Banking & Financial Awareness Mixed Quiz: Set 19

The correct answer is C, 1 April 2025. The Directions were issued on 24 March 2025 and came into effect on 1 April 2025, superseding the Directions of 4 September 2020. The revision raised the education ceiling to 25 lakh rupees, raised the housing ceilings on the three population slabs, and set 60 per cent as the target for primary urban co-operative banks. Option A is wrong because April 2015 was an earlier revision, the one that introduced the sub-targets for small and marginal farmers and micro enterprises and allowed off-balance sheet exposure in the base. Option B is wrong because 4 September 2020 is the date of the Directions that these replaced, a favourite distractor. Option D is wrong because the Directions did not wait for a calendar year to begin; like most Reserve Bank lending norms they follow the financial year.

The correct answer is B, SBI. Ecowrap is the research report of the State Bank of India, brought out by its economic research department.

Ecowrap is written by the team of the group chief economic adviser at SBI and comments on growth, inflation, bank credit, government finances and the state of households. It is widely quoted in the press because it often carries an early estimate of GDP growth or of the fiscal position before the official figures appear. The edition of May 2020 studied the damage the Covid-19 lockdown was doing to incomes and to economic activity. SBI is the country's largest commercial bank, with its headquarters in Mumbai.

A is wrong: the Reserve Bank publishes its own Monetary Policy Report, Financial Stability Report and Annual Report, not Ecowrap. C is wrong: HDFC Bank brings out no report of this name. D is wrong: nor does ICICI Bank.

Exam tip: Ecowrap belongs to SBI Research, while the best known Reserve Bank reports are the Financial Stability Report and the Monetary Policy Report.

The correct answer is A, no fee. Filing a complaint with the Ombudsman is free, and the complainant needs no lawyer; he may file online through the Reserve Bank's complaint management portal, by email, or on paper to the Centralised Receipt and Processing Centre at Chandigarh. Keeping the forum free is the point of the scheme, because the sums in dispute in retail banking are often too small to justify going to court. Options B and C are wrong because the scheme prescribes no filing fee of rupees 100 or 500; small court fees of that kind belong to other forums. Option D is wrong because no proportion of the claim is charged, unlike the ad valorem fees payable in some civil proceedings. Remember that the award itself is also free of cost to the complainant.

The correct answer is C, 18 per cent. Of the 40 per cent that a domestic commercial bank must lend to the priority sector, 18 per cent of Adjusted Net Bank Credit has to go to agriculture, which covers farm credit, agriculture infrastructure and ancillary activities. Within that 18 per cent there is a further sub-target of 10 per cent for small and marginal farmers and of 14 per cent for non-corporate farmers. Option A is wrong because 10 per cent is that small and marginal farmer slice, which sits inside the agriculture figure. Option B is wrong because 12 per cent is the target for weaker sections, an overlapping head that counts borrowers rather than activities. Option D is wrong because 7.5 per cent is the sub-target for micro enterprises under the micro, small and medium enterprises category.

The correct answer is B, 28 August 2014. PMJDY, the National Mission for Financial Inclusion, was launched on 28 August 2014 with the aim of giving every unbanked household a bank account, a RuPay debit card, an overdraft facility and access to insurance and pension. Option A is wrong because 15 August 2014 is the date on which the scheme was announced from the Red Fort in the Independence Day address, and it is also the opening date of the first enrolment phase, but the launch itself came thirteen days later. Option C is wrong because 8 April 2015 is the launch date of the Pradhan Mantri MUDRA Yojana. Option D is wrong because 5 April 2016 is the launch date of Stand Up India. Mixing these three dates is the commonest error in this topic.

The correct answer is A, Muhammad Yunus. Muhammad Yunus, an economist from Bangladesh, founded Grameen Bank. He grew it out of a lending experiment begun in the village of Jobra in 1976, and the bank was given formal status by law in 1983. It lends small sums without collateral, mostly to poor rural women organised in small groups whose members stand behind one another's repayment, and this model of microcredit has since been copied across Asia, Africa and Latin America. Yunus and the bank shared the Nobel Peace Prize in 2006 for creating economic and social development from below. B is wrong because Abdullah Abu Sayeed is a Bangladeshi writer and educationist. C is wrong because Anu Muhammad is an economist known for his writing on development, not the bank's founder. D is wrong because Atiur Rahman served as Governor of Bangladesh Bank. Exam tip: Muhammad Yunus, Grameen Bank of Bangladesh, microcredit, Nobel Peace Prize 2006.

The correct answer is C, 1 June 2000. FEMA was passed as Act 42 of 1999 and received the assent of the President on 29 December 1999, but it was brought into force only on 1 June 2000, on which date the Foreign Exchange Regulation Act of 1973 stood repealed. Option A is wrong because 29 December 1999 is the date of the President's assent, and a question that asks for commencement is testing exactly this distinction. Option B is wrong because 1 April 2000 is the beginning of a financial year and has no connection with the Act; it is offered because candidates expect a tax-style date. Option D is wrong because by 1 January 2001 the Act had already been in force for seven months. Remember the pair: assent in 1999, commencement in 2000.

The correct answer is 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. It gives tiny loans, takes small savings and sells simple insurance, usually working through self-help groups or joint liability groups in which the members stand guarantee for one another, so no collateral is needed. The loans are small, are repaid weekly or monthly, and are often used for a small shop, a sewing machine, cattle or seed. In India these bodies are registered with the Reserve Bank of India as NBFC-MFIs, and NABARD's SHG-Bank Linkage programme works on the same idea. A and B are wrong because government employees and Union ministers draw regular salaries and can borrow from ordinary banks. C is wrong because corporate borrowers are served by commercial banks and the capital market. Exam tip: microfinance means small collateral-free loans to the poor, through SHGs and NBFC-MFIs under the RBI.

The correct answer is B, 10 lakh rupees. Under the renewable energy category a bank may lend up to 35 crore rupees to a borrower for a solar, biomass, wind, micro-hydel or non-conventional energy project, and for an individual household the ceiling is 10 lakh rupees, which is what a rooftop solar system or a small biogas plant needs. Option A is wrong because five lakh rupees is not a ceiling the Directions use for this purpose. Option C is wrong because 35 lakh rupees is the housing loan ceiling for a centre with a population below ten lakh, where the dwelling must cost no more than 44 lakh rupees. Option D is wrong because 35 crore rupees is the project ceiling for a borrower such as a developer of a renewable energy generator, not the figure for a household.

The correct answer is B, twenty five lakh rupees. The guidelines require that at least half of a small finance bank's loan portfolio be made up of loans and advances of up to twenty five lakh rupees each, and the purpose is to keep the bank lending small even as it grows, so that it does not drift towards large corporate credit once it has a licence. Option A, ten lakh rupees, is not the threshold in these guidelines, although candidates often recall it from other small borrower schemes. Option C, fifty lakh rupees, and option D, one crore rupees, are both far above the ceiling and would defeat the purpose of the category; they are offered because they sound like plausible small business figures. Note that this rule limits the size of individual loans, while the separate rule of seventy five per cent of adjusted net bank credit governs the sector the lending goes to.

The correct answer is D, all of the above. The consumer protection law recognises six rights, and the three named in the options are among them: the right to safety, that is protection against goods and services hazardous to life and property; the right to choose from a range of goods and services at competitive prices; and the right to consumer education, the right to acquire the knowledge and skill needed to be an informed consumer. The other three are the right to be informed about quality, quantity, potency, purity, standard and price, the right to be heard, and the right to seek redressal against unfair or restrictive trade practices. Options A, B and C are therefore each correct but incomplete, and in a question framed this way the combined option is the answer. A bank customer may invoke these rights alongside the Reserve Bank's ombudsman route.

The correct answer is B, the insured bank, out of its own earnings. The whole of the deposit insurance premium is paid by the bank, and a bank is barred from passing the cost on, so the charge never appears in a depositor passbook. Option A is wrong for exactly that reason: the depositor pays nothing at all for the cover. Option C is wrong because the Reserve Bank of India owns the Corporation but does not pay premium on behalf of banks; the Corporation collects premium from each insured bank on its assessable deposits. Option D is wrong because the Central Government neither pays the premium nor guarantees bank deposits. Claims are met from the Deposit Insurance Fund, which is built up from premia, from recoveries out of the assets of failed banks and from the income on the Corporation investments. The premium is payable half yearly in advance, and a bank that defaults for three consecutive half year periods risks having its registration cancelled.

The correct answer is C, Rupees 2 lakh. The free RuPay debit card issued with a Jan Dhan account carries a built-in accidental insurance cover, and for accounts opened after 28 August 2018 this cover was raised from one lakh rupees to two lakh rupees when the mission was made open-ended. Option A is wrong because thirty thousand rupees was the life cover, not the accident cover, and it applied only to accounts opened in the first phase between 15 August 2014 and 31 January 2015. Option B is wrong because one lakh rupees is the cover for accounts opened on or before 28 August 2018, which is why the date in the question decides the answer. Option D is wrong because no stage of the scheme has carried a five lakh rupee accident cover; five lakh rupees is the family cover under the health insurance scheme Ayushman Bharat.

The correct answer is B, Section 24 of the Banking Regulation Act, 1949. It requires every banking company to maintain in India, in cash, gold or unencumbered approved securities, assets of a value not less than the prescribed percentage of its demand and time liabilities, and that percentage is the Statutory Liquidity Ratio. Option A is the classic trap, because Section 42(1) of the RBI Act, 1934 is the provision for the Cash Reserve Ratio that scheduled banks keep with the Reserve Bank; candidates who remember only that the Reserve Bank fixes both ratios pick it. Option C is wrong because Section 17 of the Banking Regulation Act requires a transfer of not less than twenty per cent of profit to the reserve fund. Option D is wrong because Section 45-IA deals with the registration of non-banking financial companies.

The correct answer is A, Foreign Exchange Regulation Act, 1973. FERA suited an economy short of foreign exchange: it presumed every transaction forbidden unless allowed, made a contravention a criminal offence punishable with imprisonment, and placed the burden of proof on the accused. FEMA repealed it and made contraventions civil and compoundable. Option B is wrong because the Prevention of Money Laundering Act of 2002 came three years after FEMA and runs alongside it, dealing with the criminal offence of laundering the proceeds of crime. Option C is wrong because the Banking Regulation Act of 1949 governs the business of banking and is still in force. Option D is wrong because the COFEPOSA Act of 1974 provides for preventive detention in smuggling cases and was not replaced by FEMA.

The correct answer is B, the Hilton Young Commission. Formally the Royal Commission on Indian Currency and Finance, it reported in 1926 that the control of currency and of credit should not be split between the Government and the Imperial Bank but placed in one central bank. Its recommendation led to the Reserve Bank of India Act of 1934 and the Bank commenced operations on 1 April 1935.

Option A, the Narasimham Committee, comes much later: the working group on rural banks that led to Regional Rural Banks, and then the reform committees of 1991 and 1998. Option C, the Chelliah Committee, reported on reform of the tax system in the early 1990s and has nothing to do with central banking. Option D, the Sivaraman Committee, recommended the National Bank for Agriculture and Rural Development, which was set up on 12 July 1982. Examiners pair each committee with its institution, so learn them as pairs.

The correct answer is B, 1986. The Consumer Protection Act, 1986 was the first comprehensive consumer law in India and created the three-tier machinery of district forums, state commissions and the National Consumer Disputes Redressal Commission. The Bill introduced in 2018 was taken forward as the Consumer Protection Act, 2019, which repealed and replaced the Act of 1986, added the Central Consumer Protection Authority, brought in rules for e-commerce and product liability, and renamed the forums as commissions. Option A is wrong because 1981 saw no central consumer statute of this kind. Option C is wrong because 1991 is the year of the economic reforms, not of consumer law. Option D is wrong because 1978 precedes the Act altogether. Remember 24 December, the day the 1986 Act received assent, as National Consumer Rights Day.

The correct answer is C, Rupees 436. PMJJBY gives a one-year renewable life cover of two lakh rupees payable on death from any cause, and its premium is four hundred and thirty-six rupees a year, auto-debited from the subscriber's bank account for a cover year that runs from 1 June to 31 May. Option A is wrong because twenty rupees a year is the premium of the Pradhan Mantri Suraksha Bima Yojana, the accident cover, which is the scheme most often confused with this one. Option B is wrong because three hundred and thirty rupees was the earlier premium of PMJJBY, charged until the rates were revised with effect from 1 June 2022, so it is the stale figure that older study material still carries. Option D is wrong because no Jan Suraksha scheme charges a premium of twelve hundred rupees.

The correct answer is B, Directorate of Enforcement. The Directorate of Enforcement, which works under the Department of Revenue in the Ministry of Finance, investigates contraventions of FEMA, conducts searches and places cases before the Adjudicating Authority. Option A is wrong because the Reserve Bank administers the Act, frames the regulations on capital account transactions, authorises authorised persons and compounds many contraventions, but it is not the investigating agency, and the paper distinguishes administration from enforcement. Option C is wrong because the Central Bureau of Investigation handles offences under the general criminal law and corruption cases, not foreign exchange contraventions. Option D is wrong because SEBI regulates the securities market and has no role in administering or enforcing this Act. Section 37A, added later, lets the Directorate seize assets of equivalent value inside India where foreign exchange is held abroad in breach of the Act.

The correct answer is D, 18 to 70 years. PMSBY is a one-year renewable personal accident insurance scheme open to savings bank account holders aged eighteen to seventy who consent to the auto-debit of the twenty rupee annual premium. It pays two lakh rupees on accidental death or permanent total disability and one lakh rupees on permanent partial disability. Option A is wrong because eighteen to forty years is the entry age band for the Atal Pension Yojana, which must allow at least twenty years of contribution before the pension begins at sixty. Option B is wrong because eighteen to fifty years is the entry age band for the life insurance scheme PMJJBY, whose cover continues up to the age of fifty-five. Option C is wrong because sixty is the age at which the Atal Pension Yojana pension starts, not an entry limit under PMSBY.