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Question 1 of 10
1. Question
2 points
The Reserve Bank has specified certain regulatory trigger points, as a part of Prompt
Corrective Action (PCA) Framework. Which of the following are included as parameters for
introducing a Prompt Corrective Action Framework in a particular bank?
1. Capital to risk weighted assets ratio
2. Debt Service Obligation
3. Net non-performing assets
4. Return on Assets
Select the correct answer using the codes given below:
Correct
Ans d
The Reserve Bank has specified certain regulatory trigger points, as a part of prompt
corrective action (PCA) Framework, in terms of three parameters, i.e.
1. Capital to risk weighted assets ratio (CRAR)
2. Net non-performing assets (NPA)
3. Return on Assets (RoA)
Incorrect
Ans d
The Reserve Bank has specified certain regulatory trigger points, as a part of prompt
corrective action (PCA) Framework, in terms of three parameters, i.e.
1. Capital to risk weighted assets ratio (CRAR)
2. Net non-performing assets (NPA)
3. Return on Assets (RoA)
Question 2 of 10
2. Question
1 points
In context of the Prompt Corrective Action Framework of RBI, consider the following
statements:
1. The Prompt Corrective Action Framework is applicable only to commercial banks
2. Under PCA, RBI can stop banks from lending and there can be a cap on lending to
specific sectors/entities
3. PCA can constrain normal operations of the banks for the general public like lending
and depositing
Which of the statements given above is/are correct?
Correct
Ans b
The RBI has clarified that the PCA framework is not intended to constrain normal operations
of the banks for the general public like lending and depositing.
Incorrect
Ans b
The RBI has clarified that the PCA framework is not intended to constrain normal operations
of the banks for the general public like lending and depositing.
Question 3 of 10
3. Question
2 points
Consider the following groupings:
1. Asian Pacific Economic Cooperation.
2. Indian Ocean Rim Association.
3. Organization for Economic Co-operation and Development.
4. South Asian Free Trade Area.
Which of the above groupings does not include India as its member?
Correct
Ans c
Asia Pacific Economic Cooperation (APEC) is a group of 21 members of the Pacific rim of
ocean economies with its headquarters in Singapore. India is not a member of this grouping.
Organization of the Petroleum Exporting Countries (OECD) is a group of oil exporting
countries with its headquarters in Austria. It was established in 1961. It includes 13
members. India is not a member of this.
Incorrect
Ans c
Asia Pacific Economic Cooperation (APEC) is a group of 21 members of the Pacific rim of
ocean economies with its headquarters in Singapore. India is not a member of this grouping.
Organization of the Petroleum Exporting Countries (OECD) is a group of oil exporting
countries with its headquarters in Austria. It was established in 1961. It includes 13
members. India is not a member of this.
Question 4 of 10
4. Question
2 points
Which one of the following statements appropriately describes “Globalisation”?
Correct
Ans c
Both option A and B describe Globalisation.
Incorrect
Ans c
Both option A and B describe Globalisation.
Question 5 of 10
5. Question
2 points
With reference to the Indian economy, consider the following:
1. Long Term Repo Auctions
2. KYC Norms
3. Currency Swap
4. Capital Adequacy Norms
Which of the above can be considered as the steps taken to achieve effective Monetary
Policy Transmission by the Reserve Bank of India?
Select the correct answer using the codes given below:
Correct
Ans c
KYC means “Know Your Customer”. It is a process by which banks obtain information about
the identity and address of the customer. It has little to no role in monetary policy
transmission.
Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in relation to its risk weighted
assets and current liabilities. However, Capital Adequacy ratio is related to a bank’s financial
soundness and not policy transmission.
Incorrect
Ans c
KYC means “Know Your Customer”. It is a process by which banks obtain information about
the identity and address of the customer. It has little to no role in monetary policy
transmission.
Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in relation to its risk weighted
assets and current liabilities. However, Capital Adequacy ratio is related to a bank’s financial
soundness and not policy transmission.
Question 6 of 10
6. Question
2 points
When the Reserve Bank of India increases the Cash Reserve Ratio by 50 basis points,
which of the following is likely to happen?
Correct
Ans d
The amount of cash that the scheduled commercial banks are required to maintain with RBI
with respect to their NDTL (on a fortnightly basis) is called Cash Reserve Ratio.
When the Cash Reserve Ratio is increased banks will have a lesser quantity of money to lend
than before.
Incorrect
Ans d
The amount of cash that the scheduled commercial banks are required to maintain with RBI
with respect to their NDTL (on a fortnightly basis) is called Cash Reserve Ratio.
When the Cash Reserve Ratio is increased banks will have a lesser quantity of money to lend
than before.
Question 7 of 10
7. Question
2 points
Which of the following terms indicates a mechanism used by the Reserve Bank of India
for absorbing excess liquidity from the market?
Correct
Ans d
Market Stabilization Scheme (MSS) is a monetary policy intervention by the RBI to withdraw
excess liquidity (or money supply) by selling government securities in the economy.
Incorrect
Ans d
Market Stabilization Scheme (MSS) is a monetary policy intervention by the RBI to withdraw
excess liquidity (or money supply) by selling government securities in the economy.
Question 8 of 10
8. Question
2 points
Consider the following financial institutions:
1. Insurance Companies
2. Chit Companies
3. Stock Broking Companies
4. Micro Financial Institutions
Which of the given financial institution(s) can be considered as Non-Banking Financial
Companies?
Correct
Ans d
All the options are types of NBFCs.
Incorrect
Ans d
All the options are types of NBFCs.
Question 9 of 10
9. Question
2 points
Consider the following statements with respect to the Payment Banks:
1. Payment banks can issue ATM/debit cards and credit cards
2. Payment banks cannot undertake lending activities
3. Payment banks can accept demand and time deposits and provide remittance
services
Which of the given statement(s) is/are incorrect?
Correct
Ans c
Payments banks can issue debit cards however, they cannot issue credit cards.
Payments banks will accept only demand deposits i.e., only savings account and current
account facility will be available. RBI has put a cap of Rs. 1 lakh on deposits that payment
banks can receive from individual customers.
Incorrect
Ans c
Payments banks can issue debit cards however, they cannot issue credit cards.
Payments banks will accept only demand deposits i.e., only savings account and current
account facility will be available. RBI has put a cap of Rs. 1 lakh on deposits that payment
banks can receive from individual customers.
Question 10 of 10
10. Question
2 points
When RBI increases the sale of government securities through open market
operations, which of the following is most likely to happen?
Correct
Ans c
Open Market operations are the sale or purchase of government securities by RBI in the
open market (secondary bond/debt market) to banks/financial institutions for injection and
absorption of durable liquidity (money supply) in the economy.
Hence, in the above given case, an increase in the sale of G-secs indicates that the RBI is
following a tight or contractionary money policy to reduce the inflation in the economy.
Incorrect
Ans c
Open Market operations are the sale or purchase of government securities by RBI in the
open market (secondary bond/debt market) to banks/financial institutions for injection and
absorption of durable liquidity (money supply) in the economy.
Hence, in the above given case, an increase in the sale of G-secs indicates that the RBI is
following a tight or contractionary money policy to reduce the inflation in the economy.
