
estimated range of unaccounted wealth held by Urban Affairs.
Indians outside the country according to the studies (4) It promotes women’s empowerment by providing
conducted by National Institute of Public Policy the ownership of houses in the name of female
and Finance (NIPFP), National Council of Applied members or in joint name.
Economic Research (NCAER), and National
(5) None of the above
Institute of Financial Management (NIFM) over
various periods between 1980 and 2010? Q.16. Who has been appointed as the head of the RBI
committee for the development of the housing
(SBI PO Mains 2019)
finance securitization market?
(1) USD 216.48 million to USD 490 million
(SBI PO Mains_2019)
(2) USD 216.48 billion to USD 490 billion
(1) Urjit Patel (2) Raghuram Rajan
(3) USD 216.48 trillion to USD 490 trillion
(3) Shaktikanta Das (4) Harsh Vardhan
(4) USD 216.48 quintillion to USD 490 quintillion
(5) S. Gurumurthy
(5) None of these
Q.17. Abhijeet Gupta is related to which sport?
Q.12. National Rural Livelihood Mission (NRLM) earlier
(SBI PO Mains 2019)
known as-
(1) Football (2) Cricket
(Nabard Grade A 2021)
(3) Hockey (4) Tennis
(1) Sampoorna Grameen Rojgar Yojana:
(5) Chess
(2) Swarnajayanti Grameen Swarozagar Yojana
Q.18. Which state has launched the Mukhyamantri Yuva
(3) Pradhan Mantri Gramodaya Yojana
Svvabhiman Yojana to provide employment for
(4) Rashtriya Gram Vikas Yojana youth?
(5) Pradhan Mantri Livelihood Mission (SBI Clerk Mains 2016)
Q.13. What was the Capital to Risk-Weighted Asset Ratio (1) Uttar Pradesh (2) Madhya Pradesh
(CRAR) of scheduled commercial banks in March
(3) Bihar (4) Maharashtra
2020?
(5) Rajasthan
(SBI PO Mains_2021)
Q.19. The Priority Sector Lending Certificates (PSLCs)
(1) 10.5% (2) 11.5% (3) 12.5%
can be traded using the RBI’s e-Kuber platform,
(4) 13.5% (5) 14.5%
which is a/an:
Q.14. Haryana belong to which of the following Agro-
(SBI PO Mains_2021)
climatic zone?
(1) Electronic Payment System
(Nabard Grade A 2021)
(2) Online Trading Platform
(1) Western Himalayan Region
(3) Virtual Marketplace
(2) Lower Gangetic Plain Region
(4) Financial Market Infrastructure
(3) Upper Gangetic Plain Region
(5) Mobile Banking Application
(4) Trans Gangetic Plain Region
Q.20. The Central Vigilance Commission has directed all
(5) Middle Gangetic Plain Region
banks to report will full defaulters cases to RBI of
Q.15. Which of the following statements regarding PM how much amount and above?
Awas Yojana is not correct?
(SBI PO Mains_2021)
(Nabard Grade A_2021)
(1) Rs 25 lakh (2) Rs 50 lakh
(1) It aims to provide housing for all in urban areas
(3) Rs 1 crore (4) Rs 5 crore
by the year 2022.
(5) Rs 10 crore
(2) It was launched in 2016.

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Q.20. National Payments Corporation of India (NPCI), Q.23. Where is country’s first Centre for Fourth Industrial
launched its one-stop fintech payment solution- UPI Revolution been setup by The World Economic
AutoPay through which customers can create e-mandate Forum (WEF) in partnership with RIL?
through their UPI ID or QR Scan for transactions up to: (IBPS Clerk Mains 2022)
(IBPS Clerk Mains_2022)
(1) New Delhi
(1) Rs 500 (2) Rs 1000
(2) Mumbai
(3) Rs 2000 (4) Rs 5000
(3) Bangalore
(5) Rs 10,000
(4) Hyderabad
Q.21. In terms of RBI Circular, Regional Rural Banks (RRBs)
may consider collecting account payee cheques drawn (5) Kochi
for an amount not exceeding what limit to the account Q.24. Which of the following terms is not related to
of their customers who are co-operative credit societies, banking sector?
if the payees of such cheques are the constituents of
(SBI PO Mains 2021)
such co-operative credit societies?
(1) CRR
(IBPS Clerk Mains_2022)
(1) Rs. 10,000 (2) Rs. 25,000 (2) Actuary
(3) Rs. 50,000 (4) Rs. 1 lakh (3) Repo Rate
(5) Rs. 2 lakhs (4) Marginal Standing Facility
Q.22. Which of the following best dscribes the Securities (5) All of these
and Exchange Board of India?
Q.25. The Imperial Bank of India transformed into State
(SBI PO 2021) Bank of India in the year _____________.
(1) S E B I is the regulator for the capital markets.
(SBI Apprentice 2021)
(2) S E B I protects the interest of investors.
(1) 1921 (2) 1955
(3) S E B I is for ethical practices.
(3) 1935 (4) 1926
(4) All of the above.
(5) None of the above. (5) None of the above

ANSWER KEY
1.(2) 2.(2) 3.(1) 4.(4) 5.(4) 6.(1) 7.(2) 8.(1) 9.(3) 10.(1)
11.(2) 12.(2) 13.(4) 14.(4) 15.(2) 16.(5) 17.(5) 18.(2) 19.(4) 20.(2)
21.(3) 22.(4) 23.(4) 24.(2) 25.(2)

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SOCIAL WELFARE SCHEMES

{{ PRADHAN MANTRI SURAKSHA BIMA YOJANA

{{ PRADHAN MANTRI MUDRA YOJANA
{{ UJALA YOJANA
{{ PRADHAN MANTRI UJJWALA YOJANA
{{ NAMAMI GANGE YOJANA
{{ MAKE IN INDIA PROJECT
{{ PRADHAN MANTRI KRISHI SINCHAYEE YOJANA
{{ UPGRADING THE SKILLS AND TRAINING IN TRADITIONAL
ARTS/CRAFTS FOR DEVELOPMENT (USTTAD) SCHEME
{{ MISSION INDRADHANUSH
{{ UDAY SCHEME
{{ STAND-UP INDIA SCHEME
{{ PRADHAN MANTRI FASAL BIMA YOJANA
{{ AYUSHMAN BHARAT YOJANA
{{ GOBAR-DHAN YOJANA
{{ MISSION SOLAR CHARKHA
{{ PRADHAN MANTRI ANNADATA AAY SANRAKSHAN ABHIYAN
(PM-AASHA)
{{ PRADHAN MANTRI KISAN SAMMAN NIDHI
{{ PRADHAN MANTRI SHRAM YOGI MANDHAN
{{ SUKANYA SAMRIDDHI YOJANA
{{ NIRVIK SCHEME
{{ KISAN RAIL YOJANA
{{ UDAAN YOJANA
{{ DEENDAYAL ANTYODAYA SCHEME
{{ KUSUM YOJANA
{{ PRACTICE PAPER QUESTIONS
{{ PREVIOUS PAPER QUESTIONS

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CHAPTER
SOCIAL WELFARE
11
SCHEMES
Pradhan Mantri Suraksha Bima Yojana Ujala Yojana
(PMSBY) Main purpose: State run Energy Efficiency Services
Pradhan Mantri Suraksha Bima Yojana allows the Ltd (EESL) has distributed over 30 crore light emitting
common man to get insurance at a very low premium. The diode (LED) bulbs across country under zero-subsidy
goal of this scheme is that even the poorest of the poor Unnat Jyoti by Affordable LEDs for All (UJALA)
people of the country can avail insurance so that there scheme.
will not be any financial trouble during any accident in Pradhan Mantri Ujjwala Yojana
their life. Under PMSBY you get accident insurance of
Rs 2 lakh. The scheme can be availed by investing only Main purpose: Pradhan Mantri Ujjwala Yojana (PMUY) was
Rs 12 per year. launched by Prime Minister of India Narendra Modi on May
1, 2016 to distribute 50 million LPG connections to women
Under the Pradhan Mantri Suraksha Bima Yojana, you of BPL families.
are paid in three cases:
Namami Gange Yojana
1. On the death of accident, a payment of 2 lakh rupees
will be made. Main purpose: The Government launched an integrated
Ganga conservation mission called ‘Namami Gange’ to arrest
2. In case of permanent complete disability in accident, a the pollution of Ganga River and revive the river.
payment of Rs 2 lakh will be made.
3. In case of permanent partial disability in the accident,
Make In India Project
ie in the case of loss of sight in one eye or in the event
of not being able to use one arm or one leg, Rs. 1 lakh
will be paid.
Benefits of the scheme
The benefit of Pradhan Mantri Suraksha Bima Yojana can
be availed by any citizen from the age of 18 to 70 years. In
this plan, the insurance holder will have to pay a premium
of 1 rupee per month.
Pradhan Mantri Mudra Yojana
The scheme was launched on 8th April 2015. Under the
scheme a loan of upto Rs. 50,000 is given under sub-scheme With the objective of making the country a manufacturing
‘Shishu’; between Rs. 50,000 to 5.0 Lakhs under sub-scheme hub for domestic and foreign companies, Prime Minister
‘Kishore’; and between 5.0 Lakhs to 10.0 Lakhs under sub- Narendra Modi on Thursday launched the NDA
scheme ‘Tarun’. Loans taken do not require collaterals. Government’s “Make in India” campaign rolling out a
red carpet to attract industrialists to make India a global
These measures are aimed at increasing the confidence manufacturing hub, to help create jobs and boost economic
of young, educated or skilled workers who would now be growth.
able to aspire to become first generation entrepreneurs;
existing small businesses, too, will be able to expand Adding that the FDI is also a responsibility for the people
their activates. As on 31.03.2019, Rs. 3,21,722 crores of India, he said, foreign direct investment (FDI) has a
sanctioned (Rs. 142,345 cr. - Shishu, Rs. 104,386 cr. different meaning for him, and not just how the world
Kishore and Rs. 74,991 cr. - Tarun category), in 5.99 looks at it only as an opportunity. For him, FDI means
crores accounts. “first develop India”.

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Government Schemes in India

Scheme Full-Form Date of Launch Government Ministry
PMJDY Pradhan Mantri Jan Dhan Yojana August 28, 2014 Ministry of Finance
PMSSY Pradhan Mantri Swasthya Suraksha Yojana January 22, 2015 Ministry of Health & Family
Welfare
PMMY Pradhan Mantri Mudra Yojana April 8, 2015 Ministry of Finance
PMJJBY Pradhan Mantri Jeevan Jyoti Bima Yojana May 9 2015 Ministry of Finance
PMSBY Pradhan Mantri Suraksha Bima Yojana May 9, 2015 Ministry of Finance
APY Atal Pension Yojana May 9, 2015 Ministry of Finance
KVP Kisan Vikas Patra March 3, 2015 Ministry of Finance
GMS Gold Monetisation Schemes November 4 2015 Ministry of Finance
PMFBY Pradhan Mantri Fasal Bima Yojana October 11, 2014 Ministry of Agriculture
PMGKY Pradhan Mantri Krishi Sinchai Yojana July 1, 2015 Ministry of Agriculture
DDUGJY Deen Dayal Upadhyaya Gram Jyoti Yojana July 25, 2015 Ministry of Power
RGM Rashtriya Gokul Mission December 16, Ministry of Agriculture and
2014 Farmers Welfare
DI Digital India July 1, 2015 Ministry of Electronics and
Information Technology
SI Skill India July 16, 2015 Ministry of Skill Development
and Entrepreneurs
(PMKVY) Pradhan Mantri Kaushal Vikas Yojana January 8, 2017 Ministry of Skill Development
and Entrepreneurs
Important Schemes launched in India related to Employment and Poverty Alleviation

Government Schemes in India

Scheme Full-form Date of Launch Government Ministry

MI Make in India September 25, Ministry of Commerce and

2014 Industry

SUI, SUI Startup India, Standup India 5 April, 2016 Government of India

PMGKY Pradhan Mantri Garib Kalyan Yojanaye April, 2015 Ministry of Skill Development
(PMGKY) and Entrepreneurs

Important Schemes launched in India related to Health and Sanitation

Government Schemes in India

Full-Form Name of Scheme Date of Launch Government Ministry

Swachh Bharat Abhiyan SBA October 2nd, 2014 Ministry of Housing and Urban
Affairs

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Namami Gange NG July 10, 2014 Ministry of Water Resources

National Bal Swachhta NBS November 10, 2014 Ministry of Women and Child
Development

Pradhan Mantri Jan Aushadhi (PMJAY) March 2016 Ministry of Chemicals and
Yojana Fertilizers

Other Government Schemes launched by the Government of India.

Government Schemes in India

Scheme Full-Form Date of Launch Government Ministry
BBBPY Beti Bachao, Beti Padhao Yojana January 22, 2015 Ministry of Women and Child
Development
PDUSJY Pandit Deendayal Upadhyay Shramev Jayate October 16, 2014 Ministry of Labour and Em-
Yojana ployment
NSTSS National Sports Talent Search Scheme February 20, Ministry of Youth Affairs &
2015 Sports

Funding Pattern: Centre- States will be 75: 25 per cent.

Pradhan Mantri Krishi Sinchayee Yojana
Union Cabinet meeting chaired by Narendra Modi approved In case of north-eastern region and hilly states it will be 90:10.
Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) or PM’s Upgrading The Skills And Training In
Agriculture Irrigation Scheme.
Traditional Arts/Crafts For Development
PMKSY is central scheme that aims at providing irrigation (USTAAD) Scheme
facilities to every village in the country by converging ongoing
irrigation schemes implemented by various ministries. Union Government formally launched Upgrading the Skills and
Training in Traditional Arts/Crafts for Development (USTTAD)
Salient features Scheme. It was launched by Union Minister of Minority Affairs
Ensure access to some means of protective irrigation to all Dr. Najma Heptullah in Varanasi, Uttar Pradesh in order to
agricultural farms in the country in order to produce ‘per improve degrading conditions of world famous Banaras Saree
drop more crop’ to bring desired rural prosperity. weavers who belong to minority communities.
Flexibility and autonomy:to states in the process of planning Facts about USTAAD Scheme:
and executing irrigation projects in order to ensure water to The Scheme aims at upgrading Skills and Training of
every farm. minority communities by preservation of traditional ancestral
Irrigation plans: ensure that state and district irrigation plans Arts and Crafts.
are prepared on the basis of sources of availability of water It also envisages boosting the skill of craftsmen, weavers and
and agro-climatic conditions in that region. artisans who are already engaged in the traditional ancestral work.
Promoting extension activities: related to ‘on farm water Under the scheme, assistance will be provided to traditional
management and crop alignment’ for farmers as well as grass artisans to sell their products in order to make them more
root level field functionaries. compatible with modern markets.
Agencies involved: nodal agency for implementation of It is fully funded by Union Government and Union Ministry
PMKSY projects will be state agriculture department.
of Minority Affairs is nodal agency in implementing it.
Inter-ministerial National Steering Committee (NSC) will
periodically review these projects. Mission Indradhanush
Budgetary allocation: PMKSY - Harkhet Kopani - Union Ministry of Health and Family Welfare has launched
Country’s 96 irrigation - deprived districts Budget allocation the Mission Indradhanush to achieve full immunisation of
is rupees 2600 cr. children below two years.

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Mission Indradhanush depicts 7 colours of the rainbow Improve operational efficiency: by implementing steps like
which aims to cover all those children by 2020 who are either
(i) swapping of coal linkages
unvaccinated or are partially vaccinated against 7 vaccine
preventable diseases (ii) monitoring aggregate technical and commercial (AT&C)
losses
These 7 diseases are :
(iii) Focus on smart metering and feeder separation in states.
• Diphtheria
So far 21 out of the 29 states have opted for this scheme,Andhra
• Whooping cough
Pradesh has become the 1st state to opt for this scheme
• Tetanus
Stand-Up India Scheme
• Polio
The Union Cabinet has approved the Stand Up
• Tuberculosis India Scheme to promote entrepreneurship among
• Measles Scheduled Caste/Scheduled Tribes (SC/ST) and Women
entrepreneurs.
• Hepatitis B
Features of Stand Up India Scheme
WHO, UNICEF, Rotary International and others are donor
partners for Mission Indradhanush. It will refinance window through Small Industries
Development Bank of India (SIDBI) with an initial amount
The mission was launched in December 2014 on the occasion 10,000 crore rupees.
of National Good Governance Day (Dec. 25)
Under it, a credit guarantee mechanism would be created
UDAY Scheme through the National Credit Guarantee Trustee Company
(NCGTC).
Union Cabinet chaired by Prime Minister Narendra Modi
has given its nod Ujwal DISCOM Assurance Yojna (UDAY) It will be the operating agency for the loan.
for financial restructuring of debt of power distribution
It will provide handholding support to the borrowers at both
companies.
pre loan stage and during operations stage.
The Scheme aims for financial turnaround and revival of
It would seek to increase their familiarity with factoring
Power Distribution companies (DISCOMs).
services, e-market places and registration with online
Allows power DISCOMs in selected states to convert their platforms as well as sessions on best practices and problem
debt into state bonds as well as roll out number of measures solving.
to improve efficiency at power plants.
It would provide women and SC/ST entrepreneurs bank loans
Seeks to ensure that struggling DISCOMs can shake off years repayable up to 7 years.
of losses and start on a path to profitability.
It would be between 10 lakh to 1 crore rupees for greenfield
Assures the rise of vibrant and efficient DISCOMs: through enterprises in the non-farm sector.
four initiatives
The overall intent is to leverage the institutional credit
(i) Improve operational efficiencies of DISCOMs structure to reach out to this under-served population.
(ii) Reduce of cost of power For this margin money of the composite loan will be up to
25%.
(iii) Reduce interest cost of DISCOMs
It is expected that this scheme would benefit atleast 2.5
(iv) Enforce financial discipline on DISCOMs through
lakh borrowers and expected date of reaching the target of
alignment with State finances.
approvals is 36 months from the launch of the Scheme.
Debt Burden: Shifts 75 per cent of power DISCOMs debt
burden to states’ balance sheets. Pradhan Mantri Fasal Bima Yojana
This step would result in interest cost savings to the tune of The Union Cabinet has approved Pradhan Mantri Fasal Bima
3-5 per cent. Yojana, a new crop insurance scheme to boost farming sector
in the country.
State Power Bonds or loans: Selected states would be able
to sell the balance 25 per cent as state-backed power bonds It is farmers’ welfare scheme that aims to reduce the premium
or loans which will carry interest rates of G-Sec plus 50 burden on farmers and ensure early settlement of crop
basis points. assurance claim for the full insured sum.
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Highlights of Scheme Uniform premium: Farmers will services, apart from free essential drugs and diagnostic
pay uniform premium of 2 per cent for all Kharif crops and services.
1.5 percent for all Rabi crops.
GOBAR-Dhan Yojana
In case of annual horticultural and commercial crops, farmers
will pay 5 per cent premium. ##The Galvanizing Organic Bio-Agro Resources Dhan
(GOBAR-DHAN) scheme was first announced by
These premium rates are very low. Finance Minister Arun Jaitley during his budget speech
Government will pay balance premium to provide full insured on February 1. The scheme would focus on managing
amount to the farmers against crop loss on account of natural and converting cattle dung and solid waste in farms to
calamities. compost, biogas and bio-CNG.

Government subsidy: There will be no upper limit Mission Solar Charkha

subsidy given by Government even if balance premium is ##The Solar Charkha Mission is a Ministry of Micro Small
90 percent. & Medium Enterprises (MSME) initiative launched
Capping the Premium: The provision of capping the during June 2018. The Khadi and Village Industries
premium rate has been removed and farmers will get claim Commission (KVIC) would implement the programme.
against full sum insured without any reduction. Government of India has accorded approval to set up 50
such clusters with a budget of Rs. 550 Crore for 2018-19
It was removed as it resulted in low claims being paid to
and 2019-20. The scheme is envisaged to generate direct
farmers and was mainly done to limit Government outgo on
employment nearly to one lakh persons in the approved
the premium subsidy.
Fifty (50) clusters.
Use of technology: Government will encourage use of
Scheme Objectives
technology especially Smart phones and remote sensing to
a great extent. The objectives of the Scheme are as follows:
In order to reduce the delays in claim payment to farmers, ##To ensure inclusive growth by generation of employment,
smart phones will be used to capture and upload data of especially for women and youth, and sustainable
crop cutting. development through solar charkha clusters in rural
areas.
To reduce the number of crop cutting experiments remote
sensing will be used. ##To boost rural economy and help in arresting migration
from rural to urban areas.
Ayushman Bharat Yojana
##To leverage low-cost, innovative technologies and
##Ayushman Bharat Yojana or Pradhan Mantri Jan Arogya processes for sustenance
Yojana (PMJAY) or National Health Protection Scheme
or ModiCare is a centrally sponsored scheme launched ##The target is to cover 50 solar clusters across
on 23 September 2018, under the Ayushman Bharat the country, whereby approx. 1, 00,000 artisans/
Mission. beneficiaries are to be covered under the various
scheme components.
##It is an umbrella of two major health initiatives namely,
Health and Wellness centres and National Health Pradhan Mantri Annadata Aay Sanrakshan
Protection Scheme (NHPS). Abhiyan (PM-AASHA)
Ayushman Bharat consists of two major elements. ##The Scheme is aimed at ensuring remunerative prices to
National Health Protection Scheme the farmers for their produce as announced in the Union
Budget for 2018. Government has already increased the
• Ayushman Bharat-National Health Protection Scheme, MSP of kharif crops by following the principle of 1.5
which will cover over 10 crore (one hundred million) times the cost of production.
poor and vulnerable families providing coverage up to 5
lakh rupees per family per year for secondary and tertiary Components of PM-AASHA:
care hospitalization. The Scheme is comprised of:
Wellness centre ##Price Support Scheme (PSS),
• Under this 1.5 lakh centres will be setup to provide ##Price Deficiency Payment Scheme (PDPS)
comprehensive health care, including for non-
communicable diseases and maternal and child health ##Pilot of Private Procurement & Stockist Scheme (PPPS).
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Expenditure:
NIRVIK Scheme
The Cabinet has decided to give additional government
To achieve higher export credit disbursement, which provides
guarantee of Rs.16, 550 crore making it Rs. 45,550 crore
for higher insurance coverage. Reduction in premium for
in total.
small exporters simplified procedure for claim settlements.
Pradhan Mantri Kisan Samman Nidhi Exporters have been assured that the new export credit
(PM-KISAN) insurance scheme, NIRVIK (Niryat Rin Vikas Yojana),
offering lower premiums, higher insurance cover and faster
##On 24 February 2019, PM Narendra Modi launched claim settlement, will be implemented in FY2020-21.
Pradhan Mantri Kisan Samman Nidhi ( PM-KISAN)
scheme in Uttar Pradesh’s Gorakhpur by transferring ##High insurance coverage.
the first instalment of Rs. 2,000 each to over one crore ##Reduction in premium for small exporters.
farmers. It is cash transfer scheme.
##Simple procedure for claim settlement.
##The Finance Minister has announced a Farmer Income
Support Scheme called Pradhan Mantri Kisan Samman Kisan Rail Yojana
Nidhi Yojana. The scheme was presented in the interim ##Kisan Rail is to be set up by Indian Railways under
budget 2019 in the national assembly on the 1st February PPP (Public Private Partnership) model to transport
2019. All small and marginal farmers with land will perishable goods. This will help in building a seamless
receive financial assistance of Rs. 6,000 every year national cold supply chain for perishables goods can be
under the scheme. transported quickly.
##A small and marginal landholder farmer is primarily ##To build a seamless national cold supply chain for
a family comprising of a husband, wife and minor perishables (milk, meat, fish, etc. o Express and Freight
children. The family possess a cultivable land up to 2 trains to have refrigerated coaches.
hectares as per land records of the concerned State and
Union Territory. The existing land-ownership system Udaan Yojana
is used for the identification of the beneficiaries for the The Union Government of India has launched the fourth
calculation of benefits. round of UDAN (Ude Desh Ka Aam Nagrik) to enhance the
Pradhan Mantri Shram Yogi Mandhan connectivity to regional areas of the country. This phase is to
focus on Hilly states, North East Region, Ladakh, Jammu and
Pradhan Mantri Shram Yogi Mandhan is a 2019 scheme Kashmir, and Islands. 100 more airports will be developed
introduced by Government of India for poor labourers in by 2024 to support the flight plan. Finance Minister Nirmala
the unorganised sector from minimum 18years of age to Sitharaman said on 1 February 2020 that the aviation ministry
maximum 40 years. Under the scheme, a monthly pension of would launch an agro-industry scheme to assist farmers in
Rs. 3,000 per month is provided to workers in the unorganised the transportation of agricultural products so that it could
sector over 60 years of age. However, to benefit from the improve their “price perception”. The scheme will be
scheme, workers have to contribute Rs. 55 monthly (for age launched by the Ministry of Civil Aviation on international
18) and it varies according to age. Maximum contribution for and national routes. This will go a long way in improving
a year cannot exceed Rs. 2400 (Rs.200 per month). price realization (on agricultural products), especially in the
northeast and tribal districts. The Modi government launched
Sukanya Samriddhi Yojana
the Udaan scheme in 2016 to improve regional connectivity.
Sukanya Samriddhi Yojana is a major scheme of the Modi
Under the scheme, selective airlines are extended by giving
government. It is a small savings scheme, launched by
financial incentives in terms of concessions from the central,
Prime Minister Narendra Modi on 22 January 2015. Savings
state governments and airport operators to encourage
accounts of girls are opened under this scheme. In which you
operations from airports and to keep airfares cheaper. Since at
can deposit from Rs 250 to Rs 1.5 lakh.
least half of the seats on flights are given concessional fares,
Benefits of Sukanya Samriddhi Yojana - and participating carriers are provided with a certain amount
##It provides tax benefits under Section 80C of Income of viability gap funding (VGF), a sum shared between the
Tax Act, 1961. center and the state.

##It offers higher interest rate as compared to other fixed Deendayal Antyodaya Scheme
deposit schemes. The Deendayal Antyodaya Yojana aims to reduce urban and
##An amount from Rs 250 to Rs 1.5 lakh can be invested in it. rural poverty by increasing livelihood opportunities through

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skill development and other measures. Keeping in mind the A significant milestone in the development of the
objective of the program, Make in India, skill development Government securities (G-sec) market, the Reserve Bank
is necessary for social and economic betterment. Deendayal of India-Retail Direct (RBI-RD) Scheme will bring G-secs
Antyodaya Yojana was launched under the Ministry of within easy reach of the common man by simplifying the
Housing and Urban Poverty Alleviation (HUPA). The process of investment. Under the Scheme, retail individual
government of India has made a provision of 500 crores for investors will be able to open a Retail Direct Gilt (RDG)
this scheme. Account with the Reserve Bank of India, using an online
portal (https://rbiretaildirect.org.in). Investments can be
The scheme is an integration of the National Urban
made using the following routes:
Livelihoods Mission (NULM) and National Rural Livelihoods
Mission (NRLM). Primary issuance of government securities: Investors can
place bid as per the non-competitive scheme for participation
The Rural Ministry signed a MoU with Bill and Melinda
in primary auction of government securities and procedural
Gates Foundation on 20 January 2020 to strengthen grassroots
guidelines for SGB issuance.
institutions under the Deendayal Antyodaya Yojana - National
Rural Livelihood Mission (DAY-NRLM). Secondary market: Investors can buy and sell government
National Urban Livelihoods Mission (NULM) has been securities on NDS-OM (‘Odd Lot’ and ‘Request for Quotes’
named Deen Dayal Antyodaya Yojana (DAY-NULM) segments).
and National Urban Livelihood Mission in Hindi. Under Payments for transactions can be done conveniently using
the scheme, for the urban areas, under the Deendayal saving bank account through internet-banking or Unified
Upadhyay Antyodaya Yojana, covering all 4041 cities Payments Interface (UPI).
and towns, the entire urban population will be covered.
All urban poverty alleviation programs cover only 790 Investor services include provisions for transaction and
towns and cities. balance statements, nomination facility, pledge or lien of
securities and gift transactions. No fees will be charged for
PM-KUSUM facilities provided under the scheme.
The Ministry of New and Renewable Energy (MNRE) The Scheme aims to provide a safe, simple, direct and secured
has launched Pradhan Mantri Kisan Suraksha Abhiyan platform to investors.
Utthan Mahabhiyan (PM Kusum) scheme for farmers PRADHAN MANTRI JAN DHAN YOJANA:
for setting up solar pumps and grid connected solar and
other renewable plants in the country. Kusum Yojana is
a scheme dedicated to the farmers of the Government of
India. Under this scheme, solar pumps will be provided
to the farmers, which will be of great benefit in farming.
Under the Kusum scheme, the government will provide
subsidy to farmers for setting up solar power plants on their
wastelands. The Kusum scheme will install agricultural
pump sets to double farmers’ income by 2022. The Central
Government has allocated Rs 48,000 / - crore in the Union
Budget 2018-19 for the coming 5 years for the successful
implementation of this scheme.
Objective of Kusum Yojana- Farmers in India have to Launched on 28th August 2014
face a lot of problems in irrigation and crops of farmers The Objective of “Pradhan Mantri Jan-Dhan Yojana
are damaged due to more or less rain. Through the Kusum (PMJDY)” is ensuring access to various financial services
scheme of the central government, farmers can irrigate like availability of basic savings bank account, access to need-
their fields by putting solar energy equipment and pumps based credit, remittances facility, insurance and pension to
in their land. the excluded sections weaker sections & low-income groups.
RBI Retail Direct Scheme Benefits of schemes are
1. Interest on deposit.
The Reserve Bank announces the activation of the RBI Retail
Direct Scheme with effect from on Nov 12, 2021. The Scheme 2. Accidental insurance cover of Rs.1Lakh
was launched in virtual mode by the Hon’ble Prime Minister, 3. No minimum balance required
Shri Narendra Modi. 4. Life insurance cover of Rs.30,000

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5. Overdraft facility after 6 months. Digital India is keyed on three key areas –
6. Access to Pension, insurance products. 1. Digital Infrastructure as a Utility to Every Citizen
7. RuPay Debit Card. 2. Governance & Services on Demand
8. Overdraft facility up to Rs.5000/- is available in only one 3. Digital Empowerment of Citizens
account per household. Pillars of Digital India –
PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA: 1. Broadband Highways
2. Universal Access to Phones
3. Public Internet Access Programme
4. e-Governance – Reforming government through
Launched on 9th May 2015. Technology
It is government backed life insurance scheme. It is open all 5. e-Kranti – Electronic delivery of services
sectors of Indian civilians 6. Electronics Manufacturing – Target NET ZERO Imports
Age limit: 18 to 50 years of age. 7. IT for Jobs
Annual premium- Rs.330 per year for life cover of 8. Early Harvest Programmes
Rs.2,00,000.
SKILL INDIA:
ATAL PENSION SCHEME:

Launched on 9th may 2015

The Atal pension scheme is targeted at unorganised sector
workers.Depending upon the contribution, the beneficiary Launched by PM Narendra Modi on 15th July 2015.
will get guaranteed pension of Rs.1000 to Rs.5000 per month. Skill India focuses on creating jobs for youth, the govt has
Govt will contribute 50% of total contribution or Rs.1000 decided to revamp the antiquated industrial training centres
whichever is lower. that will skill over 20 lakh youth annually and create 500
Age limit: 18-40 years million jobs by 2020. The initiative was launched on the
The pension will start at the age of 60 years. occasion of world youth skills day. Samsung recently signed
a major deal in providing hands-on training to youths for
DIGITAL INDIA:
employment and improving the skills at the same time.
The Government of India has launched the Digital India
SWACHH BHARAT:
programme with the vision to transform India into a digitally
empowered society and knowledge economy.

Launched on 2nd October 2014.

Swachh Bharat Abhiyan is a national campaign by the
Launched on 1st July 2015. government of India aims to accomplish the vision of
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clean India by 2nd October 2019. A performance ranking on which are critical in India’s current health crisis. This plan
Swachh Bharat Abhiyan of 476 cities in the country, based on is based on Kerala’s successful cooperative hospital model,
the extent of open defecation and solid waste management which proved beneficial in the COVID-19 (Coronavirus)
practices, released by the Ministry of Urban Development pandemic.
recently. Surakshit Matritva Aashwasan (SUMAN)
Top 10 cities are: Mysore, Tiruchirapalli, Navi Mumbai, It is a new scheme launched on October 10, 2019. The main
Kochi, Hassan, Mandhya, Bengaluru, Thiruvananthapuram, goal is to provide free healthcare to newborns, pregnant
Halisahar, Gangtok. women, and mothers for the first six months following
National Heritage City Development and Augmentation delivery. The Surakshit Matritva Aashwasan (SUMAN)
Yojana (HRIDAY) Scheme was established to lower the Infant Mortality Rate
This scheme was launched on January 21, 2015. Its main (IMR) and Maternal Mortality Rate (MMR) (MMR). The
goal is to conserve each Heritage City’s heritage identity by government will provide:
holistically integrating urban planning, economic growth, o Free healthcare to pregnant women.
and heritage conservation. The scheme was supposed to run o For mothers for up to six months after birth.
for 27 months (finishing in March 2017) in 12 cities: Ajmer,
o For all sick newborns under this Scheme.
Amaravati, Amritsar, Badami, Dwarka, Gaya, Kanchipuram,
Mathura, Puri, Varanasi, Velankanni, and Warangal. In a There would be no cost associated with identifying and
mission mode, the scheme was implemente. treating issues during and after pregnancy. In addition, the
federal government will provide free transportation from
PM SVANidhi (PM Street Vendors Atmanirbhar Nidhi)
home to the medical centre. At least four antenatal check-ups
Scheme
under the SUMAN scheme, including one during the first
It was launched on 18 July 2020 with a goal to supply rehdi trimester, at least it will include one under the PM Surakshit
/ patri valas with short-term loans of up to Rs. 10,000. It is a Matritva Abhiyan, Iron Folic Acid supplementation,
Central Sector Scheme to assist street sellers in obtaining an Tetanus-Diphtheria injection, and other components of a
inexpensive working capital loan to resume their livelihood comprehensive ANC package, as well as six home-based
operations following the lockdown. The Pradhan Mantri newborn care visits.
Street Merchants Atmanirbhar Nidhi is a special micro-credit
Gramin Pradhan Mantri Awas Yojana (Renamed from
programme that provides street vendors with inexpensive
Indira Awas Yojana)
financing. The government has created this Scheme because
the COVID-19 lockdown has severely harmed the livelihoods It was launched in 2015. PMAY Gramin is a rural component
of these daily wage earners. The programme will provide of Prime Minister Narendra Modi’s flagship PM Awas
street vendors with a working capital loan to help them get Yojana - Houses for All (PMAY-HFA), which aims to provide
back on their feet. Street sellers from peri-urban and rural housing for India’s rural poor by 2022. By FY 2022, the
areas might benefit from this programme. national government wants to build 4 crore dwellings for
impoverished people in rural areas. Beneficiaries of the rural
Ayushman Bharat Abhiyan (Ayushman Bharat Abhay)
dwellings would be selected based on information from
It was launched on June 11, 2019, the main goal is to raise the 2011 Socio-Economic Caste Census. In plain areas, a
money for cooperative healthcare facilities. Ayushman construction allowance of Rs. One hundred twenty thousand
Sahakari Scheme 2020 was to be launched by the National would be supplied, while in hilly areas, a building allowance
Cooperative Development Corporation (NCDC). This of one hundred thirty thousand will be provided.
programme would subsidize cooperative healthcare facilities,

NOTES

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SOCIAL WELFARE SCHEMES- (PRACTICE QUESTIONS)
Q.1. Which one of the following PMJDY is related to- Q.9. Which of the following categories will be given loan
(1) Female education (2) Literacy between 5 lacs and upto 10 lacs under PM MUDRA
yojna?
(3) Bank (4) Financial inclusion
(1) Shishu (2) Kishore
(5) All the above
(3) Tarun (4) All of the above
Q.2. What is the amount for life insurance cover in
(5) None of these
PMJDY?
Q.10. In which of the following schemes we receive sixty
(1) 1.00 lac rupees (2) 5000 rupees percent of the loan offered under PM MUDRA
(3) 30,000 rupees (4) 2.00 lacs rupee yojna?
(5) None of these (1) Shishu (2) Kishore
Q.3. What is the amount for accidental insurance cover (3) Tarun (4) All of the above
in PMJDY? (5) None of these
(1) 1.00 lac rupees (2) 5000 rupees Q.11. Which of the given statements is true regarding
(3) 30,000 rupees (4) 2.00 lacs rupee ‘Make in India’?
(5) None of these (A) The program was launched by PM Modi in
September 2014
Q.4. What is the amount under overdraft facility in
PMJDY? (B) It is to transform India into a global design and
manufacturing hub
(1) 1.00 lac rupees (2) 10,000 rupees
(C) ‘Make in India’ is just an inspiring slogan.
(3) 3,000 rupees (4) 50,000 rupees
(D) Department of Industry Policy and Promotion
(5) None of these works on this program.
Q.5. Under PMJDY to claim the benefits of accidental (1) All options are false
insurance policy, the RuPay Debit Card must be
(2) Only option (A), (B) & (C) are true
used at least once in how many days?
(3) Only option (A), (B) & (D) are true
(1) in 90 days (2) in 30 days
(4) Only (C) is true
(3) in 60 days (4) in 65 days
(5) All statements are true
(5) None of these
Q.12. MUDRA bank will be....
Q.6. PM MUDRA yojna has classified micro units under
(1) Commercial Bank (2) Regulating Agency
following the categories?
(3) Refinance Agency (4) Credit Rating Agency
(1) Shishu (2) Kishore
(5) None of these
(3) Tarun (4) All of the above
Q.13. The objective of Beti Bachao Beti Padhao yojna is-
(5) None of the above
(A) Prevention of gender biased selective elimination
Q.7. Which of the following category will be given loan
(B) Ensuring survival & protection of the girl child
upto 50,000 under PM MUDRA yojna?
(C) Ensuring education and participation of the girl
(1) Shishu (2) Kishore
child
(3) Tarun (4) All of the above
(1) Only (A) (2) Both (A) & (B)
(5) None of these (3) Both (B) & (C) (4) All (A), (B) and (C)
Q.8. Which of the following category will be given loan (5) None
between 50,000 and upto 5 lacs under PM MUDRA
yojna? Q.14. Beti Bachao Beti Padhao yojna was launched on-
(1) 21 January 2014 (2) 21 January 2015
(1) Shishu (2) Kishore
(3) 22 January 2014 (4) 22 January 2015
(3) Tarun (4) All of the above
(5) None of these
(5) None of these
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Q.15. Sukanya Samridhi account was launched on- Q.21. What is the amount provided as an insurance cover
(1) 21 January 2014 (2) 21 January 2015 under the PMJJB Yojna?
(1) Rs. 1 lac (2) Rs. 2 lacs
(3) 22 January 2015 (4) 22 January 2014
(3) Rs. 3 lacs (4) Rs. 4 lacs
(5) None of these
(5) Rs. 5 lacs
Q.16. The minimum investment limit in one financial year
under Sukanya Samridhi account is- Q.22. The maximum age eligibility for PMSBY is-
(1) Rs. 250 (2) Rs. 5000 (1) 100 years (2) 40 years
(3) Rs. 100 (4) Rs. 10000 (3) 50 years (4) 60 years
(5) Rs. 500 (5) 70 years
Q.17. The maximum investment limit in one financial year Q.23. What is the amount as premium in PMSBY?
under Sukanya Samridhi account is- (1) Rs. 12 (2) Rs. 33
(1) Rs. 12000 (2) Rs. 1.5 lacs (3) Rs. 330 (4) Rs. 70
(3) Rs. 1 lac (4) Rs. 10000 (5) Rs. 100
(5) Rs. 100 Q.24. What is the amount provided as insurance cover
Q.18. The amount in Sukanya Samridhi account can be under PMSBY?
deposited until the completion of ..........years from (1) Rs. 1 lac (2) Rs. 2 lacs
date of opening the account. (3) Rs. 3 lacs (4) Rs. 4 lacs
(1) 18 years (2) 21 years (5) Rs. 5 lacs
(3) 12 years (4) 10 years Q.25. Swachh Bharat Abhiyan-
(5) 14 years (A) It was started on 02 October 2014.
Q.19. The maximum age eligibility for PMJJBY is- (B) It is started to celebrate the 150th anniversary
(1) 100 years (2) 40 years of Indira Gandhi
(3) 50 years (4) 60 years (C) It is a cleanliness drive targeting to clean India
by 2019.
(5) 70 years
(1) Option (B) is true
Q.20. What is the amount as premium in PMJJBY?
(2) Only (C) is true
(1) Rs. 12 (2) Rs. 33
(3) Only (C) is true
(3) Rs. 330 (4) Rs. 70
(4) Both (A) & (C) are true
(5) Rs. 100
(5) All are true
ANSWER KEY
1.(4) 2.(3) 3.(4) 4.(2) 5.(1) 6.(4) 7.(1) 8.(2) 9.(3) 10.(1)
11.(5) 12.(3) 13.(4) 14.(4) 15.(3) 16.(1) 17.(2) 18.(5) 19.(3) 20.(3)
21.(2) 22.(5) 23.(1) 24.(2) 25.(4)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)

Q.1 Which ministry launched the SAMADHAAN portal Q.6 What was the allocation for the Mahatma Gandhi
for redressal of grievances of Central Armed Police National Rural Employment Guarantee Act
Forces (CAPF) personnel? (MNREGA) for the financial year 2017-18?
(SBI PO Mains 2017) (SBI PO Mains 2018)
(1) Ministry of Home Affairs (1) Rs 30,000 crore (2) Rs 35,000 crore
(2) Ministry of Defence (3) Rs 40,000 crore (4) Rs 45,000 crore
(3) Ministry of Personnel, Public Grievances, and (5) Rs 48,000 crore
Pensions
Q.7 How many Regional Rural Banks (RRBs) did
(4) Ministry of Law and Justice the Indian Government identify for Initial Public
(5) Ministry of Finance Offerings (IPOs) in the year in question?
Q.2 As of 2020, how many public sector banks are there (IBPS PO Mains 2019)
in India?
(1) 2 (2) 3 (3) 4
(SBI Clerk Mains 2018) (4) 5 (5) 6
(1) 10 (2) 12 (3) 14 Q.8 For how many days were the Insolvency and
(4) 18 (5) None of these Bankruptcy Code (IBC) norms extended in the year
Q.3 Which of the following options is incorrect regarding in question?
SFURTI clusters (Scheme of Fund for Regeneration (SBI Clerk Mains 2019)
of Traditional Industries)? (1) 60 days (2) 75 days (3) 90 days
(SBI PO Mains 2022) (4) 100 days (5) 120 days
(1) The scheme is aimed at promoting traditional Q.9 Where was the G20 Finance Ministers and Central
industries such as handicrafts, pottery, and weaving. Bank Governors Meeting held in the year?
(2) The scheme provides financial support for setting (SBI Clerk Mains 2019)
up of common facilities and improving the quality
(1) USA (2) Canada (3) Germany
and design of products.
(4) China (5) Japan
(3) SFURTI clusters are set up only in rural areas of
India. Q.10 Which Indian state has launched the water
conservation scheme named “Jalamrutha” in the
(4) The scheme is implemented by the Ministry of year in question?
Micro, Small and Medium Enterprises.
(IBPS PO Mains 2022)
(5) The scheme seeks to improve the competitiveness
of traditional industries and increase employment (1) Kerala (2) Maharashtra
opportunities in rural areas. (3) Gujarat (4) Telangana
Q.4 The Union Cabinet approved a production linked (5) Karnataka
incentive (PLI) scheme for the pharmaceutical sector Q.11 Which Indian city was named as a UNESCO World
for the financial year 2020-21 to _____ to increase Heritage Site, becoming the second Indian city in
investment. the list, in the year in question?
(IBPS Clerk Mains 2018) (SBI Clerk Mains 2021)
(1) Attract foreign investment (1) Agra (2) Delhi (3) Hyderabad
(2) Encourage domestic companies to invest in R&D (4) Jaipur (5) Kolkata
(3) Increase the production of APIs (Active Q.12 According to the announcement made by the Indian
Pharmaceutical Ingredients) in India Government in the year in question, how often
(4) Provide affordable medicines to the public would the interest rate on the Floating Rate Savings
Bonds, 2020 (Taxable) be revised as per the Reserve
(5) Promote exports of pharmaceutical products Bank of India (RBI)?
Q.5 In which year was the FDI limit in the Defence
(SBI Clerk Mains 2021)
manufacturing sector under the automatic route raised?
(1) One year (2) Two years
(SBI Clerk Mains 2019)
(3) Three years (4) Four years
(1) 2016 (2) 2017 (3) 2018
(4) 2019 (5) 2020 (5) Six months

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Q.13 In the year in question, the Indian Prime Minister Q.21 Kisan Credit Card (KCC) has been extended to
Narendra Modi launched a Central Sector Scheme which of the following?
for financing agriculture infrastructure. For how (SBI PO Mains 2018)
many years will this scheme run? (1) Fisherman
(SBI PO Mains 2018) (2) Cattle
(1) 2022 (2) 2025 (3) 2026 (3) Small Business
(4) 2028 (5) 2029 (4) Both A & B
Q.14 Which Indian city is home to the Keetham Lake that
(5) None of these
was recently added to the Ramsar site list?
Q.22 When was the PMMY (Pradhan Mantri Mudra
(SBI PO Mains 2018)
Yojana (PMMY)) launched ?
(1) Agra (2) Delhi (3) Kolkata
(SBI PO Mains 2022)
(4) Mumbai (5) Chennai
(1) 8th March 2015
Q.15 In the year in question, which Indian bank launched
a virtual property exhibition named ‘Home Utsav’ (2) 8th April 2015
to showcase real estate projects by well-known (3) 10th May 2015
developers from various cities across the country? (4) 15th April 2015
(IBPS Clerk Mains 2018) (5) None of these
(1) HDFC Bank (2) Axis Bank Q.23 What is the maximum loan amount under PMMY
(3) ICICI Bank (4) State Bank of India kishor account scheme?
(5) Punjab National Bank (SBI PO Mains 2022)
Q.16 What is the maximum age limit for purchasing an (1) 50 K (2) 5 Lakhs
Arogya Sanjeevani policy? (3) 10 Lakhs (4) 20 Lakhs
(IBPS Clerk Mains 2022) (5) None of these
(1) 50 years (2) 60 years (3) 65 years Q. 24 Which of the following statements are true regarding
(4) 70 years (5) 75 years the Pradhan Mantri Awas Yojana (Urban)?
Q.17 According to RBI guidelines, up to what limit can (SBI PO Mains 2022)
matured SHG loans be sanctioned? A. It aims to provide affordable housing to urban poor.
(IBPS Clerk Mains 2022) B. The scheme was launched in 2015.
(1) Rs. 50,000 (2) Rs. 1 lakh C. The scheme is implemented by the Ministry of
(3) Rs. 2 lakhs (4) Rs. 5 lakhs Housing and Urban Affairs.
(5) Rs. 10 lakhs D. Beneficiaries are selected based on a lottery
Q.18 Kisan Credit Card (KCC) was prepared by NABARD system.
on the recommendations of________commitee. E. The scheme only covers slum rehabilitation
(SBI PO Mains 2022) projects.
(1) R.V Gupta (2) Malcom
Select the correct option(s):
(3) Nachet More (4) Narasimman
(1) A and B
(5) None of these
(2) A, B and C
Q.19 KCC (Kisan Credit Card) was launched in which year?
(3) A, B and D
(SBI PO Mains 2017)
(4) A, C and E
(1) 1989 (2) 1998 (3) 1999
(4) 1982 (5) None of these (5) All of the above (A, B, C, D, and E)
Q.20 A holder of KCC ( Kisan Credit Card) is also covered Q.25 What is the limit set by RBI for sanctioning matured
with a personal accident cover ———- amount. loans of Self Help Groups (SHG)?
(SBI PO Mains 2017) (IBPS Clerk Mains 2022)
(1) 50 K (2) 20 K (3) 1 Lakh (1) Rs. 50,000 (2) Rs. 1 lakh (3) Rs. 2 lakh
(4) 2 Lakhs (5) None of these (4) Rs. 3 lakh (5) No limit

ANSWER KEY
1.(1) 2.(3) 3.(3) 4.(3) 5.(3) 6.(5) 7.(2) 8.(3) 9.(5) 10.(5)
11.(1) 12.(5) 13.(2) 14.(1) 15.(4) 16.(3) 17.(5) 18.(1) 19.(2) 20.(1)
21.(4) 22.(2) 23.(2) 24.(2) 25.(5)

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INSURANCE SECTOR

{{ WHAT IS INSURANCE
{{ BRIEF HISTORY OF INSURANCE
{{ PURPOSE AND NEED OF INSURANCE
{{ THE BUSINESS OF INSURANCE IN INDIA
{{ WHAT IS PREMIUM
{{ LAW AND REGULATIONS
{{ LIFE INSURANCE CORPORATION ACT, 1956
{{ INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
ACT 1999
{{ ESSENTIALS OF IRDA ACT
{{ CONSUMER PROTECTION ACT 1986 (COPA)
{{ INSURANCE OMBUDSMAN
{{ GENERAL INSURANCE
{{ IMPORTANT ABBREVIATION RELATED TO INSURANCE
{{ QUESTION & ANSWER
{{ PRACTICE PAPER QUESTIONS
{{ PREVIOUS PAPER QUESTIONS

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CHAPTER
INSURANCE
12
SECTOR
of the cargo to reduce the weight and restore balance. Such
What is Insurance
throwing away is called jettisoning) The Greeks had started
The business of insurance is related to the protection of the benevolent societies in the late 7th century AD, to take care of
economic values of assets. Every asset has a value. The asset the funeral and families of members who died. The friendly
would have been created through the efforts of the owner. The societies of England were similarly constituted. The Great Fire
asset is valuable to the owner, because he expects to get some of London in 1666, in which more than 13000 houses were lost,
benefits from it. It is a benefit because it meets some of his gave a boost to insurance and the first fire insurance company,
needs. The benefit may be an income or in some other form. called the Fire Office, was started in 1680.
In the case of a factory or a cow, the product generated by it
The origins of insurance business as in vogue at present, is traced
is sold and income is generated. In the case of a motor car,
to the Lloyd’s Coffee House in London. Traders, who used to
it provides comfort and convenience in transportation. There
gather in the Lloyd’s coffee house in London, agreed to share the
is no direct income. Both are assets and provide benefits.
losses to their goods while being carried by ships. The losses used
Every asset is expected to last for a certain period of time to occur because of pirates who robbed on the high seas or because
during which it will provide the benefits. After that, the of bad weather spoiling the goods or sinking the ship. In India,
benefit may not be available. There is a life-time for a insurance began in 1818 with life insurance being transacted by an
machine in a factory or a cow or a motor car. None of them English company, the Oriental Life Insurance Co. Ltd.. The first
will last for ever. The owner is aware of this and he can so Indian insurance company was the Bombay Mutual Assurance
manage his affairs that by the end of that period or life-time, Society Ltd, formed in 1870 in Mumbai. This was followed by
a substitute is made available. Thus, he makes sure that the the Bharat Insurance Co. in 1896 in Delhi, the Empire of India in
benefit is not lost. However, the asset may get lost earlier. 1897 in Mumbai, the United India in Chennai,the National Indian
An accident or some other unfortunate event may destroy and the Hindusthan Cooperative in Kolkata.
it or make it incapable of giving the benefits. An epidemic
Later, were established the Cooperative Assurance in Lahore,
may kill the cow suddenly. In that case, the owner and those
the Bombay Life (originally called the Swadeshi Life), the
enjoying the benefits therefrom, would be deprived of the
Indian Mercantile, the New India and the Jupiter in Mumbai
benefits. The planned substitute would not have been ready.
and the Lakshmi in New Delhi. These were all Indian
There is an adverse or unpleasant situation. Insurance is a
companies started as a result of the swadeshi movement in
mechanism that helps to reduce the effects of such adverse
the early 1900s. By the year 1956, when the life insurance
situations. It promises to pay to the owner or beneficiary of
business was nationalised and the Life Insurance Corporation
the asset, a certain sum if the loss occurs.
of India (LIC) was formed on 1st September 1956, there were
Types of Insurance 170 companies and 75 provident fund societies transacting
1. Life Insurance life insurance business in India. After the amendments to the
2. Non Life Insurance (General Insurance) relevant laws in 1999, the L.I.C. did not have the exclusive
privilege of doing life insurance business in India.
Brief History of Insurance
Insurance has been known to exist in some form or other since Purpose And Need of Insurance
3000 BC. The Chinese traders, traveling treacherous river Assets are insured, because they are likely to be destroyed or
rapids would distribute their goods among several vessels, so made nonfunctional before the expected life time, through
that the loss from any one vessel being lost, would be partial accidental occurrences. Such possible occurrences are called
and shared, and not total. The Babylonian traders would agree perils. Fire, floods, breakdowns, lightning, earthquakes, etc,
to pay additional sums to lenders, as the price for writing off the are perils. If such perils can cause damage to the asset, we say
loans, in case of the shipment being stolen. The inhabitants of that the asset is exposed to that risk. Perils are the events. Risks
Rhodes adopted the principle of ‘general average’, whereby, if are the consequential losses or damages. The risk to a owner
goods are shipped together, the owners would bear the losses of a building, because of the peril of an earthquake, may be
in proportion, if loss occurs, due to jettisoning during distress. a few lakhs or a few crores of rupees, depending on the cost
(Captains of ships caught in storms, would throw away some of the building, the contents in it and the extent of damage.

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Insurance does not protect the asset. It does not prevent its against. Insurance takes care. Thus, the risks in the case of a
loss due to the peril. The peril cannot be avoided through human being are related to
insurance. The risk can sometimes be avoided, through better ##Early death
safety and damage control measures. Insurance only tries
##Living too long
to reduce the impact of the risk on the owner of the asset
and those who depend on that asset. They are the ones who ##Disabilities
benefit from the asset and therefore, would lose, when the ##Sickness
asset is damaged. Insurance only compensates for the losses ##Unemployment
and that too, not fully.
Insurance of Intangibles
Only economic consequences can be insured. If the loss is not
The concept of insurance has been extended beyond the
financial, insurance may not be possible. Examples of non-
coverage of tangible assets. Exporters run the risk of losses,
economic losses are love and affection of parents, leadership
if the importers in the other country default in payments or
of managers, sentimental attachments to family heirlooms,
in collecting the goods. They will also suffer heavily due
innovative and creative abilities, etc.
to sudden changes in currency exchange rates, economic
How Insurance Works policies or political disturbances in the other country.
People facing common risks come together and make their These are dynamic risks and are insured. Doctors and other
small contributions to a common fund. The contribution to professionals run the risk of being charged with negligence
be made by each person is determined on the assumption that and subsequent liability for damages. The amounts in question
while it may not be possible to tell beforehand, which person can be fairly large, beyond the capacity of individuals to bear.
will suffer, it is possible to tell, on the basis of past experiences, These are insured. Thus, insurance is extended to intangibles.
how many persons, on an average, may suffer losses. In some countries, the voice of a singer or the legs of a
Human Asset dancer may be insured. These are assets which produce the
income and provide living to the owners. The object insured
A human being is an income generating asset. One’s
is intangible, but it is linked to a financial loss, and therefore
income generating ability depends on one’s skills, (manual,
becomes insurable. Indian non-life insurers are perhaps,
professional, problem solving, entrepreneurial, etc). These
considering the feasibility to insure such risks.
are the assets. The value of the asset can be measured by
considering the income that is generated by the person The Business of Insurance in India
concerned. The concept of Human Life Values, provides In India, insurance business is classified primarily as life and
scientific ways to determine the asset value of the human life non-life or general. Life insurance includes all risks related to
and therefore, the amount of life insurance required.. These the lives of human beings and general insurance covers the
techniques, like other techniques related to selling, will have rest. General insurance has three classifications viz., (1) Fire
to be learnt for the job. (dealing with all fire related risks). (2) Marine (dealing with
These assets also can be lost through unexpectedly early all transport related risks and ships) (3) Miscellaneous (dealing
death or through sickness and disabilities caused by accidents. with all others like liability, fidelity, motor, crop, engineering,
Accidents may or may not happen. Death will happen, but construction, I aviation, personal accident, etc). Personal
the timing is uncertain. If it happens around the time of one’s accident and sickness insurance, which are related to human
retirement, when it could be expected that the income will beings, is classified as ‘non-life’ in India, but is classified as
normally cease, the person concerned could have made some ‘life’ in many other countries. What is ‘non-life’ in India is
other arrangements to meet the continuing needs. But if it termed as ‘Property and Casualty’ in some other countries.
happens much earlier when the alternate arrangements are In India, the IRDA has, in 2005, issued Regulations enabling
not in place, there can be losses to the person and dependents. micro-insurance (broadly meaning insurance for small Sums
Those dependent on the income are helped to overcome their Assured, like 5 to 50 thousands) to be done by both life and
difficulties, by insurance. general insurers on the basis of mutual tie-ups. A policy
A person, who may have made arrangements for his needs may be issued by a life insurer covering both life and non-
after his retirement, also would need insurance. This is life risks, but premium on account of the non-life business
because the arrangements would have been made on the basis will be passed on to a general insurer and the claim amount
of some expectations like, likely to live for another 15 years, collected from the latter.
or that children will be able to look after the aged parents. The premium for insurance is based on expectations of the
If any of these expectations do not become true, the original losses. These expectations are based on studies of occurrences
arrangement would become inadequate and there could be in the past and the use of statistical principles. There is, in
difficulties. Living too long can be as much a problem as statistics, a “law of large numbers”. When you toss a coin, the
dying too young. Both are risks, which need to be safeguarded chance, or probability, of a head or tail coming up is half. If

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the coin is tossed 100 times, one cannot be sure that the head (Sum Assured) is paid on the death of any of the insured
will come up 50 times. If the coin is tossed 1 million times, the persons during the term or at the end of the term. Some plans
number of heads will be closer to half a million proportionately also provide payment of SA on the death of one life and the
than in the case of 10. The variation will be less as a percentage. policy is continued to cover the second life till maturity,
Reinsurance: Reinsurance is a contract between the without payment of further premium.
insurance company (insurer) and a third party (re-insurer), Childrens Plans
wherein the latter will protect the former by paying losses Insurance can be taken on the lives of children, who are
sustained by it under the original contract of insurance. minors. The proposal will have to be made by a parent or a
Re-insurers from London, as well as other parts of Europe, guardian.
see significant potential in the re-insurance market in India. Group Insurance
Top four global reinsurers, Lloyds, Swiss Re, Munich Re and
Group insurance is a plan of insurance, which provides cover
Berkshire Hathaway amongst those eyeing India. In India the
to a large number of individuals under a single policy called
general insurance corporation of India is the national reinsurer.
the “Master Policy”. The individuals covered under the
Bancassurance : Bancassurance is distribution of insurance master policy are not parties to the contract. The contract will
product through a bank’s network. Under this channel of be between the insurer and a body that represents the group
distribution and selling of insurance product bank acts as of individuals covered. This body may be the employer, who
insurance agent and considering the volume of business is interested in obtaining benefits for his employees through
insurance companies used to associate their employees with insurance. The body may be an association of individuals
the branches for support and assistance. through whom the collective interests of the individuals are
What is Premium safeguarded, like a trade or professional association. A bank
or financier can make arrangements through a group policy
In a contract of insurance, the insurer promises to pay to
to protect his interests against defaults occurring because of
the policyholder a specified sum of money, in the event of a
the death of the debtors.
specified happening. The policyholder has to pay a specified
amount to the insurer, in consideration of this promise. First Premium Receipt (FPR)
‘Premium’ is the name given to this consideration that the The underwriter’s decision on the proposal may be to accept
policyholder has to pay in order to secure the benefits offered at OR or otherwise. If it is accepted at OR, the policy can
by the insurance contract. It can be looked upon as the price be commenced immediately, provided the full premium had
of the insurance policy. It may be a one-time payment. That is been paid along with the proposal. The FPR will be issued. If
not common. Often, it has to be paid regularly over a period the acceptance is not at OR, the proposer has to agree to the
of time. A default in premium can endanger the continuance modified terms and pay the balance premium if any, before
of the policy. If that happens, the policy will be treated as the FPR can be issued. The IRDA regulations require that
‘lapsed’ and the expected benefits may not be available. The the decision on the proposal should be made by the insurer
consequences of default are specified in the policy conditions. within 15 days.
The calculation of premium is a complex technical process, Law And Regulations
involving actuarial and statistical principles. Only trained
Insurance Act, 1938
professionals, called actuaries, do it. Tables of premium rates
for each plan of insurance are made available by insurance The Insurance Act 1938, which came into effect from 1st
companies for the use of agents, who are required to quote the July 1939, and was amended in 1950 and later in 1999, is
premium for a particular policy being offered to a prospect. the principal enactment relating to the business of insurance
in India. The Act contains provisions regarding licensing of
With Profit And Without Profit Policies agents and their remunerations, prohibition of rebates, and
Without profit’ or ‘Non-participating’ policies are not entitled protection of policyholder’s interests. It also has provisions
to bonuses, which are declared after actuarial valuations. ‘With placing limits on the expenses of insurers, use of funds and
profit’ or ‘Participating’ policies pay a slightly higher premium patterns of investments, maintaining solvency levels, and
for the right to participate in the progress of the insurer. ‘With constitution of Insurance Associations and Insurance Councils
profit’ policies are popular because the bonuses are expected and the Tariff Advisory Committee for general insurance.
to be more than the extra premium paid. ‘With Profit’ policies, Till the constitution of the IRDA by the IRDA Act in
where the premium is payable for a limited period, will 1999, the Controller of Insurance was responsible for the
continue to participate even after the premiums have ceased. administration of the Insurance Act. Since 1999, the IRDA
Joint Life Policies has replaced the Controller of Insurance. The Insurance Act
Two or more lives can be covered under one policy. Such vests the IRDA with powers to Register insurance companies
policies usually cover married couples or partners. The SA and also cancel their registrations.

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##Monitor and certify the soundness of the terms of life and Development Authority (IRDA, which was constituted
insurance business. by an act of parliament) specify the composition of Authority
##Make regulations relating to the conduct of the business The Authority is a ten member team consisting of
of insurance. (a) One Chairman;
##Inspect documents of insurers. (b) Five whole-time members
##Appoint additional directors. (c) Four part-time members. (all appointed by the
##Issue directions. Government of India)
##Take over the management of an insurer and appoint Duties, Powers and Functions of IRDA under IRDA Act,
administrators. 1999
##Adjudicate on disputes between insurers and Section 14 of IRDA Act, 1999 laysdown the duties,powers and
intermediaries or between intermediaries. functions of IRDA..(1) Subject to the provisions of this Act
##Decide on disputes relating to settlement of claims of and any other law for the time being in force, the Authority
amounts not .exceeding Rs. 2000. shall have the duty to regulate, promote and ensure orderly
growth of the insurance business and re-insurance business.
Life Insurance Corporation Act, 1956
(2) Without prejudice to the generality of the provisions
This Act was the basis for the establishment of the L.I.C. as contained in sub-section (1), the powers and functions
a body corporate consisting of not more than 16 members of the Authority shall include, -
appointed by the Central Government, one of them being
(a) Issue to the applicant a certificate of registration,
Chairman. The Corporation’s duty was to carry on life
renew, modify, withdraw, suspend or cancel such
insurance business to the best advantage of the community.
registration;
Section 30 gave the L.I.C exclusive privilege to transact life
insurance business in India. This exclusive privilege ceased as (b) Protection of the interests of the policy holders in
a result of the amendments made in 1999. These amendments matters concerning assigning of policy, nomination
were made in pursuance of the Government’s policy of by policy holders, insurable interest, settlement of
economic reforms. 24 insurance companies were registered insurance claim, surrender value of policy and other
and had commenced life insurance business till 11.02.2020. terms and conditions of contracts of insurance;
Insurance Regulatory And Development (c) Specifying requisite qualifications, code of conduct
and practical training for intermediary or insurance
Authority Act 1999 intermediaries and agents;
This Act, passed in December 1999, provided for the (d) Specifying the code of conduct for surveyors and
establishment of the IRDA to protect the interests of holders loss assessors;
of insurance policies, to regulate, promote and ensure orderly
growth of the insurance industry and for matters connected (e) Promoting efficiency in the conduct of insurance
therewith or incidental thereto. It also sought to amend the business;
Insurance Act, 1938, the Life Insurance Corporation Act, (f) Promoting and regulating professional organisations
1956 and the General Insurance Business (Nationalization) connected with the insurance and re-insurance
Act, 1972. business;
The IRDA is a corporate body. It is advised by an Insurance (g) Levying fees and other charges for carrying out the
Advisory Committee consisting of not more than 25 purposes of this Act;
members to represent the interests of commerce, industry, (h) Calling for information from, undertaking inspection
transport, agriculture, consumer forums, surveyors, agents, of, conducting enquiries and investigations including
intermediaries, organisations engaged in safety and loss audit of the insurers, intermediaries, insurance
prevention, research bodies and employees’ associations in intermediaries and other organisations connected
the insurance sector. It replaces the ‘Controller of Insurance’ with the insurance business;
to administer the provisions of the Insurance Act. That (i) Control and regulation of the rates, advantages,
includes registrations, licensing, and laying down regulations terms and conditions that may be offered by insurers
for the proper conduct of the business and the protection of in respect of general insurance business not so
the interests of policyholders. controlled and regulated by the Tariff Advisory
Essentials of IRDA Act Committee under section 64U of the Insurance Act,
Composition of Authority under IRDA Act, 1999 1938 (4 of 1938);
As per the section 4 of IRDA Act’ 1999, Insurance Regulatory (j) Specifying the form and manner in which books
of account shall be maintained and statement of
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accounts shall be rendered by insurers and other and the insurer are allowed to make personal submissions.
insurance intermediaries; But lawyers are not permitted to argue the case.
(k) Regulating investment of funds by insurance companies; Complaints to the Ombudsman lie only when the insurer had
(l) Regulating maintenance of margin of solvency; rejected the complaint or no reply was received within one
month of the complaint or the reply was not satisfactory. A
(m) Adjudication of disputes between insurers and
complaint can be made within one year after the insurer had
intermediaries or insurance intermediaries;
rejected the representation. The subject matter should not be
(n) Supervising the functioning of the Tariff Advisory already before any court or consumer forum or arbitration.
Committee; The Ombudsman is expected to make a recommendation
(o) Specifying the percentage of premium income of within one month from the date of receipt of complaint. If
the insurer to finance schemes for promoting and the complainant accepts this recommendation, the insurer
regulating professional organisations referred to in has to comply within 15 days and inform the Ombudsman
clause (f); accordingly. If the complainant does not accept the
(p) Specifying the percentage of life insurance business Ombudsman’s recommendation, the Ombudsman shall
and general insurance business to be undertaken by pass an award in writing, stating the amount awarded which
the insurer in the rural or social sector; and shall not be in excess of what is necessary to cover the loss
(q) Exercising such other powers as may be prescribed. suffered by the complainant as a direct consequence of the
insured peril or for an amount not exceeding Rs. 30,00,000,
Consumer Protection Act 1986 (COPA) whichever is lower. The award has to be passed within 3
Under this Act, a consumer, as an individual or along with other months. The complainant has to intimate his acceptance of
individuals, or through a consumer organisation, can approach the award within one month by a letter of acceptance to the
the various forums prescribed under the Act for redress, in case insurer and the insurer has, to comply within 15 days and
he is not satisfied with the goods or service provided. He has to inform the Ombudsman. If the Complainant does not intimate
allege a defect in the goods or service. A defect or deficiency acceptance, the award cannot be implemented.
is a fault, imperfection, shortcoming or inadequacy in the General Insurance
quality, nature or manner of performance, which is required
Products
to be maintained by or under any law or in pursuance of a
contract or undertaking in relation to that service. 1. Fire Insurance : Fire Insurance is desgined to provide
financial protection for property against loss or damage by
In order to attend to complaints under this Act, consumer
Fire and others specified perils.
dispute redressal forums are established in each district
and for each State. The forum at the district level will hear 2. Marine Insurance : Marine insurance, comprises (a) cargo
complaints up to the value of Rs.20,00,000 and the forum insurance and (b) hull insurance. Cargo insurance provides
at the State level will hear complaints up to the value of Rs. insurance cover in respect of loss of or damage to goods
1,00,00,000. The National Commission will attend formatters during transit by rail, road, sea or air. Thus cargo insurance
beyond the jurisdiction of the State forums and also appeals concerns the following:
against the decisions of a State forum. ##Export and import shipments- by ocean-going vessels of
all types, coastal shipments by steamers, sailing vessels,
INSURANCE OMBUDSMAN mechanized boats, etc., shipments by inland vessels or
The Governing body of the Insurance Council is authorized country craft, and consignments by rail, road, or air and
by law to appoint Ombudsmen for the insurance industry. articles sent by post.
The function of the Ombudsman is to resolve complaints in ##Hull insurance, on the other hand, concerns the insurance
respect of disputes between policyholders and insurers in of ships (hull, machinery, etc.)
cost effective, efficient and impartial manner.
3. Motor Insurance : The insurance of motor vehicles
The complaints to the Ombudsman may relate to (1) partial or against damage is not made compulsory, but the insurance
total repudiation of claims (2) any dispute regarding premium of third party liability arising out of the use of motor vehicles
paid or payable in terms of the policy (3) any dispute on the in public places is made compulsory. No motor vehicle can
legal construction of the policy relating to claims (4) delay in ply in a public place without such insurance.
settlement of claims (5) non-issue of any insurance document
4. Personal Accident Insurance : The policy provides that,
to customers after receipt of premium.
if the insured shall sustain any bodily injury resulting solely
The Ombudsman acts as counsel and mediator in matters and directly from accident caused by external violent and
within its terms of reference. It is not a judicial authority. It visible means, then the company shall pay to the insured or
has no right to summon witnesses. It has to make its decision his legal personal representative(s), as the case may be, the
on the basis of documents submitted to it. The complainant sum or sums set forth, in the policy.
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5. Health Insurance : This insurance provides for or ordinary theft is not covered).
reembersment of hospitalization/domicilary hospital b) Loss insurable under fire or plate glass policy.
expenses for illness/disease suffered are accidental injury
2. The policy can be extended to cover riot, strikes and
sustained during the policy period.
terrorism risks at extra premium.
6. Liability Insurance : The purpose of liability insurance
10. House Holder Insurance : This is a package insurance
is to provide indemnity in respect of damages payable under
scheme designed to meet the requirements of a householder
law for personal injury to third parties or damage to their
by combining under a single policy a number of contingencies
property. This legal liability may arise under common law
which are otherwise covered under separate policies.
on the basis of negligence or under statutory law (e.g. Public
Liability Insurance Act or Workman’s Compensation Act) 11. Shopkeeper’s Insurance : The policy is designed for
on ‘no-fault’ basis, that is even when there is no negligence. small shopkeepers. The policy is comprised of 10 sections.
Another class of legal liability insurance relates to employer’s Section 1. Loss or damage to (A) building / (B) contents
legal liability towards his employees for death or bodily (excluding money and valuables) whilst contained in insured
and the policy is known as employer’s liability insurance or premises by specified perils.
workman’s compensation insurance. Section 2. Loss of or damage to contents (excluding money
7. Engineering Insurance : This policy is designed to and valuables) whilst contained in the premises by burglary
protect the interests of contractors and principals in respect and housebreaking. (No theft risk is covered)
of civil engineering projects, like buildings, bridges, tunnels, Section 3.
etc. The policy provides an “All Risk” cover. Every risk is a) Loss of money in transit due to accident/ misfortune.
covered which is not specifically excluded. This means that
b) Loss of or damage to money / valuables by Burglary /
almost any sudden and unforeseen loss or damage occuring
housebreading whilst contained in a burglar proof safe.
during the period of insurance to the property insured on the
construction site is indemnified. c) Loss of money whilst lying in cashier’s till and or
counter in insured’s premises by Burglary, house-
8. Rural Insurance : Rural policies comprise the insurances
breaking or following assault /violence on insured or his
of various livestock e.g., cattle, sheep, goat, etc. sub-animals
employees.
e.g., silkworm and honeybee, plantation and horticultural
crops e.g. rubber, grapes, etc. property e.g. agricultural Section 4. Loss of or damage to pedal cycle (s) and legal
pumpsets, etc. e.g. gramin accident. liability to third parties.
9. Burglary Insurance : Section 5. Loss of or damage to fixed plate glass in the
insured premises.
1. The policy is available to commercial establishments,
factories, godowns, shops etc. Property in any form, Section 6. Loss of or damage to Neon Sign/glow sign.
including cash, in the business premises can be covered. Section 7. Loss of or damage to Personal Baggage of insured
The risks covered are : or baggage in connection with trade, any where in India.
a) Theft of property after actual forcible and violent entry Section 8. Personal Accident cover for insured/his employees
into the premises or theft following actual, forcible as per PA practice.
and violent - exit from the premises. Section 9. Direct pecuniary loss suffered by the insured due
b) Damage to insured property or premises by burglars to fraud or dishonesty committed by any salaried employees.
Cash cover operates only when the cash is secured in a safe Section 10.
and is granted only if the safe is burglar proof and is of an a) Legal liability to a third party.
approved make and design. b) Liability to employees under the W.C. Act/common
The cover is granted subject to the following two clauses :- law.
(i) The loss of cash abstracted from the safe following 12. Misc. Insurance : Such as bankers blanket policy,
the use of the key to the said safe or any duplicate jewllers block policy, horse insurance etc.
thereof belonging to the insured is not covered unless Difference between life insurance and general insurance
such key has been obtained by violence or threats of 1. General insurance works on the principle of indemnity but
violence. This is generally known as “key clause” in life insurance it is only the principle of financial security
(ii) A complete list of the amounts of cash in safe should 2. In life Insurance Insurers insured the life of the human
be kept secure in some place other than the safe. being and in general insurance insurers insured other than
Some important exclusions under the policy are : human life. But there is few exception such as health
a) Theft by persons lawfully on the premises (larceny insurance, which is provided by both.

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Important Abbreviation Related to Insurance
IRDA Insurance Regulatory and development Authority.
LIC Life Insurance Corporation of India
ULIP Unit Linked Insurance Plans
COPA Consumer Protection Act
GIC General Insurance Corporation of India
NAV Net Asset Value
SSS Salary Savings Scheme
SA Sum Assured
FPR First Premium Receipt
IDV Insured’s declared Value
CC Cubic Capacity
TPA Third Party Administrator
NCB No Claim Bonus
NSDL National Securities Depository Limited
CDSL Central Depository Services Limited

Insurance Companies Operating In India Life Insurers

Public Sector Private Sector
1. Life Insurance Corporation of India 1. Bajaj Allianz Life Insurance Company Limited .
2. Aditya Birla Sun Life Insurance Co. Ltd
3. HDFC Life Insurance Co. Ltd
4. ICICI Prudential Life Insurance Co. Ltd
5. Max Life Insurance Co. Ltd
6. PNB Metlife India Insurance Co. Ltd.
7. Kotak Mahindra Life Insurance Limited
8. SBI Life Insurance Co. Ltd
9. Tata AIA Life Insurance Company Limited
10. Reliance Nippon Life Insurance Company Limited.
11. Aviva Life Insurance Company India Limited
12. Sahara India Life Insurance Co, Ltd.
13. Shriram Life Insurance Co, Ltd.
14. Bharti AXA Life Insurance Company Ltd.
15. IDBI Federal Life Insurance Company Ltd.,
16. Future Generali India Life Insurance Company Ltd.
17. Canara HSBC Oriental Bank of Commerce Life Insurance
18. AEGON Life Insurance Company Limited.
19. DHFL Pramerica Life Insurance Co. Ltd.
20. Star Union Dai-ichi Life Insurance Co. Ltd.,
21. India First Life Insurance Company Limited
22. Edelweiss Tokio Life Insurance Co. Ltd.
As on 07/ March/ 2023

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Non-Life Insurers
Public Sector Private Sector
1. IFFCO Tokio General Insurance Co. Ltd. 1. Bajaj Allianz General Insurance Co. Ltd.
2. National Insurance Co. Ltd. 2. ICICI Lombard General Insurance Co. Ltd.
3. The New India Assurance Co. Ltd. 3. Reliance General Insurance Co. Ltd.
4. The Oriental Insurance Co. Ltd. 4. Royal Sundaram General Insurance Co. Limited
5. United India Insurance Co. Ltd. 5. Tata AIG General Insurance Co. Ltd.
6. Export Credit Guarantee Corporation of India Ltd. 6. Cholamandalam MS General Insurance Co. Ltd.
7. Agriculture Insurance Co. of India Ltd. 7. HDFC ERGO General Insurance Co. Ltd.
8. Universal Sompo General Insurance Co. Ltd. 8. Star Health and Allied Insurance Company Ltd.
9. SBI General Insurance Company Ltd. 9. Navi General Insurance Company Ltd.
10. Future Generali India Insurance Company Ltd.
11. Shriram General Insurance Company Ltd.
12. Raheja QBE General Insurance Company Ltd.
13. Niva Bupa Health Insurance Company Limited
14. Care Health Insurance Company Limited
15. Magma HDI General Insurance Company Ltd.
16. Liberty Videocon General Insurance Co. Ltd.
17. Cigna Manipal Health Insurance Company Limited.
18. Kotak Mahindra General Insurance Co. Ltd.
19. Adiya Birla Healt Insurance Co. Ltd.
20. Edelweiss General Insurance Ltd.
21. Acko General Insurance Ltd.
22. Go Digit General Insurance Ltd.

As on 07/03/2023
Re- Insurer
1. General Insurance Corporation of India As on 07/03/2022
Companies With Foreign Partners
Indian Partner Foreign Partner Country
Religare AEGON USA
Dabur Invest Corp. AVIVA Group UK
Bajaj Finserv Ltd. Allianz SE Germany
Bharti Enterprises AXA Group France
Aditya Birla Group Sun Life Financial Canada
Canara Bank & Oriental Bank HSBC Insurance UK
Deewan Housing Finance Corporation Prudential Intl. Holdings Ltd. USA
Future Group & Industrial Inv. Trust Ltd. Generali Group Italy
HDFC Ltd . Standard Life UK
ICICI Bank Prudential UK
Bank of India & Union Bank Dai-Chi Life Japan
TATA Group AIG USA
HDFC Ltd. Ergo International AG Germany
IFFCO Tokio Marine and Nichido Fire Group Japan
Max India Ltd. Bupa UK

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INSURANCE - (PRACTICE QUESTIONS)
Q.1. Which of the following types of companies/ Q.7. Select the correct statement from the following:
organisations issue ULIP? (A) Premium is the fixed amount of sum paid over
(1) Insurance companies the period by the insured to the insurance company
(2) Banks to take insurance policy and to complete the contract
of insurance.
(3) NABARD
(B) Underwriting is the consideration of material
(4) RBI fact to asses the risk and to take the decision whether
(5) All of these to accept the risk for insurance contract and if so at
Q.2. If an insurance policy holder is not satisfied with what rate of premium.
the award of the insurance ombudsman, he / she can (C) Reinsurance is an arrangement by which
approach to__? insurance companies spread their risk with other
(1) Courts of law underwriters or reinsurance companies called
Reinsurance.
(2) Consumer forums
(D) Deductible is the amount, which the insured has
(3) Either 1 or 2 to bear in all cases and this amount is first, deducted
(4) The award of insurance ombudsman can not be from the total assessed payable claims amount before
challenged determining insurance company’s liability.
(5) Govt (1) A, B & C (2) A, B & D
Q.3. Which one of the following is the example of (3) A, C & D (4) B, C & D
Insurance depositories? (5) All are correct
(1) Central Insurance Repository Limited (CIRL) Q.8. FPR stands for:
(2) Karvy Insurance repository Limited (1) Final Proposal Report
(3) NSDL Database Management Limited (2) First Proposal Report
(3) First Premium Receipt
(4) All of these
(4) Final Premium Receipt
(5) None of these
(5) None of the above
Q.4. Which of the following is correct full form of IGMS Q.9. Who is responsible to bear the cost of Medical
with reference to insurance sector? Checkups when the person for whom the policy
(1) Integrated Grievance Management System have been applied?
(2) Internal Grievance Management System (1) Insurance Company
(3) Important Grievance Management System (2) the person for whom the policy have been applied
(4) Integral Grievance Management System (3) Proposer
(5) Insurance Grievance Management System (4) The Sales Officer
(5) any of the above
Q.5. Which Insurance policy gives holder the benefits of
both Insurance and Investment? Q.10. Select the correct statement in respect to Marine
Insurance:
(1) Term Insurance Policies
(A) It coveres the goods in transit from one place to
(2) Money-back Policies another through Sea
(3) Unit-linked Investment Policies (B) It coveres the goods in transit from one place to
(4) Pension Policies another through Rail & Road
(5) Reinsurance Policies (C) It coveres the goods in transit from one place to
another through Air
Q.6. Which of the following cannot be ensured?
(D) It does not covere the goods in transit from one
(1) Property (both movable and immovable)
place to another through a any possible combination
(2) Result of any competition of Sea, Rail, Road and Air.
(3) liability towards others (1) A, B & C (2) A, B & D
(4) dishonesty (3) A, C & D (4) B, C & D
(5) cash (5) All are correct

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Q.11. Which ofthe following works as Re-Insurer in India? (5) Actuarial science is used to decide the rate of
(1) National Insurance Co. Ltd. premium for both Life and Non- Life insurance.
(2) The Oriental Insurance Co. Ltd. Q.16. The concept of indemnity is based on the key
principle that policyholders should be prevented
(3) General Insurance Corporation of India from.
(4) Export Credit Guarantee Corporation of India (1) Making false insurance claims.
Ltd.
(2) Insuring existing losses.
(5) The New India Assurance Co. Ltd.
(3) Paying excessively for insurance cover.
Q.12. IRDAI was incorporated as a statutory body on -
(4) Profiting from insurance
(1) 06 January 2000 (2) 01 April 1999 (5) None of these
(3) 19 April 1999 (4) 01 April 2000 Q.17. Which among the following is a non-traditional life
(5) 19 April 2000 insurance product?
Q.13. Insurance works on the principal of Indemnity it (1) Endowment insurance
means: (2) General insurance
(1) Under this insurance contract both the parties (3) Whole life insurance
should have faith over each other. As a client it is (4) Term assurance
the duty of the insured to disclose all the facts to the
(5) None of these
insurance company. Any fraud or misrepresentation
of facts can result into cancellation of the contract. Q.18. Under what circumstances would the policyholder
need to appoint an appointee?
(2) That an insured may not be compensated by
the insurance company in an amount exceeding the (1) Policyholder is a Politician.
insured’s economic loss. (2) Insured is minor
(3) Under this principle of insurance, the insured (3) Nominee is a minor
must have interest in the subject matter of the (4) Policyholder is in Army
insurance. Absence of interest makes the contract (5) None of these
null and void.
Q.19. IRDAI stands for __________.
(4) It enables the insured to claim the amount from
(1) Issuance Regulatory & Development Authority
the third party responsible for the loss. It allows
of India.
the insurer to pursue legal methods to recover the
amount of loss. (2) International Regulatory & Development
Authority of India.
(5) None of the above
(3) Indian Regulatory & Development Authority of
Q.14. Which of the following is covered under General India.
Insurance:
(4) Income Regulatory & Development Authority
(1) Term Plans (2) ULIPs of India.
(3) Mediclaim Policies (4) 2 and 3 both (5) Insurance Regulatory & Development Authority
(5) None of the above of India.
Q.15. Slect the wrong satetement from the following: Q.20. Which of the below party is not eligible to enter into
a life insurance contract?
(1) Insurance follow the ‘Law of Large Numbers’
(1) Business owner
(2) Principal of ‘Probability’ is required to followed.
(2) House wife
(3) The Principal of Subrogation is applicable to
Life Insurance only. (3) Government employee
(4) General Isurance has wider scope and penetration (4) Private employee
in India as compared to Life Insurance. (5) Minor

ANSWER KEY
1.(1) 2.(3) 3.(4) 4.(1) 5.(3) 6.(2) 7.(5) 8.(3) 9.(3) 10.(1)
11.(3) 12.(5) 13.(2) 14.(3) 15.(3) 16.(4) 17.(2) 18.(3) 19.(5) 20.(5)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)

Q.1. Who is protected under the In-Contestability Clause Q.6. Where was India’s first life insurance company,
included under a Life Assurance Policy? named Oriental Life Insurance, set up during the
(LIC AAO 2011) British rule?
(1) Insurer (LIC Apprentice Development Officer (ADO) 2013)
(2) Insured (1) Calcutta (2) Bombay
(3) Insurance Agent (3) Surat (4) Hyderabad
(4) Insurance Broker (5) None of these
(5) None of these Q.7. The Foreign Exchange Regulation (Amendment)
Act, 1993, forms the statutory basis for Exchange
Q.2. Section 45 (Indisputability Clause) of Insurance Act,
Control in India. The manual which supplements’
protects the Insured, from Rejection of Claim, by
the act has been issued by-
the Insurer; provided the Policy has completed --.
Choose the Most Appropriate Option. (United India Insurance AO Exam 2013)
(LIC ADO 2019) (1) Securities and Exchange Board of India
(1) One Year (2) Reserve Bank of India
(2) Three Years (3) Confederation of Indian Industry
(3) Five Years (4) Union Ministry of Finance
(4) Seven Years (5) None of these
(5) None of these Q.8. Which of the following form of Plastic Money?
Q.3. What Does, First Premium Receipt (F.P.R.), signify? (United India Insurance AO Exam 2013)
(United India Insurance AO Exam 2013) (1) Credit Card
(1) Free-Look Period has ended. It is the Evidence, (2) Banknote
that
(3) Coins and currencies
(2) The Policy-Contract has begun.
(4) Paper note
(3) Policy cannot be cancelled, Now.
(5) None of these
(4) Policy has acquired a Certain Cash-Value
(5) None of these Q.9. In the economic field, what does ALM stand for?

Q.4. Identify the Document, that evidences a Contract, (United India Insurance AO Exam 2013)
between the Insurer and the Insured. (1) Asset liability management
(LIC Apprentice Development Officer (ADO) 2013) (2) Application lifecycle management
(1) Proposal-Form (3) American Le Mans
(2) Claim-Form (4) AudioLingual Method
(3) Nomination-Form (5) None of these
(4) Policy-Document Q.10. In financial accounting and finance, bad debt refers
(5) None of these to-
Q.5. What is the fly Leaf? (United India Insurance AO Exam 2013)
(GIC Assistant Exam 2013) (1) An amount owed to a business or individual that
(1) Thin paper sheet for making packaging material is written off by the creditor as a loss
(2) A blank page at the beginning or end of a book (2) A debt due to money laundering activities
(3) A marker in a book (3) A type of mortgage
(4) A sheet of paper next to the main title of the book (4) A type of unsecured loan
(5) None of these (5) All of the above

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Q.11. Which of the following statements related to General Q.16. Singapore’s Central Bank and Financial Regulatory
Insurance Corporation of India is not correct? Authority is known as-
(LIC Apprentice Development Officer (ADO) 2013) (NICL Assistant Online Exam 2015)
(1) It is the sole reinsurance company in the Indian (1) Monetary Authority of Singapore
insurance market
(2) Reserve Bank of Singapore
(2) The entire general insurance business in India
(3) Other than those given as options
was nationalised by the Government of India
(GOI) through the General Insurance Business (4) State Bank of Singapore
(Nationalisation) Act (GIBNA) of 1981 (5) Federal Reserve of Singapore
(3) It has been active in the Indian insurance market Q.17. A life insurance policy where in the policyholder
with over three decades receives a fixed amount at specific intervals
(4) Its registered office and headquarters is in throughout the duration of the policy is known
Mumbai as –
(5) None of these (NICL Assistant Online Exam 2015)
Q.12. Which is a fixed amount for a covered service in (1) Whole Life Plan
health sector?
(2) Unit Linked Insurance Plan
(United India Insurance AO Exam 2013)
(3) Moneyback Policy
(1) Copay
(4) Fixed term plan
(2) Coinsurance
(5) Double Cover Plan
(3) Deductible
Q.18. The Insurance Regulatory and Development
(4) Health Insurance Authority of India (IRDA) is an autonomous apex
(5) None of these NICL Assistant Online Exam 2015
Q.13. Where is the headquarter of LIC of India located? (IBPS Clerk Mains 2022)
(United India Insurance Assistant Exam 2015) (1) Consultative Body
(1) New Delhi (2) Kolkata (2) Statutory Body
(3) Chennai (4) Chandigarh (3) Advisory Body
(5) Mumbai (4) Cooperative Body
Q.14. The American global payments technology solution (5) Corporate Body
firm Visa .inc has recently planned to launch a new
mobile payment service in India called. Q. 19. Consider the following statements regarding Paid
up Policy:
(United India Insurance Assistant Exam 2015)
(LIC Apprentice Development Officer (ADO) 2013)
(1) pVisa (2) cVisa
(a) It is an insurance policy that requires no further
(3) Vapp (4) mVisa
premium payments to be made.
(5) Dwota
(b) In such a policy, the sum assured is reduced in
Q.15. An application for obtaining an insurance cover or accordance with the paid premiums.
for obtaining quotations of the premium chargeable
(c) Insurance company does not provide interest on
is known as the-
premium Select the correct answer using the codes
(NICL Assistant Online Exam 2015) given below:
(1) Proposal (1) Only a
(2) Brochure (2) Only b .
(3) Catalogue (3) Both a and b
(4) Pamphlet (4) Both b and c
(5) Prospectus
(5) None of these

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Q.20. Which of the following statements is/are correct (c) RBI is empowered to fix CRR between 5 and 20
regarding the Insurance Regulatory and Development percent
Authority? Select the correct answer using the codes given
(LIC Apprentice Development Officer (ADO) 2013) below:
(a) Its aims at the protection of the interests of the (1) Only a
policy holders. (2) Only b
(b) As laid down in section 14 of IRDA Act, 1999 it (3) Both a and b
has powers of undertaking inspection of, conducting (4) Both b and c
enquiries and investigations into all the companies (5) None of these
of insurance business.
Q.23. Select the Correct Statement.-
(c) It is an authority of State Government
(1) The Policy Document has to be signed by a
Select the correct answer using the codes given Competent Authority, but need not be compulsorily
below: stamped according to Indian Stamp Act.
(1) Only a (2) The Policy Document has to be signed by
(2) Only b a Competent Authority, and should be stamped
(3) Both a and b according to Indian Stamp Act.
(4) Both b and c (3) The Policy Document need not be signed by
a Competent Authority, but should be stamped
(5) None of these according to Indian Stamp Act.
Q.21. What does ‘subscription policy’ imply in the field (4) The Policy Document neither needs to be
of insurance? signed by a Competent Authority, nor it needs to be
(LIC Apprentice Development Officer (ADO) 2013) compulsorily stamped according to Indian Stamp
(a) It is a policy shared by two or more insurers. Act.
(b) In a subscription policy, each insurer assumes a (5) None of these
portion of the risk. Q.24. What is the full form of BASIC?
(c) A maxiumum of three companies can take part (LIC AAO (Assistant Administrative Officer) 2016)
in it Select the correct answer using the codes given (1) A Balanced Assembly System Integrated Code
below: (2) B Basic All System Internal Code
(1) Only a (3) Beginners Assembly Syntax Instruction Code
(2) Only b (4) Beginners All purpose Symbolic Instruction Code
(3) Both a and b (5) Basic All purpose Syntax Integrated Code
(4) Both b and c Q.25. Which firm has India Post Payments Bank (IPPB)
(5) None of these partnered with for insurance?
Q.22. Which of the following statements on Cash reserve (IBPS Clerk Mains 2022_25TH JAN)
Ratio (CRR) is/are correct? (1) HDFC Life Insurance Company Limited
(LIC Apprentice Development Officer (ADO) 2013) (2) Birla Sun Life Insurance Company Limited
(a) It is the amount of funds that the banks have to (3) ICICI Prudential Life Insurance Company
keep with the Reserve Bank of India. Limited
(b) It is calculated on the basis of demand and term (4) Bajaj Allianz Life Insurance Company Limited
liabilities of banks. (5) SBI Life Insurance Company Limited

ANSWER KEY
1.(2) 2.(2) 3.(2) 4.(4) 5.(2) 6.(1) 7.(2) 8.(1) 9.(1) 10.(1)
11.(2) 12.(1) 13.(5) 14.(4) 15.(1) 16.(1) 17.(3) 18.(2) 19.(3) 20.(3)
21.(3) 22.(3) 23.(2) 24.(4) 25.(4)

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MISCELLANEOUS

{{ LIST OF ABBREVIATIONS
{{ INTERNATIONAL ORGANIZATIONS
{{ INTERNATIONAL ORGANIZATION AND MEMBER COUNTRY
{{ LIST OF SPORTS TERMS
{{ LIST OF CUPS AND TROPHIES
{{ BOOKS AND AUTHORS
{{ STATE/UNION TERRITORY CAPITAL
{{ MISSILE
{{ CENSUS 2011
{{ MAJOR CLASSICAL DANCE FORMS OF INDIA
{{ IMPORTANT FINANCIAL ORGANIZATIONS IN INDIA & THEIR
HEADQUARTERS
{{ PRACTICE PAPER QUESTIONS
{{ PREVIOUS PAPER QUESTIONS

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CHAPTER

13 MISCELLANEOUS

List Of Abbreviations DBS Department of Banking Supervision,

AD Authorized Dealer RBI
ADB Asian Development Bank DCCB District Central Cooperative Bank
ADR American Depository Receipt DCM Department of Currency Management,
RBI
AFS Available For Sale
DD Demand Draft
ASSOCHAM Associated Chambers of Commerce and
Industry of India DEIO Department of External Investments and
Operations
ATM Asynchronous Transfer Mode
DICGC Deposit Insurance and Credit Guarantee
ATM Automated Teller Machine Corporation of India
BIS Bank for International Settlements DRI Differential Rate of Interest Scheme
BOI Bank of India DVP Delivery versus Payment
BoP Balance of Payments ECB External Commercial Borrowing
BCBS Basel Committee on Banking Supervision ECB European Central Bank
CAD Capital Account Deficit ECGC Export Credit and Guarantee Corporation
CAG Comptroller and Auditor General of ECS Electronic Clearing Scheme
India
EEFC Exchange Earners Foreign Currency
CBS Consolidated Banking Statistics, Core
Banking Solution EPF Employees Provident Fund
CC Cash Credit EXIM Export- Import Bank of India
CD Certificate of Deposit FCCB Foreign Currency Convertible Bond
CD Ratio Credit Deposit Ratio FCNR(B) Foreign Currency Non-resident (Banks)
CII Confederation of Indian Industry FCNRA Foreign Currency Non-resident Account
CO Capital Outlay FCNRD Foreign Currency Non-Repatriable
Deposit
CP Commercial Paper
FDI Foreign Direct Investment
CPI Consumer Price Index
FEMA Foreign Exchange Management Act
CPI-IW Consumer Price Index for Industrial
Workers FICCI Federation of Indian Chambers of
Commerce and Industry
CR Capital Receipts
FII Foreign Institutional Investor
CRAR Capital to Risk (Weighted) Asset Ratio
FIMMDA Fixed Income Money Market and
CRR Cash Reserve Ratio Derivatives Association of India
CSIR Council of Scientific and Industrial FISIM Financial Intermediation Services
Research Indirectly Measured
CSO Central Statistics Office FPI Foreign Portfolio Investment
CVC Central Vigilance Commission FRBM Fiscal Responsibility and Budget
DAP Development Action Plan Management Act, 2003
DBOD Department of Banking Operations and FRN Floating Rate Note
Development GDP Gross Domestic Product

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GDR Global Depository Receipt NSC National Statistical Commission
GIC General Insurance Corporation NSC National Saving Certificate
G-Sec Government Securities NSSF National Social Scurity Fund
HDFC Housing Development Finance Corporation OD Over Draft
HFT Held For Trading OECD Organization for Economic Cooperation
HTM Held to Maturity and Development
HUDCO Housing & Urban Development Corporation OECO Organization for Economic-operation
IBRD International Bank for Reconstruction OLTAS Online Tax Accounting System
and Development OMO Open Market Operations
IBS International Banking Statistics PACS Primary Agriculture Credit Societies
IDBI Industrial Development Bank of India PD Primary Deficit
ICICI Industrial Credit and Investment Corporation PDAI Primary Dealers Association of India
of India PDs Primary Dealers
IFC International Finance Corporation PDS Public Distribution System
IIBI Industrial Investment Bank of India PIO Persons of Indian Origin
IIP Index of Industrial Production PNB Punjab National bank
IIP/InIP International Investment Position PSE Public Sector Enterprise
IMF International Monetary Fund PUC Paid Up Capital
IRBI Industrial Reconstruction Bank of India PUC Pro University Courses
ISO International Organization for Standardization RBI Reserve Bank of India
KVIC Khadi & Village Industries Commission REER Real Effective Exchange Rate
LAF Liquidity Adjustment Facility RIDF Rural Infrastructure Development Fund
LAMPS Large-sized Adivasi Multipurpose RNBC Residuary Non-Banking Company
Societies
RWA Risk Weighted Asset
LERMS Liberalised Exchange Rate Management
SCARDB State Cooperative Agriculture and Rural
System
Development Bank
LIC Life Insurance Corporation of India
SCB State Cooperative Bank
MIGA Multilateral Investment Guarantee Agency
SCB Scheduled Commercial Bank
MSS Market Stabilisation Scheme
SCB Standard Chartered Bank
NABARD National Bank for Agriculture and Rural
SDR Special Drawing Rights
Development
SEBI Securities and Exchange Board of India
NASSCOM National Association of Software and
Services Companies SGL Subsidiary General Ledger
NBFC Non Banking Financial Company SGSY Swarnajayanti Gram Swarojgar Yojana
NEER Nominal Effective Exchange Rate SHGs Self-Help Groups
NGO Non-Governmental Organization SIDBI Small Industries Development Bank of
India
NHB National Housing Bank
SJSRY Swarna Jayanti Shahari Rojgar Yojana
NPV Net Present Value
SSI Small-Scale Industries
NR(E)RA Non-Resident (External) Rupee Account
UCB Urban Cooperative Bank
NR(NR)RA Non-Resident (Non-Repatriable) Rupee
Account UTI Unit Trust of India
NRE Non-Resident External VC Venture Capital
NRG Non-Resident Government WPI Wholesale Price Index
NRI Non-Resident Indian YTM Yield to Maturity

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International Organizations
International Organizations Abbreviation Year of Headquarter
Establishment
United Nations Organisation UNO 1945 New York
International Monetary Fund IMF 1945 Washington DC
International Finance Corporation IFC 1956 Washington DC
International Development Association IDA 1960 Washington DC
World Trade Organisation WTO 1995 Geneva
United Nationas Educational Scientific and Cultural UNESCO 1945 Paris
Organisation
International; Labour Organisation ILO/OIT 1919 Geneva
Food and Agriculture Organisation FAO 1945 Rome
World Health Organisation WHO 1948 Geneva
International Civil Aviation Organisation ICAO 1944 Montreal
International Atomic Energy Agency IAEA 1957 Vienna
International Fund for Agricultural Development IFAD 1977 Rome
Universal Postal Union UPU 1874 Bern
United Nations Children’s Fund UNICEF 1946 New York
United Nations Industrial Development Organisation UNIDO 1966 Vienna
United Nations Population Fund UNFPA 1969 New York
United Nations Development Programme UNDP 1966 New York
United Nations High Commissioner for Refugees UNHCR 1950 Geneva
International Telecommunication Union ITU 1865 Geneva
World Meteorological Organisation WMO 1950 Geneva
World Intellectual Property organisation WIPO 1967 Geneva
World Tourism Organisation UNWTO/OMT 1964 Madrid
Organisation for Prohibition of Chemical Weapons OPCW 1997 The Hage
International Trade Center ITC 1964 Geneva
World Food Program WFP 1961 Rome
United Nations Office on Drug and Crime ODCCP 1997 Vienna
United Nations Institute for Training and Research UNITAR 1963 Geneva
United Nations University UNU 1973 Tokyo
United Nations Human Settlement Programme UNCHS 1975 Nairobi
United Nations Development Fund for Women UNIFEM 1976 New York

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International organization and member country
Organization Number Member country
of country
ASEAN Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines,
10+1
Singapore, Thailand, Vietnam. Papua New Guinea(observer)
NAFTA 3 Canada, Mexico, and the United States
APEC United States, Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong,
China, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea,
21
Peru, Philippines, Russia, Singapore, Republic of Korea, Chinese Taipei, Thailand
and Vietnam.
EUROPEAN UNION Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,
27
Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania,
Slovakia, Slovenia, Spain, Sweden.
MERCOSUR Argentina, Brazil, Paraguay, Uruguay and Venezuela. (Members)
5+6+2 Bolivia, Chile, Peru, Colombia, Ecuador, Surinam (Associates) New Zealand,
Mexico (observer)
OPEC Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia,
14
United Arab Emirates , Venezuela and Indonesia.
SAARC Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri
8
Lanka.
G-15 Algeria ,Argentina ,Brazil, Chile, Egypt, India Indonesia, Islamic Republic of
17 Iran, Jamaica, Kenya, Malaysia, Mexico, Nigeria, Senegal, Sri Lanka Bolivarian
Republic of Venezuela, Zimbabwe
OECD Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan,
34 Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland,
Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the
United Kingdom, and the United States.
ASEM European Countries 29 + ASEAN countries 17 + Japan, South Korea, Australia,
53
New Zealand, Rusia, Mangolia, Kazakhstan.
ACU (Asian Clearing Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka
9
Union) and Iran
UNO 193 192 – Montenegro, 193- South Sudan
SAFTA 7 India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives
WTO 164 163-Liberia, 164- Afghanistan
BIMSTEC 7 India, Bangladesh, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal.
G-7 7 The United States, United Kingdom, France, Canada, Italy, Japan and Germany.
G-20 Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia,
20+EU Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa,
Turkey, United Kingdom, United States, European Union.
SHANGHAI 8 China, India, Pakistan, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan.
BENELUX 3 Belgium, the Netherlands, and Luxembourg.
European Economic 28 All member countries of European Union Community

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IBSA 3 India, Brazil, and South Africa
Commonwealth Country which has The Queen as Sovereign, while ‘monarchy’ Indicates a
56
Commonwealth country
NATO Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, Neatherlands,
Norway, Portugal, United Kingdom, United States, Greece, Turkey, Germany,
30
Spain, Czech Republic, Hungary, Poland, Bulgaria, Estonia, Latvia, Lithuania,
Romania, Slovakia, Slovenia, Albania, Noth Macedonia, Montenegro and Croatia.
ARAB LEAGUE Algeria, Bahrain, the Comoros Islands, Djibouti, Egypt, Iraq, Jordan, Kuwait,
22 Lebanon, Libya, Morocco, Mauritania, Oman, Palestine, Qatar, Saudi Arabia,
Somalia, Sudan, Syria, Tunisia, the United Arab Emirates, and Yemen.
ARAB PETROLEUM Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria, United
11
Arab Emirates and Tunisia.

List of Sports Terms

## Athletics—Relay, Photo finish, Track, Lane, Hurdles, Shot-put, Discuss Throw, Hammer Throw, Triple Jump, High
Jump, Cross Country, etc.
## Badminton—Shuttle cock, Service court, Fore hand, Back Hand, Smash, Hit, Drop, Net, Love, Double fault, etc.
## Baseball—Pinching, Home run, Base runner, Throw, Perfect game, Strike, Put out, etc.
## Basketball—Free throw, Technical foul, Common foul, Under head, Over head, etc.
## Bridge—Master point, Perfect deals, Gland slam, Dummy, Trump, etc.
## Billiards & Snooker—Pull, Cue, Hit, Object ball, Break shot, Scoring, Cushion billiards, etc.
## Boxing—Knock out, Round, Ring Stoppage, Punch, Upper-cut, Kidney punch, Timing, Foot work, etc.
## Chess—E. L. O. rating, international master, Grand master, Gambit, Kings Indian Defence, etc.
## Cycling—Sprint, Time trial, Point race, Trackrace, etc.
## Cricket—Toss, Run, Wicket, Pitch, Stump, Bails, Crease, Pavalion, Gloves, Wicket Keeper, Over, Maiden over,
Followon, Rubber, Ashes, Catch, Bowled, Stump out, Run out, L. B. W; Hit Wicket, Not out, No ball, Wide ball, Dead
ball, Over Throw, Bye, Leg by, Cover drive, Late cut, Hook, Glance, Stroke, Shot, Pull, Sixer, Followthrough, Turn,
Googley, Spin, Yorker, Bouncer, Hattrick, Round the wicket, Over the wicket, Seamer, Boundry line, Slip, Square leg,
Runner, Cover, Gully, Long on, Silly point, Midwicket, Mid on, Forward short leg, Deep/mid-wicket, etc.
## Horseriding—Three day Event, Show jumping, Dresses, Faults, etc.
## Football—Goal, Kick, Head, Penalty kick, Dribble, Off side, Hattrick, Foul, Left out, Right out, Stopper, Defender,
Move, Sideback, Pass, Baseline, Rebound, Comer bick, etc.
## Gymnastics—Parellel bar, Horizontal bar, Floor exercise, Uneven bar, Push up, Sit up. etc.
## Judo—Cocoa, Blue, white, Green belt, etc.
## Hockey—Bully Sudden death, Short corner, Hattrick, Goal, Penalty Corner, Penalty stroke, Pushin, Cut, Dribble, Scoop,
Centre forward, Half back, Astroturf, Left in, Left out, Off-side, Tie breaker, Carried, Stick, Striking circle, Under cutting, etc.
## Swimming—Freestyle, Breast stroke, Back stroke, Butterfly, Lane, Pool, Crawl, etc.
## Polo—Polo-Bunker, Chukker, Mallet, etc.
## Tennis—Service, Grandslam, Advantage, Deuce, Game Point, Break point, Smash, Shot, Grass Court, Break, Drop
shot, Netplay, Baseline, etc.
## Shooting—Rapidfire Pistol, Standard rifle, Air rifle, Free pistol, Range, Bull’s eye, etc.
## Table Tennis—Volley, Late service, Half volley, Back hand, Drive spin, Chop, etc.
## Weight Lifting—Snatch, Jerk, etc.
## Volleyball—Deuce, Spikers, Booster, Smash, Sidearm, Panetration, etc.
## Wrestling—Free style, Hal Nelson, Point, Heave, etc.

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List of Cups And Trophies

Sport Cups and Trophies
Hockey Aga khan Cup, Begam Rasul Torphy (woman’s), Maharaja Ranjit Singh Gold Cup, Lady Ratan
Tata Trophy (woman’s), Gurunanak Championship (woman’s) Dhyanchand Trophy, Nehru Trophy,
Sindhia Gold cup, Murugappa Gold Cup, Wellington Cup etc,
Football Begum Hazarat Mahal Cup, BILT Cup, Bordoloi Trophy Colombo Cup, Confederation cup, DCM
Trophy, Durand Cup, Rovers Cup, B.C. Raj Trophy (National Championship), FIFA world Cup, Jules
Rimet Trophy, Kalinga Cup, Santosh Trophy (National Championship), IFA Shield, Scissor Cup,
Subroto Mukherjee Cup, Sir Ashutosh Mukherjee Trophy, Todd Memorial Trophy, Vittal Trophy, etc,
Cricket Anthony D, Mellow Trophy, Ashes, Asia Cup, Benson and Hedges Cup, Bose Trophy, Champions
Trophy, Charminar Challenger Cup, C.K Naidu Trophy, Cooch – Behar Trophy, Deodhar Trophy,
Duldeep Trophy, Gavaskar –Border Trophy, G.D. Birla Trophy, Gillette Cup, Ghulam Ahmad
Trophy, Hamkumat Rai Trophy, ICC World Cup, Irani Trophy Interface Cup, Jawaharlal Nehru Cup,
Lomboard World Challenge Cup, Mc Dowells Challenge Cup, Merchant Cup, Moin –ud –Dowla
Cup, Net West Trophy, Prudential Cup(World Cup), Rani Jhansi Trophy, Ranji Trophy, Rohinton
Barcia Trophy, Rothmans Cup, Sahara Cup, Sharjah Cup, Sheesh Mahal Trophy, Sheffield Shield,
Singer Cup, Sir Frank Worrel Trophy, Texaco Cup, Titan Cup, Vijay Hazare Trophy, Vijay Merchant
Trophy, Vizzy Trophy, Wisden Trophy, Wills Trophy, World Series Cup.
Table Tennis Berna Bellack cup( Men), Cobillion Cup (women), Jai Laxmi cup(women),Rajkumari Challenge
Cup (women junior), Ramanuja Trophy (men Junior), Travancore Cup (women), Swathling Cup
(men) etc.
Badminton Aggrawal Cup, Amrit Diwan Cup, Asia Cup, Australasia Cup, Chaddha Cup, European Cup, Harilela
Cup, Ibrahim Rahimatillah Challenger Cup, Konica Cup, Sophia Cup, Kitiakara Cup, Thomas Cup
Tunku Abdulrahman Cup, Uber Cup, Yonex Cup etc.
Basketball Basalat Jha Trophy, B.C. Gupta Trophy, Federation Cup, S.M. Arjun Raja Trophy, Todd memorial
Trophy, William jones Cup, Bangalore Bules Challenge Cup, Nehru Cup, Federation Cup etc.
Bridge Basalat Jha Trophy, Holkar Trophy, Ruia Gold Cup, Singhania Trophy. etc
Polo Ezra Cup, Gold Cup, King’s Cup, Prithi Pal Singh Cup, Radha Mohan Cup, Winchester Cup etc.
Athletics Charminar Trophy, Federation Cup etc.
Air Racing Jawaharlal Challenge Trophy, King’s Cup, Schneider Cup etc.
Billiards Arthur Walker Trophy, Thomas Cup etc.
Boxing Aspy Adjahia Trophy, Federations Cup,Val Baker Trophy etc.
Golf Canada Cup, Eisenhower Trophy, Muthiah Gold Cup, Nomura Trophy, President ‘s Trophy, Prince
of wales Cup, Ryder Cup, Solheim Cup, Topolino Trophy, Walker Cup, World Cup etc.
Chess Naidu Trophy, Khaitan Torphy , Lin Are City Trophy, World Cup etc.
Horse Racing Beresford Cup, Blue Riband Cup, Derby, Grand National Cup etc.
Netball Anantrao Pawar Trophy etc.
Rugby Football Bledisloe Cup, Calcutta Cup, Webb Ellis Trophy, etc.
Shooting North Wales Cup, Welsh Grand Prix etc.
Volleyball Centennial Cup, Federation Cup, and Indira Pradhan Trophy, Shivanthi Gold Cup, etc.
Yatch Racing America Cup etc.

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State/Union Territory capital
S.No. State Capital

1 Andhra Pradesh Hyderabad

2 Arunachal Pradesh Itanagar

3 Assam Dispur

4 Bihar Patna

5 Goa Panaji

6 Chhattisgarh Raipur

7 Gujarat Gandhinagar

8 Haryana Chandigarh

9 Himachal Pradesh Shimla

10 Jharkhand Ranchi

11 Karnataka Bengaluru

12 Kerala Thiruvananthapuram

13 Madhya Pradesh Bhopal

14 Maharashtra Mumbai

15 Manipur Imphal

16 Meghalaya Shillong

17 Mizoram Aizawl

18 Nagaland Kohima

19 Odisha Bhubaneswar

20 Punjab Chandigarh

21 Rajasthan Jaipur

22 Sikkim Gangtok

23 Tamil Nadu Chennai

24 Telangana Hyderabad

25 Tripura Agartala

26 Uttar Pradesh Lucknow

27 Uttarakhand Dehradun

28 West Bengal Kolkata

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Union Territory Capital
1 Andaman and Nicobar Islands Port Blair

2 Chandigarh Chandigarh

3 Dadra and Nagar Haveli & Daman and Diu Daman

4 Ladakh Leh

5 Delhi New Delhi

6 Lakshadweep Kavaratti

7 Puducherry Puducherry

8 Jammu and Kashmir Jammu (Winter)/Srinagar (Summer)

Missile
Missile Range
Agni I Surface to Surface 1250 Km
Agni II Surface to Surface 3000 Km
Agni III Surface to Surface 5000 Km
Agni IV Surface to Surface 4000 Km
Agni V Surface to Surface 8000 Km
Agni VI Surface to Surface 12000 Km
Akash Surface to air 30 Km
Astra Air to Air 80 Km
Barak 1 Ship to air, Ship to surface 12 Km
Barak 8 Ship to air, Ship to surface 90 Km
Brahmos Land, Naval, Air 300 Km
Dhanush Sea to Sea/Surface 350 Km
K4 Under water to surface 3500 Km
Nag Surface to surface, Air to surface 4 Km

Nirbhay Land, Naval, Air 1000 Km

Prahaar Surface to surface 150 Km
Prithvi I Surface to Surface 150 Km
Prithvi II Surface to Surface 350 Km
Prithvi III Surface to Surface 600 Km
Sagarika (K15) Under water to surface 700 Km
Shaurya Surface to Surface 700-1900 Km
Trishul Surface to air 9 Km

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Census 2011
CENSUS 2011 is the 15 in an unbroken series since 1872
th

It is the 7th Census of Independent India

Tag line of Census 2011 – Our Census Our Future

India’s Population is Approx. 17.5 % of World Population

India is the Second Most Populous Country in the World

Every 6th Person in the World is an Indian.

India has more than 50% of its population below the age of 25 & More than 65% below the age of 35.
Facts Related To Districts
Thane (Maharashtra) is the most populated district of India with 1.10 Crore Population.

Dibang Valley (Arunachal Pradesh) is the least populated district with 7,950 Population.

Mahe district (Puducherry) has highest Sex Ratio of 1176 females per 1000 males.

Daman district has lowest sex ratio of 553 females per 1000 males.

Serchhipp district (Mizoram) has highest literacy rate of 98.76%.

Alirajpur (Madhya Pradesh) is the least literate district with 37.20% only.

North East Delhi has the highest density with 37,346 person per Sq. Km.

Dibang Valley (Arunachal Pradesh) has the least density of 1 person per Sq. Km.
Facts Related To Cities
Mumbai is the most populated city in India with 1.24 Crore Population.

Kapurthala (Punjab) is the lease populated city with 99,000 Population.

Kozhikode (Kerala) has the highest Sex Ratio of 1093 female per 1000 males.

Bhiwandi (Maharashtra) has lowest Sex Ratio of 709 female per 1000 males.

Aizawl (Mizoram) has highest literacy rate city with 98.40%.

Sambhal (Uttar Pradesh) is the least literacy city with 48.20%.

Maharashtra is having 18 cities with more than 5 lakh population

POPULATION 2011 PERCENTAGE DECADAL CHANGE

TOTAL RURAL URBAN TOTAL RURAL URBAN

83, 34, 63,448 37, 71, 06,125

1,21,05,69,573 17.7% 12.3% 31.8%
(69%) (31%)

TOTAL MALE FEMALE

1,21,05,69,573 62,31,21,843 58,74,47,730

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India Urban Population (%) Rural Population (%)

31.20% 68.80%

Highest Population – State Uttar Pradesh (19.98 Crore)

Lowest Population – State Sikkim (6.10 Lakhs)

Highest Population – UT New Delhi (1.67 Crore)

Lowest Population – UT Lakshadweep (64 Thousand)

Highest Urban Population- State Maharashtra (5.08 Crore)

Lowest Urban Population - State Sikkim (1.53 Lakh)

Highest Rural Population – State Uttar Pradesh ( 15.53 Crore)

Lowest Rural Population – State Sikkim (4.5 Lakhs)

Density Of Population [Per Sq. Km]

Density Of Population – India 382

Bihar (1106)
Highest Density – State

Lowest Density – State Arunachal Pradesh (17)

Highest Density – UT New Delhi (11,320)

A & N Islands (46)
Lowest Density – UT
Sex Ratio [No. Of Female Per 1000 Males]
Sex Ratio – India 943

Highest Sex Ratio – State Kerala (1084)

Lowest Sex Ratio – State Haryana (879)

Highest Sex Ratio – UT Puducherry (1037)

Daman & Diu (618)
Lowest Sex Ratio – UT

Child Population (0-6 Years)

16.44 Crore (15.9% of Total Population)
Child Population (0-6 Years) – India
Uttar Pradesh (3.07 Crore)
Highest Child Population – State

Lowest Child Population – State Sikkim (64 Thousand)

Highest Child Population – UT Delhi (20 Lakhs)

Lakshadweep (7 Thousand)
Lowest Child Population – UT

Child Sex Ratio - India 919

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Scheduled Caste Population
INDIA SC POPULATION DECADAL CHANGE % OF SC

20,13,78,086 20.80% 16.60%

Highest SC Population – State Uttar Pradesh (4.13 Crore)

Lowest SC Population – State Mizoram (1280)

SCHEDULED TRIBE POPULATION

DECADAL
INDIA ST POPULATION % OF ST
CHANGE
10,42,81,034 23.70% 8.60%

Highest ST Population – State Madhya Pradesh (1.53 Crore)

Lowest ST Population – State Goa (1.5 Lakhs)

Literates & Literacy Rate (Age 7 Years & Above)

LITERACY RATE %

INDIA TOTAL LITERATES TOTAL RURAL URBAN

76,34,98,517 74.04% 68.90% 85.00%

Literacy Rate %
INDIA TOTAL MALE FEMALE
74.04 82.10 65.50
Kerala (94%)
Highest Literacy Rate – State
Bihar (63.80%)
Lowest Literacy Rate –State

Highest Literacy Rate – UT Lakshadweep (92%)

Lowest Literacy Rate – UT D & N Haveli (78%)

Religious Demographics
RELIGION % OF TOTAL POPULATION

Hindus 78.35%

Muslims 14.20%
Christians 2.30%
Sikhs 1.90%

Buddhists 0.80%
Jains 0.40%

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Linguistic Demographics

LANGUAGE % OF TOTAL POPULATION

Hindi 41.03%

Bengali 8.11%

Telugu 7.19%

Marathi 6.99%
Tamil 5.91%

Number of States/UT 35

Number of Districts 640

Number of Statutory Towns 4041

Number of Villages 6,40,930

Major Classical Dance Forms of India

S.NO. CLASSICAL DANCE FORM STATE OF ORIGIN

1 Bharatanatyam Tamil Nadu
2 Chhau Odisha, West Bengal, Jharkhand
3 Gaudiya Nritya West Bengal
4 Kathak Uttar Pradesh [North India]
5 Kathakali Kerala
6 Kuchipudi Andhra Pradesh
7 Manipuri Manipur
8 Mohiniyattam Kerala
9 Odissi Odisha
10 Sattriya Assam
11 Ghoomar Rajasthan
12 Thang Ta Manipur

Major Folk Dance Forms Of India

S.NO. FOLK DANCE FORM STATE OF ORIGIN

1 Bhangra Punjab

2 Charkula Uttar Pradesh

3 Dhandiya Raas Gujarat

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4 Garba Gujarat

5 Bihu Assam

6 Giddha Punjab

7 Thirayattam Kerala

8 Tutsa Naga Arunachal Pradesh

9 Yakshagana Karnataka

10 Jhumar Punjab

11 Rasiya Uttar Pradesh

12 Gombhira West Bengal

13 Raibenshe West Bengal

14 Dhali Tamil Nadu

15 Kummi Kerala

16 Kikkli Punjab

17 Cheraw Mizoram

18 Bagurumba Asom

19 Panthi Chhattisgarh

20 Dhimsa Odisha

List Of Famous Classical Dancers

S.NO. NAME OF THE DANCER DANCE FORM

1 Mallika Sarabhai Kuchipudi & Bharatanatyam

2 Pt. Birju Maharaj Kathak

3 Rukmini Devi Arundale Bharatanatyam

4 Shovana Narayan Kathak

5 Sonal Mansingh Bharatanatyam, Kuchipudi & Chhau

6 Yamini Krishnamurthy Kuchipudi & Bharatanatyam

7 Raja Reddy & Radha Reddy Kuchipudi

8 Shambhu Maharaj Kathak

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9 Sitara Devi Kathak

10 Kalamandalam Ramankutty Nair Kathakali

11 Kalamandalam Gopi Kathakali

12 Madavoor Vasudevan Nair Kathakali

13 Kelucharan Mahapatra Odissi

14 T Chinnammu Amma Mohiniyattam

15 Kalamandalam Sugandhi Mohiniyattam

16 Indira P Bora Sattriya

17 Maniram Datta Moktar Sattriya

FOREIGN DIRECT INVESTMENT

Foreign Direct Investment Is Prohibited In Following Sectors
Lottery Business Gambling and Betting

Chit funds Nidhi company

Trading in Transferable Development Rights Real Estate Business or Construction of Farm Houses

Manufacturing of cigars, of tobacco or of Activities/sectors not open to private sector investment e.g. Atomic
tobacco substitutes energy, Railway operations

Sector FDI Limit Entry Route

Agriculture & Animal Husbandry
a) Floriculture, Horticulture, and Cultivation
of Vegetables & Mushrooms under controlled
conditions
b) Development and Production of seeds and 100% Automatic
planting material
c)Animal Husbandry (including breeding of dogs),
Pisciculture, Aquaculture, Apiculture.
d) Services related to agro and allied sectors
Plantation Sector
(i) Tea sector including tea plantations
(ii) Coffee plantations
(iii) Rubber plantations 100% Automatic
(iv) Cardamom plantations
(v) Palm oil tree plantations
(vi) Olive oil tree plantations

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Mining and Exploration of metal and non-metal ores 100% Automatic

Coal & Lignite 100% Automatic
Mining and mineral separation of titanium bearing minerals 100% Automatic
and ores, its value addition and integrated activities
Exploration activities of oil and natural gas fields, infrastructure
related to marketing of petroleum products and natural gas, 100% Automatic
marketing of natural gas and petroleum products, petroleum
product pipelines, natural gas/pipelines
Petroleum refining by the Public Sector Undertakings (PSU) 49% Automatic
Defence 100% Automatic up to 49% Government
route beyond 49% wherever it is
likely to result in access to modern
technology or for other reasons to
be recorded
Teleports 100% Automatic
Direct to Home (DTH)
Cable Networks
Mobile TV
Headend-in-the Sky Broadcasting Service(HITS)
Cable Networks
(i) Terrestrial Broadcasting FM(FM Radio) 49% Government
(ii) Up-linking of ‘News & Current Affairs’ TV
Channels
Up-linking of Non-‘News & Current Affairs’ TV 100% Automatic
Channels/ Down-linking of TV Channels
(i) Publishing of newspaper and periodicals dealing 26% Government
with news and current affairs
(ii) Publication of Indian editions of foreign
magazines dealing with news and current affairs
(i) Publishing/printing of scientific and technical 100% Government
magazines/specialty journals/ periodicals
(ii) Publication of facsimile edition of foreign
newspapers
Civil Aviation 100% Automatic
Airports
(a) Greenfield projects
(b) Existing projects
Air Transport Services 100% Automatic up to 49% (Automatic
(i) Scheduled Air Transport Service/ up to 100% for

Domestic Scheduled Passenger Airline NRIs) Government route beyond

49%
(ii) Regional Air Transport Service

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Air Transport Services 100% Automatic
(i) Non-Scheduled Air Transport Services
(ii) Helicopter services/seaplane services
requiring DGCA approval
Civil Aviation - Ground Handling Services 100% Automatic
Civil Aviation -Maintenance and Repair organizations
Construction Development: Townships, Housing, Built-up 100% Automatic
Infrastructure
Industrial Parks -new and existing 100% Automatic
Satellites- establishment and operation 100% Government
Private Security Agencies 74% Automatic up to 49% Government
route beyond 49% and up to 74%
Telecom Services 100% Automatic up
to 49%
Government
route beyond
49%
Trading Cash & Carry Wholesale Trading/Wholesale Trading 100% Automatic
(including sourcing from MSEs)
E-commerce activitie 100% Automatic
Single Brand product retail trading 100% Automatic up to 49%
Government route
beyond 49%
Multi Brand Retail Trading 51% Government
Duty Free Shops 100% Automatic
Railway Infrastructure 100% Automatic
Asset Reconstruction Companies 100% Automatic
Banking- Private Sector 74% Automatic up to 49% Government
route beyond 49% and up to 74%.
Banking- Public Sector 20% Government
Credit Information Companies 100% Automatic
Infrastructure Company in the Securities Market 49% Automatic
Insurance 49% Automatic
Pension Sector 49% Automatic
Power Exchanges 49% Automatic
White Label ATM Operations 100% Automatic
Pharmaceuticals - Greenfield 100% Automatic
Pharmaceuticals - Brownfield 100% Automatic up to 74%
Government route beyond 74%

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List Of Major Indian Cities On Rivers
S.NO. NAME OF THE CITY STATE NAME OF RIVER
1 Varanasi Uttar Pradesh Ganga
2 Kanpur Uttar Pradesh Ganga
3 Mirzapur Uttar Pradesh Ganga
4 Haridwar Uttarakhand Ganga
5 Patna Bihar Ganga
6 Bhagalpur Bihar Ganga
7 Hajipur Bihar Ganga
8 Agra Uttar Pradesh Yamuna
9 New Delhi Delhi Yamuna
10 Mathura Uttar Pradesh Yamuna
11 Nashik Maharashtra Godavari
12 Nanded Maharashtra Godavari
13 Rajahmundry Andhra Pradesh Godavari
14 Lucknow Uttar Pradesh Gomti
15 Dibrugarh Assam Brahmaputra
16 Guwahati Assam Brahmaputra
17 Vijayawada Andhra Pradesh Krishna
18 Sangli Maharashtra Krishna
19 Cuttack Odisha Mahanadi
20 Sambalpur Odisha Mahanadi
21 Kolkata West Bengal Hugli
22 Hyderabad Telangana Musi
23 Bengaluru Karnataka Vrishabhavathi
24 Pune Maharashtra Mula, Mutha
25 Ahmedabad Gujarat Sabarmati
26 Vadodara Gujarat Vishwamitri
27 Ayodhya Uttar Pradesh Saryu
28 Gorakhpur Uttar Pradesh Rapti
29 Ujjain Madhya Pradesh Shipra
30 Jabalpur Madhya Pradesh Narmada
31 Surat Gujarat Tapi
32 Erode Tamil Nadu Kaveri
33 Coimbatore Tamil Nadu Noyyal
34 Madurai Tamil Nadu Vaigai

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Important Financial Organizations In India & Their Headquarters
NAME OF THE ORGANIZATION ESTD. HEADQUARTERS
Reserve Bank of India RBI 1935 Mumbai

Securities & Exchange Board of India SEBI 1988 Mumbai

State Bank of India SBI 1955 Mumbai

Life Insurance Corporation of India LIC 1956 Mumbai

General Insurance Corporation of India (GIC Re) GIC Re 1972 Mumbai

National Bank for Agriculture & Rural Development NABARD 1982 Mumbai

Export Import Bank of India EXIM 1982 Mumbai

Export Credit Guarantee Corporation ECGC 1957 Mumbai

Deposit Insurance & Credit Guarantee Corporation DICGC 1978 Mumbai

The New India Assurance Company Limited NIACL 1919 Mumbai

National Payments Corporation of India NPCI 2008 Mumbai

Banking Codes & Standards Board of India BCSBI 2006 Mumbai

Credit Information Bureau of (India) Limited CIBIL 2000 Mumbai

Credit Rating Information Services of India Limited CRISIL 1987 Mumbai

Bombay Stock Exchange BSE 1875 Mumbai

National Stock Exchange NSE 1992 Mumbai

Metropolitan Stock Exchange (MCX Stock Exchange) MSE 2008 Mumbai

Multi Commodity Exchange MCX 2003 Mumbai

National Securities Depository Limited NSDL 1996 Mumbai

Central Depository Services Limited CDSL 1998 Mumbai

Asset Reconstruction Company (India) Limited ARCIL 2002 Mumbai

Indian Railway Finance Corporation IRFC 1987 Mumbai

Credit Analysis & Research Limited CARE 1993 Mumbai

SME Rating Agency of India SMERA 2005 Mumbai

Unit Trust of India UTI 1964 Mumbai

Industrial Development Bank of India IDBI 1964 Mumbai

Industrial Credit Investment Corporation of India ICICI 1955 Mumbai

Pension Fund Regulatory & Development Authority PFRDA 2003 New Delhi

National Housing Bank NHB 1988 New Delhi

Micro Units Development & Refinance Agency Bank MUDRA Bank 2015 New Delhi

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Agriculture Insurance Company AIC 2002 New Delhi

Employees Provident Fund Organization EPFO 1952 New Delhi

Employee State Insurance Corporation ESIC 1952 New Delhi

The Oriental Insurance Company Limited OICL 1947 New Delhi

Power Finance Corporation PFC 1986 New Delhi

Industrial Financial Corporation of India IFCI 1948 New Delhi

Investment Information & Credit Rating Agency ICRA 1991 New Delhi

Security Printing & Minting Corporation of India SPMCIL 2006 New Delhi

United India Insurance Company Limited UIIC 1938 Chennai

Infrastructure Development Finance Company IDFC 1997 Chennai

Insurance Regulatory & Development Authority of India IRDAI 2000 Hyderabad

National Insurance Company Limited NICL 1906 Kolkata

Small Industries Development Bank of India SIDBI 1990 Lucknow

Bharatiya Reserve Bank Note Mudran Pvt. Limited BRBNMPL 1995 Bengaluru

Public Sector Banks In India

Name Of The Bank Estd. Headquarters Tagline / Slogan

State Bank Group

The banker to every Indian

Pure banking, nothing else
State Bank of India 1955 Mumbai With you – all the way
A bank of the common man
The nation banks on us

Nationalised Banks
1ST PHASE

Bank of India 1906 Mumbai Relationship beyond Banking

Central Bank of India 1911 Mumbai “Central” to you since 1911

Union Bank of India 1919 Mumbai Good people to bank with

Bank of Maharashtra 1935 Pune Ek parivar, Ek bank

Canara Bank 1906 Bengaluru Together we can

Syndicate Bank 1925 Manipal Faithful & friendly

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Punjab National Bank 1894 New Delhi The name you can Bank upon!

Indian Overseas Bank 1937 Chennai Good people to grow with

Indian Bank 1907 Chennai Your own bank

Allahabad Bank 1865 Kolkata A tradition of trust

UCO Bank 1943 Kolkata Honours your trust

United Bank of India 1950 Kolkata The bank that begins with “U”

Bank of Baroda 1908 Vadodara India’s international bank

2Nd Phase
Corporation Bank 1906 Mangalore A premier public sector bank

Punjab & Sind Bank 1908 New Delhi Where service is a way of life

Andhra Bank 1923 Hyderabad Where India banks

Oriental Bank of Commerce 1943 New Delhi Where every individual is committed
* Dena Bank and Vijaya Bank has been merged in Bank of Baroda.
Private Sector Banks In India
Name of The Bank Estd. Headquarters Tagline / Slogan

Old Private Sector Banks

City Union Bank 1904 Kumbakonam Trust & excellence since 1904

Lakshmi Vilas Bank 1926 Chennai The changing face of prosperity

Karur Vysya Bank 1916 Karur Smart way to bank

Tamilnad Mercantile Bank 1921 Tuticorin Be a step ahead of life

Catholic Syrian Bank 1920 Trissur Support all the way

South Indian Bank 1929 Trissur Experience next generation banking

Dhanlakshmi Bank 1927 Trissur Tann. Mann. Dhan.

Federal Bank 1945 Kochi Your perfect banking partner

Karnataka Bank 1924 Mangalore Your family bank across India

Jammu & Kashmir Bank 1938 Srinagar Serving to empower

Nainital Bank 1922 Nainital -

RBL Bank Ltd 1943 Kolhapur Apno ka bank

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New Private Sector Banks

Axis Bank (UTI Bank) 1994 Mumbai Badhti ka nam zindagi
ICICI Bank 1994 Mumbai Hum hain naa! / Khayaal aapka
We understand your world /
HDFC Bank 1994 Mumbai
Bank aapki mutthi mein
Kotak Mahindra Bank 1985 Mumbai Let’s make money simple
IndusInd Bank 1994 Mumbai We make you feel richer
Yes Bank 2004 Mumbai Experience our expertise
DCB Bank 1930 Mumbai We value you
Bandhan Bank 2015 Kolkata Aapka bhala, Sabki bhalai
IDFC First Bank 2015 Mumbai The bank of now / Always You First
IDBI 1964 Mumbai Bank Aisa Dost Jaisa/Banking For All

Top Foreign Banks In India

Name Of The Foreign Bank Country Tagline

Citi Bank USA The citi never sleeps

BNP Paribas France The Bank for the changing world

HSBC Bank UK The world’s local bank

Standard Chartered Bank UK Your right partner

DBS Bank Singapore Living, breathing Asia

Barclays Bank UK Fluent in finance

Deutsche Bank Germany A passion to perform

Institutions Established By Financial Regulators

Name of The Institution Estd By. Location

National Institute of Bank Management NIBM RBI Pune

Institute for Development & Research in Banking Technology IDRBT RBI Hyderabad

Indira Gandhi Institute of Development Research IGIDR RBI Mumbai

Centre for Advanced Financial Research and Learning CAFRAL RBI Mumbai

National Institute of Securities Market NISM SEBI Mumbai

National Insurance Academy NIA IRDAI Pune

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STATE Festival
Andhra Pradesh Ugadi
Arunachal Pradesh Losar festival
Assam Bihu
Bihar Chhath Puja
Chattisgarh Maghi Purnima
Goa shigmo mel
Gujarat Navaratra (Dandiya Dance)
Haryana Gugga Naumi
Himachal Pradesh Gochi Festival
Jammu and Kashmir Bahu Mela
Jharkhand Karam Festival
Karnataka Mysore Dasara
Kerala Onam
Madhya Pradesh Lokrang festival
Maharashtra Ganesh Chaturthi
Manipur Yaoshang
Meghalaya Khasis
Mizoram Chapchar Kut
Nagaland Sekrenyi
Odisha Dola Yatra
Punjab Bandi Chhor Divas
Rajasthan Gangaur
Sikkim Losar
Tamil Nadu Pongal
Telangana Bathukamma
Tripura Kharchi Puja
Uttar Pradesh Ram Navmi
Uttarakhand Purna Kumbh Mela
West Bengal Durga Puja

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International Organizations
United Nations (UN): World Trade Organization (WTO):
The United Nations is an intergovernmental organization The World Trade Organization is an international organization
founded in 1945. It serves as a platform for international that deals with global rules of trade between nations.
cooperation and aims to promote peace, security, and Established in 1995, it has its headquarters in Geneva,
sustainable development worldwide. The UN has 193 Switzerland. The WTO aims to facilitate trade flows,
member states and operates through various specialized negotiate trade agreements, resolve trade disputes, and
agencies, programs, and funds. Its headquarters is in ensure fair and equitable treatment of member countries. It
New York City, USA. The UN’s core principles include provides a forum for member governments to negotiate and
maintaining international peace and security, fostering set rules on trade policies, tariffs, and other barriers to trade.
friendly relations among nations, promoting social progress, The WTO also promotes transparency in trade regulations,
and advocating for human rights. It addresses global provides technical assistance to developing countries, and
challenges such as poverty, climate change, armed conflicts, monitors global trade trends. It plays a vital role in fostering
and human trafficking. Key agencies under the UN include a predictable and stable international trading system that
UNICEF, UNESCO, World Health Organization (WHO), benefits all countries and supports economic growth.
World Bank, International Monetary Fund (IMF), and International Labour Organization (ILO):
International Labor Organization (ILO).
The International Labour Organization is a specialized agency
World Health Organization (WHO): of the United Nations established in 1919. Its headquarters is
The World Health Organization is a specialized agency of the located in Geneva, Switzerland. The ILO sets international
United Nations focused on global public health. Established labor standards, promotes decent work conditions, protects
in 1948, its headquarters is in Geneva, Switzerland. WHO’s workers’ rights, and addresses social and labor issues
primary goal is to promote health, prevent diseases, and globally. It brings together governments, employers, and
ensure equitable access to healthcare for all. It provides workers’ representatives to develop policies and programs
leadership in shaping health policies, setting global health that promote social justice and improve working conditions.
standards, coordinating responses to health emergencies, The ILO focuses on areas such as employment promotion,
and conducting research to address public health challenges. social protection, rights at work, social dialogue, and the
WHO works in collaboration with governments, international elimination of child labor and forced labor.
partners, and civil society to combat infectious diseases, United Nations Educational, Scientific and Cultural
promote maternal and child health, strengthen health systems, Organization (UNESCO):
and address non-communicable diseases.
UNESCO is a specialized agency of the United Nations
International Monetary Fund (IMF): founded in 1945. Its headquarters is situated in Paris,
The International Monetary Fund is an international financial France. The organization aims to promote international
institution established in 1944. Based in Washington, D.C., collaboration in the fields of education, science, culture,
the IMF aims to promote global monetary cooperation, secure and communication. UNESCO’s core objectives include
financial stability, facilitate international trade, promote high fostering peace, eradicating poverty, promoting sustainable
employment and sustainable economic growth, and reduce development, and intercultural dialogue through education,
poverty. It provides policy advice, financial assistance, and cultural heritage preservation, scientific research, and
technical expertise to member countries facing economic freedom of expression. UNESCO administers various
challenges. The IMF conducts economic surveillance, programs related to education, cultural diversity, the
monitors global financial developments, and assists countries preservation of world heritage sites, the promotion of media
in designing and implementing sound economic policies. Its development, and the advancement of scientific cooperation.
primary tools include financial assistance programs, capacity United Nations Children’s Fund (UNICEF):
development, and research and analysis on economic issues.
UNICEF is a United Nations agency established in 1946,
World Bank Group: headquartered in New York City, USA. Its primary focus
The World Bank Group is an international financial is to provide humanitarian and developmental assistance
institution that provides financial and technical assistance to to children worldwide. UNICEF works to promote child
developing countries for development projects. It consists of rights, survival, and development, with a particular emphasis
five institutions: the International Bank for Reconstruction on the most vulnerable and disadvantaged children. The
and Development (IBRD), the International Development organization supports programs in areas such as healthcare,
Association (IDA), the International Finance Corporation nutrition, education, water and sanitation, child protection,
(IFC), the Multilateral Investment Guarantee Agency and emergency response. UNICEF collaborates with
(MIGA), and the International Centre for Settlement of governments, civil society organizations, and other partners
Investment Disputes (ICSID). The World Bank Group to advocate for children’s rights and ensure their well-being.
supports projects in areas such as infrastructure, education, United Nations High Commissioner for Refugees
healthcare, agriculture, and governance, with the goal of (UNHCR):
reducing poverty and promoting sustainable development.
It provides loans, grants, and expertise to help countries The United Nations High Commissioner for Refugees is
implement projects and improve their economic and social a UN agency established in 1950. It is headquartered in
conditions. Geneva, Switzerland. UNHCR’s mandate is to protect and

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assist refugees and internally displaced persons worldwide. protection of intellectual property (IP) rights globally and
The agency works to provide shelter, healthcare, education, facilitates cooperation among member states in the field
and legal support to refugees, advocate for their rights, and of IP. The organization administers international treaties
seek durable solutions to displacement situations. UNHCR on patents, trademarks, copyrights, and other forms of
also plays a crucial role in coordinating responses to refugee intellectual property. WIPO provides services to protect IP,
crises, supporting host countries, and promoting international facilitates the resolution of IP disputes, promotes IP education
cooperation on refugee issues. and awareness, and supports the development of IP policies
Food and Agriculture Organization (FAO): and frameworks.
The Food and Agriculture Organization is a specialized International Maritime Organization (IMO):
agency of the United Nations founded in 1945. Its The International Maritime Organization is a specialized
headquarters is located in Rome, Italy. FAO’s mission is to agency of the United Nations established in 1948.
eliminate hunger, improve nutrition, enhance agricultural Headquartered in London, United Kingdom, IMO is
productivity, and promote sustainable agriculture. The responsible for promoting safe, secure, and environmentally
organization works to achieve food security for all, ensure sustainable shipping. It sets international standards and
access to nutritious food, support rural development, and regulations for maritime safety, security, and the prevention
promote sustainable management of natural resources. of marine pollution. IMO works to improve navigation,
FAO provides technical assistance, conducts research, and vessel design and construction, crew training, and the
facilitates policy dialogue to address food and agriculture- handling of hazardous substances. The organization also
related challenges globally. facilitates cooperation among member states to address
International Atomic Energy Agency (IAEA): emerging challenges in the maritime industry, such as piracy,
climate change, and marine biodiversity conservation.
The International Atomic Energy Agency is an international
organization established in 1957. Headquartered in Vienna, International Criminal Court (ICC):
Austria, the IAEA promotes the peaceful use of nuclear The International Criminal Court is an intergovernmental
energy, safeguards against nuclear proliferation, and fosters organization established by the Rome Statute in 2002.
nuclear safety and security worldwide. It assists member Headquartered in The Hague, Netherlands, the ICC is the
states in using nuclear science and technology for various first permanent international court with the jurisdiction
peaceful purposes, such as energy production, healthcare, to prosecute individuals for genocide, crimes against
agriculture, and environmental protection. The IAEA also humanity, war crimes, and the crime of aggression. The ICC
conducts inspections, verification, and monitoring activities investigates and prosecutes those responsible for the most
to ensure compliance with nuclear non-proliferation treaties serious international crimes when national courts are unable
and agreements. or unwilling to do so. It aims to promote accountability,
World Meteorological Organization (WMO): deterrence, and justice, contributing to the prevention of
future atrocities.
The World Meteorological Organization is a specialized
agency of the United Nations founded in 1950. Based in International Red Cross and Red Crescent Movement:
Geneva, Switzerland, it serves as the global authority on The International Red Cross and Red Crescent Movement
weather, climate, and water resources. The WMO coordinates is a humanitarian movement composed of the International
international cooperation in meteorology, climatology, Committee of the Red Cross (ICRC), the International
hydrology, and related fields. It promotes the exchange Federation of Red Cross and Red Crescent Societies (IFRC),
of weather and climate data, conducts research, provides and national Red Cross and Red Crescent Societies. The
technical guidance, and supports capacity building in movement provides humanitarian assistance, protection,
member countries to enhance weather forecasting, disaster and support to those affected by armed conflicts, natural
preparedness, and climate change adaptation. disasters, and other emergencies. It promotes the principles
International Civil Aviation Organization (ICAO): of humanity, impartiality, neutrality, independence, voluntary
service, unity, and universality. The Red Cross and Red
The International Civil Aviation Organization is a specialized Crescent Societies operate globally, working to alleviate
agency of the United Nations established in 1944. Its suffering, restore dignity, and save lives.
headquarters is located in Montreal, Canada. ICAO sets
international standards and regulations for aviation safety, Organization for Economic Cooperation and Development
security, efficiency, and environmental protection. The (OECD):
organization works to ensure the safe and orderly development The Organization for Economic Cooperation and
of international civil aviation, facilitates cooperation among Development is an intergovernmental organization founded
member states, and promotes the sustainable growth of the in 1961. Headquartered in Paris, France, the OECD consists
aviation industry. ICAO also provides assistance and training of 38 member countries. The organization promotes policies
to member countries to enhance their aviation infrastructure that improve economic growth, social well-being, and
and capabilities. environmental sustainability. The OECD conducts research,
World Intellectual Property Organization (WIPO): provides policy advice, and facilitates dialogue among
member countries on a wide range of economic, social, and
The World Intellectual Property Organization is a specialized governance issues. It focuses on areas such as economic
agency of the United Nations founded in 1967. It is development, trade, education, innovation, taxation,
headquartered in Geneva, Switzerland. WIPO promotes the employment, and environmental sustainability.

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North Atlantic Treaty Organization (NATO): environment and its ability to attract investment and foster
The North Atlantic Treaty Organization is an intergovernmental sustainable growth. The index was introduced in 2004 and has
military alliance established in 1949. NATO consists of 31 since become a key reference for policymakers, businesses,
member countries from North America and Europe. The and researchers worldwide.
organization aims to safeguard the freedom, security, Corruption Perceptions Index (CPI):
and territorial integrity of its members through collective The Corruption Perceptions Index, published by Transparency
defense and political cooperation. NATO promotes International, measures the perceived levels of public sector
stability, democratic values, and security cooperation corruption in different countries. It ranks countries on a scale
among member countries. It operates through various of 0 to 100, with higher scores indicating lower levels of
political and military structures, conducting joint defense corruption. The CPI plays a crucial role in highlighting the
activities, crisis management, and cooperation in areas such importance of transparency and accountability in governance.
as counterterrorism, cybersecurity, and defense capability It was first introduced in 1995 and has since become a widely
development. recognized and influential tool for assessing corruption risks
African Union (AU): and promoting anti-corruption efforts globally.
The African Union is a continental union of 55 African Ease of Doing Business Index:
countries established in 2002. Headquartered in Addis Ababa, The Ease of Doing Business Index, published by the World
Ethiopia, the AU aims to promote unity, cooperation, and Bank, measures the regulatory environment and ease of doing
development in Africa. It works to enhance political and business in different countries. It evaluates factors such as
economic integration, strengthen peace and security, promote starting a business, obtaining permits, accessing credit, and
democratic governance, and advance socio-economic enforcing contracts. The index provides valuable information
development on the continent. The AU operates through for entrepreneurs, investors, and policymakers to understand
various structures, including the Assembly of Heads of State the business climate and identify areas for reform. The Ease
and Government, the Executive Council, and specialized of Doing Business Index was introduced to the public in 2003
technical committees. It addresses regional challenges, and has since been revised and updated annually to reflect
supports conflict resolution efforts, and promotes African evolving business environments.
interests on the global stage.
Global Peace Index (GPI):
European Union (EU):
The Global Peace Index is produced by the Institute for
The European Union is a political and economic union of Economics and Peace (IEP) and measures the relative
27 European countries. It traces its origins to the European peacefulness of countries and regions. It considers various
Coal and Steel Community established in 1951. The EU indicators such as levels of violence, crime rates, political
aims to promote peace, stability, and prosperity through instability, and militarization. The GPI provides valuable
economic integration, the free movement of goods, services, insights into the societal, economic, and political factors that
capital, and people, and cooperation in various policy areas. contribute to peace. It was first introduced in 2007 and has
The EU operates through institutions such as the European since become a widely recognized and influential tool for
Commission, European Parliament, and Council of the assessing peace and promoting peacebuilding efforts globally.
European Union. It addresses common challenges, sets
policies on trade, agriculture, environment, justice, and other Environmental Performance Index (EPI):
areas, and coordinates foreign policy and security cooperation The Environmental Performance Index is a collaboration
among its member states. between Yale University and the World Economic Forum.
Famous Rating Indices It ranks countries based on their environmental performance
and sustainability. The EPI evaluates indicators such as
Human Development Index (HDI): air quality, water resources, biodiversity, climate change,
The Human Development Index is a composite index and environmental health. The index provides valuable
developed by the United Nations Development Programme information for policymakers, researchers, and environmental
(UNDP) to measure the overall development levels of organizations to understand and address environmental
countries. It considers factors such as life expectancy, challenges. It was first introduced in 2001 and is published
education, and per capita income. The HDI provides a biennially.
comprehensive assessment of human well-being and is Social Progress Index (SPI):
widely used to compare countries’ development progress.
The index was introduced in 1990 and is published annually The Social Progress Index is a global index that measures
by the UNDP. the social and environmental performance of countries. It
assesses various dimensions of social progress, including
Global Competitiveness Index (GCI): basic human needs, foundations of well-being, and
The Global Competitiveness Index is an annual report opportunity. The SPI provides insights into a country’s
published by the World Economic Forum (WEF) that assesses performance beyond economic indicators, highlighting
the competitiveness of countries based on various factors. It areas for improvement and policy focus. The index was first
examines areas such as infrastructure, institutions, market introduced in 2013 and has gained recognition as a tool for
efficiency, innovation, and business sophistication. The policymakers, businesses, and civil society organizations to
GCI provides valuable insights into a country’s economic track and drive social progress.

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MISCELLANEOUS - (PRACTICE QUESTIONS)

Q.1 Which of the following is the currency of Maldives? Q.10 What is the Capital of Hungary?
(1) Dinar (2) Dirham (1) Bujumbura (2) Bangui (3) Kinshasa
(3) Peso (4) Rufiyaa (4) Budapest (5) Banjul
(5) None of these Q.11 Chakra dam is located in which state in India?
Q.2 Nayudamma Memorial Award is given in which of (1) Kerala (2) West Bengal
the following fields? (3) Karnataka (4) Maharashtra
(1) Sports (5) Chhattisgarh
(2) Science and Technology Q.12 Cairo is the capital of ________.
(3) Literature (1) Estonia (2) Czech Republic
(4) Music (3) Fiji (4) Brunei
(5) None of these (5) Egypt
Q.3 Which of the following terms is not associated with Q.13 International E-Waste Day is celebrated on which date?
Finance? (1) 15-Oct (2) 14-Oct (3) 13-Oct
(1) Asset Turnover Ratio (4) 12-Oct (5) 11-Oct
(2) Balance Sheet Q.14 Salar Jung museum is located in which state?
(3) Budget (1) Andhra Pradesh
(4) Ashes (2) Gujarat
(5) None of these (3) Madhya Pradesh
Q.4 World Pulses Day is celebrated which date? (4) Uttarakhand
(1) 10-February (5) Telangana
(2) 11-February Q.15 Which of the following is an example of NBFC?
(3) 12-February (1) M&M Financial
(4) 9-February (2) Indiabulls
(5) 8-February (3) Edelweiss Capital
Q.5 The monetary units of the International Monetary (4) JM Financial
Fund is called _____ .
(5) All of the above
(1) ADR (2) ETF (3) SDR
Q.16 With reference to Banking, what is PCR?
(4) GDR (5) IDR
(1) Profit Credit Ratio
Q.6 Shanti Swaroop Bhatnagar Award is given for
excellence in the field of _____ . (2) Provision Credit Ratio
(1) Science and Technology (3) Provisioning Coverage Ratio
(2) Sports (3) Economics (4) Provision Cash Ratio
(4) Cinema (5) None of these (5) None of these
Q.7 Which of the following is not a member country of Q.17 In which of the following state of India, Chilika Lake
ASEAN? situated?
(1) Vietnam (2) India (1) Assam (2) Rajasthan (3) Kerala
(3) Myanmar (4) Indonesia (4) Manipur (5) Odisha
(5) Brunei Q.18 What is the full form of MSF in banking?
Q.8 Which of the following term is not associated with (1) Managed Standing Facility
the game of Hockey? (2) Marginal Statutory Facility
(1) Scoop (2) Stick Goal (3) Marginal Standing Facility
(3) Goal (4) Sprint (4) Money Standing Facility
(5) None of these (5) None of these
Q.9 Expand FATCA. Q.19 Where is the headquarters of Central Railway?
(1) Financial Account Tax Compliance Act (1) Gorakhpur
(2) Foreign Account Trade Compliance Act (2) Mumbai
(3) Financial Account Trade Compliance Act (3) Secunderabad
(4) Foreign Account Tax Capital Act (4) Hajipur
(5) Foreign Account Tax Compliance Act (5) Kolkata

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Q.20 The portfolio management services offered by banks Q.29 Regional Rural Banks were sponsored by-
can be classified __________. (1) RBI (2) SBI
(1) Comprehensive and limited (3) GOI (4) Nationalized Banks
(2) Advisory and non-discretionary (5) Any Bank
(3) Advisory and non-advisory Q.30 What is the capital of Peru?
(4) Discriminatory and non- discriminatory (1) Lima (2) Angola (3) Zaire
(5) None of these (4) Cairo (5) Bern
Q.21 OPEC is a group of countries which are _________. Q.31 “Foal Eagle” is a joint military exercise, which
(1) Exporting Oil is organized between ____________ and
(2) Producing cotton _____________.
(3) Rich and developed (1) Srilanka & Maldives
(4) Developing and poor (2) Thailand & Russia
(5) None of these (3) US & South Korea
Q.22 Which of the following is currency of Lebanon? (4) Japan & South Africa
(1) Pound (2) Dinar (5) Seychelles & Brazil
(3) Euro (4) Peso Q.32 Karta is a manager of___.
(5) None of these (1) Joint family (2) Joint family properties
Q.23 Hanoi is the capital city of which of the following (3) Only (1) (4) Only (2)
country? (5) Both (1) & (2)
(1) Yemen Q.33 What is the full form of SECC?
(2) Vietnam (1) Socio Economic Class Survey
(3) Vatican City (2) Socio Economic Caste Service
(4) Zimbabwe (3) Social Earning Class Survey
(5) None of these (4) Socio Economic Caste Census
Q.24 Bokaro Thermal Power Station is located in which (5) None of these
of the following state? Q.34 What is the Currency of Iceland?
(1) Bihar (1) Dollar (2) Krona
(2) Odisha (3) Dinar (4) Franc
(3) West Bengal (5) Euro
(4) Jharkhand Q.35 In which state is Vembanad Lake located?
(5) None of these (1) Tamilnadu
Q.25 Where is Veer Savarkar International Airport located? (2) Kerala
(1) Pune, Maharashtra (3) Andhra Pradesh
(2) Bhopal, Madhya Pradesh (4) Madhya Pradesh
(3) Port Blair, Andaman and Nicobar Islands (5) Manipur
(4) Guwahati, Assam Q.36 Sandeep Sejwal is related to which sports?
(5) None of these (1) Table Tennis
Q.26 On which day, World Literacy Day is observed? (2) Badminton
(3) Weightlifting
(1) 2-September (2) 8-September
(3) 15-October (4) 20-November (4) Tennis
(5) None of these (5) Swimming
Q.27 Losar festival is celebrated in which of the following Q.37 What is the currency of Nigeria?
region of India? (1) Naira (2) Euro
(1) Punjab (2) Kerala (3) Ladakh (3) Pound (4) Yen
(4) Goa (5) Karnataka (5) Ruble
Q.28 RBI was nationalized on which date? Q.38 Radhanagari Dam is built on which River?
(1) 1-Jan-47 (2) 1-Jan-49 (1) Koyna (2) Bhatsa
(3) 1-Apr-49 (4) 1-Jul-49 (3) Girna (4) Bhogawati
(5) 1-Jan-50 (5) Yamuna

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Q.39 In which state is Sri Padmanabhaswamy Temple Q.49 Arjuna Award was started in which year?
located? (1) 1951 (2) 1981 (3) 1971
(1) Kerala (4) 1961 (5) 1991
(2) Karnataka Q.50 The atmosphere of which exoplanet is made up of
(3) Uttar Pradesh vaporized iron and titanium?
(4) Meghalaya (1) 55 Cancri e (2) Gliese 581c
(5) Sikkim (3) COROT-7b (4) Kepler-10b
Q.40 BCSBI was recommended by which committee? (5) Kelt-9b
(1) Bimal Jalan Q.51 MICR code is a 9 digits numeric code, it represents -
(2) Khan Committee (1) Bank, City, Branch
(3) Narsimhan (2) City, Bank, Branch
(4) Soma Verma (3) Branch, Bank, City
(5) S.S.Tarapore (4) Bank, Country, Branch
Q.41 ORANGE Label ATM refers to- (5) Branch, City, Bank
(1) Agricultural Transaction Q.52 What is the currency of Georgia?
(2) Share Transactions (1) Euro (2) Birr (3) Lari
(3) E-commerce (4) Forint (5) None of these
(4) Women banking Q.53 World Youth Skill Day is observed on -
(5) Minor banking (1) 10-July (2) 15-July (3) 11-July
Q.42 Where is the Headquarters of New Development (4) 12-July (5) 14-July
Bank (NDB)? Q.54 Who is the founder of Madame Tussauds?
(1) Brasília, Brazil (1) Marie Tussauds
(2) Moscow, Russia (2) James Tussauds
(3) New Delhi, India (3) Francois Tussauds
(4) Shanghai, China (4) Curtius Tussauds
(5) Cape Town, South Africa (5) None of these
Q.43 What is the currency of Swaziland? Q.55 Where is the headquarters of Unilever PLC?
(1) Dalasi (2) Kwacha (1) London (2) Rotterdam
(3) Lilangeni (4) Dollar (3) Only (1) (4) Only (2)
(5) Lari (5) Both (1) & (2)
Q.44 Manjira Wildlife Sanctuary is located in which state? Q.56 World Health Day is celebrated on ____.
(1) Sikkim (2) West Bengal (1) 3-April (2) 5-April (3) 7-April
(3) Maharashtra (4) Telangana (4) 8-April (5) 10-April
(5) Meghalaya Q.57 P in DWP is…………
Q.45 Which Day is observed as the National Panchayati (1) Payment (2) Price
Raj Day? (3) Pension (4) Program
(1) 24-April (2) 24-May (3) 24-June (5) None of these
(4) 24-July (5) 24-March Q.58 What is the currency of Indonesia?
Q.46 Gulmarg Wildlife Sanctuary is located in which state? (1) Euro (2) Dinar (3) Lek
(1) Mizoram (2) Meghalaya (4) Rupiah (5) Rial
(3) Uttarakhand (4) Jammu and Kashmir Q.59 What is the capital of Latvia?
(5) Sikkim (1) Riga (2) Beirut (3) Maseru
Q.47 Kathakali is a famous dance form of which state? (4) Pristina (5) Monrovia
(1) Uttar Pradesh (2) Kerala Q.60 Where is the headquarters of World Health Organization?
(3) Andhra Pradesh (4) Odisha (1) Vienna (2) Geneva
(5) Maharashtra (3) Washington (4) New York
Q.48 Jeremy Lalrinnunga is related to which sports? (5) Paris
(1) Judo (2) Badminton Q.61 Idukki dam is built on which of the following rivers?
(1) Kundala river (2) Periyar river
(3) Weightlifting (4) Hockey
(3) Walayar river (4) Neyyar river
(5) Volleyball
(5) None of these
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Q.62 Armed Forces Veterans Day is celebrated which date? Q.69 World Anti-Corruption Day is celebrated which date?
(1) 12-January (2) 13-January (1) 8-December (2) 9-December
(3) 14-January (4) 15-January (3) 3-December (4) 5-December
(5) 10-January (5) 6-December
Q.63 Where is the headquarters of the North Atlantic Q.70 ‘The world’s local bank’ is the tag line of which bank?
Treaty Organization (NATO)? (1) ABN Amro
(1) New Delhi (2) Brussels (2) Standard Chartered bank
(3) Geneva (4) Vienna (3) Rabo bank
(5) New York (4) Hong Kong and Shanghai Banking Corporation
Q.64 Bharatanatyam is the dance form of which state? (5) None of these
Q.71 The “Katni-Satna-Singarauli” region in Madhya
(1) Tamil Nadu (2) Kerala
Pradesh is well known for __.
(3) Sikkim (4) Karnataka
(1) Mango production
(5) Andhra Pradesh (2) Coal production
Q.65 In Finance, Time Horizon is related to___. (3) Cement production
(1) Investment (2) Capital (4) Diamond polishing
(3) Land (4) Labour (5) None of these
(5) None of these Q.72 Headquarter of NABARD is located at–
Q.66 Which financial instrument’s price is derived from (1) Lucknow (2) Mumbai (3) Kolkata
a different asset? (4) Delhi (5) Chennai
(1) Share (2) Bond Q.73 How many banks were nationalized in 1969?
(3) Debenture (4) Underlying Security (1) 12 (2) 19 (3) 6
(5) None of these (4) 14 (5) 20
Q.67 Bancassurance is related to selling ________ Q.74 Pooram is a festival celebrated in which state?
product. (1) Arunachal Pradesh
(1) Deposits (2) Insurance (2) Andhra Pradesh (3) Kerala
(3) Gold (4) Locker (4) Bihar (5) None of these
(5) None of these Q.75 What is an FPO (Follow on Public Offering)?
Q.68 Which of the following is per-share value of Mutual (1) It is issue of shares by company for the 1st time
Fund? (2) It is issue of shares by the company subsequent to IPO
(1) NAV (2) EFT (3) It is issue of Commercial Paper by the company
(3) ECS (4) All of these (4) All of the above
(5) None of these (5) None of these

ANSWER KEY
1.(4) 2.(2) 3.(4) 4.(1) 5.(3) 6.(1) 7.(2) 8.(4) 9.(3) 10.(4)
11.(3) 12.(5) 13.(2) 14.(5) 15.(5) 16.(3) 17.(5) 18.(3) 19.(2) 20.(4)
21.(1) 22.(1) 23.(2) 24.(4) 25.(3)

26.(2) 27.(3) 28.(2) 29.(4) 30.(1) 31.(3) 32.(5) 33.(4) 34.(2) 35.(2)
36.(5) 37.(1) 38.(4) 39.(1) 40.(5) 41.(2) 42.(4) 43.(3) 44.(4) 45.(1)
46.(4) 47.(2) 48.(3) 49.(4) 50.(5)

51.(2) 52.(3) 53.(2) 54.(1) 55.(5) 56.(3) 57.(3) 58.(4) 59.(1) 60.(2)
61.(2) 62.(3) 63.(2) 64.(1) 65.(1) 66.(4) 67.(2) 68.(1) 69.(2) 70.(4)
71.(3) 72.(2) 73.(4) 74.(3) 75.(2)

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PREVIOUS YEAR PAPER QUESTIONS (BASED ON MEMORY)

Q.1 Allinn is the capital of which country? Q.8 In which Indian state is the Gobind Sagar dam located?
(IBPS PO Mains_2017) (SBI Clerk Mains 2017)
(1) Latvia (2) Lithuania (3) Belarus (1) Uttarakhand
(4) Estonia (5) Finland (2) Himachal Pradesh
Q.2 Panna National Park is located in which state of India? (3) Jammu and Kashmir
(IBPS PO Mains 2017) (4) Punjab
(1) Gujarat (5) Haryana
(2) Maharashtra Q.9 Hirakud Dam, one of the longest earthen dams in
(3) Madhya Pradesh the world, is located in which Indian state?
(4) Rajasthan (SBI Clerk Mains 2018)
(5) Uttar Pradesh (1) Gujarat
Q.3 Where is the headquarters of Amnesty International (2) Madhya Pradesh
located? (3) Odisha
(IBPS PO Mains 2017) (4) Bihar
(1) New York (2) Paris (3) London (5) West Bengal
(4) Geneva (5) Brussels
Q.10 Lusaka is the capital city of which African country?
Q.4 Fugdi is a folk dance native to which Indian state?
(SBI Clerk Mains 2018)
(IBPS PO Mains 2017)
(1) Tanzania (2) Zambia
(1) Punjab (2) Maharashtra
(3) Mozambique (4) Zimbabwe
(3) Tamil Nadu (4) Assam
(5) Malawi
(5) Rajasthan
Q.11 Malabo is the capital city of which African country?
Q.5 Dudhawa Dam is actually built across which river in India?
(SBI Clerk Mains 2018)
(IBPS PO Mains 2017)
(1) Gabon
(1) Betwa River
(2) Equatorial Guinea
(2) Chambal River
(3) Burkina Faso
(3) Tapti River
(4) Niger
(4) Damodar River
(5) Cameroon
(5) Mahananda River
Q.12 The headquarters of the Asian Development Bank
Q.6 Where is the headquarters of Rabobank located? (AD(2) is located in which city?
(SBI Clerk Mains 2017) (SBI Clerk Mains 2018)
(1) Frankfurt, Germany (1) Tokyo, Japan
(2) Amsterdam, Netherlands (2) Beijing, China
(3) London, United Kingdom (3) Bangkok, Thailand
(4) Paris, France (4) Manila, Philippines
(5) Utrecht, Netherlands (5) Jakarta, Indonesia
Q.7 Where is the headquarters of the International Q.13 Indira Sagar Dam, one of the largest dams in India,
Criminal Court located? is located in which state?
(SBI Clerk Mains 2017) (SBI Clerk Mains 2018)
(1) Geneva, Switzerland (1) Rajasthan
(2) New York City, United States (2) Madhya Pradesh
(3) Vienna, Austria (3) Gujarat
(4) Brussels, Belgium (4) Maharashtra
(5) The Hague, Netherlands (5) Uttar Pradesh
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Q.14 The Lok Sabha, which is the lower house of the Q.21 Recently, a new organization has been formed in
Indian Parliament, has how many sessions in a year? India for the research sector. What is the name of
(IBPS PO Mains 2022) the organization?
(1) One (2) Two (3) Three (SBI Clerk Mains 2019)
(4) Four (5) Five (1) National Research Council (NRC)
Q.15 Where is Maharaja Bir Bikram Airport located in India? (2) National Research Organization (NRO)
(IBPS PO Mains_2018) (3) Indian Council of Research (ICR)
(1) Agartala (2) Kolkata (3) Mumbai (4) National Research Foundation (NRF)
(4) Chennai (5) Bengaluru (5) Indian Foundation for Research (IFR)
Q.16 Where is the headquarters of Karur Vysya Bank Q.22 In which Indian state was the Hemis Festival celebrated?
located in India? (SBI Clerk Mains 2019)
(IBPS PO Mains 2018) (1) Himachal Pradesh
(1) Chennai (2) Mumbai (3) Bengaluru (2) Jammu & Kashmir
(4) Hyderabad (5) Karur (3) Uttarakhand
Q.17 In which state of India is the Kharchi Puja festival (4) Sikkim
celebrated? (5) Arunachal Pradesh
(IBPS PO Mains_2018) Q.23 What is the capital city of Vietnam?
(1) Tripura (2) Odisha (3) West Bengal (SBI Clerk Mains 2019)
(4) Bihar (5) Jharkhand (1) Bangkok (2) Hanoi (3) Jakarta
Q.18 The term used to refer to the monetary value of all (4) Manila (5) Kuala Lumpur
the finished goods and services produced within a Q.24 In which Indian state was the statue of Lal Bahadur
country’s borders in a specific time period is: Shastri Ji inaugurated?
(IBPS PO Mains 2018) (SBI Clerk Mains_2019)
(1) Gross National Product (GNP) (1) Rajasthan
(2) Net Domestic Product (NDP) (2) Maharashtra
(3) Gross Domestic Product (GDP) (3) Gujarat
(4) National Income (NI) (4) Uttar Pradesh
(5) Personal Income (PI) (5) Bihar
Q.19 Where is the headquarters of Ujjivan Small Finance Q.25 What is the name of the largest moon in our Solar
Bank located in India? System and which planet does it orbit?
(IBPS PO Mains 2019) (SBI Clerk Mains 2021)
(1) Mumbai (2) Bengaluru (3) Kolkata (1) Titan - Saturn
(4) New Delhi (5) Pune
(2) Ganymede - Neptune
Q.20 How many digits are there in a CIBIL Score in India?
(3) Triton - Uranus
(IBPS PO Mains 2019)
(4) Ganymede – Jupiter
(1) 4 Digits (2) 3 Digits (3) 2 Digits
(5) None of these
(4) 5 Digits (5) 6 Digits
ANSWER KEY
1.(4) 2.(3) 3.(3) 4.(2) 5.(5) 6.(5) 7.(5) 8.(2) 9.(3) 10.(2)
11.(2) 12.(4) 13.(2) 14.(3) 15.(1) 16.(5) 17.(1) 18.(3) 19.(2) 20.(2)
21.(4) 22.(2) 23.(2) 24.(4) 25.(4)

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PSYCHOMETRIC TEST - 1
The attributes required to become a successful banker
Given below are a few suggested attributes required to rise to the highest level in
a Bank; These are not arranged in order of importance
A. Ability to Manage Risks.

B. Should ensure that staff are fairly treated; with performers being rewarded
and non-performers pulled up.

C. Ability to understand the Trends and Progress in Banking.

D. Relationship Building and Management.

E. Ability to delegate responsibilities.

F. Capacity to take decisions.

G. Should be able to manage the regulators / controllers.

H. Should have worked in all areas of Banking.

I. Should always ensure that the targets are me

J. ______________________________________________

K. ______________________________________________

Your Task: Please rank the suggested attributes in decreasing order of importance, which
in your opinion are required for a successful Banker, you may also add 2 attributes if you
feel that they are critical and have been omitted from the above list, please then arrive
at group consensus regarding the ranking.

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PSYCHOMETRIC TEST - 2
Test require you to indicate whether you agree or disagree with the statement, neutral or strongly agree
or strongly disagree as under
S. Disagree Strongly Neutral Strongly Agree
No. Disagree Agree
01 When painful choices have to be made I
find it difficult to commit / engage myself
02 When information is incomplete a decision
is best deferred
03 The views of someone who has been in an
organization only a short time are not as
valid as those of someone with long service
04 I pride myself in being able to do a high
- pressure job while dealing sensitively
with people and issues
05 Always plan for the worst case even if it
is very unlikely to happen
06 My greatest attribute is my ability to think
strategically while overseeing day - to -
day activities
07 You have to take stock, be sure that all the
financial needs and objectives are served
before you press on with new initiatives
08 Drive and, of course, luck will affect a
positive solution to most challenges
09 9’Accuracy should never be sacrificed to speed
10 I am 100 % customer focused; the rest can
look after itself
11 I excel when faced with a number of
competing and demanding tasks but routine
administration is something I find demeaning
12 I like to know what is expected of me and
prefer not to have to drop everything to
help solve someone else’s problems
13 Delegation is something which I dislike
14 Everyone makes mistakes, so it is best if
we report them immediately
15 I would feel uncomfortable in a situation
where resources were being used that did
not represent best value for money
16 I understand the importance of effective
listening
17 To manage people well you have to get
fully involved in the detail
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18 I may have some faults but a lack of ‘ get

up and go ‘ is not one of them
19 I have always considered myself the best
qualified in taking charge of my own
personal development
20 In work I prefer to set my own targets and
objectives
21 A target is only a target if it is stretching
22 I am looking for a role without restrictions
or barriers
23 I am prepared to argue even on trifle issues
24 I want a job where my cool - headed
approach will serve me well
25 I like nothing better than to get my teeth
into a challenge
26 I work best when I can get on with my job
with the minimum of distractions
27 I prefer a high degree of order and tend to
get stressed if things do not go as per plan
28 The higher the risk, the higher the
potential return
29 Regulations stifle creativity
30 A rude customer cannot expect the same
level of service as one who is nice
31 Sometimes you cannot properly make a
point without raising your voice
32 In work it is sometimes necessary to tell
a little lie
33 If a personal problem arose that affected
my performance at work I would inform
my line manager straight away
34 When something goes wrong it is best to
put it right and then report it
35 If I witnessed someone being bullied I
would inform my supervisor
36 A joke at working normal but some people
can’t take them and they need to lighten up a bit
37 If I found that I regularly could not
complete all my jobs I would stay late to
get the job done
38 If I found I could complete all my tasks
with time to spare I would offer to help a
colleague who was busy
39 I think it is not right if I am asked to do
something that is not in my job description
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PSYCHOMETRIC TEST - 3
Take this sample test to gain an insight into your personality: In the list given below, for each statement
numbered 1-50 mark how much you agree with on the scale of 1-5, where 1 is disagree, 2 is slightly
disagree, 3 is neutral, 4 is slightly agree and 5 is agree, in the space next to it.
S. Disagree Slightly Neutral Slightly Agree
No. Disagree Agree
01 I Am the life of the party
02 I Feel little concern for others
03 I Am always prepared
04 I Get stressed out easily
05 I Have a rich vocabulary
06 I Don’t talk a lot
07 I Am interested in people
08 I Leave my belongings around
09 I Am relaxed most of the time
10 I Have difficulty understanding
abstract ideas
11 I Feel comfortable around people
12 I Insult people
13 I Pay attention to details
14 I Worry about things
15 I Have a vivid imagination
16 I Keep in the background
17 I Sympathize with others ‘ feelings
18 I Make a mess of things
19 I Seldom feel blue
20 I Am not interested in abstract ideas
21 I Start conversations
22 I Am not ever interested in other
people’s problems
23 I Get chores done right away
24 I Am easily disturbed
25 I Have excellent ideas
26 I Have little to say
27 I Have a soft heart
28 I Often forget to put things back in
their proper place
29 I Get upset easily
30 I Do not have a good imagination.
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31 I Talk to a lot of different people at

parties
32 I Am not really interested in others
33 I Like order
34 I Change my mood a lot
35 I Am quick to understand things
36 I Don’t like to draw attention to
myself
37 I Take time out for others
38 I Shirk my duties
39 I Have frequent mood swings
40 I Use difficult words
41 I Don’t mind being the center of
attention
42 I Feel others ‘ emotions
43 I Follow a schedule
44 I Get irritated easily
45 I Spend time reflecting on things
46 I Am quiet around strangers
47 I Make people feel at case
48 I Am exacting in my work
49 I 0ften feel blue
50 I Am full of ideas

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