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Banking & Financial Awareness Previous Year Questions (PYQ) with Answers

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Banking & Financial Awareness questions asked in previous year papers of SSC, Banking, Railway and other exams, with the exam and year, answers and explanations.

76 previous-year questions

All Banking & Financial Awareness questionsBanking & Financial Awareness NotesPYQs by exam
Q1.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2026, GS Paper IHard

Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India : 1. NBFCs cannot accept demand deposits. 2. All the NBFCs operating in India have to be registered with the RBI. 3. NBFCs form part of the payment and settlement system and can issue cheque drawn on itself. 4. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs. Which of the statements given above is/are correct ?

  1. A.1 and 4
  2. B.1, 2 and 3
  3. C.4 only
  4. D.2, 3 and 4
Show answer
Correct answer: A. 1 and 4

These are two of the three ways the RBI itself says an NBFC differs from a bank. An NBFC lends and invests like a bank, but it cannot accept demand deposits such as savings or current accounts, so statement 1 is correct.

Q2.Banking & Financial AwarenessAsked in: UPSC CAPF · CAPF 2026, Paper IHard

Consider the following statements about the Special Drawing Facility (SDF) : 1. It makes provision of short-term loans by the RBI to the State Governments/UT Governments against Government Securities. 2. Interest rate charged by the RBI on it is the same as Repo Rate. 3. It can be availed by the State Governments/UT Governments only after exhausting the normal Ways and Means Advances limit. Which of the statements given above is/are correct?

  1. A.1, 2 and 3
  2. B.1 only
  3. C.1 and 3 only
  4. D.2 and 3 only
Show answer
Correct answer: B. 1 only

The Special Drawing Facility is short-term, secured lending to States, but it is cheaper than the repo rate and comes before ordinary WMA, not after it.

Q3.Banking & Financial AwarenessAsked in: UPSC CAPF · CAPF 2026, Paper IHard

Consider the following statements about Ways and Means Advances (WMA) : 1. WMA is a provision in which the Reserve Bank of India provides long-term loans to the State Governments/UT Governments and Central Government. 2. WMA is a provision in which the Reserve Bank of India provides short-term loans to the State Governments/UT Governments and Central Government. 3. WMA was introduced in 1997. 4. Interest rate charged by the RBI on WMA is the same as the bank rate. Which of the statements given above is/are correct?

  1. A.1 only
  2. B.1 and 3 only
  3. C.2 and 3
  4. D.1, 3 and 4
Show answer
Correct answer: C. 2 and 3

Ways and Means Advances are short-term loans from the RBI, and the scheme began in 1997. Governments often spend before their receipts arrive.

Q4.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2024, GS Paper IMedium

Consider the following statements in respect of the digital rupee:

1. It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy.

2. It appears as a liability on the RBI's balance sheet.

3. It is insured against inflation by its very design.

4. It is freely convertible against commercial bank money and cash.

Which of the statements given above are correct?

  1. A.1 and 2 only
  2. B.1 and 3 only
  3. C.2 and 4 only
  4. D.1, 2 and 4
Show answer
Correct answer: D. 1, 2 and 4

The digital rupee is RBI-issued sovereign money, sits as a liability of the RBI like notes do, and can be exchanged one-to-one for cash and bank deposits.

Q5.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2024, GS Paper IMedium

Consider the following statements:

Statement-I: Syndicated lending spreads the risk of borrower default across multiple lenders.

Statement-II: The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line.

Which one of the following is correct in respect of the above statements?

  1. A.Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  2. B.Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  3. C.Statement-I is correct, but Statement-II is incorrect
  4. D.Statement-I is incorrect, but Statement-II is correct
Show answer
Correct answer: C. Statement-I is correct, but Statement-II is incorrect

A syndicate shares the default risk, and a syndicated facility can be either a term loan or a credit line.

Q6.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2024, GS Paper IHard

With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements : 1. There is no minimum capital requirement for wholly owned banking subsidiaries in India. 2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals. Which of the statements given above is/are correct ?

  1. A.1 only
  2. B.2 only
  3. C.Both 1 and 2
  4. D.Neither 1 nor 2
Show answer
Correct answer: B. 2 only

RBI does set a minimum capital for a foreign bank's wholly owned subsidiary, and it requires at least half the board to be Indian nationals.

Q8.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2023, GS Paper IMedium

With reference to Central Bank digital currencies, consider the following statements: 1. It is possible to make payments in a digital currency without using US dollar or SWIFT system. 2. A digital currency can be distributed with a condition programmed into it such as a time-frame for spending it. Which of the statements given above is/are correct?

  1. A.1 only
  2. B.2 only
  3. C.Both 1 and 2
  4. D.Neither 1 nor 2
Show answer
Correct answer: C. Both 1 and 2

A central bank digital currency can settle payments directly between countries without the dollar or SWIFT, and it can be programmed with conditions on its use.

Q10.Banking & Financial AwarenessAsked in: SSC MTS · 13 Sept, 2023, Shift 3Easy

Which of the following is a feature of Micro Finance Institutions?

  1. A.Financial service to government employees
  2. B.Finance service to Union ministers
  3. C.Financial service to corporate
  4. D.Financial service to disadvantaged people
Show answer
Correct answer: D. Financial service to disadvantaged people

A microfinance institution exists to lend small sums to poor and low-income people who cannot offer the security an ordinary bank asks for.

Q11.Banking & Financial AwarenessAsked in: SSC CHSL · 02 Aug, 2023, Shift 4Hard

Based on the recommendations of which Committee was the creation of a separate category for NBFCs operating in the microfinance sector (NBFC-MFI) done?

  1. A.Narasimhan Committee
  2. B.Malegam Committee
  3. C.Deepak Parekh Committee
  4. D.PK Mohanty Committee
Show answer
Correct answer: B. Malegam Committee

The Reserve Bank of India set up this sub committee of its Central Board under Y. H. Malegam in October 2010, after complaints of very high interest rates and harsh recovery in the microfinance business.

Q12.Banking & Financial AwarenessAsked in: SSC GD Constable · 24 Jan 2023, Shift 3Medium

The rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers is called the ______.

  1. A.Bank Rate
  2. B.Cash Reserve Ratio
  3. C.Reverse Repo Rate
  4. D.Repo Rate
Show answer
Correct answer: A. Bank Rate

Section 49 of the Reserve Bank Of India Act defines the bank rate as the standard rate at which the Bank is prepared to buy or rediscount bills of exchange or other commercial paper eligible for purchase.

Q14.Banking & Financial AwarenessAsked in: SSC GD Constable · 13 Feb 2023, Shift 4Hard

SEWA (Self-Employed Women's Association) Bank, a cooperative bank in Gujarat, was launched in India in ______.

  1. A.1974
  2. B.1894
  3. C.1994
  4. D.1874
Show answer
Correct answer: A. 1974

Women of the Self-Employed Women's Association at Ahmedabad, who worked as vendors, headloaders and home-based workers, pooled their own share capital and registered a cooperative bank of their own in 1974 because ordinary banks would not deal with borrowers who had no collateral and no paperwork.

Q15.Banking & Financial AwarenessAsked in: SSC MTS · 19 May 2023, Shift 1Easy

Which among the following is a public sector bank?

  1. A.Axis Bank
  2. B.ICICI Bank
  3. C.Bank of Baroda
  4. D.Yes Bank
Show answer
Correct answer: C. Bank of Baroda

It was founded in 1908 by Maharaja Sayajirao Gaekwad III, nationalised in the first round of July 1969, and the Government of India still holds the majority of its shares, which is what makes a bank a public sector bank.

Q16.Banking & Financial AwarenessAsked in: SSC MTS · 12 Sept 2023, Shift 1Easy

What is the primary function of a commercial bank?

  1. A.Issuing currency notes and coins
  2. B.Conducting monetary policy
  3. C.Granting loans and accepting deposits
  4. D.Regulating the money supply
Show answer
Correct answer: C. Granting loans and accepting deposits

A commercial bank exists to gather savings from those who have a surplus and lend them to those who need funds, and it earns from the gap between the interest it pays depositors and the interest it charges borrowers.

Q19.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2022, GS Paper IMedium

Consider the following statements : 1. In India, credit rating agencies are regulated by Reserve Bank of India. 2. The rating agency popularly known as ICRA is a public limited company. 3. Brickwork Ratings is an Indian credit rating agency. Which of the statements given above are correct ?

  1. A.1 and 2 only
  2. B.2 and 3 only
  3. C.1 and 3 only
  4. D.1, 2 and 3
Show answer
Correct answer: B. 2 and 3 only

Credit rating agencies in India are regulated by SEBI, not by the RBI, while statements 2 and 3 are true.